Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd

The case for the applicant is, in effect, that the respondents got together and came to an arrangement whereby they stopped granting "Ayers Rock specials" or, at least, significantly reduced the number of occasions when such specials were on offer. The applicant has asserted that in November 1994 Mr Hunter of Territory Rent-A-Car telephoned Ms Smith of Budget saying:- "I am organising a get together to stop the Ayers Rock specials. Neville Ivey and the Hertz manager will also be there. Nathalie Keller is not invited, as she will do as she is told. Are you coming?" Neville Ivey was the Alice Springs manager of Avis and Nathalie Keller was from Thrifty. Ms Smith allegedly declined to attend the meeting "because it was illegal". Notwithstanding the claim that Ms Smith refused to attend the meeting, it is then alleged in par 20 of the Statement of Claim that in late November 1994 Mr Hunter of Territory Rent-A-Car made an oral arrangement or arrived at an oral understanding (referred to in the Statement of Claim "the first arrangement or understanding") with Budget to the effect that Territory Rent-A-Car and Budget would no longer offer "Ayers Rock specials". It is then alleged that there was a second arrangement or understanding that was arrived at during December 1994 between all corporate respondents (but excluding Budget). It was also said to be to the effect that there would be no further "Ayers Rock specials". The applicant has claimed that the provisions of both the first and second arrangement or understanding "had the purpose, or would have had or were likely to have had the effect of, substantially lessening competition in the Alice Springs walk up market". Alternatively, it is alleged that the first and second arrangement or understanding "had the purpose, or had or were likely to have had the effect of, fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the prices for, and the discounts in relation to, the rental of vehicles in the Alice Springs walk up market." The existence of such arrangements would, if proved, constitute a breach of sub-par 45(2)(a)(11) or, alternatively, a breach of sub-s 45(a)(1) of the Act. There then follows allegations in pars 25 to 28 which specifically address the activities of Budget and the manner in which it allegedly implemented the first arrangement or understanding. Following on the allegations with respect to Budget, the Further Amended Statement of Claim proceeds with allegations specific to each corporate respondent. Those allegations are not identical but they do address, with respect to each corporate respondent, matters such as the implementation of the alleged arrangement not to offer "Ayers Rock specials" in the Alice Springs walk up market. The main paragraphs in the Further Amended Statement of Claim that are relevant to these proceedings are as follows:-

Territory Rent-A-Car : pars 29-33 Thrifty : pars 34-37 Avis : pars 38-39 Hertz : pars 40-46 The next and final section of the Further Amended Statement of Claim, commencing with par 48, deals with the alleged contraventions of the Act. By Notice of Motion, the fourth respondent, Hertz, has moved the Court for an order:- "... pursuant to Order 11 Rule 6 of the Federal Court Rules striking out paragraphs 15(a), 15(c), 21(b)(l), 21(b)(2) and 20(2) of the Statement of Claim." For the purpose of analysing the arguments for and against the order sought it is necessary to set out not only the challenged provisions of the Further Amended Statement of Claim but also some of the associated provisions. Thus, I consider a proper appreciation of the provisions of sub-pars 15(a) and (c) is more readily obtained if the whole of par 15 is set out. It reads as follows:- "During one or more years prior to December 1994, and largely between the months of about November and April, each of the corporate respondents and Budget rented a substantial number of vehicles in the Alice Springs walk up market on conditions which: (a) included daily kilometre allowances substantially in excess of the daily kilometre allowance advertised in brochures published by each of them; (b) charged twenty-five cents per kilometre travelled after the daily kilometre allowance had been used; (c) set daily rental rates substantially different from the daily rental rates advertised in the brochures or publications published by each of them; and (d) as a result of conditions (a), (b) and (c) above, resulted in the price of a vehicle rental in the Alice Springs walk up market being substantially less than the price payable pursuant