TRADE PRACTICES COMMISSION v PARKFIELD OPERATIONS PTY.

duration in an arrangement or understanding necessary to have the purpose of fixing, controlling or

Trade Practices Act 1974, ss. 45(2) and (3), 45A (1), 76(1)(b) and (da)

TRADE PRACTICES COMMISSION v PARKFIELD OPERATIONS PTY. LIMITED and LAWRENCE NEIL CHAPMAN

Judge making order: Bowen C.J. Date order made: 30 October 1985

1. The appeal be allowed.
2. The decision of the trial Judge be set aside.
3. In respect of the offences referred to in paragraphs 17,

BETWEEN: TRADE PRACTICES COMMISSION Appellant AND: PARKFIELD OPERATIONS

CORAM: BOWEN, C.J., SMITHERS and MORLING Jd. DATED: 30 OCTOBER 1985

THE COURT: This is an appeal from a decision of a judge of the Court dismissing an application made by the Trade Practices Commission for the imposition of penalties on the respondents

for alleged breaches of sub-s.45(2) of the Trade Practices Act

Sub-section 45(2) of the Act provides, in part, that

a corporation shall not make a contract or arrangement, or

arrive at an understanding, if a provision of the proposed

contract, arrangement or understanding has the purpose, cr

A certificate under the Federal Proceedings (Costs) Act be granted to the first respondent Parkfield Operations Pty. Ltd. subject to its being suitably qualified under

the terms of that Act. A certificate under the Federal Proceedings (Costs) Act

be granted to the second respondent, Laurence Neil Chapman.

The costs of the Trade Practices Commission of the proceedings at first instance and of the appeal be paid

by Parkfield Operations Pty. Limited and Laurence Neil

Settlement and entry of orders is dealt with in Order 36

would have or be likely to have the effect, of substantially

Section 76(1)(b) of the Act provides for the imposition of penalties upon a person who attempts to contravene a provision of Part IV of the Act, in which 3.45 appears. Sub-section 45A(1) provides, inter alia, that a provision of a proposed arrangement or understanding shall be deemed for the purposes of s.45 to have the purpose, or to be likely to have the effect, of substantially lessensing competition if the provision has the purpose, or is likely to have the effect, of fixing, controlling or maintaining the price for "goods supplied by the parties to the proposed arrangement or understanding or by any of them, in competition

The first respondent ("Parkfield") owns and operates petrol service stations in the Newcastle and Maitland districts. Mr Chapman, the second respondent, was at all material times, the manager and a director of Parkfield. 4L Petroleum Fty. Limited ("XL") owns petrol stations in

Maitland and in Hamilton, a suburb of Newcastle. At all

material times the managing director of KL was Mr Sykes.

The substance of the Commission's case against Parkfield was that during May and June 1983 at attempted to

make an arrangement or arrive at an understanding between

itself, XL and other petrol retailers in the Newcastle and Maitland areas whereby the retail price of petrol charged in those areas by the proposed parties to the arrangement or understanding would be increased. An alternative alleaation was made that Parkfield attempted to induce XL to make such an arrangement or arrive at such an understanding. The case against the second respondent was that he attempted to induce XL to make an arrangement or arrive at an understanding of a

similar kind with Parkfield and other petrol retailers.

The learned trial judge held that the Commission had not established its cases against the respondents and dismissed the application. Before turning to consider his Honour's reasons and the arguments presented on the hearing of the appeal, it is necessary to refer to the evidence called at the hearing. The evidence was within a relatively small compass. It consisted, for the most part, in accounts given by Mr Sykes of conversations he had with Mr Chapman. Since the respondents did not call any evidence at the trial, Mr Sykes' account of these conversations was uncontradicted. The learned judge found that Mr Sykes gave his evidence honestly and to the best of his ability. However, Mr Sykes conceded in his evidence that his recollection of the detail of the convers- ations might not be completely correct and that "words may have

been somewhat differently ordered, and individual wordz may be different". This concession led his Honour to observe during

the course of his reasons that he did not "have a comfortabls

gatistaction concerning the words used in the conversations deposed to by Mr Sykes or as to the particular occasions on which important parts of them took place". We shall return to

the significance of this observation later in these reasons.

