Federal Court of Australia|1990-03-21|Before: Einfeld J

Re Commodore Business Machines Pty Limited v Trade Practices Commission [1990] FCA 77 (21 March 1990)

Trade Practices - engagement in the practice of resale price maintenance - contraventions admitted - proceedings for pecuniary penalties - whether any error in principle - effect of Trade Practices Act 1974, sub-s. 76 (3).

Trade Practices - injunction - whether injunction appropriate relief - form of injunction - Trade Practices Act 1974,

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

The Heating Centre Pty. Ltd. v Trade Practices Commission (1986) 9 FCR 153

Pye Industries Sales Pty. Ltd. v Trade Practices Commission (1979) ATPR 40-124

Trade Practices Commission v Tubemakers of Australia Ltd. (1983) ATPR 40-390

Trade Practices Commission v Kensington Hiring Co. Pty. Ltd. (1981) ATPR 40-256

Mikasa (N.S.W.) Pty. Ltd. v Festival Stores [1972] HCA 69; (1972) 127 CLR 617 (HC); (1971) 18 FLR 260 (Cth Industrial Court)

Epitoma Pty. Ltd. v Australasian Meat Industry Employees Union [1984] FCA 202; (1984) 3 FCR 55

Trade Practices Commission v Glo Juice Co. Pty. Ltd. (1987) 73 ALR 407

Queensland Wire Industries Pty. Ltd. v Broken Hill Pty. Co. Ltd. (1987) 75 ALR 331

Turner v General Motors (Australia) Proprietary Limited [1929] HCA 22; (1929) 42 CLR 352

B.M. Auto Sales Pty. Ltd. v Budget Rent A Car System Pty. Ltd. (1977) 51 ALJR 254

In re Mileage Conference Group of the Tyre Manufacturers' Conference Ltd.'s Agreement (1966) 1 WLR 1137

In re Black Bolt and Nut Association's Agreement (No. 2) (1962) 1 WLR 75

the Appellant: and C.C. Hodgekiss Esq.

instructed by

Messrs. Hunt & Hunt.

Counsel and Solicitors for Mr. J.D. Heydon QC

the Respondent: and A.J.L. Bannon Esq.

instructed by the

Australian Government

Solicitor.

(1) Order 5 of the orders made 3 August 1989 be varied

so as to read:

"5. The Respondent pay to the Commonwealth of

Australia a pecuniary penalty of $35,000 in

respect of the incidents alleged in paras. 25

(d) and 26 of the statement of claim."

(2) The appeal otherwise be dismissed.

(3) The respondent to the appeal pay one quarter of the

costs of the appellant of the appeal.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

This is an appeal by Commodore Business Machines Pty. Limited ("Commodore") from the decision of a Judge of this Court (Einfeld J.) in which, in proceedings instituted by the present respondent, the Trade Practices Commission ("the Commission"), pecuniary penalties were imposed upon Commodore and an injunction granted against it, pursuant to ss. 76 and 80 of the Trade Practices Act 1974 ("the Act"). This relief was granted in respect of contraventions by Commodore of the prohibition imposed by s. 48 of the Act upon engagement in the practice of resale price maintenance. The acts constituting engagement in resale price maintenance are spelled out in s. 96 of the Act. The Commission relied upon paras. (a), (b) (c), (d) (i) and (f) of sub-s. 96 (3) read with sub-ss. 96 (1), (4) (a), (6) and (7). His Honour's decision is reported, (1989) ATPR 40-976.

2. The Commission alleged against Commodore a number of contraventions during the course of 1986. All but one of these allegations was admitted. The result was that the trial was concerned primarily with issues as to penalty. A number of affidavits, filed by Commodore and by the Commission, were read. In addition, one of the Commodore deponents, Mr. Serra (who was the Managing Director of Commodore between January 1986 and April 1989) gave oral evidence in chief and was cross-examined.

3. Commodore is a wholly owned subsidiary of Commodore International Limited, a company incorporated in the Bahamas. It is a member of the Commodore group of companies which engages, in a number of countries, in the development, manufacture and supply of a range of computers and computer accessories including computer programmes. In 1986, Commodore carried on business in Australia by means of a network of dealers, supplying only traders who were part of that network. The network comprised a number of large department stores, together with smaller retail traders described as "independent dealers". In the calendar year 1988, Commodore's gross revenue was approximately $134,000,000.

4. In early 1986, the Commodore group released, initially in North America and in Europe, a new range of personal computers marketed under the name "Amiga". Trading terms and conditions for proposed Amiga dealerships in Australia were drawn up by Commodore in early April 1986. Clause 4 of the terms and conditions as settled upon by Commodore read as follows:

"4. Any advertising of Amiga by the dealer must

state the recommended retail price of Amiga.

