Meyer Heine Pty Ltd v China Navigation Co Ltd

The first of the defendants' demurrers relates to those parts of the statement of claim which allege a breach of s. 4 (1) of the Act by the making or entering into of a contract or contracts; and the ground is, in effect, that the plaintiff does not allege, and the fact could not be, that the plaintiff suffered injury by the making or entering into of a contract without more. A limited demurrer of this kind is permitted by O. 26, r. 1 (b), if the part that is demurred to sets up a distinct cause of action. The parts of the statement of claim to which the first demurrer is directed do not by themselves set up a distinct cause of action, but at the end of the pleading there is a general allegation of injury "by reason of the aforesaid acts or things done by the defendants in contravention of the provisions of the said Act", and no doubt the demurrer intends to embrace this allegation in so far as it applies to the making and entering into of agreements. Presumably the allegation of injury should be read distributively, as alleging injury from each alleged contravention, and if so the first demurrer must necessarily fail except as to any contract of which it is right to say that no injury to the plaintiff could possibly have been caused by the bare act of the defendants' entering into it. Because of the view which I shall later express as to the making of the three classes of agreements in Japan and Hong Kong, I need not consider the question in relation to them. But in relation to the Sydney agreement of 23rd May 1961 I do need to consider it. The point in that connexion is that at the time the Sydney agreement was made the plaintiff was not in existence. The statement of claim gives the date of the plaintiff's incorporation as 15th June 1962, so that by entering into the agreement the defendants cannot have caused the plaintiff any injury. This demurrer should therefore succeed in so far as it relates to the Sydney agreement. No question arises at present concerning the extension of the agreement which is alleged to have taken place on or about 30th June 1963.

The second demurrer is to that part of the statement of claim which alleges that the agreements of the three classes abovementioned, entered into with shippers and importers and/or spinners in Japan, were made and entered into by the defendants in contravention of s. 4 (1) of the Act. This demurrer, like the last, presumably intends to include the general allegation of injury in so far as it applies to the making or entering into of the three classes of agreements. The contention here is that s. 4 (1) does not apply to the making or entering into of a contract outside Australia, at least by a company which, like each of the defendants, owes its incorporation to the law of another country. The question thus raised is one of pure construction. So far as material, the provision made by s. 4 (1) is that any person who makes or enters into any contract in relation to trade or commerce with other countries in restraint of or with intent to restrain trade or commerce is guilty of an offence. There being no express geographical restriction upon the generality of any of the expressions "any person", "makes or enters into", and "any contract", the question is whether such a restriction is implied. I take it to be clear that no basis for a conclusion on this question is to be found by consideration of any limit upon constitutional power. If implication there be, it must arise either from other provisions of the statute or from the general rule that "if any construction otherwise be possible, an Act will not be construed as applying to foreigners in respect to acts done by them outside the dominions of the sovereign power enacting": per Lord Russell of Killowen, Reg. v. Jameson [1] .

If I thought that the Act itself gave no relevant indication of intention I should find it necessary to discuss more fully than I do the arguments for and against the application of the general rule; but as it is I need say but little about them. Questions of the same general description under the Sherman Act in the United States have arisen in a series of important cases, from American Banana Co. v. United Fruit Co. [2] (in which the judgment of Holmes J. gives full effect to the rule abovementioned) to the much-debated Alcoa Case, United States v. Aluminum Co. of America [3] , and Steele v. Bulova Watch Co. [4] . A case of a combination of shipping lines is Thomsen v. Cayser [5] . These and the later case of United States v. Watch-makers of Switzerland Information Centre Inc. (1964) are the subject of valuable discussions, to which we have been referred, in papers presented to the 1964 Conference at Tokyo of the International Law Association. Such discussions have relevance to questions of statutory construction because, as Lord Russell of Killowen said in the Jameson Case [6] after stating the general rule in the terms I have quoted: "That is a rule based on international law by which one sovereign power is bound to respect the subjects and the rights of all other sovereign powers outside its own territory" [7] . In the present proceeding, however, it is not necessary to decide what view should be recognized by Australian Courts upon the question, about which unanimity among nations is lacking, of the legislative jurisdiction of a country in regard to acts done outside its territory but intended to have and actually having adverse effects upon the internal or external trade of that country. No doubt much may be said for the view that the state of international opinion in 1906 was such that an enactment passed in that year in the general terms of s. 4 (1) should be taken to apply only to the making and entering into of contracts within Australia; and that an enactment passed in 1910, when s. 4 (1) took its present form, that is to say after Holmes J. had delivered the judgment of the Supreme Court in the Banana Case [1] , should with all the greater assurance be taken to apply only to such contracts.

1. (1909) 213 U.S. 347 [53 Law. Ed. 826]. 2. (1945) 148 Fed. Rep. 2nd. 416. 3. (1952) 344 U.S. 280 [97 Law. Ed. 319]. 4. (1917) 243 U.S. 66 [61 Law. Ed. 597]. 5. [1896] 2 Q.B. 425. 6. [1896] 2 Q.B., at p. 430. 7. (1909) 213 U.S. 347 [53 Law. Ed. 826].

