Tradestock Pty Ltd v T.N.T. (Management) Pty Ltd & Ors [1978] FCA 2

2, William Jomes Frewen and Noel! Baward Stock be joined as

3. The plaintiffs have leave to amend the Staterent of Claim . herein in accordance with the terms of the amended Statement of Claim delivered to the defendants during the course of the proceedings signed by counsel for the plaintiff end filed

4.° Subject tc further order as may be made the plaintiffs' action so far as it relates to the tenth and cleventh defendants be

stayed until the security for the costs of those defendants

be provided in the total sum of $2000 to the satisfaction of the Registrar.

5. (a) The defendants! costs of these proceceings, except to the extent that they inclvie the amount of additional costs which would have been incurred in relation to their applications for the stay of proceedings pending the provision of security for costs which were hoard in April 1977 nad the nmaterzal put before the Court in the present proceedings then been placcd before the Court shall be peid by the plaintzff in any event but thas tho taxation and payment thereof be stayed pending further order.

(b) The amount of the said additional costs be cosls in the

6. The parties herein have leave to apply as they may be advised.

CF-AUSIRILLE In the natter of - TTE TRADE PRACTTOES ACT 1974

Defendants ee BER CF "BENCH Smithers J. DATE: 27 January 197¢.

In May of 1977 on the application of the first, second, third, fourth, fifth, sixth, seventh and twelfth defendants an order was made that subject to further order the plaintiff's action be stayed in respect of those actions until sccurity for their costs was provided by the plaintiff in certain specified amownis.

That order and the reasons therefor appear in Tradestockr Pty. Ltd.v

The relevant principles as outlined in thet decision are not challenged but the pleintiff being wnable to provide the specified security or any part thereof has, pursuant to leave

reserved, submitted new evidence and now seeks an order removing

This new evidence is directed to the matter of the bona fides of the plaintiff's business, its difficulties arising because of the alleged contract arrengement or understanding between the

defendants not to dealwithit, and to indicating to the Court evidence

actually available to the plaintiff of the existence and

implementation of the alleged contract or arrangement or undsr- standing.

The plaintiff has submitted that on the material now vefore the Court it appears that the case against the defendants is a strong one, and that on the balarce of justice it is entitled to the exercise of the Court's diserstion in its favour. Certain procedural orders are also sought.

the The plaintiff company, undex "control of lir. Frowen and

Mr. Stock, in March 1976 took over the business of what may be called transport brokers theretofore carried on by them in partnership under the name "TIC Managemcnt Consultants". 'The partnership had been in business since July 1975. The nature of the business was that of consultants and advisers to business entitics using road, reil and air freight services. They wovld study the requirements of such an entity, work out co-ordinated programmes and endeavour to arrange with a carrying company for the supply of the transport services required at the best terms obtainable in the freight carrying industry. Their romuneration was by way of commission received by them from the carrying company or otherwise but of course it was derived ultimately from the swrs paid by those who accepted and used the relevant freicht carrying

It would seem that the kind of business which the plaintiff carries on has been carried on by others in the past,

The evidence indicates that the plaintiff has from timc to time been appointed by a number of quite substantial companies as their transport brokers. Its duties to those companies as

such involve investigation of their current programmes for the

carriage of goods and the preparation of reports and proposals

jor the most efficlent amplenentation thereof ond the ne;otiation of contracts with freight carrving companies for carria,e of coods

in accordarce with the requitements cr the user ecmvenics.

The plaintiff renders these services on the basis that during the period of the vlaintiff'ts appointment as breker the user companies themselves shall refruin from negotiating direct

It is normally a term o2 the appointrent thet the user combeny incurs no liability to pay any fee or commission to the broker for his services. It is apparcny however that the user commanies know that a fee by way of commission ov othersisc will be paid by the carrying comreny with wrom a contract of carriage