Mr Sykes said that Mr Chapman rang him from Newcastle in early May 1984. He gave the following account of the

"MR WHITLAM: After that initial exchange, what was said then, do you recall - again doing the best you can?---Yes, Mr Chapman said that - would it not be better if we could raise our prices four cents or six cents a litre. I think he named the price of - JI think it was 45.3 cents a litre or something like that, and he said - if you did you would be able to make five or six cents a litre more profit, would that not be better?

HIS HONOUR: How much was the raise?---Five or six cents a litre. I think at that stage we were selling at somewhat below forty cents a litre, so 45.3 cents would be a rise of well over five cents. I think he said five or s1x cents a litre, would we not all make more profit? I said well. we would. He said would we agree to gcing up to ~- I think he named a price of - 44.8 cents a litre if everybody else in Newcastle went up to 45.3 cents a litre. I said, 'No, I will not have a bar of any arrangement like that'. Mr Chapman then said. 'Well, I will be shortly coming to Melbourne. Would it be all right if I call in to see you personally?' I said, 'You would be most welcome to see me at any time you wish'.

Was anything said about other retailers in this telephone conversation?---Yes, well either at

meeting Mr Chapman said that he had got the other retailers to agree to go to - I think the

price was - 45.3 cents a litre and he had a qualification about that, because I asked him

asked was at the meeting and not at the first phone call - I am not sure whether he said that

~ I just forget - at the phone call or the next meeting.

I am asking you now about the telephone call?---I am

What was that?---I said that XL policy was to never

make arrangements or bargains between other brands or other service stations because we thought, and we had been told, it had been illegal."

May 1985 and he gave the following account of what was said at

HONOUR: After the introductions can you recall what was said in your discussions?---Not in

could confine you, was anything said about other petrol retailers in Maitland and/or Newcastle?---Yes.

was said?---Mr Chapman said that he had got the agreement of other petrol - he said all - all

other petrol retailers except KL to move up to 45.3, I think it was, provided we moved up to

make any bargains like that. Our attitude was the same, and we could not do it. I said, 'We

set our own prices, in our own way, and at our own time. We might change 1f the market goes up or down, but that 1s up tous. We cannot make a bargain like that. It would be very surprising if you have an agreement with Solo like that. Have you asked Solo, when you say all the sites in Newcastle?' He aaid, 'Yes, I

have asked Solo and both their sites have agreed to go to 44.8'."

petrol "sky-rocketed". Apparently there was about a four

another telephone call from Mr Chapman. Mr Sykes' account

the more important part of this conversation was as follows:

"MR WHITLAM: What was said?---Mr Chapman said if XL or you do not raise your price then the whole of the Newcastle market is going to come down

again, I think at that stage I might have said: 'Our price is a bit higher already at

Was anything said in this telephone conversation about other retailers?---Yes. I said I was

mentioned that everybody else would be happy if XL was 44.8. I cannot remember which time that was said or whether it was said at both.

It was said at either the meeting cannot remember any more. I said:

As we have already observed, his Honour said that he did not have a comfortable satisfaction concerning the words used in the conversation deposed to by Mr Sykes. However, it is necessary to evaluate this statement in the context of the whole of his Honour's reasons. His Honour expressly found that Mr Sykes was an honest witness. His reservation about Mr Sykes' evidence appears to have related only to the accuracy of Mr Sykes' recollection of precisely what was said in the

conversations to which he deposed, rather than to the substance

of those conversations. For example, his Honour said later in his reasons that he accepted that Mr Chapman was pressing Mr Sykes to increase the price of XL petrol. And in another part of his judgment he said: "What he (i.e. Mr Chapman) did do was to try to get Mr Sykes' agreement to participate in a proposed scheme the reality of which, on the evidence, was totally at large". It necessarily follows from this passage in his Honour''s judgment that he accepted Mr Sykes' evidence that Mr Chapman tried to get his agreement to participate in a proposal to increase the price at which petrol would be sold. We do not think his Honour intended to convey that he rejected Mr Cfykes'