I rest my conclusion, however, not upon such considerations as these but upon the fact that I find in s. 9 (b) of the Act what seems to me a compelling indication that in creating offences the Act intends to speak territorially. The provision of s. 9 is: "Whoever aids, abets, counsels, or procures, or by act or omission is in any way, directly or indirectly, knowingly concerned in or privy to - (a) the commission of any offence against this Part of the Act; or (b) the doing of any act outside Australia which would, if done within Australia, be an offence against this Part of this Act, shall be deemed to have committed the offence." It will be observed that the concluding words, "the offence", as applied to (a) refer to an offence committed, but as applied to (b) refer to a purely notional offence, namely the offence which would have been committed if the act done outside Australia had been done within Australia. But, in relation both to an offence committed and to an act which is saved from being an offence by the fact that it was done outside Australia, the section, as I read it, is speaking of something done in fact in respect of which the question whether it is an offence is to be answered by considering the operation of other provisions in Pt II of the Act. It appears to me to accept the situation that if the act done is an offence the doer is punishable under another provision, and, equally, that if the act done is saved by its extra-territoriality from being an offence under another provision the doer of the act is saved by that fact from being punishable. I do not understand it to be altering the position of the doer of the act. Rather does it appear to be directed to the case of a person who has done something which is neither the commission of an offence nor the doing of an act which if done in Australia would have been an offence, but which has one of the specified forms of connexion with an offence or act which has been committed or done by someone else. Like the other provisions creating offences, s. 9 says nothing expressly as to the territorial extent of its own operation. But the presence of par. (b) is, I think, to be accounted for only on the basis that the Act as a whole, including s. 9 itself, has been framed in reliance upon its being taken for granted by everyone that when conduct is made an offence it is only conduct in Australia that is meant. There is, I think, nothing inconsistent with this view in s. 6 (1) (a) as read with the definition of Commercial Trust in s. 3. I should add that I do not accept the suggestion made on behalf of the plaintiff that the word "act" in s. 9 (b) is inapt to comprehend being or continuing to be a member of or engaging in a combination. An intention to refer by that word to any conduct which would amount to the commission of an offence if it were done within Australia is too clear to permit of so narrow an interpretation. I would decide this demurrer in favour of the defendants.

The next demurrer is to all those parts of the statement of claim which allege contraventions of s. 4 (1), scil. by which the plaintiff was injured. The relevant allegations need not be stated in detail; it is enough to say that they allege contraventions of s. 4 (1) (a) by the defendants, not only by making and entering into contracts, but also by being members of or engaged in a combination, in restraint of or with intent to restrain trade or commerce. The ground of demurrer is that it is an essential ingredient in a cause of action under s. 11 for injury by reason of any such contravention that the conduct complained of was to the detriment of the public and unreasonable. If s. 4 had been enacted in its present form but without sub-s. (3) this result might possibly have been reached by force of considerations such as those which have led the Supreme Court of the United States, in a line of cases which began with Standard Oil Co. of New Jersey v. United States [1] , to interpret the corresponding provision of the Sherman Act as being subject to an implied exception of contracts in restraint of trade which are enforceable at common law, though the force of Harlan J.'s dissenting opinion would have had to be recognized. By such an interpretation the enforceability of a contract at common law would become the test of the legality under the statute of a contract or combination: cf. Attorney-General of the Commonwealth of Australia v. Adelaide Steamship Co. Ltd. [2] . But an argument along that line is untenable, I think, in view of the changes made by the amending Act 1910 which introduced sub-s. (3). Before that Act, s. 4 (1) applied only with respect to contracts and combinations "with intent to restrain trade or commerce to the detriment of the public". The Act altered this to read "in restraint of or with intent to restrain", omitting "to the detriment of the public", and it capped those amendments with the insertion of sub-s. (3). The sub-section enacts that it shall be a defence to a proceeding for an offence under par. (a) of sub-s. (1), if the party alleged to have contravened the section proves - (a) that the matter or thing alleged to have been done in restraint of, or with intent to restrain, trade or commerce, was not to the detriment of the public, and (b) that the restraint of trade or commerce effected or intended was not unreasonable. The defendants submit that sub-s. (3) recognizes that detriment to the public and unreasonableness are impliedly elements in the offence, but casts the burden of disproving them upon the defence in a prosecution, while leaving the burden of proving them upon the plaintiff in an action for treble damages. This seems to me a strained and indeed an impossible construction to place upon the provision. I should have thought, particularly in view of the context provided by s. 11 (2), s. 14A and s. 14B, that an action for treble damages for injury by a contravention of s. 4 (1) (a) is a proceeding for an offence under that provision, within the meaning of sub-s. (3), and that the manifest intention of sub-s. (3), enacted, as it was, correlatively to the amendment of sub-s. (1), is to make detriment to the public and unreasonableness matters of defence only, and, as a necessary consequence, to indicate that they are not ingredients in the offence. But even if s. 4 (3) were to be regarded as merely creating a prima facie presumption as to matters germane to the offence, a statement of claim seeking damages for injury caused by the offence would not be demurrable for omitting to allege those matters: see O. 20, r. 27, of the High Court Rules. This demurrer, in my opinion, should be overruled.

1. (1911) 221 U.S. 1 [55 Law. Ed. 619]. 2. [1913] A.C. 781, at p. 801; (1913) 18 C.L.R. 30, at pp. 39, 40.

I shall next deal with a demurrer by the defendants which is in terms restricted to certain parts of the statement of claim charging them with having acted contrary to s. 7A of the same Act. This is a demurrer to allegations setting up distinct causes of action in respect of injury to the plaintiff by reason of having, contrary to s. 7A (as is alleged), given, offered, or promised any rebate, refund, discount, concession, or reward, for the reason or upon the condition (to express it shortly) of dealing exclusively with members of the Conference. There is a provision in sub-s. (3) of s. 7A that it shall be a defence to a "prosecution" under the section (the expression is not "a proceeding for an offence" as it is in sub-s. (3) of s. 4) if the party alleged to have contravened the section proves that the matter or thing alleged to have been done in contravention of the section was not to the detriment of the public, and did not constitute competition which was unfair in the circumstances, and was not destructive of or injurious to any Australian industry. (The third of the matters to be proved was added by amendment in 1910.) The ground of demurrer is, in effect, that no cause of action is disclosed by a pleading which does not allege the contrary of the matters of defence provided for in sub-s. (3). In my opinion sub-s. (3) amounts in effect to a legislative declaration that conduct within the descriptions in sub-s. (1) presumptively constitutes an offence, but that the presumption is rebuttable by proof of the matters mentioned. Accordingly in my opinion the statement of claim alleges enough to disclose a cause of action for injury resulting from contravention of the section even though it alleges nothing as to those matters: O. 20, r. 27. This demurrer in my opinion fails.

