Mikasa (NSW) Pty Ltd v Festival Stores [1972] HCA 69;

Mikasa (NSW) Pty Ltd v Festival Stores [1972] HCA 69; - HCA 1972 case summary — Zoe

[54]

29. First of all it was submitted that s. 66B (2) (d) (ii) applied only in respect of goods which had already been supplied to the person who was seeking a further supply which further supply had been refused. It was said that the expression "is likely to sell goods supplied to him by the supplier" referred only to goods which had already been supplied and that the expression was inapt to include goods which would have been supplied if the supply had not been withheld. Counsel pointed to the circumstance that in par. (e) (ii) of that sub-section there was included the expression "goods supplied to him, or to be supplied to him". Attention was thus called to the contrast between that formula and the formula used in par. (d). However, in my opinion, the subject matter of par. (e), including as it does the expression "has obtained, or wishes to obtain" in the opening parts of the paragraph, clearly differentiates the two paragraphs and makes the presence of the words "or to be supplied to him" both natural and necessary in par. (e), whereas there are no circumstances in relation to par. (d) which, in my opinion, would require the inclusion of those words. It is hardly likely that the Parliament should have intended to confine par. (d) (ii) to persons who had had at least one supply of the goods from the supplier and to have excluded from the operation of the paragraph persons who were seeking the supply of the goods for the first time. Grammatically the expression "is likely to sell goods supplied to him by the supplier" is quite inapt at the one time to include goods supplied and goods to be supplied, particularly in the context of a provision dealing with the withholding of supply. The sense of the provision, in my opinion, is that the supply has been withheld for the reason that the person from whom it has been withheld is likely to sell the goods, if supplied to him, at a price less than the price specified. In my opinion that is the proper construction of the paragraph and this submission of the appellant should be rejected. (at p634)

[55]

30. It was then submitted that the expression "for the reason that" meant for the reason only that or for the sole reason that. The Industrial Court found that in fact the sole reason for the withholding by the appellant of the supply of "Mikasa" dinnerware from the respondent was that the respondent was likely to sell the dinnerware at less than the recommended price. As I have said, I would not disturb that finding, but, in my opinion, it was not necessary to make that finding in order to establish that the appellant had in this case engaged in the practice of resale price maintenance in the "Mikasa" dinnerware. In my opinion it is not correct to so emphasize the participle in the phrase "for the reason that" as to interpret the paragraph as requiring the withholding of the supply to be for one reason only. In my opinion, if the likelihood that the would-be purchaser would sell at less than the specified price is an operative reason for withholding that supply, the supplier engages in the practice of resale price maintenance, however many other reasons the supplier may in fact have for not supplying the goods to the would-be purchaser. The likelihood of price cutting is not required, in my opinion, to be the predominant reason ; it is enough if it is an operative reason, that is to say, a substantial reason in the totality of reasons for the withholding of the supply. There was abundant evidence on which this lesser conclusion of fact could have been drawn in this case. Understandably, the Industrial Court did not credit the assertion that the appellant was moved only by considerations which did not include the possibility of price cutting. After all, the predominant feature of a discount house is, I gather, that it sells at prices less than those charged in other parts of the trade. The appellant's sole reason given to the respondent for the refusal to supply was that the respondent was a discount house. But even if the other reasons now given by the appellant for withholding supply had been operative in its decision to follow that course, the appellant, in my opinion, ought to have been found to have engaged in the practice of resale price maintenance in the "Mikasa" dinnerware, the likelihood that the respondent would sell below the recommended price being also a reason for withholding supply. (at p635)

[68]