This price must be the ONLY price which

appears in the advertisement."

5. On 10 April 1986, Messrs. Sly & Russell, solicitors, wrote to Agnes Li, the Financial Controller of Commodore, a letter the substantive part of which read:

"We refer to our telephone conversation

with you on Thursday 10 April and note

that you wish to include the following

clause in the Dealer Agreement:-

'Any advertising of Amiga by the

Dealer must state the recommended

resale (sic) price of Amiga. This

price must be the only price which

appears in the advertisement.'

We confirm the advice given to you over

the telephone that this clause does not

constitute resale price maintenance for

the purposes of the Trade Practices Act

providing each Dealer is aware that it

can price the relevant product at whatever

level it chooses. Also it would be

illegal for your company to terminate the

appointment of a Dealer or discontinue

supply of your company's products to the

relevant Dealer for the reason that the

Dealer sold below this price.

As we mentioned to you there is nothing

in the Trade Practices Act to prevent

your company establishing a price above

which it prohibited its products from

being sold. All that is prohibited is

the setting of a minimum price."

(Emphasis supplied)

6. Between April and November 1986, Commodore required all of its "independent dealers" who received Amiga computers to sign a document containing clause 4. There was evidence clearly indicating that clause 4 was understood by dealers not only as concerned with the terms of advertising but also as inhibiting the sale of Amiga's products at less than the recommended retail price; see para. 96 (3) (f) of the Act. Further, in giving their advice, Messrs. Sly & Russell overlooked the provisions of sub-s. 96 (7) of the Act. This sub-section requires that a reference in sub-s. 96 (3) to the selling of goods at a price less than a price specified by the supplier should be construed as including references to the advertising of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be advertised for sale. On the other hand, it is true that their advice that clause 4 did not constitute resale price maintenance was given with the proviso that each dealer be aware that the dealer could price the product at whatever level it chose.

7. The department stores were not asked to sign the document containing clause 4. In his cross-examination, Mr. Serra said that if Commodore had asked them to sign such a document "they would be very insulted to deal with you". He also agreed that Commodore chose the "independent dealers" as the signatories because they were more "vulnerable" in the sense that the Commodore product was more necessary to the profit-making of the "independent dealers" than it was for the large department stores.

8. Approximately 150 "independent dealers" signed the document containing clause 4. One dealer, which played a significant part in the events that then unfolded, Data Management Pty. Limited, did not execute the document. Its principal, Mr. Scobie, received the document early in July 1986 but decided not to sign it; accordingly, para. (a) of sub-s. 96 (3) of the Act did not apply in his company's case. He believed that the restriction on price advertising in the agreement would limit his company's ability to make its own commercial judgments.

9. There occurred between May and November 1986 a number of exchanges between Commodore and various of the "independent dealers". We will return to deal with these events.

10. On 9 January 1987, Mr. Serra wrote a letter to each of the independent Amiga dealers, which enclosed a letter dated 4 December 1986. Mr. Serra had been at the offices of Commodore on 15 December 1986 when he had been served with a notice under s. 155 of the Act. The letter from Mr. Serra, dated 9 January 1987 was in the following terms:

"We attach a letter clarifying the

meaning of Clause 4 in the Agreement

appointing you an Amiga dealer.

We sought the advice of our Solicitors on

this letter towards the end of November.

However it has not been possible to get

this letter to you before now because of

business commitments I had overseas and

the annual Christmas/New Year holiday break.

Our Solicitors have confirmed and I

emphasise that you are free to advertise

and offer our Amiga product for sale at

less than the recommended resale (sic)

price. However you may not advertise or

offer that product for sale at a price

above the recommended resale (sic) price.

Wishing you a profitable 1987 and

assuring you of our best attention at all times."

The enclosed letter dated 4 December 1986 was in the following terms:

"We understand there is some confusion in

the Amiga dealer base regarding the

meaning of Clause 4 in the Agreement

appointing you an Amiga dealer.

The inclusion of this clause was

specifically intended to protect the

consumer and our product from being over-priced.

As each of you is aware prior to

the official launch of the Amiga product

in Australia, and even today, there are

computer retailers who parallel import or

'grey market' our product from overseas

sources. These retailers were selling

the same Amiga product as we released in

Australia for up to $1,000 more than the

recommended resale (sic) price.

We were not prepared to let this happen

with locally supplied product and

therefore we decided to set a maximum

resale (sic) price or a price above which

you would not be permitted to advertise

this product. Clause 4 was intended to

have this effect. Naturally you may

advertise and offer the Amiga product for

sale at less than the recommended resale

(sic) price.

Hoping this clarifies the situation."