to the kilometre allowances and daily rental rates advertised in brochures or publications published by each of them. Particulars (1) Each of the corporate respondents and Budget had brochures which advertised vehicle rentals in the Alice Springs walk up market with a kilometre allowance of 100 kilometres a day. (2) Each of the corporate respondents and Budget also rented vehicles in the Alice Springs walk up market with kilometre allowances of up to 600 kilometres a day, and when combined with a daily rental rate, led to the total rental price for a vehicle in the Alice Springs walk up market being up to $300 less than if the same vehicle had been rented pursuant to the kilometre allowance and daily rental rates advertised in each of the corporate respondent's and Budget brochures. (3) Copies of each of the corporate respondent's and Budget's brochures may be inspected at the offices of the applicant's solicitor by prior appointment." In the language of O 11 r 6 it is claimed by Hertz that sub-pars 15(a) and (c) do not disclose a reasonable cause of action against Hertz. Alternatively it is argued that the above stated paragraphs are so frivolous or vexatious that Hertz, and in particular the staff of Hertz, are unable to know the actual nature and extent of the allegations made by the applicant in its Further Amended Statement of Claim. The first specific complaint by Hertz is with respect to the use of the words "substantial" and "substantially". The Further Amended Statement of Claim refers to the renting of a "substantial" number of vehicles in the Alice Springs walk up market (par 15; line 4). There is a further reference in sub-par 15(a) to kilometre allowances "substantially" in excess of the advertised allowance. Sub-par 15(c) refers to the setting of daily rates "substantially" different from the advertised rates. Finally sub-par 15(d) refers to the price of vehicle rental in the Alice Springs walk up market being "substantially" less than the advertised prices appearing in the respondents' respective brochures. Adverbs and adjectives can cause trouble in pleadings; they should be avoided where possible and they could have been avoided in this case. Nevertheless, in the circumstances of this case, I have come to the conclusion that there is nothing offensive in these uses of the word "substantially" or its derivatives. I have come to this conclusion by having regard to the nature of the allegations against Hertz. The complaints against Hertz are set out in pars 60 and 61:- "60.By engaging in the conduct referred to in paragraph 21 hereof, Hertz made the second arrangement or arrived at the second understanding in contravention of sub-paragraph 45(2)(a)(ii) of the Act, which conduct constitutes conduct of the kind referred to in paragraphs 76(1)(a) and 80(1)(a) of the Act. 61.By engaging in the conduct referred to in paragraphs 42, 43, 44, 45 and 46 hereof, Hertz gave effect to the second arrangement or understanding in contravention of sub-paragraph 45(2)(b)(ii), which conduct constitutes conduct of the kind referred to in paragraphs 76(1)(a) and 80(1)(a) of the Act." Paragraph 21 refers to the second arrangement or understanding. Paragraphs 42 to 46 contain allegations that Mr Bennett instructed Christine Evans, the Hertz reservation manager and another employee, Christine Kinlock to withdraw off season rates. Another Hertz employee, Denise Coach received like instructions (par 44) but in her case it is pleaded that "Hertz instructed" her. In the overall context of these allegations it is not a matter of any great significance to know the number of vehicles that a particular respondent rented in the Alice Springs walk up market. Rather it is sufficient to allege and prove that a particular corporate respondent was engaged in that business and that in the conduct of that business in contravened ss 45 or 45A of the Act. Nor is it necessary to plead that the kilometre allowance was "substantially" in excess of the advertised allowance or that the rental rates were "substantially" different from the advertised rates. What the applicant must prove is that there was an excess and a difference and that they were, or were part of, an arrangement or understanding that had, or was likely to have had the effect of "substantially lessening competition". Those quoted words are taken from sub-par 45(2)(a)(ii) but the mere presence of the word "substantially" in the legislation is no cause, as was suggested on behalf of Hertz in argument, to suggest that some special legislative meaning had been purportedly transmogrified into the pleadings.