8. Secondly, it was contended by counsel for the appellant that the power, given to the Commonwealth Industrial Court by s. 90AA of the Act, to grant an injunction, is not judicial power and that the section is consequently invalid. The Commonwealth Industrial Court is, of course, a federal court created under s. 71 of the Constitution and, according to the decisions, it can have judicial power only. I have no doubt, however, that the power conferred by s. 90AA is judicial power and nothing more. It is a power, in proceedings between parties with respect to a matter at issue between them, to grant an injunction to restrain what, in such proceedings, is found to be an unlawful practice. The moving party may be (a) the Attorney-General, (b) the Commissioner of Trade Practices or (c) a person who has suffered loss or damage by reason of another person having unlawfully engaged in resale price maintenance. To fall within the conception of judicial power, it is not necessary that the jurisdiction conferred to grant an injunction should be conditioned by what a court of equity would, in ordinary cases, require before granting an injunction. A new jurisdiction can be conferred upon a federal court provided that there is a "matter" between parties and that any discretion conferred upon such a court to grant or refuse an injunction in the determination of that matter, is a judicial discretion. These elements are plainly present in s. 90AA. The present proceedings are not at all unlike proceedings for an injunction by a person who has suffered special damage by reason of a public nuisance. The point was made that although the practice of resale price maintenance is made unlawful, no criminal proceedings lie against a person who engages in that practice. This consideration does not seem to me to carry any implication about the character of s. 90AA which provides for legal proceedings against a person said to have engaged in the unlawful practice. By taking such proceedings the moving party raises for determination a matter, namely, (1) whether the other party has engaged in unlawful practice, (2) if so, whether the moving party has thereby suffered loss or damage, and (3) if so, whether in the exercise of judicial discretion an injunction should be granted to restrain continuance of that practice. The second ground of constitutional invalidity taken therefore fails. (at p639)

[80]

15. The appellant's first argument against the findings of the Commonwealth Industrial Court depended upon the construction which was sought to be put upon the words "for the reason that". The Court decided that the evidence showed that the price cutting methods of trading of the respondents was the one and only reason why the appellant withheld supples of Mikasa ware from the respondents. Had I been in the position of the Court I doubt whether I would have reached a conclusion so exclusive and so exhaustive, for in business affairs it is usual to find that a course of action has been adopted for a number of reasons, and I am disposed to think that the appellant's policy in relation to Mikasa ware was not adopted for only one reason. However, it was open to the Court to find as it did. This finding made it unnecessary for the Court to decide whether the words "for the reason that" meant "for the sole reason" or could be satisfied by something else. It was stated, however, that there was a good deal to be said in favour of the view that the sub-section covered a case where the reason specified therein is not the only reason for the withholding. It is my view that if the goods would not have been withheld had it not been for the likelihood of price cutting the withholding which occurred does then fall within the description in s. 66B (2) (d) even if the supplier had additional reasons for withholding supplies. Accordingly, as to this matter, my conclusion is that there was evidence upon which the Court could decide as it did but, in any event, it was not necessary to go as far as to find that the likelihood of price cutting was the only reason for withholding supplies. Evidence to the effect that the practice of the respondents in trading at a discount had nothing to do with the withholding of supplies of Mikasa ware, was, in the light of other evidence, quite incredible and the Court did not believe it. The conclusion that the appellant would not supply the respondents with Mikasa ware except upon conditions as to their selling price was not only open, it was correct. The argument for the appellant based upon the words "for the reason that" to take the appellant outside s. 66B (2) (d) accordingly fails. (at p642)

[103]

30. In my opinion, these submissions do not provide any basis for a conclusion that the power given to the Court is not judicial in its character. Where a person has engaged in the practice of resale price maintenance an application may be made under s. 90AA by the Attorney-General or the Commissioner of Trade Practices or by a person who has suffered loss or damage by reason of the firstmentioned person having engaged in that practice. In every such case the Court is required to decide the question whether or not the person against whom the application is made has engaged in the practice of resale price maintenance, that is to say, the Court must decide whether that person has acted in a way which is declared by the Act to be unlawful. It is necessary for the Court to make findings of fact in relation to events which have occurred before the date of the application and to apply to the facts so found the provisions of the Act, in accordance with the construction which the Court puts on those provisions ; and it is by those processes that the Court determines whether or not a person, who is a party to proceedings before it, has acted in breach of the Act and has thereby rendered himself liable to have an injunction granted against him, in accordance with a provision which seems clearly to be intended to furnish a sanction by which the observance of the restrictive provisions of the Act may be secured. Where the applicant is not the Attorney-General or the Commissioner, the Court is required also to decide whether the applicant has suffered loss or damage by reason of the fact that the other party has engaged in the practice of resale price maintenance. Finally, the Court has to determine whether an injunction should be granted and, if so, what the terms of the injunction should be. In my opinion, all those functions which the Court is called upon to perform have the characteristics which are commonly associated with the exercise of judicial power. When it is found that those functions have been entrusted by the Parliament to a court which has been duly constituted in accordance with Ch. III of the Commonwealth Constitution as a federal court, it is plain in my opinion that the court, when hearing and deciding an application which requires the performance of those functions, is engaged in the exercise of judicial power. The considerations upon which the argument for the appellant on this question relied and to which I have referred above do not appear to me to have any significance in deciding what is the character of the power conferred upon the court. That does not mean, of course, that those considerations are to be ignored by the Commonwealth Industrial Court when it has to decide in a particular case whether or not an injunction should be granted and has to decide whether any injunction that is granted should be broad or limited in its terms. (at p650)