11. In respect of any contravention of s. 48 of the Act by a body corporate, the Court may order payment to the Commonwealth of such pecuniary penalty not exceeding $250,000 as the Court determines to be appropriate. In making its determination, the Court is required by sub-s. 76 (1) to have regard to:

". . . all relevant matters including the

nature and extent of the act or omission

and of any loss or damage suffered as a

result of the act or omission, the

circumstances in which the act or

omission took place and whether the

person has previously been found by the

Court in proceedings under this Part to

have engaged in any similar conduct."

"76 (3) If conduct constitutes a contravention

of two or more provisions of Part IV,

a proceeding may be instituted under

this Act against a person in relation

to the contravention of any one or

more of the provisions but a person

is not liable to more than one

pecuniary penalty under this section

in respect of the same conduct."

The primary Judge approached the matter on the footing that "one piece of conduct" was involved in the signing up of the "independent dealers" upon the "terms and conditions" of "Amiga dealership", but that separate penalties were properly sought in relation to later dealings between representatives of Commodore and various dealers.

13. The Commission sought and obtained the award of penalties not only in respect of the imposition on the "independent dealers" of the document containing clause 4, but also in respect of what it submitted were seven separate contraventions between May and November 1986. These were described by his Honour in the following terms (at 50,668):

"1. 1 May 1986 - the Five Star incident

Miss Ellis, an employee of (Commodore),

telephoned Miss Barnes at Five Star

Computers Pty. Ltd. and told her that Five

Star's dealership would be cancelled because

it had advertised Amiga computers at five

dollars below the recommended retail price.

Miss Ellis then had a similar conversation

with Mr O'Neill, the manager of Five Star.

2. 19 July 1986 - the Civic Entertainments/

Hamilton incident

Mr K Hamilton, a senior officer of

(Commodore), told Mr B Dainton of Civic

Entertainments Pty. Ltd. that Civic had been

refused supply of Amiga computers because it

was advertising one hundred dollars below

the recommended retail price. Mr Dainton

then sent a telex saying he would abide by

the document in order to be supplied.

3-5. July to November 1986 - three Firth incidents

In telephone conversations with Mr Firth of

Software-to-Go, who had asked whether there

was any way to get around cl. 4, (Commodore's)

Mr K Hamilton twice and Miss Ferguson once

told Mr Firth that any advertising of Amiga

computers by him for a price below the

recommended retail price would result in

(Commodore) not supplying him with any more

Amiga computers. The evidence does not

establish whether Mr Firth actually engaged

in such advertising.

6. 27 August 1986 - the Civic Entertainments/

Nardi incident

Mr K Dainton of Civic Entertainments was

told by Mr S Nardi of (Commodore) that an

order for computers placed by Civic had been

cancelled because it had advertised Amiga

computers at a price below the recommended

retail price. This conversation is denied

by (Commodore) which says that the

cancellation was an error. Mr Dainton had

cancelled another order and there may have

been some confusion over which order was in

fact cancelled.

7. 27 November 1986 - the Data Management incident

Miss Tolcon of (Commodore) told Mr Scobie of

Data Management Pty. Ltd. on the telephone

that she had received complaints from other

dealers that Data Management had advertised

four hundred dollars below the recommended

retail price, and that this was in breach of

the dealership agreement as comprised in the

document. It appears that Mr Scobie had

never actually signed the document. In

another telephone conversation said to have

been made on Mr Hamilton's instructions,

Miss Tolcon advised Mr Scobie that he would

no longer be supplied with Amiga computers.

Mr Hamilton seems to have been the senior

executive in charge of sales at the time."

14. As we have indicated, Commodore admitted all of the allegations except No. 6, the Civic Entertainments/Nardi incident of 27 August 1986. On the appeal, Commodore submitted that the factual basis for the imposition of a penalty must be established on the balance of probabilities, taking into account the gravity of the matter alleged; reliance was placed upon Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, as applied in the The Heating Centre Pty. Ltd. v Trade Practices Commission (1986) 9 FCR 153 at 160.

15. His Honour found the sixth incident proved and, in our view, in accordance with the principles indicated in the authorities, it was open for him on the evidence to do so. However, as will appear, in respect of this contravention, his Honour imposed a penalty at the lower end of the range.

16. His Honour dealt with penalty as follows (at 50,675):

"For contravening sec. 48 in seeking and

procuring dealers' signatures on multiple

additions of the document containing cl.

4 between the first legal advice and the

letter dated 4 December 1986 but not sent

out until 9 January 1987, there will be a

penalty of $25,000. Without the legal

advice this sum would have been

considerably more. For the double threat

to Five Star that its dealership would be

cancelled because it had cut $5 from the

recommended retail price, I impose a

penalty of $40,000. The contraventions

involved in the Civic Entertainments/

Hamilton and the three Firth incidents

each warrant a penalty of $30,000.