If not expressly stated it would necessarily be apparent to the user company that the freight rates quoted to it by a carrying company would reflect the fact that the plaintiff's remuneration was payable by the carrying company. But adoption of this method of trading is not a condition of the pleintiff conducting its consulting advising and negotiating business on behalf of users of freight carrying services. The evidence indicates that there are alternavives whereby, for instance, the plaintiff acts as a principal contracting with a carrying company for the supply by it of freight services which the plaintiff makes available to the user at a rate differential in its favour or by arranging a straight-out fee payable by users for the plaintiff's consulting planning and negotiating services. But if the important freight carrying companies as a body refuse to hold any communication with the plaintiff with reference to the supply

of their services to users, then the plaintiff's business is

In the performance of its services to the user companiocs, according to whatever procedure is adopted, it would normelly or at least frequently occur that the plaintiff would seek competitive guotations with a view to keeping their carrying costs as low as possible. It is the case for the plaintiff that there is much scope for its engagerient by companies requiring any considerable

It 1s said also on its behalf that in the absence of a ban upon dealing with brokers by an important segment of freight carriers in business, it would succecd in attracting freight carriers to do business on the proposcd basis with benefits to the users of their services and to itself and possibly to the

The defendants deny that any benefits would accruc to them. They take the view that the remuneration of the plaintiff is an added cost for which the services performed by the plaintirf would not be adequate or perhaps any compensation. And the defendants have other objections to the business procedures

If there be a contract arrangement cor understanding of the kind alleged by the plaintiff then not only is it excluded fron doing business with the parties to it, but, and more importantly for the purposes of the Trade Practices Act, the services of the parties to the contract arrangement or understanding are not available to persons who appoint the plaintiff as their transport broker and desire that negotiation of their requirements be

Clearly it is important to the success os the plairntirf's business that the Large transport companies such as the defendants be willing to consider on their merits es commercial propositions requests for transport services which the plaintiff may make to

And the substantial complaint which the plaintiff makes in these proceedings is that this willingness is denied to it because of a contract arrangement or understanding between the defendants that none of the defendants will consider any

proposition emanating from the plaintiff as broker.

When this matter was last before me I took the view that

the evidence cid not suggest that the vl2intiff's prospects of prov- were promising.

ing such en arrengement or undcrstending, But at the conclusion of the hearing of the application now before me the situation is very different particularly in relation to certain of the defendants. On the evidence now defore me the conclusion to be drarm is that against certain of the defendants at least the prospect of success must be rated as quite high. I emphasise, of course, that at the trial the evidence leading to this conclusion may be contradicted

or explained away. But at this stage I must be guided by what

The evidence falls into three classes. First there is evidence of the difficulties experienced by the plaintiff in its dealings with various defendants who refuse to deal with it.

Some have never been responsive to approaches from the plaintiff, some have dealt with the plaintiff for a time and later withdrawn from contact. Some have made clear to customers of the plaintiff

that they will not negotiate with them unlcss the plaintiff is

entirely excluded from all re] «nt communications. The evidence

discloses conduct common to most or the defendants of failure to

answer letters waich in ordinary circumstances one would have

Secondly, there is evidence that a number of the defendants are members of the National Freirht Forwarders Association, calied for convenience the"NFFA", the minutes of which disclose that letters from the plaintiff to members wseking quctes for freight movements for various organisations have been referred by the members to the N.F.F.A. and that on three occasions, namely 12 Februery 1976, 20 May 1976 and 4 August 1976 there was unenimity on the part of the representatives of members who were present that it was better for the client and operator

to deal direct and without the intervention of a broker.

Thirdly there is evidence of various telephone conversations between Mr. Frewen or Mr. Stock with persons apparently responsible and representative at fairly high level

of certain of the defendants, to the following effect,

(a) On 26 July 1976 one ir, F. GardnerJinterstate Parcels Express Company Pty. Ltd. (I.P.E.C.) the second defendant, in a conversation with lir. Frewen and Mr. Stock or one of then, the contents of which were as follows -

"TJ said: I had a meeting with Ian Shortell some months ago and he gave me the names of his executive directors: Roy Heasman dchn Jacobs Dick Pedlow

He said: Oh! That can't be right because the NFFA decided unanimously that we would not deal with consultants or

brokers and that was three months ego. I was there. It was

an inauguration dinner for Roy Heasman when they put him in

the chair. There were 40 people there representing the industry. At the meeting the NFFA decided unanimously to refuse t. deal with broker agents or consultants so I can't understand why he told you he would. I will ring him up as soon as we finish speaking to check up. °

I said: Fold on I will just cteck my diary to see when

the mceting with Tan was. Yes here it 18, it was in March. The 9th March at 4 o.m. that's before the NFFA meeting you are talking about. Sorry I thought it was only a couple of months ago. I had my times confused.