[108]

2. It was first submitted that s. 90AA of the Trade Practices Act 1965-1971 (Cth) ("the Act") attempts to give the Industrial Court a power which is not judicial in character and that the section is therefore invalid. The power which s. 90AA confers is exercisable only on an application made by one person against another under that section ; clearly there must be a controversy between parties before the section can apply. The Industrial Court is given power to settle that controversy and to settle it authoritatively. It goes without saying that in doing so it must hear both parties and in other respects proceed judicially. In settling the dispute the Court must find, inter alia, whether the person against whom the relief is sought has engaged in the practice of resale price maintenance and that involves finding the facts and applying to them the existing law as stated in Pt VIA of the Act. If the Court finds in favour of the applicant it may grant an injunction - a traditional form of relief in judicial proceedings - and it may enforce compliance with the injunction by proceedings for contempt of court. All these circumstances indicate that the power conferred is judicial in nature. However, in the argument for the appellant reliance was placed on the width of the discretion conferred. A somewhat similar argument was recently considered in Cominos v. Cominos [1972] HCA 54; (1972) 127 CLR 588 . In my opinion s. 90AA does not confer on the Court a discretion of an arbitrary kind. It appears from the section that the object of granting an injunction is to restrain a person who has already engaged in an unlawful practice from again engaging in that practice. To require, rather than permit, the Court to grant an injunction once the condition precedent to its grant had been established would deny the Court the power to adapt the remedy to the needs of the case and would lead to injustice ; moreover, an injunction is in its nature a discretionary remedy. Since the discretion is conferred on a court and is to be exercised in proceedings inter partes, it must be concluded, when there is no indication in the Act to the contrary, that it is to be exercised judicially. The existence of the discretion does not alter the conclusion that the power conferred by s. 90AA is a judicial power. (at p651)

[109]

3. The other main constitutional submission made on behalf of the appellant was that Pt VIA of the Act is invalid because it attempts to interfere with the freedom of inter-State trade guaranteed by s. 92 of the Constitution. I agree with the remarks made by my brother Menzies as to the interest of the appellant to raise this question and as to the propriety of deciding it. I agree also that the appellant's challenge to the validity of Pt VIA must fail. Part VIA proscribes a practice - resale price maintenance as defined in s. 66B (2) of the Act - which the Parliament considers undesirable. In most of its aspects, the practice proscribed could not form part of inter-State trade, but would at most be incidental or ancillary to such trade : statements or inducements made by a seller to a buyer or prospective buyer (see s. 66B (2) (a), (b) and (f) and the action of withholding the supply of goods (see s. 66B (2) (d) and (e)) do not themselves form part of inter-State trade. To forbid the practice in those aspects would not impair the freedom guaranteed by s. 92. Although s. 66B (2) (c) goes further in prohibiting the making of any agreement for the supply of goods containing a proscribed term, the legislation is not in my opinion invalid for that reason. A law which prohibits certain classes of contracts, made in the course of inter-State trade, will not necessarily be invalid - see Samuels v. Readers' Digest Association Pty. Ltd. [1969] HCA 6; (1969) 120 CLR 1, at pp 36,38 . In my opinion, Pt VIA effects a permissible regulation of the manner of trading, within the principles discussed in that case. In support of the appellant's argument, it was submitted that Pt VIA, which applies only in the circumstances specified in ss. 7A and 66A, discriminates against inter-State traders, in favour of an intra-State trader who is not a corporation. However, the Parliament has endeavoured to make the law apply as widely as its legislative power permits. The Part applies to intra-State trade conducted by corporations, that is to a substantial proportion of intra-State transactions, as well as to inter-State trade. In my opinion the Part cannot be said to discriminate against inter-State trade. Part VIA in my opinion is not rendered invalid by the provisions of s. 92. (at p652)

At a glance

Court

Decision date

Source

Judgment (147 paragraphs)

Mikasa (NSW) Pty Ltd v Festival Stores [1972] HCA 69; (1972) 127 CLR 617 (21 December 1972)

Parties

Legislation Cited (8)

Cases Cited (19)