Although the proximity and similarity of

the Civic Entertainments/ Nardi incident

to Civic's earlier confrontation by the

respondent's senior executive Mr Hamilton

make accidental breach somewhat

suspicious, the onus of proof in matters

of penalty and sentence leads me to treat

this this possibility as calling only for

the relatively nominal penalty for this

incident of $5,000. On the other hand,

the Data Management incident was in my

opinion the most serious contravention of

all because of the absence of a signed

document and the persistence, aggressiveness

and direct high level authorisation

of the breach. The penalty for this

incident will be $60,000. The total

penalties payable to the Commonwealth by

the respondent will thus be $250,000."

17. His Honour then turned to consider the question of injunctive relief. The injunction granted against Commodore restrains it "from engaging in the practice of resale price maintenance in the manner alleged in the statement of claim or in any similar manner". We draw attention to the phrase "any similar manner".

18. In deciding to grant injunctive relief, his Honour had particular regard to what he found was (i) the delay in sending out the revised legal advice until after the Christmas/New Year period 1986/87, (ii) Commodore's "strong resistance" to the application for the injunction coupled with its failure to offer any undertakings or lead evidence designed to give the Court any confidence that further breaches were unlikely, (iii) Commodore's refusal to take steps then, and later, to prevent breaches and discipline the staff involved, and (iv) Commodore's refusal to institute education and training for its staff in these respects "right up to the present time". His Honour also took into account what he found was Commodore's failure to respond to and heed an earlier warning by the Commission in 1984.

19. On 26 September 1984, the Commission had written to the then Managing Director of Commodore, Mr. N.F. Shepherd, notifying him of a complaint by a retailer that he had been told by an officer of Commodore that he would not be supplied because "we have to protect our approved outlets from your type of dealing, because you sell too cheap for the likes of other local businesses". Correspondence between Commodore and the Commission ensued, but this conversation was not denied in terms, as the Commission pointed out in its letter to Mr. Shepherd of 13 February 1985. In that letter the Commission said that whilst it did not propose to investigate the matter further at that stage, "it views suggestions of resale price maintenance seriously".

20. Upon the appeal, Commodore complained both as to the quantum of the penalties, and as to the grant of injunctive relief. On penalty, senior counsel for Commodore submitted that an appropriate global penalty would be within the range of $10,000 to $20,000. He drew attention to the circumstance that the penalties imposed were in the aggregate $250,000, which happened to be the statutory maximum for any one contravention. Senior counsel for the Commission submitted that whilst the penalties were on the high side, nevertheless the learned primary Judge had fixed the penalties within the permissible range.

21. On the matter of injunctive relief, Commodore objected both to the grant of any relief, and also to the form of the injunction, with particular reference to the concluding phrase "any similar manner".

22. Counsel for both parties were agreed that should we reach the conclusion that revision of the form of the injunction was necessary or that in one or more respects the penalties imposed were excessive, we should then ourselves revise the form of the injunction and deal with any adjustment of the penalties, rather than send the matter back.

23. We turn first to consider the issues touching the question of penalty. There was no dispute as to the applicable principles, both as regards the assessment of penalties under s. 76 of the Act, and as regards the role of an appellate court in a case such as the present.

24. In R v Tait (1979) 24 ALR 473 at 476, a decision of the Full Court of this Court, Brennan, Deane and Gallop JJ. said:

"An appellate court does not interfere

with the sentence imposed merely because

it is of the view that sentence is

insufficient or excessive. It interferes

only if it be shown that the sentencing

judge was in error in acting on a wrong

principle or in misunderstanding or in

wrongly assessing some salient feature of

the evidence. The error may appear in

what the sentencing judge said in the

proceedings, or the sentence itself may

be so excessive or inadequate as to

manifest such error . . ."

These remarks by the Full Court reflect what was said by Dixon, Evatt and McTiernan JJ. in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505 in a well known passage. The Full Court was dealing with an appeal by the Crown against a sentence imposed in the Supreme Court of the Northern Territory. But what was there said has been treated by the Full Court as applicable also to cases such as the present, arising under s. 76 of the Act; see Pye Industries Sales Pty. Ltd. v Trade Practices Commission (1979) ATPR 40-124 at 18,325.

25. In reaching his decision as to penalties, his Honour referred to various criteria which he took into account. He said there was considerable actual and potential harm flowing from the contraventions of the Act, both to the broader public interest and to the sector of the public immediately concerned; the Amiga products were said to be of a type and price as to be likely to attract younger or less affluent members of the community in disproportionate numbers. His Honour said that the fact that there was no evidence of any actual refusal by an independent dealer to give a discount had to be viewed in the light of the dealers' fears of offering discounts, the likely lack of knowledge of the prospective buyers that they were entitled to ask for a discount, and the freedom of the large department stores to offer discounts, they not being constrained by clause 4.