Fe said: Ycs, I thovgeht that must be the case because the NIFA dinner and mecting was only 3 months ago, at the end of May and it was definitely decided not to do business with consultants or brokers.

I said: Well, that's pretty clear thanks for talking to me.

He said: Nothing personal you understand, it's just that

we can't let this type of barter market develop. We mus make sure our salesmen look after the customer. It's more personal than the cold hard method of negotiating with agents representing, clients that you are suggesting.

I said: Yes, but we have many clients and eventually because wo are getting more we will come to the situation Where you ill want to talk to us about a particuler client but you are not helping to cnable this to happen by refusing to valk about our present clients, what happens next.

Ne said: Well, we are prepared to lose a client if he wants to do business through you but we will face that later."

(b) On 26 July 1976 one lir. Ian Shortell of the first defendant

TT (lanagenent) Pty. Ltd. spoke to Mr. Frewen and Mr. Stock in a conversation which proceedcd as follows -

I said: Ian, I haven't had a reply to our recent letters concerning our clients. Also did you receive a call this

He said: Wo, we haven't replied to your letters and I haven't heard from Garaéner as yet.

I said: But Gardner said he was going to phone you this morning.

fle said: Yes....Yes I have spoken to him this morning.

I said: Gardner told re that the "FFA will not deal with us. Is that correct. I believe there were some 40 members at a4 meeting.

T said: Ian, at my last meeting with you, you told me that the pipeline was open and that I was to put forward any deals to Heasman, Pedlow or Jacobs.

He said: Yes, that's true but at the moment we are not dealing with consultants. I thought 1 made our position well clear when I telexed Shovelton Storey.

I said: Yes Tt recaiij that time, That mates things very difficult if 40 of you have decided not to do business with us, that makes it a bit hard mate.

(c) On 26 July 1976 one Mr. Wise of the fifth defendant Arsett Transport Industries (Operations) Piy. Ltd. spoke to Mr. Prewer and Mr. Stock in a conversation which vroceeded as follows

mr. Stock seid: Noel Stock here. J don't know if you Imo me but ve wrote to you and haven't receivc@ a reply. 'We yondered if you have received our letters o- porhaps you are ignoring us.

hic. Wise said: Yes we havc received your letter and as to the otner you put it rignt, we have chosen to ignore you.

If we want toe do business ve want to deal direct vith customers. Anyway your list of comnissiou charges fiichtened us.

lr, Stock: But they are negotiable we are like the insurance brokers and we can negotiate on any particuler deal.

Mr. Wise said: %, 2% or 2% its a cost, and my ovm salesmen I believe to be the best choice if it comes te paying somebody.

It really boils down to a decision to deal with you, or with my own salesmen, and I have decided to deal with salesmen.

Mr. Stock said: We are saying that the salcsnmen is a cost our clients can avoid. After ail what do salesmen do Lor the client, they just make calls with their rate schedules and attempt to get the client to spend more money.

hiv. Wise: Yes, but thet's good, what you want to do is lower our rates. Why don't you go out and get higher rates.

Mr. Stock said: Your reaction is predictable. But we act in the client's interests and attempt to improve his situation with regard to efficiency and reduce wastage. At the mworent we are dealing with small to medium transport companies and in order to improve ovr clients situation in some instances we would like to deal with larger companics like yours but you have slammed the bags. You won't negotiate with us.

Mr. Wise said: Yes, we have decided not to do business with you. If we want to we can do busincss later and at that stage you can say bugger you John you missed the boat.

ir. Stock said: Well, I've spoken to Ian Shortell and we understand that is an NEFA decision.

Mr. Wise said: Well if you have spoken to Ian thav's

all very well. But if you say it is an NFPA decision, and IT am a member of the NIFA, that's restrictive trade and I didn't tell you that.

Mr. Stock said: Well I an only repeating what we know is true and What we have proof of.