Finally, there is a demurrer to those parts of the statement of claim which allege contraventions of s. 7, that is to say a demurrer to the statement of claim in so far as it sets up distinct causes of action in respect of injury by reason of the defendants' having monopolized or attempted to monopolize, or combined or conspired to monopolize, any part of the trade or commerce with other countries or among the States. The ground taken is that proof of such a contravention requires proof that the monopolization effected or attempted is pernicious or harmful to the Australian public, and that the statement of claim does not allege that it was. If such proof is in truth necessary it must be because the word "monopolize" as used in s. 7 connotes a pernicious or harmful effect or tendency. The statement of claim, after alleging a number of matters of conduct on the part of the defendants, charges the defendants in the very words of s. 7 and by specific reference to that section. In so doing it must, I think, be taken to use the word "monopolize" in the sense of the section, and in any event s. 14A provides that in any proceeding for an offence against Pt II of the Act any statement of claim shall suffice if the offence is set forth as nearly as may be in the words of the Act. Accordingly I think that the point raised is not an available ground of demurrer. If it were necessary to decide the point I should regard it as one of some difficulty in view of the Privy Council's judgment in the case above cited. That case was decided on the section as originally enacted. It then contained words which concluded the question and supplied their own test of perniciousness by using the words: "with intent to control, to the detriment of the public, the supply or price of any service, merchandise, or commodity". The amending Act of 1910 omitted these words from the section, but it does not necessarily follow that by so doing it showed an intention that "monopolize" in the section should thenceforth have a meaning wide enough to include the creation of a benign monopoly. However, I would overrule this demurrer for the reason I have mentioned, and the more readily because I think it would be desirable not to deal with the question until findings have been made as to what the defendants did and in what circumstances. Presumably evidence would not be admissible as to the actual or probable consequences of what was done, even on the assumption that the section should be construed as the defendants suggest; for on that assumption the question for the Court to decide would be simply one as to the nature of any monopoly which the defendants effected or attempted or combined or conspired to effect: cf. Attorney-General of the Commonwealth of Australia v. Adelaide Steamship Co. Ltd. [1] .

1. [1913] A.C. 781, at p. 797; (1913) 18 C.L.R. 30, at p. 35.

I turn to the plaintiff's demurrers. They are all directed to paragraphs of the defence which set up distinct grounds of defence to be relied upon if it should be held that the fact of a contract having been entered into in Japan or Hong Kong affords by itself no answer to a charge that by entering into it the defendants contravened the Act. To the allegation that the contracts were entered into (if at all) in those places the paragraphs in question add certain further allegations, such as that the other parties were domiciled in those places, or were domiciled and possessed nationality there; and some of them add also that the conduct complained of was justifiable by the local law. The view I have expressed as to the implied territorial restriction upon the sections of the Act which create offences makes it unnecessary to deal with these demurrers, and I would make no order upon them.

In the result I would allow what I have called the defendants' first demurrer (contained in par. 13 of the defence) in so far as it relates to the agreement of 23rd May 1961; I would also allow the defendants' second demurrer (contained in par. 13a of the defence). The defendants' other demurrers I would overrule. I would make no order as to costs.

By its statement of claim the plaintiff alleges breaches of ss. 4 (1), 7 and 7A of the Australian Industries Preservation Act 1906-1950 Cth and sues pursuant to s. 11 of that Act to recover treble the amount of damages which, it is asserted, it has suffered as a result. The defendants have demurred to parts of the statement of claim on a number of grounds and it is as well to state the substance of the demurrers with some particularity. There is:

(1) A demurrer to that part of the statement of claim which alleges that the agreements referred to in pars. 14, 15 and 16 thereof were made or entered into by the defendants in contravention of s. 4 (1) of the Act on the ground that, as appears from the statement of claim, the agreements were entered into in Japan or Hong Kong and the sub-section does not apply or purport to apply to agreements entered into outside Australia (Defence: par. 13a).

The so-called agreements are forms of agreement only but it is alleged that the members of the Australian and New Zealand/Eastern Shipping Conference (including the defendants) have, from time to time, entered into contracts in one or more of the forms with persons in Japan and Hong Kong. Briefly, the agreements as set forth, oblige:

(i) The shipper of goods from Japan and Hong Kong, to forward under penalty all their shipments to Australian and New Zealand ports exclusively by vessels operated by members of the Conference; and,

(ii) The consignee of wool being imported into Japan to confine all shipments from Australian and New Zealand ports to vessels operated by members of the Conference. On their part the shipowners agree to allow "an immediate discount" of 9½ per centum on the standard rates of freight.

An agreement and constitutional rules governing the mutual rights and obligations of the members of the Conference are recited earlier in the statement of claim as is also the fact that, at all material times, substantially all the wool shipped from Australia to Japan and substantially all the general cargo shipped from Japan and Hong Kong to Australia was carried in vessels operated by members of the Conference. It remains only to be said at this stage that the defendants are incorporated in the United Kingdom and registered as foreign companies under the law of New South Wales.

(2) A demurrer to those parts of the statement of claim which allege that the defendants had acted in a manner contrary to s. 4 (1) of the Act on the grounds that:

(a) in an action brought under s. 11 of the said Act claiming damages for the alleged offence the plaintiff must allege facts which, if proved, would establish that the contract or combination alleged to be in restraint of or with intent to restrain trade or commerce was to the detriment of the public and that the restraint of trade or commerce effected or intended was unreasonable;

(b) in such an action the plaintiff must allege facts which, if proved, would establish that the restraint of trade or commerce effected or intended by the contract of combination alleged was unreasonable (Defence: par. 14).