26. On the appeal, Commodore criticised this approach to the matter. However, there was, in our opinion, ample evidence to support the conclusion that clause 4 was understood by "independent dealers" as prohibiting not only the advertising, but also the sale of the product at less than the recommended retail price. Indeed, Commodore in a sense acknowledged this in the reference to "confusion in the Amiga dealer base" in the letter of 4 December 1986; this reference was explained by Mr. Serra in his cross-examination as having been understood by Commodore as referring to what it apprehended as:

". . . confusion by dealers on the basis

that we were trying to control the

pricing that they sold at versus what we

(were) trying to get as an advertising

control price."

There was evidence that the retail market was very price competitive. Mr. Scobie had received some 30 to 40 responses to his company's discounted advertisement offering the Amiga product at $2,095 as against the recommended retail price of $2,495. His conduct drew a sharp response from Commodore. He received two telephone calls on the one day from an employee of Commodore, the second telephone call opening with the words:

"Hello, George, you are no longer an

Amiga dealer. You won't get any more

supply from Commodore of these machines."

27. The examples of the advertising which were in evidence laid the ground for an inference drawn by his Honour as to the nature of the consumer market involved in the purchase or prospective purchase of the Amiga computers. In our view, it was also open for his Honour to conclude that the public harm caused by the conduct of Commodore was accentuated by the circumstance that the policy in question was imposed only on "independent dealers", that is to say dealers other than department stores. The department stores would not have agreed to a document containing clause 4, whereas the dealers were in a far weaker position vis a vis Commodore. The conduct which contravened the Act occurred on a large scale, affecting as it did some 150 dealers across the country. The evidence disclosed a sale of 5,301 Amiga computers between March and December 1986, out of a stock of 7,519. This was a trade worth some millions of dollars.

28. Further, having taken the evidence of Mr. Serra, his Honour did not accept Commodore's explanations for its conduct. The essence of Commodore's explanation is set out in the letter of 4 December 1986, designed to remove "confusion" regarding the meaning of clause 4. The text of that letter is set out earlier in these reasons. His Honour found that explanation "quite far fetched".

29. His Honour said that some allowance had to be given for the "inadequate legal advice", particularly in the light of its apparently reputable source. He said that without the legal advice, the penalty of $25,000 "for the use of the documents" containing clause 4 would have been considerably more. On the appeal, Commodore sought to classify all the contraventions as having stemmed directly from innocent reliance on the incorrect legal advice provided to Commodore. This would support the view that a single penalty was appropriate; see Trade Practices Commission v Tubemakers of Australia Ltd. (1983) ATPR 40-390 at 44,577. Senior counsel for the Commission took issue with this suggested approach to the matter. We accept his submissions as having considerable force.

30. The evidence did not disclose any attempt on the part of Commodore to instruct its employees of the full import of the legal advice. We already have referred to the proviso which was an integral part of that advice, to the effect that each dealer should be made aware that it could price the Amiga product at whatever level it chose. Further, it sits rather oddly for Commodore, which alleges it obtained advice as to the legality of clause 4 as a means for setting a maximum advertised price, to rely upon that advice in defence of conduct in enforcing an advertised minimum price. There was evidence to support the conclusion that clause 4 was understood by the "independent dealers" as prohibiting the sale of the Amiga product at less than the recommended retail price. It is true that Mr. R.K. Hamilton, a Commodore executive, said in his affidavit that having read the legal advice he was aware that he could not tell a dealer that he could not sell below a certain price, and that when someone asked him at what price an Amiga might be sold, he was careful always to reply in words to the effect that the dealer could sell at any price he wished, but could only advertise at the recommended retail price. But no specific instances were given of this course being followed.

31. On the other hand the evidence discloses exchanges between Commodore and several of the "independent dealers" in which it would have been highly appropriate for Commodore to refer to the proviso to the legal advice, but Commodore did not do so. We refer to the affidavits by Miss Barnes of Five Star Computers Pty. Ltd. (paras. 3 and 5), Mr. Scobie of Data Management Pty. Ltd. (paras. 10 and 11), Mr. Mitchell also of Data Management Pty. Ltd. (para. 4; cf. Mr. R.K. Hamilton's affidavit (para. 22)), Mr. R.P. Firth of "Software-To-Go" (paras. 10, 11, 12) and Mr. I.W. Hamilton of "Excellent Suggestions" (para. 5). We should refer also to the concluding portion of para. 8 of Mr. Mitchell's affidavit, which is in the following terms:

"It was my understanding from reading

that clause that any advertisement Data

Management placed in a newspaper or

computer magazine for the Amiga that

included a price had to state the

recommended retail price and that Data

Management could not sell the computer

below that price."