Mr. Wise said: If you are saying that, you are talking restrictive trade. There 1s no way you will get me to say that.

(d) On 26 July 1976 one Mr. Wilkins of the cighth defendant, Young's Transport Pty. Ltd., spoke to Mr. Stock in a

"Mr. Stock said: Well we haven't receive a reply and we are not quite sure, but are you ignoring us.

Mr. Wilkins said: No, we weren't ignoring you in fact we appreciate the opportunity to do business and I remember

Mr. Stock said: Yes about six months ago a client of curs SKF was lost by you through our involvement and perhaps

we can redeem the situation. Incidentally are you independent of the NFPA.

Mr. Wilkins said: No, we are members of the NIFFA and I an not telling you anything new when I say that your approaches have been discussed, especially your commissions we can't afford to pay.

(e) On 27 July 1976 one Nr. Linfoot of the sixth named defendant Brambles Industries Limited in a telephone conversation with Mr. Frewen said the letters received from the plaintiff had not been answered because his organisation would not deal with brokers or agents and would not discuss anything with the plaintiff unless the client actually drected it to do so. Mr. Linfoot said that his organisation was a member of the NFFA and that he was a "Brambles representative" at NFFA

meetings but it was three months since he attended a

The Minutes of the NFFA meetings contain the following - 4th March 1969 "FREIGHT BROKERS

The activities of freight brokers were discussed. It was clear that the only possible effect of their functiors is to depress rates and 1t was agreed that N.F.F.A. policy regerding freight brokers is -

'That quotations will not be submitted to other than genuine shippers or authentic members of the transport industry (i.e. no quotations to freight brokers, consultants or other variations of "go-between" type operetors).' "

It was noted that the above Organisation had made approaches to several Transport Companies for quotes for freight movement for various other organisaions.

Similar 'Transport Brokerage Agencies' had eppeared in the industry at various times in the past and previous experience showed that it was better for the Client and Operator to deal direct."

A letter from Tradestock Pty. Ltd. incorporating T.I.C. Management Consultants, to a Member Company was tabled.

The letter outlined a proposal with regard to the Member's existing clients

1. Future requirements with regard to freight transportation services.

2. Negotiation of future rates and charges for services offered by the Company.

3. Tradestock's remuneration. Point three was based on a percentage of charges carned.

In discussion it was agreed that this type of operation could only mecrease charges to the extent of the brokerage payable, that similar "Transport Brokerage Agencies" had appeared 1n the industry at various times in the past and that experience showed that 1t was better for the Client and operator to deal directly with each other."

"TRANSPORT BROKERAGE SERVICES A letter from Tradestock Pty.

The Meetang reaffirmed it's opinion that it is in each Company's best interests to deal directly with it's own

of the N.F.F.A. on the dates referred to above were -

Mr. E. Prebble Mr. N. Robinson Mr. W. Roots Mr. P. Chase Mr. N.O'Brien Mr. M.G. Davies Mr. F. Gardner Mr. R. Bass

Ansett Freight Express Brambles Long Distance Trasnport

Brambles Limited A.U.T. Holdings Ltd. A.U.T. Holdings Ltd. Youngs Transport

Mayne Nickless Limited IPEC Australia Ltd. IPEC Australia Ltd.

Executive - Kr. dg. Wise - Ansett Freight Express Executive - Mir. J.W. Linfoot Brambles Ltd.

Mr. M.G. Davies jayne Nickliess Limited. ATOLOGIES:

Those of the defendants who are mcombers or divisions or associates of members of the N.F.F.A. are the first (21.N.@.), second (I.P.E.C.), fifth (Ansett), sixth (Brambles), seventh (Mayne Nickless) eighth (Youngs) and twelfth (Tradex) - the third

and fourth defendants are associated with the second defendant.