No such facts are alleged in the statement of claim.

(3) A demurrer to those parts of the statement of claim which allege that the defendants have acted in a manner contrary to s. 7 of the Act on the ground that in order to prove an offence against s. 7 it must be established that the monopolization effected or attempted is monopolization which is pernicious and harmful to the Australian public and no facts have been alleged which, if proved, would establish that ingredient of the offence (Defence: par. 15).

(4) A demurrer to those parts of the statement of claim which allege that the defendants have acted in a manner contrary to s. 7A of the Act on the ground that, in an action brought under s. 11 of the Act claiming damages for an offence against s. 7A of the Act, the plaintiff must allege facts which, if proved, would establish that the matter or thing alleged to have been done in contravention of s. 7A was to the detriment of the public and constituted competition which was unfair in the circumstances and was destructive of or injurious to an Australian industry (Defence: par. 16).

(5) A demurrer to those parts of the statement of claim which allege a breach of s. 4 (1) of the Act by the making of or entering into a contract or contracts in relation to trade or commerce with other countries in restraint of or with intent to restrain trade or commerce and claim treble damages for injury alleged to have been suffered by reason of such breach on the following grounds:

(a) the plaintiff has not alleged any facts which, if proved, would substantiate a claim that it has suffered any injury by reason of the breach alleged, and

(b) the plaintiff, not being a party to any of the alleged contracts, could not have suffered injury by reason of the making of or entering into the said contracts within the meaning of s. 11 of the Act (Defence: par. 13).

There were demurrers to various parts of the statement of defence but these can be left until consideration has been given to the defendants' demurrers.

The first question which arises is concerned with how far, if at all, the provisions of s. 4 (1) of the Act apply to, or with respect to, contracts or combinations made or entered into outside Australia. The sub-section, which is generally silent on the point, merely provides that any person who, either as principal or as agent, makes or enters into any contract or, is, or continues, to be a member of or engages in any combination in relation to trade or commerce with other countries or among the States: "(a) in restraint of or with intent to restrain trade or commerce is guilty of an offence". The words of the section are general but, prima facie, "the persons, property, and events in respect of which Parliament has legislated are presumed to be limited to those in the territory over which it has jurisdiction" (per Isaacs J. in Morgan v. White [1] ) and "it is always to be understood and implied that the legislature of a country is not intending to deal with persons or matters over which, according to the comity of nations, the jurisdiction properly belongs to some other sovereign or State" (per Dixon J. (as he then was) in Barcelo v. Electrolytic Zinc Company of Australasia Ltd. [2] quoting from the judgment of James L.J. in Niboyet v. Niboyet [3] - see also Jumbunna Coal Mine, No Liability v. Victorian Coal Miners' Association [4] and Reg. v. Foster; Ex parte Eastern and Australian Steamship Co. Ltd. [5] ). It was with these shortly stated principles in mind that we were referred by the defendant to the attention which has been given in recent years by distinguished lawyers to problems associated with the extra-territorial operation of the restrictive trade legislation of various countries. In particular we were referred in some detail to the proceedings of the Committee on The Extra-Territorial Application of Restrictive Trade Legislation at the Tokyo Conference of the International Law Association. But the rule, as I have stated it, is one of interpretation only and, if by a local statute otherwise within power, provision is made "in contravention of generally acknowledged principles of international law" it is binding upon and must be enforced by the courts of this country (Polites v. The Commonwealth [6] , per Latham C.J. [7] , Starke J. [8] , Dixon J. [9] and McTiernan J. [10] ).

1. (1912) 15 C.L.R. 1, at p. 13. 2. (1932) 48 C.L.R. 391, at p. 424. 3. (1878) 4 P.D. 1, at p. 7. 4. (1908) 6 C.L.R. 309, at p. 363. 5. (1959) 103 C.L.R. 256, at p. 275. 6. (1945) 70 C.L.R. 60. 7. (1945) 70 C.L.R., at p. 69. 8. (1945) 70 C.L.R., at p. 75. 9. (1945) 70 C.L.R., at p. 77. 10. (1945) 70 C.L.R., at p. 79.

For the plaintiff it is asserted that the very subject matter with which the Act deals makes it manifest that the legislative intention was that the section should extend to acts done beyond the Commonwealth. It was intended for the protection of the trade and commerce of this country with other countries and among the States and both categories of trade, and particularly the former, can just as well be affected adversely by contracts and combinations made and entered into in other countries as by contracts and combinations made or entered into in Australia. But I do not find in these very general considerations any clear indication that s. 4 (1) was intended to apply to acts done or performed outside Australia. Indeed, there is, I think, manifest in the provisions of s. 9 a recognition that the other provisions of Pt II do not so apply. The first paragraph of s. 9 is plainly recognizable as an "aiding and abetting" provision for it is in the traditional form. It does not operate unless and until the substantive offence has been committed and "then, and then only, does the section operate to make any person falling within the terms of the section a principal participating in that offence" (Walsh v. Sainsbury [1] , per Isaacs J. [2] ). "The section is an aiding and abetting section and it was necessary first that the commission of the principal offence should be established and next that the appellant was knowingly concerned in the commission of that offence" (R. v. Goldie; Ex parte Picklum [3] ). But the second paragraph, (b), is a provision of a somewhat different character. It provides that whoever aids, abets, counsels, or procures, or by act or omission is in any way directly or indirectly knowingly concerned in, or privy to, the doing of any act outside Australia which would, if done within Australia, be an offence against this Part of the Act, shall be deemed to have committed that offence. As will be observed it does not require proof of the commission of an offence by a principal offender; all that it requires is proof of an act done outside Australia which would, if done within Australia, be an offence against Pt II of the Act and that the defendant aided, abetted, counselled, or procured it or by act or omission was directly or indirectly knowingly concerned in, or privy to, it. In terms, it recognizes quite plainly that the doing of an act which, if done in Australia, would constitute an offence against the general provisions of the Part, is not a contravention of those provisions where it is done outside Australia. Yet it subjects to a penalty any person who aids, abets or procures or by act or omission is in any way directly or indirectly knowingly concerned in, or privy to, the doing of any such act. There may be room for some difference of opinion concerning the effect of the paragraph but to me it seems that it was intended merely as supplementary to par. (a) and to prescribe a penalty for things done in Australia which would not qualify as an offence under that paragraph because the act aided and abetted, having been done outside Australia, was not an offence against the other provisions of the Part. It was, however, suggested that the language of par. (b) is, in effect, apt to extend the operation of the other provisions of the Part to things done outside Australia; it was submitted that, in terms, it was wide enough to extend to the doer of an act outside Australia which would, if done in Australia, be an offence against the other provisions of the Part. But this submission should be rejected, for its effect would be to treat the provision, which according to its form and content is no more than supplementary to the preceding paragraph, as, in effect, a substantive declaration that the whole of the provisions of the Part should operate extra-territorially. That being so I am of the opinion that the defendants' demurrer raised by par. 13a of the statement of defence should be allowed.