(Emphasis supplied)

Further, the seventh incident, that involving Mr. Scobie, a most serious incident of aggressive conduct by Commodore, occurred after the giving of instructions by the company to its solicitors to reconsider the clause in question; that further advice was later the subject of the letter of 9 January 1987 and its enclosure dated 4 December 1986.

32. Accordingly, we do not accept the submission for Commodore that all of the contraventions of the resale price maintenance provisions are to be seen as stemming from the inadequate legal advice supplied on 10 April 1986.

33. Among the matters which his Honour took into account in favour of Commodore were considerations that despite threats to do so, apparently no dealerships had been cancelled, that the proceedings had not been defended and that there had been co-operation with the Commission in relation to the proceedings. But, on the other side of the ledger, his Honour said that there had been more than a month's delay in advising the dealers of the correct position after revised legal advice was received late in 1986, and that the delay had coincided with the busy Christmas trading period.

34. His Honour also said that there was no evidence of any steps taken by Commodore to avoid future contraventions of the Act. This conclusion was challenged by Commodore on the appeal. But when they are read in context, his Honour's remarks are to be understood as assuming the reader has in mind what was said in the preceding paragraph of the judgment as to the corrective advice given the dealers in January 1987. Criticism also was directed by Commodore to his Honour's failure to take into account the statement by Mr. Serra in his affidavit that since the events giving rise to the proceedings, Commodore had sought general advice on the provisions of the Act, and such advice had been provided "by way of a seminar conducted at Commodore's Sydney premises by Mr. Warren Pengilley". It does appear this piece of evidence was not in his Honour's mind. But we would not for that omission alone disturb the outcome of the proceedings before his Honour. The evidence in question revealed nothing as to what was said at the seminar or who attended it.

35. There was some debate on the appeal as to whether in the judgment there is an accurate description of what transpired at the hearing as regards an alleged agreement that there should be one penalty for the use of the document containing clause 4 and seven separate penalties for the enforcement activities by Commodore's staff. In any event, in our view, the method adopted was plainly one which conformed to s. 76 in its application to the facts of this case. This conclusion is underlined by our refusal to accept the proposition that all of what transpired is to be considered as stemming from the legal advice.

36. It was then submitted that the penalties, totalling $250,000, were quite disproportionate to the gravity of the offences involved, and were manifestly excessive given all the circumstances of the case.

37. We accept that, with the possible exception of the penalty of $5,000, the penalties imposed were at the upper end of the range. But guided by the applicable principles controlling the role of an appellate court in this situation, to which we have referred earlier in these reasons, we would not interfere with what was done, save with one exception. To this we now turn.

38. His Honour said that the three incidents involving Mr. Firth of "Software-To-Go" each warranted a penalty of $30,000. On the appeal, it was strongly submitted that what was there involved was properly to be seen as essentially the same conduct, such that one penalty only was applicable; cf. Trade Practices Commission v Kensington Hiring Co. Pty. Ltd. (1981) ATPR 40-256 at 43,288-9.

39. On three occasions in the latter half of 1986, Mr. Firth had conversations with officers of Commodore in which he sought to establish whether there was a way in which his business could advertise for less than the recommended price and, in effect, avoid the restriction in clause 4. Two of the conversations were with Mr. R.K. Hamilton and one with Miss Ferguson. On the first occasion, he was told by Miss Ferguson that if in advertisements he did not put the full retail price, he would not "see Amiga computers again". Words to that effect were repeated on the second and third occasion. On the third occasion, Mr. Firth had called upon Mr. Hamilton at Commodore's offices in Lane Cove, a Sydney suburb. Mr. Firth's understanding from these conversations was that Amiga computers had to be advertised for $2,495 and if they were not then "Software-To-Go would lose its dealership".

40. Mr. Firth's business was conducted by mail order rather than retail sales across the counter. Given the nature of this business it thus was particularly susceptible to the mischief that flowed from the imposition of a restriction as to the advertised price for Amiga computers. However, the incidents of which complaint was made differed from those involving the other dealers in that they did not flow from any action taken by the dealer which provoked from Commodore a hostile response, or (in the case of the Civic Entertainments/Nardi incident) an allegedly hostile response.

41. The point is not free from difficulty, but we have reached the conclusion that we should accept the submission that what was involved here is properly to be seen as essentially the one piece of conduct, such that one penalty only was applicable. As we have said, we would not disturb any of the other penalties.

42. In all the circumstances, we would substitute for para. 5 of the orders made by Einfeld J. on 3 August 1989 an order that Commodore pay to the Commonwealth of Australia a pecuniary penalty of $35,000 in respect of the incidents alleged in paras. 25 (d) and 26 of the statement of claim. In the result, the total amount of the penalties imposed will be reduced to $195,000.