At the hearing of this present aoplicatvion kr. Frewen was cross-cxamined at considerable length by Mr. Rogers Q.C. for the sixth defendant and Mr. Lockhart Q.C. for the first defendant. The books of the plaintiff were produced, as were also the documents in the possession of their customers and these were subjected to close examination and many questions were asked arising out of the matters disclosed in the books and documents. Wr. Frewen's experience in the freight carrying industry was examined. Many questions were asked about the manner in which the telephone conversations set out above were conducted and recorded. It appeared that Mr. Frewen and Mr. Stock were seated at telephones in tandem so that each could hear all that was said and speak into the phone if that had been required and each was equipped with paper and pen to record what was being said by either of them

But the result of the cross-examination may be summarised

(a) the experience of Mr. Frewen was less than might have appeared from his affidavit on its face but it was far from trivial and he did reveal a substential degree of Imowledge of the industry;

(b) the bookkeeping methods of the plaintiff were in some respects complicated but appeared to be designed to record correct statements of its dealings with its customers and generally;

(c) nothing was revealed to throw doubt on the general bona fides of My. Frewen or the plaintiff;

(a) the method of recording the telephone conversations was sow not to be the most efficient that might have becn designed but there was no suggestion made to the witness that the substaace of the conversation was not accurately recorded

Arising out of the foregoing, Mr. Cestan on behalf of the plaintiff stated, (i) that by reason of s.45 of the Trade Practices Act 1974 as it stood prior to 1 July it was a contravention of the Act - (a) to make a contract arrangement or understanding in restraint of trade, and (b) to give effect to such a contract arrangement or understanding (11) that since 1 July 1977 by reason of the amendments to the Trade Practices Act 1974 which were made by Act No. &1 of 1977 it is a contravention of s.15(2)(b) for a cornoration to give effect to a provision of a contract arrangement or understand- ing whether made before or after 1 July 1977 1f that provision is an exclusionary provision. It was pointed out that a provision the purpose of which is to prevent restrict or

limit the supply of services to or the acquisition of

services from particular persons generally, or in particular circumstances, by all or any of the parties to a contract

arrangement or underslending is an exclusicnary provision

'within the meaning of the statute. See s.45 and s.4D. It

was urged also that such a provision is inevitably a prevision in restraint of trade proscribed by 5.45(2) of the Trade Practices Act as it stood immediately before

that there is uncontradicted evidence as to 'the Minutes cf the meetings of the .P.F.A. set out above, uncontradicted evidence of the experiences of the plaintiff in its attempts to do business with various defendants and uncontradicted evidence that Mr. Gardiner and Mr. Shortell unhesitatingly stated that members of the N.F.F.A. have agreed not to do business with the plaintiff or with anybody negotiating throvgh the plaintiff;

that although the defendants do not admit acting in concert their conduct in relation to the plaintirf is uniform, it is the conduct which would follow the observance of the alleged contract arrangement or understamirgif it were made, and at the very least it is conduct indulged in after reference of the subject matter thereof to the .F.F.A. for its consideration and after the expression by those speaking in that body of the unanimous common opinion that, in effect, the desirable course for those in the Association was to abstain from doing business with or through the plaintiff or any broker. that the proceedings in relation to the matter at the N.F.F.A. meetings support the inference that at the very

least there was created an understanding between the mombers

that they would not de business vith or through the plaintiff, that once the views of the N.F.r.é4A. were expressed each member would reaZise that for the purpose of its own business it was dependant upon cach other member concucting itself in accordence witn the unanimous vicws expressed and that conduct on its part which would conflict with the implied understanding as to the conduct of each as expressed at the meetings of N.F.F.A. would be a breacn of faith;

thet the evidence referred to in the last paragraph renders it likely that the alleged contract arrancement or understand- ing will ultimately be proved; :

that some of the defendants did do business through the plaintiff initially but thereafter withdrew and that various

defendants did not revly to letters from the plaintiff, might, in the absence of some positive evidence that such acts or omissions were performed in concert, possibly pass as coincidental individual actions, / that positive cvidence to the contrary was now »rovided in the Minutes of the NFFA meetings, inferences thercfrom and tne positive statcments by

Mr. Gardiner and Mr. Shortell and to a lesser extent of

that the suggestion of the defendants that there were sound commercial reasons to explain the defendants! common course of conduct towards the plaintiff was true only in the sense that that commercial advantage depended upon the defendants maintaining by arrengemont or understanding a common attitude of refusal to do business with or through the plaintifl;

there would be no such good commercial reason if each

defendant was operating in conditions in which his competitors

were genuinely free, without ties, to deal or not to deal

with or through the nlaintiff. In such a state of arfairs the only consiacration in relation to any particular proposition would be the financial rerits to the frei,ht carrier of the yroposition in auestion;

that so far as 1t is said that to inject the serviccs of

the plaintiff into the freight carrying business involves

an added cost that statemert is an oversimpli fication.