1. (1925) 36 C.L.R. 464. 2. (1925) 36 C.L.R., at p. 477. 3. (1937) 59 C.L.R. 254, at p. 263.

The next question raised for our consideration is concerned with what I may, for the moment, call the substance of the offences created by s. 4 and s. 7A. In its original form s. 4 (1) provided that any person who, either as principal or as agent, makes or enters into any contract, or is or continues to be a member of or engages in any combination, in relation to trade or commerce with other countries or among the States with intent to restrain trade or commerce to the detriment of the public is guilty of an offence. Section 7A, which was introduced by the amending Act of 1909, provides, in effect, that any person who, in relation to trade or commerce with other countries or among the States, either as principal or agent, in respect of dealings in any goods or services gives offers or promises to any other person any rebate, refund, discount, concession, or reward, for the reason, or upon the condition, express or implied, that the latter person deals, or has dealt, or will deal, or intends to deal exclusively with any other person, either in relation to any particular goods or services or generally, or with members of a Commercial Trust is guilty of an offence. But by sub-s. (3) of that section it is further provided that it shall be a defence to a prosecution under this section, and an answer to an allegation that a contract was made or entered into in contravention of this section, if the party alleged to have contravened its provisions proves that the matter or thing alleged to have been done in contravention was not to the detriment of the public, and did not constitute competition which was unfair in the circumstances, and was not destructive of or injurious to any Australian industry. In the following year, 1910, s. 4 was amended by omitting, inter alia, the words "to the detriment of the public" and by adding a new sub-s. (3): "(3) It shall be a defence to a proceeding for an offence under paragraph (a) of sub-section (1) of this section and an answer to an allegation that a contract was made or entered into in restraint of, or with intent to restrain, trade or commerce, if the party alleged to have contravened this section proves - (a) that the matter or thing alleged has been done in restraint of, or with intent to restrain, trade or commerce, was not to the detriment of the public, and (b) that the restraint of trade or commerce effected or intended was not unreasonable". It may be noted that every contract made or entered into in contravention of either section is absolutely illegal and void.

It is apparent from a consideration of these provisions that a prosecution for an offence against either of these sections will fail if the defendant proves the exculpatory matter. Proof of such matter in proceedings for an offence against s. 4, or, in a prosecution for an offence under s. 7A, will mean that there has been no contravention of either section. But what is the position where an action for damages is brought pursuant to s. 11? That section merely provides that any person who is injured in his person or property by any other person, by reason of any act or thing done by that other person in contravention of this part of the Act, may sue for and recover treble damages for the injury. The basis of liability is a contravention of the provisions of the Act causing damage to the plaintiff but the section is silent as to whether the defendant may, where the contravention alleged is a breach of s. 4 or s. 7A, exculpate himself by proof of the matters mentioned in sub-s. (3) of each of those sections. And, according to the defendants' contentions, neither s. 4 (3) nor s. 7A (3) provides that a defendant may set up as a defence to proceedings under s. 11 the exculpatory matter that might be set up as a defence to a prosecution for offences under those sections. In this situation, it is said, we might well find an action for damages resulting from an alleged contravention of either section succeeding and a prosecution for the same contravention failing. This, of course, could scarcely be so when the defendant has been prosecuted unsuccessfully before the institution of proceedings for damages under s. 11. But it could be so, on the defendant's contention, where proceedings of the latter character are prior in point of time to the prosecution for the same contravention. It is, to my mind, unthinkable that a construction should be given to the legislation which will be capable of producing such an anomalous result. We have, therefore, the choice of holding that, in spite of the contention which is raised as to the limited operation of s. 4 (3) and s. 7A (3), the exculpatory matter may be proved as a defence to an action under s. 11 or, on the other hand, that in such an action it is necessary for the plaintiff to establish positively that, in the case of an alleged contravention of s. 4, that the matter or thing alleged to have been done in restraint of or with intent to restrain trade or commerce was to the detriment of the public, or, that the restraint of trade or commerce effected or intended was unreasonable, and, in the case of an alleged contravention of s. 7A, that the matter or thing alleged to have been done in contravention of the section was to the detriment of the public, or, constituted competition which was unfair in the circumstances or was destructive or injurious to any Australian industry. Since there is no contravention of either section if the defendant proves the exculpatory matter the argument was that the effect of s. 4 (3) and s. 7A (3), from a practical point of view, was, in a prosecution under those sections, simply to place the onus of proof in relation to these matters on the defendant. Thus detriment to the public, or unfair competition or destruction or injury to an Australian industry was of the substance of the offences created by s. 4 and s. 7A (1). But I think this contention must be rejected. Under s. 4 (3) and s. 7A (3) the exculpatory matter may be proved not only as a defence to proceedings for an offence or to a prosecution for an offence but also as "an answer to an allegation that a contract was made or entered into restraint of or with intent to restrain trade or commerce" (s. 4), or, as "an answer to an allegation that a contract was made or entered into in contravention of s. 7A" and, it seems to me, these expressions are apt to refer to allegations necessarily made in proceedings commenced under s. 11. It may be noted that it is conceivable that there may be a contravention of s. 7A constituted by some act other than the making of a contract but this, it seems to me, is of little consequence when one comes to give a meaning to the sub-section. It seems to me that proceedings under s. 11 based upon alleged contraventions of s. 4 and s. 7A constituted by the making of a contract or contracts, or, by engaging in a combination, cannot succeed unless there is an allegation that the acts complained of were done in restraint of trade or with intent to restrain trade or commerce (s. 4), or, unless it is alleged that they were done in contravention of s. 7A. In answer to such allegations the defendant may, as sub-s. (3) of each section provides, prove, as an answer to those allegations, the exculpatory matter. The construction of the relevant provisions are difficult but, in my opinion, this interpretation is to be preferred and accordingly the defendant's demurrer raised by pars. 14 and 16 of the defence should be overruled.