43. We turn then to consider the question of injunctive relief. As we have indicated, Commodore submitted on the appeal that no injunction should have been imposed on Commodore and, alternatively, that the form of injunction should be varied.

44. Commodore submitted that the exercise of the discretion reposed in his Honour by s. 80 of the Act miscarried. It was submitted that his Honour misdirected himself as to the factual basis for several of the circumstances relied upon by him as tending to favour the grant of an injunction. In particular, it was said that his Honour had wrongly assumed the absence of evidence of efforts by Commodore to prevent contraventions of the Act. We already have referred to this aspect of the matter. On the other hand, his Honour was entitled, as we believe on a proper reading of his reasons he did, to rely upon the attitude taken by Commodore after the 1984 incident, in which the then Managing Director, Mr. Shepherd, dealt over some months with the Commission. As we have indicated, by letter dated 13 February 1985, the Commission concluded the exchange with, in effect, a warning that it viewed seriously suggestions of resale price maintenance. At that stage, Mr. Serra was the most senior person dealing with sales in the Commodore organisation and he reported to Mr. Shepherd.

45. When asked in his cross-examination whether he could positively deny that Mr. Shepherd had spoken to him in about 1985 concerning the matter, Mr. Serra said he could not answer that question positively. He continued:

"I mean, it could have been said in

passing at any - walking down a hallway."

Mr. Serra was then Commodore's national sales manager. His Honour was entitled to have regard to this evidence in forming his conclusion that a relevant matter on the question of injunction was the failure of Commodore to respond to and heed the earlier warning of the Commission in 1984/85.

46. His Honour was entitled also to refer, as he did, to the delay in sending out the revised legal advice until early in 1987. We have referred earlier to this aspect of the case. His Honour also mentioned the "strong resistance" by Commodore to the application for injunctive relief. We have been taken to the passages in the address of Commodore's then senior counsel on this issue, and though, of course, they were expressed in terms of moderation, nevertheless they do amount to a strong resistance to the application for the injunction. His Honour also said that he was led by "other evidence" to conclude that the present case called for injunctive relief. There are at least two matters which his Honour may have had in mind, because he referred to them earlier in his reasons for judgment. To us, they appear matters of some importance.

47. First, his Honour, having heard Mr. Serra, the Managing Director, was plainly unhappy with his evidence as to the reason for the adoption and implementation of clause 4. He concluded that Commodore had engaged in sharp business practice. Further, and this matter also is related to the worth of Mr. Serra's evidence, his Honour was, in our view rightly, critical of the delay until early 1987 in making known to the dealers the corrective legal advice which Commodore had received. In any event, the form of letter sent out in January 1987 was not satisfactory in that Commodore still relied upon an explanation of its conduct which at the trial was rejected by the Judge. This must be a factor tending to favour the grant of injunctive relief.

48. His Honour also referred to the failure to proffer an undertaking. Indeed, there is no evidence as to why no undertaking was proffered. We would add that on the evidence the Data Management incident, involving Mr. Scobie, a serious one, occurred three days after Commodore sought revised legal advice. A fact such as that is, putting the matter at its most favourable to Commodore, indicative of a poor system of communication within its management. That also is a factor tending to favour the grant of injunctive relief under s. 80 of the Act.

49. It is true that the contraventions of the Act occurred in 1986. But the power of the Court to grant an injunction in this case was exercisable whether or not it appeared to the Court that Commodore intended to engage again in conduct of that kind; sub-s. 80 (4).

50. In all the circumstances, we see no ground for disturbing his Honour's decision to impose an injunctive restraint upon Commodore. We would add that it is open to Commodore to apply, after an appropriate interval, for the variation or dissolution of the injunction, as provided by sub-s. 80 (3) of the Act.

51. We turn now to the submission that the form of the injunction is unsatisfactory and that a modification of its terms is appropriate.

52. At the outset, we observe, though we would not rely solely upon this, that the form of injunction does not appear to have been opposed by Commodore at the trial. Rather, its submission appears to have been that no injunction at all, whatever its form, should have been granted against it.

53. The injunction sought in the Application was in the following terms:

"An injunction restraining (Commodore)

from engaging in the practice of resale

price maintenance in respect of the

supply of Amiga computers (as defined in

the Statement of Claim) supplied by (Commodore)"

An injunction in that form might be suggested by the relief granted by the Commonwealth Industrial Court in Festival Stores v Mikasa (N.S.W.) Pty. Ltd. [1972] HCA 69; (1971) 18 FLR 260. On appeal, reported [1972] HCA 69; (1972) 127 CLR 617 at 631-632, Barwick C.J. rejected an attack on the propriety of an order which enjoined a wholesaler "from engaging in the practice of resale price maintenance in respect of tableware marketed . . . under the trade name 'Mikasa'".