It is pointed out that although there is undoubtedly competition between the defendants there are no details of the cost structure of the defendants before the Court. It is urged that the statemont ignores savings to be made by the defendants because of the fart to be played by the plrintiff, it disregards the possibility of discounts being already given to people with bargaining power and inbuilt variations in range of cost and profit coverage in various sections of the business done by entities such as the defendants, and that even if the actual cost to the ultimate customer for the freight carriage arranged were to bear the cost of the remuneration of the plaintiff that was and had been shown to be something which it would pay the ultimate customer to pear;

that the plaintiff has a genuine business with genuine services to offer and a good prospect of success if the

that for the plaintiff to give proper service to its customers it was essential that those offering freight carrying services in a big way such as the defendants should be willing to do business with it according to law, and

by reference to the commercial value to it of the business

offered to it. The refusal of the defendants to do this

1s a material causative factor of the plaintiff's current

On behalf of the sixth defendant, Brambles Industries Limited, Mr. Rogers Q.C. contended that the inability of the plaintiff to do business with his client and indeed with the defendants generally was due to the presence of a good commercial reason for the defendants' refusal to do such business, namely that the plaintiff's services involved an added charge for the commission ot other charges of the plaintiff for such services. He said that this was such a clear explanation of the attitude of the defendants that any agreement between them on the matter

He said that the industry is competitive, that the brokerage fees would have to be added to the freiaght charges already made and that there is no evidence that that covld be

Mr. Rogers Q.C. criticised Mr. Freven for failing to Imow the profit ratio in the industry, but it is not clear to me how lir. Frewen could be expected to have relevant information of the profit ratio of business done by, for instence, Brambles Industrics Limited. But as matters stand it seems to me that the capacity of the industry to bear the cost, be it added or substitutionarv of the plaintiff's services could only be tested in the market place where the various parties are free to do business individually unhenpered by restrictions undertaken as between themselves. In this case it could be true that 311 or some of the defendants said to be acting in concert would indulge in

the same conduct as it is said they have committed whether or not

there be any understanding between them and other defendants.

But if there is a contract, arrangement or understanding between

them that such conduct will be indulged in, then questions

ir, Rogers Q.C. said that even if such a contract, arroengenent or understanding be proved it is not srorm by the plaintiff that the conduct of the defendants although conferming

to its terms is committed "in accordence with" such contract

arrangement or understarding. See the Cefinition of "ive effect

to" in s.4(1) of the Trade Practices Act. He said the plaintiff

must establish that when the defendants or ary of them have celuseda broker's business they have done so not because of the comercial or other merits or demerits of the proposed Lrensacticn as they

appeared to them individually, but because they are the terms of

the relevant arrangement or understerding. Th put by Mr. Lockhart @.C. and supported by other partics. I do not

Since the Trade Fractices Act 1974 has been operative it has been the will of Parliament that contracts, erransemonts or understandings such as that now alleged should not be made and if made should not be given effect to. And Parliament has said that in relation to a provision of a contract, arrangement or understanding the words "give effect to" ure to incluae "do an act or thing in pursuance of or in accordance with or enforce or purport to enforce" (s.4(1)). It is to be observed that an act done by way of implementation of a contract arrangement or understanding would necessarily be done "in pursuance thereof", If the only acts struck at by the Act are those done by way of implementation of the contract arrangement or understanding then there is no work left to be done by the words "or in accordance with". And there

is good reason for thinking that those words are intended to cover

tne situation where whet is done is or may be done for reasons

other than to implement the understanding. In such circumstances proof of the real or dominant motive or reason actuating the

actor is likcly to be a matter of great difficulty and may in many cases be impossible. To adopt the vicw submitted by ily. Rogers would be to conclude that Parliament wiich hes stated its disapproval of the relevant contract arrangement or wnderstandings and the kind of action for which Ll provides was content to allow such action to proceed as though it wore lawful in circunstences

where the evidence was insufficient tc prove tke precise mctive

for or actuating reason of the conduct in question.