Lockhart J took time to consider the meaning of the word "substantially" and its presence in s 45 of the Act in Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) ATPR 40-318. He said:- "The word "substantial" is imprecise and ambiguous. Its meaning must be taken from its context. It can mean considerable or big: Palser v Grinling (1948) A.C. 291 per Viscount Simon (at p.317). It can also mean not merely nominal, ephemeral or minimal. Sometimes it is used in a relative sense, and at other times to indicate an absolute size or quantity." In my opinion, that sense of relativity to which his Honour referred is appropriate to most of the usages of the word in the pleadings. I do not consider that Hertz has any cause for complaint about the use of this word or any of its derivatives. It would know that the obligation that is upon the applicant is to prove a lessening of competition that was real or of substance. There will be no "substantial" lessening if the effect of the respondents' conduct was merely trivial or insubstantial. The complaints encompassed in par 15 of the Further Amended Statement of Claim are matters "along the way" which, if established, may or may not achieve the applicant's objective. I decline, therefore, to strike out any part of par 15 of the Further Amended Statement of Claim. The gravamen of the applicant's allegations is that the first arrangement or understanding was made "in or around late November 1994" (par 20) and that the second arrangement or understanding was made "in or around December 1994" (par 21). It would seem, therefore, that it will be necessary for the applicant to prove first, that Budget and Territory Rent-A-Car, and secondly, that all corporate respondents were, in those respective months, carrying on the business of renting motor vehicles in the Alice Springs walk-up market. (If this is correct, the opening words of par 15 would be deficient; they refer to periods before December 1994 and the latest of those periods expired in April 1994). Assuming, however, that the applicant is able to prove both arrangements or understandings, it follows that it would then be the case for the applicant that it has pleaded and proved parallel conduct, at least with respect to the second arrangement or understanding. Such conduct may constitute circumstantial evidence from which an arrangement or understanding may be inferred: Trade Practices Commission v Allied Mills Pty Ltd (1980) 48 FLR 102 at 102 per Sheppard J; see also Trade Practices Commission v Email Ltd (1980) 34 FLR 383. Paragraph 20 This paragraph reads as follows:- "20.In or around November 1994, and after the telephone conversations between Hunter and Smith referred to in paragraphs 18 and 19 hereof, Territory Rent-A-Car made an oral arrangement, or arrived at an oral understanding ("the first arrangement or understanding") with Budget, which contained provisions to the effect that, from around late November 1994, Territory Rent-A-Car and Budget: (a) would not offer Ayers Rock specials in the Alice Springs walk up market; and (b) would only rent vehicles in the Alice Springs walk up market with a kilometre allowance of 100 kilometres per day. Particulars (1) Hunter telephoned Smith at the Budget office in Alice Springs, and had a conversation with Smith. The material substance of that conversation was that: (A) Hunter told Smith that he knew Budget was offering Ayers Rock specials in the Alice Springs walk up market; (B) Hunter told Smith that Territory Rent-A-Car, Thrifty, Avis and Hertz were not offering Ayers Rock specials in the Alice Springs walk up market; (C) Hunter told Smith that Budget should "get into line" with these other companies; (D) Hunter told Smith that employees of Territory Rent-A-Car would regularly telephone Budget to check if Budget had stopped offering Ayers Rock specials in the Alice Springs walk up market; and (E) Smith told Hunter that Budget would offer Ayers Rock specials in the Alice Springs walk up market. (2) Further or in the alternative, the first arrangement or understanding is to be inferred from the facts alleged in paragraphs 17, 18, 19, 21, 25 to 39 and 42 to 47 hereof." As can be seen, par 20 deals exclusively with the alleged first arrangement or understanding between Territory Rent-A-Car and Budget. It has nothing to do with Hertz, even though sub-par 20(2) refers to pars 42 to 47 (which are paragraphs detailing the alleged activities of Hertz in the second arrangement or understanding).