54. Nevertheless, such an injunction as that sought by the Commission in this case would have been open to the objection that it was of an undesirable width because, in respect of the supply of Amiga computers, it did no more than reproduce, but this time with the risk of sanctions for contempt, that which the Act in terms forbade by s. 48. Any practice of awarding injunctions in such a form is to be discouraged. Such injunctions conflict with the general precept, applicable to the exercise of power under s. 80 of the Act as much as to the framing of injunctions in aid of legal and equitable rights, that a final injunction should bear upon the case alleged and proved against the defendant, and should indicate that conduct which is enjoined or commanded to be performed, so that the defendant knows what is expected of him as a matter of fact. Further, where the injunction is in the form of an interlocutory order, it is undesirable to frame the injunction in such a way as to leave the issues in the case open for determination on a contempt proceeding, rather than at the final hearing. See generally Epitoma Pty. Ltd. v Australasian Meat Industry Employees Union [1984] FCA 202; (1984) 3 FCR 55 at 65-66 (Full Court); Trade Practices Commission v Glo Juice Co. Pty. Ltd. (1987) 73 ALR 407 at 412-416 (Burchett J.) and Queensland Wire Industries Pty. Ltd. v Broken Hill Pty. Co. Ltd. (1987) 75 ALR 331 at 347 (Pincus J.).

55. The injunction that was granted was in much narrower terms than those propounded in the Application. The injunction restrained Commodore "from engaging in the practice of resale price maintenance in the manner alleged in the statement of claim . . .". The Statement of Claim (as amended on 15 November 1988) was a document of 58 paragraphs, which included particulars of the incidents in respect of which his Honour made his findings. If the injunction had stopped there, then Commodore would, in our opinion, have been without any reasonable ground of complaint.

56. The difficulty of which Commodore complains is the addition to the injunction of the concluding words "or any similar manner". However, senior counsel for the Commission submitted that a narrower form of injunction would leave Commodore at liberty to repeat its conduct in slightly different circumstances and encourage it to "sail close to the wind"; the risk of this would be lessened by use of an expression such as "similar manner" or "like effect".

57. Similar considerations apply in various areas of the general law in which it has been customary to grant injunctions enjoining conduct of a similar character or to the like effect of that conduct which has been found against the defendant. In some cases, there is a risk that an injunction drawn too precisely may encourage evasion of the spirit but not the letter, whilst a wider form of injunction will not place the defendant in any real position of doubt as to what is expected of him. For example, in Turner v General Motors (Australia) Proprietary Limited [1929] HCA 22; (1929) 42 CLR 352, the injunction as modified by the High Court restrained "the defendants from using the words 'General Motor' or 'General Motors' in connection with any business or businesses then or thereafter carried on by them or any of them without clearly distinguishing such business from the business carried on by General Motors (Australia) Proprietary Limited and from using any name calculated to lead persons to believe that the said business or businesses or any business of the defendants was or were identical or connected with the business of the plaintiff and also from representing or holding out to the like effect" (Emphasis supplied). See also the terms of the injunction granted in B.M. Auto Sales Pty. Ltd. v Budget Rent A Car System Pty. Ltd. (1977) 51 ALJR 254.

58. The meaning of the phrase "to the like effect" in relation to comparison between two agreements was discussed in two cases under the Restrictive Trade Practices Act 1956 (U.K.), In re Mileage Conference Group of the Tyre Manufacturers' Conference Ltd.'s Agreement (1966) 1 WLR 1137 at 1161 and In re Black Bolt and Nut Association's Agreement (No. 2) (1962) 1 WLR 75 at 85.

59. In our view, when the injunction granted in this case is read with the Statement of Claim and with his Honour's reasons, the result is that Commodore will not be placed in any real position of uncertainty as to what is required of it. The injunction protects the public against the sort of breach which has occurred without exposing Commodore to the risk of finding itself in contempt of court because of a different problem altogether; cf. Trade Practices Commission v Glo Juice Pty. Ltd. (supra at 418).

60. We would not modify the form in which the injunction was granted.

61. Order 5 of the orders made 3 August 1989 should be varied so as to read:

"5. The Respondent pay to the Commonwealth of

Australia a pecuniary penalty of $35,000 in

respect of the incidents alleged in paras.

25 (d) and 26 of the statement of claim."

63. The appellant should have a portion of its costs of the appeal, which we fix at one quarter, but the costs order made at first instance should not be disturbed.

Restrictive Trade Practices Act 1956

Re Commodore Business Machines Pty Limited v Trade Practices Commission [1990] FCA 77

At a glance

Court

Decision date

Before

Source

Judgment (105 paragraphs)

Re Commodore Business Machines Pty Limited v Trade Practices Commission [1990] FCA 77 (21 March 1990)

Parties

Legislation Cited (8)

Cases Cited (11)