The next matter to be considered is whether the statement of claim in so far as it alleges that the defendants have acted in a manner contrary to s. 7 of the Act is demurrable on the ground that it does not allege that the monopolization effected or attempted is a monopolization which is pernicious and harmful to the Australian public. The contention that the burden of alleging and proving these additional matters lies upon the plaintiff was, it was said, supported by observations made by the Judicial Committee in Attorney-General of the Commonwealth of Australia v. Adelaide Steamship Co. Ltd. [1] . But their Lordships' observations in that case were directed to the section as it then stood. Under the section in its earlier form it was necessary, in order to prove that a contravention of the section had occurred, to establish that the monopoly, or the attempt to monopolize, was with intent to control, to the detriment of the public, the supply or price of any service, merchandise, or commodity. However, by the amending Act of 1910, the italicized words were removed from the section which now reads as follows: "Any person who monopolizes or attempts to monopolize, or combines or conspires with any other person to monopolize, any part of the trade or commerce with other countries or among the States, is guilty of an indictable offence". There are, in my view, no grounds for putting any gloss upon the section; indeed, to do so, would be quite contrary to the legislative intention as revealed by the amendment. Accordingly, I am of the opinion that the demurrer raised by par. 15 of the defence should be overruled.

I have some difficulty in understanding the demurrer raised by par. 13 of the statement of defence. As I understand it, it seeks to draw a distinction between the effect of the mere making of a contract or contracts in restraint of, or, with intent to, restrain trade or commerce and with the effect of acts done in pursuance of such contracts and alleges that no damage can result from the making of the contracts as distinct from acts done in furtherance of them. But it is clear enough that agreements in the form set out in pars. 14, 15 and 16 were alleged to have been entered into with shippers and consignees in Japan as a means of carrying the alleged combination into effect and that the mere making of these agreements could result in damage to the plaintiff. However I do not find in the statement of claim any allegation that damage resulted to the plaintiff merely from the making of the agreements; on the contrary, the allegation is that damage to the plaintiff resulted from "the aforesaid acts or things done by the defendants in contravention of the provisions of the said Act" (par. 27) and these include many acts and things which are alleged as contraventions of Pt II of the Act. The demurrer is, as I see it, therefore, misconceived and should be overruled.

The plaintiff's demurrers are directed to paragraphs of the defence which allege that the agreements in question were made in Japan and Hong Kong with persons who are nationals of those places and domiciled there. In addition it is alleged that the conduct on the part of the defendant of which the plaintiff complains in pars. 14a and 15a, 16a, 19, 20 and 21 took place, it if took place at all, in Hong Kong or in Japan. In each case it is alleged that the making of the contracts and the conduct of which the plaintiff complains was justifiable according to the law of the places where the contracts were made and where the conduct took place.

In substance, the answer to these demurrers is provided by what has already been said concerning the operation of the statute but the defendants' contention that the contracts which were entered into and the conduct complained of on the part of the defendants were lawful according to the laws of Japan or Hong Kong respectively represents an attempt to introduce into this field the principles upon which an action may be brought in this country for a tort committed in a foreign country. The circumstances in which this may be done are discussed in Phillips v. Eyre [1] and Koop v. Bebb [2] but the principles therein enunciated have no application to the circumstances of the present case. If it were to be held that the statute disclosed an intention that it was to have an extra-territorial operation the fact that an act in contravention of the statute was lawful according to the place where it was done would be of no relevance whatever.

1. (1870) L.R. 6 Q.B. 1. 2. (1951) 84 C.L.R. 629.

One remaining point deserves mention. It was contended that it was only by virtue of treating the several offences alleged as torts that an action could be maintained against two only of the parties to the acts complained of for the whole of the damage alleged. They could be made liable to that extent, it was asserted, only as joint tortfeasors. But strictly speaking, it is a misuse of the term to call a contravention of the Act which causes damage a tort (cf. per Fullagar J. in Darling Island Stevedoring and Lighterage Co. Ltd. v. Long [3] ). Nevertheless, in an action brought under s. 11, a claim to recover damages from all those persons who have combined to do acts in contravention of the Act could result in judgment for one sum only which any one defendant might be called upon to pay. In my view, though s. 11 does not expressly so provide, the liability of each of such persons, in cases where combination is of the essence of the alleged contraventions, extends to the whole of the proved damages and an action may be brought against some only of the defendants as has been done in this case.

In the result I agree that an order should be made in the terms proposed by Kitto J.