Hertz now claims in its Notice of Motion that par 20(2) of the Further Amended Statement of Claim should be struck out. I understand that as referring to the sub-paragraph numbered (2) appearing under the heading "Particulars". In its written submissions Hertz said:- "It follows that the particulars, or alternatively paragraphs 42 to 47 insofaras they purport to plead that Hertz was involved in the first arrangement or understanding, should be struck out." I do not accept this submission. However, before stating my reasons, I should first say that the contents of sub-par (2) are not particulars: they constitute a substantive allegation. My reason for rejecting Hertz's submission is that par 20 of the Further Amended Statement of Claim has nothing to do with Hertz and, contrary to the submissions to which I have just referred, it does not contain any allegation that Hertz was involved in the first arrangement or understanding. The incorporation of references (through pars 42 to 47) to the alleged activities of Hertz with respect to the second arrangement or understanding, will be an evidentiary matter of parallel conduct - assuming always that no problems of admissibility will arise. It may well be that Hertz's conduct, if proved as pleaded, may constitute admissible evidence against Territory Rent-A-Car in respect of the alleged breach that is represented by the first arrangement or understanding. However, that will be a matter for the trial judge to determine. It provides no support for this strike-out application. Paragraph 21 This paragraph is in the following terms:- "21.In or around December 1994, the corporate respondents made an arrangement, or arrived at an understanding ("the second arrangement or understanding") which contained provisions to the effect that, from around December 1994, each of the corporate respondents: (a) would not offer Ayers Rock specials in the Alice Springs walk up market; and (b) would only rent vehicles in the Alice Springs walk up market with a kilometre allowance of 100 kilometres per day. Particulars (1) The arrangement or understanding was made or arrived at in Alice Springs in or around December 1994, between Hunter, Ivey, Keller and staff of Hertz. (2) Further or in the alternative, the arrangement or understanding is to be inferred from the facts alleged in paragraphs 17 to 20, 25 to 39, and 42 to 47 hereof." I consider that the contents of the sub-par numbered 2, under the heading "Particulars", are not truly "Particulars" but form part of the substantive allegations in the Further Amended Statement of Claim. The first complaint by Hertz was in relation to the reference to the "staff of Hertz". That complaint is not, however, a cause for a strike out application. Rather it would justify an order that further and better particulars be given identifying the member or members of the staff who were involved in the making of the arrangement or understanding. In addition, it would also justify an order that the applicant should, for the benefit of all respondents, give further and better particulars of this alleged arrangement or understanding. How was it implemented? At a meeting? If so, where was it held and who attended? If, as I was told from the bar table, this information is not known to the applicant, it should say so and particularise the allegations from which it claims that appropriate inferences can be drawn. Its inability to identify "the staff" is not fatal: Trade Practices Commission v Allied Mills Industries (supra) at 108. Hertz next complains about pars 17 to 20 (which deals with the first arrangement or understanding), claiming that as there is no allegation that the intended "get together" occurred, it is an empty allegation. I do not agree. First, the facts of the alleged first arrangement or understanding may constitute admissible evidence against Territory Rent-A-Car (at least) in a consideration of its involvement in the second arrangement or understanding. Secondly, although no "get together" is pleaded, it is pleaded that Mr Hunter telephoned Ms Smith and that Ms Smith told Mr Hunter "that Budget would offer fewer Ayers Rock specials in the Alice Springs walk up market" (par 20: particulars sub-pars (1)(A) and (E)). Hertz has submitted that the alleged second arrangement or understanding cannot be supported by allegations about the first arrangement or understanding. That is not correct so far as Territory Rent-A-Car is concerned and may not be correct with respect to the other respondents. But, as I have stated earlier, it is an evidentiary matter to be determined by the trial judge; it is not apposite to a strike out application. Hertz's next argument again relies on the ambiguous reference to the "staff of Hertz" in par 21 and compares that deficiency with the positive allegations that Mr Bennett was the individual who instructed employees of Hertz to withdraw off-season prices (see pars 42 to 44 in particular). Again I cannot see any substance in this complaint. The applicant's failure (or inability) to identify the "staff of Hertz", does not mean that it cannot rely on allegations that Mr Bennett, at or shortly after, the time of the making of the alleged arrangement or understanding, instructed his company's employees to withdraw off-season charges. It does not mean that Mr Bennett had to be one of the "staff of Hertz" who played an active role in the alleged making of the second arrangement or understanding. Once more, it is a matter for the trial judge to determine as a matter of evidence, what inferences, if any, could be drawn from accepted evidence that such an arrangement or understanding was made and from accepted evidence that Mr Bennett gave the alleged instructions.