evidence as a correct account of the substance of those

As appears from other passages in his judgment his Honour was not satisfied that the conversations provided a sufficient foundation fcr a finding that a case had been made

out against the respondents. He held this view because, in

his opinion, the arrangement suggested by Mr Chapman to Mr Sykes was too nebulous to constitute an "arrangement" or "understanding", or a proposal for such. Further, he was of the opinion that the evidence did not disclose an attempted contravention of s.45 because at the time Chapman had his discussions with Sykes there still remained much to be done to translate the allegedly nebulous proposal into an arrangement or understanding. He was of the view that there can be no attempt to induce a person to make an arrangement if, despite invitation to do so, there is no arrangement "which is in place and can be effected, or can readily be effected". These were the matters which led his Honour to dismiss the application. In our opinion it is reasonably clear from his Honour's reasons

that he accepted that Mr Sykes had given a truthful account of the substance, if not the detail, of his conversations with Mr Chapman but was of the view that proof of those conversations

did not establish the case against the respondents.

We are of the opinion that the conversations did establish a case against both the respondents. It was unnecessary that Mr Sykes should give a completely accurate account of his conversation with Mr Chapman. It was sufficient that his evidence established, as we think it dad, that Mr Chapman's conduct amounted, in substance, to an attempt to make an arrangement of the kind alleged against the respondents or an attempt to induce SL to make such an

arrangement. The real question in the appeal 1s whether any

of the matters referred to by his Honour as negativing the proof of the making of the alleged attempts did, indeed,

In the first place, his Honour thought that the arrangement suggested by Mr Chapman to Mr Sykes was "extremely

nebulous". He was led to this view because the other

retailers were not identified, either by name or by any reasonably precise reference to the areas in which they traded. We can accept that the evidence did not establish that any particular retailers were, or were to be, involved in the suggested arrangement and did not establish with precision the area within which they traded. But we do not think it was necessary for these matters to be proved in any greater detail than appeared from the conversations to which Mr Sykes deposed. It was sufficient for the Commission to establish an attempt to Make an arrangement between Parkfield, XL and other petrol retailers, without identifying those retailers. In our opinion, 1t would not have mattered if, at the time of the conversations, no other petrol retailer had signified his agreement to join in any arrangement which Parkfield might be able to make with XL. It was sufficient for the Commission to prove that Parkfield intended to make an arrangement between itself, XL and such other petrol retailers as might be persuaded to be parties to it, and that, as the first step in making that arrangement, it attempted to make an arrangement

between itself and XL. The evidence to which we have referred

puts beyond question that the respondents were proposing to involve other retailers in the arrangement to increase prices. It is an inescapable inference from the evidence that the attempt to make the arrangement with XL was but part of, and a step in, the attempt to make an arrangement with XL and other

Counsel for the respondents argued that for conduct to amount to an attempt it must involve one or more steps towards the commission of a specific illegal act and be immediately, and not merely remotely, connected with the commission of that act. He contended that merely to contemplate the doing of an illegal act, or to enquire as to the feasibility of committing it, does not constitute an attempt to commit the illegal act. That being so, so 1t was arqued, the most that can be said in the present case is that Chapman made enquiries as to the feasibility or possibility of entering into an arrangement or understanding. We agree that an attempt must involve the taking of a step towards the commission of the illegal act and that it 1s not sufficient that 1t be merely remotely connected

or preparatory to the commission of it. See Haughton v Smith

(1975) AC 476 at 492 and Trade Practices Commissisn v

Tubemakers of Australia (1983) 47 ALR 719 at 736 where Toohey

J. referred to the follcwing statement in Archboid's Pleading

» - . the actus reus necessary to constitute an attempt is complete if the prisoner does an act which 1s a step towards the commission of the specific crime, which is immediately and not merely remotely connected with the commission of it, and the doing of which cannot be regarded as having any

other purpose than the commission of the specific crime."