The Court has before it demurrers by the defendants to the plaintiff's amended statement of claim which seem to me to raise four questions with regard to the meaning and application of the Australian Industries Preservation Act 1906-1950 Cth. The demurrers raise a further question which does not, I think, involve any question of construction. There is also a demurrer by the plaintiff to the defendants' amended defence which raises, so it seems, substantially one question with regard to the meaning and application of ss. 4 (1), 7 (1) and 7A (1) of the Act. Initially, I will deal with the questions raised by the defendants' demurrers.

The first, raised by par. 13a of the amended defence and demurrer, is whether s. 4 of the Act applies when what is charged as an offence is something done outside Australia. This raises no question of power, for a law which is with respect to trade and commerce with other countries can validly control conduct outside Australia: cf. Reg. v. Foster; Ex parte Eastern and Australian Steamship Co. Ltd. [1] . The question is simply one of the construction of a section expressed in language amply wide enough to cover acts done outside Australia. The defendants, however, to limit the section relied upon the well-accepted general principle of statutory construction that, prima facie, penal laws of one country are not intended to reach into the territory of another country to make punishable in the courts of the former acts done in the territory of the latter. Having given full weight, however, to this principle, I am not satisfied that the operation of s. 4 should be limited to acts done within Australian territory. The Act is primarily one for the preservation of Australian industries. This appears from its title and from its provisions as a whole. The protection for Australian industries which it provides is clearly enough against specified conduct on the part of those whose interest it is to destroy or injure Australian industries. The Act, therefore, is directed, inter alia, against those whose interests lie outside Australia. To construe an Act for this purpose as having an operation limited to acts done within Australia would of necessity deprive it of much of its efficacy. On this aspect of the matter I find myself in full agreement with the decision of the Circuit Court of Appeals reported in United States v. Aluminum Co. of America [2] with regard to the United States Sherman Act, upon which the legislation here under consideration was largely based. There Judge Learned Hand, for the Court, said: " we are concerned only with whether Congress chose to attach liability to the conduct outside the United States of persons not in allegiance to it. That being so, the only question open is whether Congress intended to impose the liability, and whether our own Constitution permitted it to do so: as a court of the United States, we cannot look beyond our own law. Nevertheless, it is quite true that we are not to read general words, such as those in this Act, without regard to the limitations customarily observed by nations upon the exercise of their powers; limitations which generally correspond to those fixed by the "Conflict of Laws". We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. On the other hand, it is settled law that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends " [1] . Upon consideration, the Sherman Act was held to impose liabilities of that character, as it was said: "Both agreements would clearly have been unlawful, had they been made within the United States; and it follows from what we have just said that both were unlawful, though made abroad, if they were intended to affect imports and did affect them" [2] .

1. (1959) 103 C.L.R. 256. 2. (1945) 148 Fed. Rep. 2nd. 416. 3. (1945) 148 Fed. Rep. 2nd., at p. 443. 4. (1945) 148 Fed. Rep. 2nd., at p. 444.

My conclusion, however, that the operation of the Act is not confined to acts done within Australia does not depend merely upon the general purpose of the Act which so clearly appears. In addition, I find in the definition of a Commercial Trust a clear indication that the Act is concerned with combinations "whether wholly or partly within or beyond Australia". I also consider that s. 4, upon its express terms, would apply to a principal in Australia whose agent outside Australia does any of the acts which the section forbids. What seems to me to be the principal objection to giving the Act extra-territorial effect is s. 9, which is in these terms: "Whoever aids, abets, counsels, or procures, or by act or omission is in any way, directly or indirectly, knowingly concerned in or privy to - (a) the commission of any offence against this Part of this Act; or (b) the doing of any act outside Australia which would, if done within Australia, be an offence against this Part of this Act, shall be deemed to have committed the offence." It will be observed that while s. 9 (a) is a provision in ordinary form making it an offence to aid or abet the commission of an offence created by some other provision of the Act, s. 9 (b) serves a different purpose. It makes it an offence to aid or abet a person to do outside Australia an act which, if done within Australia, would be an offence. Section 9 (b) covers cases not falling within s. 9 (a) because, presumably, the doing of the act outside Australia which was aided or abetted was not itself an offence. A simple explanation of this provision would be the existence elsewhere in the Act of some particular offence depending upon the doing of an act within Australia - for example, if, in contravention of s. 10A, an act were to be done in breach of an injunction granted under s. 10 expressly prohibiting nothing but the doing of acts in Australia. I am not, however, satisfied about this as an explanation of s. 9 (b), particularly as s. 10A is an amending provision inserted in 1909, whereas s. 9 was in the original Act of 1906. Although I cannot account for s. 9 (b) to my satisfaction, I do not think that I am compelled by its terms to decide that it is only an act done in Australia that can be an offence against the Part. To do that would be to give too much weight to an ancillary provision of the Act.

The second question raised by an amendment to par. 13a of the amended defence and demurrer is whether, assuming that the Act does have some application to acts done outside Australia, it does so only when they are the acts of a corporation incorporated in Australia.

I content myself with saying that I have not been able to find anything to support such a limitation upon the operation of the Act.

The third question, raised by pars. 14 and 16 of the amended defence and demurrer, arises both with regard to s. 4 and s. 7A. Each of these sections creates an offence and provides that: "Every contract made or entered into in contravention of this section shall be absolutely illegal and void". There follows, in each section, an exculpatory provision, viz: -

4 - (3) It shall be a defence to a proceeding for an offence under paragraph (a) of sub-section (1) of this section, and an answer to an allegation that a contract was made or entered into in restraint of, or with intent to restrain, trade or commerce, if the party alleged to have contravened this section proves -

(a) that the matter or thing alleged to have been done in restraint of, or with intent to restrain, trade or commerce, was not to the detriment of the public, and

(b) that the restraint of trade or commerce effected or intended was not unreasonable.