The principles to be applied in respect of an application to strike out a statement of claim or any part of parts of it have, in recent times, evolved from the judgement of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. In a well know passage the Chief Justice said:- "The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion."(p129) Although it might be thought that the remarks of the Chief Justice could be limited to applications for summary dismissal, it is clear that subsequent decisions have extended his Honour's remarks to strike out applications. For example, Brambles Holdings Limited v Trade Practices Commission (1979) 28 ALR 191, a decision of a Full Court of this Court, considered an appeal from a refusal of a trial judge to strike out certain specified paragraphs of a statement of claim. Fisher J said:- "Dicta of Barwick CJ in General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 at 130 clearly establishes that only if a cause of action is "so clearly untenable that it cannot possibly succeed" should it be dismissed." Elsewhere it has been said that "the summary procedure for striking out pleadings" is only to be used in "plain and obvious cases": Lonrho PLC v Fayed (1992) 1 AC 448 at 469: see also Murex Diagnostics Australia Pty Ltd v Chiron Corporation (1995) 128 ALR 525 at 533 per Burchett J. In a strike-out application, it is appropriate to accept the allegations contained in a statement of claim at face value. If, then, the court is satisfied that Hertz employees were given instructions to withdraw off-season prices (as alleged in pars 42, 43 and 44) and if, further, that the second arrangement or understanding was made and that Hertz was a party to it, what conclusions, if any, might follow? Hertz submits that nothing would follow. In its written submission it claims:- "A further significant deficiency is that paragraphs 42, 43 and 44 of the Statement of Claim do not support any allegation of an agreement made by the staff of Hertz. Rather, it supports only a suggestion that from time to time the staff of Hertz were given instruction in relation to rental of motor vehicles." I do not see that as the only conclusion. Another probability may be that proof of instructions to the employees could be accepted by the trial judge as proof of the existence of the earlier arrangement or understanding. In prosecuting its action against the respondents, the applicant will be obliged, in respect of each of the alleged arrangements or understandings, to prove a "meeting of the minds" (Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) ATPR 40-126 at 18,342 per Fisher J. But if there is a finding of common purpose, the evidence of any relevant senior employee of one of the corporate respondents may well be admissible against the other respondents: Trade Practices Commission v David Jones (Aust) Pty Ltd (1986) 13 FCR 446 at 469 per Fisher J. Hertz cannot distance itself from the allegations made against each corporate respondent with respect to the alleged second arrangement or understanding. It has no cause to have any of the provisions of par 21 of the Further Amended Statement of Claim struck out. Paragraph 41 This paragraph alleges that "on or around 5 December 1994" Hertz employees were instructed to rent vehicles in the Alice Springs walk-up market at prices which included off season prices. Hertz has complained that the paragraph is deficient as it fails to plead which employees were so instructed, how they were instructed and by whom the instructions were given. These complaints have no substance. Paragraph 41 merely introduces the allegation that there was a change in business practice in a manner that allegedly contravened the Act. Paragraph 41 only serves the purpose of stating that Hertz was in the business of offering off-season prices and later allegedly changed its policy. It is the nature of the change and the reason for the change that is important. Hertz's Notice of Motion sought an order striking out nominated passages in the Further Amended Statement of Claim. It also argued that the applicant should be refused leave to file an amended Statement of Claim. I reject the first argument and the second issue does not presently arise. Although there are, in my opinion, deficiencies in the statement of claim, they are not of the nature that warrant a strike out. Those deficiencies are not however of such a magnitude as to justify a strike out application. It is no longer necessary to plead facts from which if they and no other facts were proved at the trial, the law will deduce a cause of action: see Mutual Life and Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 631. Beaumont J referred to the advice of the Privy Council in Mutual Life and Citizens v Evatt (supra) in Pann Continental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 414 when he said:- "... under the modern system of pleading, the question is not whether the facts pleaded are in themselves sufficient to give rise to a cause action. Rather, the question is whether it would be open to the applicant upon the pleadings to prove facts at the trial which would constitute a cause of action." The application contained in the Notice of Motion is dismissed with costs. I certify that this and the preceding pages are a true copy of the Reasons for Judgment of the Honourable Justice O'Loughlin.

Dated: Counsel for the Australian Competition and Consumer Commission : Mr RF Riley QC with him Mr R Antich Solicitor for the Australian Competition and Consumer Commission : Australian Government Solicitor

Counsel for the NT Outback Adventure Rentals Pty Ltd : Mr P Slattery Solicitor for the NT Outback Adventure Rentals Pty Ltd : Turner & Deane