See also, Director of Public Prosecutions v Stonehouse (1978)

Counsel for the respondents argued that the facts of the present case established no more than that Chapman took

preparatory action which demonstrated that he may have formed

an intention to make an agreement, but did not constitute an

attempt to make an agreement. He relied on Hope v_- Brown (1954) 12 WLR 250. However, on the facts of that case it was

not established that the accused took any action towards committing the offence with which he was charged. All that was proved was that he had formed the intention to commit the offence. In the present case, Chapman's conversations with Sykes were steps towards the making of an agreement with XL and other retailers to raise prices and those conversations were immediately, and not merely ramotely, connected with the making of that agreement, or the attempt to make it. The conversations cannot reasonably be regarded as having any purpose other than progressing the making of an agreement to which XL and other retailers would hopefully be parties. They went far beyond merely evidencing an intention to make an

agreement or arrive at an understanding with XL and other

The learned trial judge was also of the view that for an attempt to be within para. 76(1)(b) of the Act it must be at a reasonably advanced stage of carrying out that which 15 charged as being attempted. He thought that in the present case Mr Chapman did not. for himself or Parkfield, attempt to enter into an arrangement with Sykes because even if he had secured Sykes' agreement, there still remained much to be done and it may well have been the case that the proposal put to Sykes may have been impossible of achievement. We do not think that there is any warrant for holding that an attempt must have reached an advanced stage before it comes within the

Finally, his Honour thought that there could be no attempt to induce XL to make an arrangement of the kind alleged

if there was no arrangement which was in place or could readily be effected. He thought that the evidence established no more than that there was an invitation "to start to see if an arrangement can be made". We do not think that it was necessary for any arrangement to be in place, or readily abie to be effected. with the other retailers. It was sufficient that the respondents sought to persuade XL to enter into an arrangement to increase prices. As was said in Yorke v Lucas (1983) 49 ADR 672 at 681 'affirmed 3/10/85, Haigh Court,

"Inducing a contravention in the context of 3.75B(b) connotes, 1n our view, some act of compulsion by

force or threat of force or some act of persuasion or stimulation aimed at ensuring that anact is committed which constitutes a contravention. The

word 'incite' £3 akin to 'induce', though induce probably covers a wider field."

We therefore cannot agree with the reasons which led his Honour to the conclusion that the Commission had not established a case aqainst the respondents. However, counsel for the respondents contends that his Honour's decision should be affirmed on grounds other than those relied upon by the learned trial judge. In the first place, in a notice of cross contention it is submitted that there was no evidence to support a finding that any arrangement or understanding which the respondents attempted to make had or was likely to have the effect of "fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the price for" petrol within the meaning of s.45A of the Act. In support of this contention counsel argued that an arrangement or understanding cannot have the purpose of fixing, controlling or maintaining a price unless there is an element of permanence or duration in the arrangement or understanding. It was argued that a mere momentary raising of prices would not have such an effect, and that there was nothing in the evidence to indicate permanence

evidence required to sustain an allegation that a provision or

an arrangement has the purpose, or 1s likely to have the

effect, of fixing, controlling or maintaining a price must te

such as to satisfy the court that the provision does indeed have that purpose. But there is no requirement that the provision should have the purpose of fixing, controlling or maintaining a price for any length of time. In any event, on the facts of the present case, there can be no suggestion that the price rise suggested by Mr Chapman was to be momentary or in any sense illusory. The proper inference from his evidence is that the arrangement in which he was seeking to involve XL and others was that there should be a price rise of indefinite duration, albeit of doubtful longevity.

In the notice of cross contention 1t was also submitted that there was no evidence to support a finding that Parkfield and XL were in competition with each other for the purposes of ss. 45 and 45A of the Act. But this submission

For these reasons the appeal should be allowed and the