7a - (3) It shall be a defence to a prosecution under this section, and an answer to an allegation that a contract was made or entered into in contravention of this section, if the party alleged to have contravened this section proves that the matter or thing alleged to have been done in contravention of this section was not to the detriment of the public, and did not constitute competition which was unfair in the circumstances and was not destructive of or injurious to any Australian industry.

The contention on behalf of the defendants is that in proceedings under s. 11 of the Act for damages for injury "by reason of any act or thing done in contravention of this Part of this Act", it is for the plaintiff to allege and prove the absence of the matters of defence and answer specified in s. 4 sub-s. (3) and s. 7A sub-s. (3).

I do not accept this contention. I read each of the exculpatory provisions, so far as here relevant, as giving the defendants the opportunity of answering an allegation that "a contract was made or entered into in restraint of, or with intent to restrain, trade or commerce" (s. 4 (3)) or that "a contract was made or entered into in contravention of this section" (s. 7A (3)) by confessing and, as it were, avoiding. In this section, if the defendants want to take advantage of ss. 4 (3) and 7A (3), it will be for them to allege and prove the matters that will constitute an answer. I am not troubled by the fact - of which a good deal was made at the hearing - that s. 4 (3) is limited to proceedings for an offence under s. 4 (1) (a) and has no relation to proceedings under s. 4 (1) (b). The legislature obviously intended to give a person who has made a contract in restraint of, or with intent to restrain, trade or commerce the opportunity of showing that the restraint was not unreasonable and was not to the detriment of the public, but just as obviously the legislature saw no reason to provide a defence by way of "confession and avoidance" to a charge of acting "to the destruction or injury of or with the intent to destroy or injure by means of unfair competition any Australian industry " There can be exculpation of conduct which would be an offence under the terms of s. 4 (1) (a) but it is difficult to see what exculpation there could be for conduct which would be an offence under s. 4 (1) (b).

For the defendants, it was next contended in support of par. 15 of the amended defence and demurrer that to establish an offence under s. 7 it must be proved that the "monopolization" is pernicious in the sense of being harmful to the Commonwealth, having regard to the interests of producers, workers and consumers. This harks back to Attorney-General of the Commonwealth of Australia v. Adelaide Steamship Co. Ltd. [1] but there their Lordships were dealing with different provisions from those with which we are here concerned. The Act as now amended contains its own special provisions relating to unreasonable restraints and to public detriment and when Parliament has amended the Act to insert particular provisions with regard to these matters in some sections, it would be going beyond construction for a court to make implications of a similar nature in other sections in which Parliament has made no similar provisions. Furthermore, the deletion from s. 7 of the words "with intent to control, to the detriment of the public, the supply or price of any service, merchandise, or commodity" tells strongly against implying "detriment to the public" as an element in the offence which the section creates.

The defendants also demurred to so much of the statement of claim as alleges contravention of s. 4 (1) by making or entering into contracts in restraint of, or with intent to restrain, trade on grounds stated as follows: "(a) The plaintiff has not alleged any facts which, if proved, would substantiate a claim that it has suffered any injury by reason of the breach alleged; (b) The plaintiff, not being a party to any of the alleged contracts, could not have suffered injury by reason of the making or entering into of the said contracts within the meaning of s. 11 of the said Act." It seems to me that one person can clearly enough be injured by others making and entering into contracts which would operate to his disadvantage. To give a simple instance, if "A" were to promise "B" a discount upon condition that "B" promised no longer to deal with "C", the making of a contract to that effect would ordinarily be thought to injure "C" in his property. Furthermore, the plaintiff has alleged injury to it in its property by acts or things done by the defendants in contravention of the Act and has set out the injury alleged (amended statement of claim, par. 27). As a pleading, this is not, I think, demurrable except as to the making of contracts entered into before the incorporation of the plaintiff company.

Subject to the exception last stated, I would therefore overrule the defendants' demurrers.

The plaintiff's demurrer does not, I think, involve any different questions from those which I have been discussing. What is contended is that it is no defence that contracts made by the defendants in Hong Kong and Japan were made with nationals of, or persons domiciled in, the place where the particular contract was made and were justifiable by the law of that place. It seems to me that if the Act does operate with respect to contracts made by the defendants in Hong Kong and Japan - as I think it does - it matters not with whom the contracts were made nor whether or not they were in breach of the law of the place where they were made.

To give effect to the foregoing, I think that the defendants' demurrer in par. 13 of the amended defence and demurrer should be allowed in so far as it relates to the making of the agreement of 23rd May 1961 but, otherwise, the defendants' demurrers should be overruled. The plaintiff's demurrer should be allowed. The costs of, and incidental to, the demurrers and the hearing should be borne by the defendants.

The prima facie presumption of English law is that a statute is to be construed as limited in its operation to the territory or the nationals of the state which enacts it. This is somewhat reinforced, I think, in the present case because when the Australian Industries Preservation Act was enacted in 1906 and amended in 1910 the decision in Macleod v. Attorney-General for New South Wales [1] still cast an uncertain shadow upon the competence of the Australian Parliament to pass an Act having extra-territorial operation. That, however, is not conclusive. The broad question in the case remains whether the prima facie presumption, that the Act does not extend to penalize acts done outside Australia, by foreigners, has been displaced. The question is one of considerable importance, and I think of some difficulty. It may be that if the Act is to have a fully effective operation with respect to trade and commerce between Australia and other countries it must strike at contracts made abroad. It can therefore be argued that the nature of the subject-matter itself indicates the scope that Parliament meant the Act to have. But this I doubt. If it had been intended that it be so widely construed one would expect some clear and express indication of this in its words. There is none. On the contrary s. 9 (b) seems to me to indicate fairly plainly that the Act is to operate territorially. If that be not so, Parliament may now amend it to make clear its intention. Having reached that conclusion on the broad question in the case, I need not say more, because I fully agree in what Kitto J. has written and in the order that he proposes.