What is prohibited by the section does not turn on whether the motives of the persons concerned are good or bad or desirable from the1r own or the community's interests. The law does not prohibil even the most irrational decision not to do bueiness, so long as the decision is an individual onc. What is prohibited is a decision commercially wise or unwise, which is a decision which the makor has undertaken with others to make or has entered into a contract arrangement or understanding with thes that he will make. When he makes that decision it is necessarily a decision made "in accordance wit!" that arrangement or under- standing although it might have been made without the decision neker having the arrangement or understandire his mind. 'This view of the statute gives a natural meaning to the words of the

definition in s.4(1) and accords with the objectives of the

It was however argued that as the plaintiff had failed to show that business between the defendants and the plaintiff on the lines proposed by the plaintiff could be profitable a refusal by the defendants te deal with the plaintiff was

adequately explained by the comrmerciel possibility that it would

not be profitable to do so. It was said to be a consequence of this that the Ccurt shovld not be impressed with the argument. that the evidence indicates the possibility that there is a contract arrengement or widerstending between the defendents

The intervention in the business of carrying freight by a broker introduces a new party to relevant transactions end anew cost. So far as appears an individual trader could reasonably conclude that such benefits as misht accrue from the intervention of the broxer were not worth the resulting cost and adjustments. Whether he was wise or unwite the decision would be a matter for him. But it wovld be far from surprising that a number of traders faced with the intervention of a broiler which prima facie at least would increase costs, would embark upon a common course of action to avoid the intervention. The lawfulness of such a procedure would be one factor but its attractiveness

In the light of the foregoing the leck of proof that business along the lines proposed by tke plaintiff would be profitable to the defendents is not significant on the issue of the existence of the alleged contract arrangement or understand~

ing or whether the defendants have given effect to it.

The significance of the staterents made by Iir. Gardiner and Mr. Shortell set out above is not only that they are admissions of the matters alleged by the plaintiff, but they reveal that there is available to the plaintiff direct evide » of the alleged contract arrangement or understanding. As matte: stand at present there 13 no denial by Mr. Garciner and Mr. Shortcil that the

alleged statements were made d indeed no assertion in cross- -

2l. examination or otherwise that thase statements were not made,

It is appropriate thcererore, al this stage, to treat the statements as true. Accordingly Mr, Gardiner and Ms. Shorteli could be expected to give evidence at the tr:al to the effect thereof with particulars of those matters which are stated therein in general form, namely for instance, the identity of those present at the meeting of May 1976. As matters stand there is evidence available to the plaintiff that all the 40 members present at the meeting in May 1976 were parties tc a very clear arranrcement

or understanding to the effect alleged by the plaintiff.

On this basis, in conj-mction with the evidence of vie minutes of N.T.F.A. the plaintie is entilled to say at this stage that it has good prospects of proving that at all uaterial tines there was in existence a contract arrangerent or understanding between a number of the defendents including the first, second, fifth, sixth, seventh and cighth defendents not to do business with or through the plaintiff and that that contract arrangement or understanding was given effect to. The third and fourth defendants are associates with the second defendant as part of a

Mr. Lockhart urged that no assumption should be made that, because no evidence is adduced orally by any of the defendants,

the plaintiff has established in some way a case for an injunction.

He said that the plaintiff must prove that in December 1976 there was a contract arrangezent or understanding between the defendants and that that contract arrangement or understanding

Mr. Lockhart addresscd himsclf tc the Iimutes. Ile said and indeed all counscl adopied it, that at most thuse Minutes may be taken as giving rise to the inference that those presenl agreed with the views expressed. He said that the Kinutes do no more than

express a recognition of an attitude which all shared.

He contended that to infer from it thet the parties expressing their common attitude were at the same time creating an arrangement or wnderstanding that they would govern their conduct

according to the attitude expressed would be unjustified.

But it is difficult to ignore the fact that the recipients of the letters referred to in the Minutes of 20 May and 4 fucust thovent f1t to bring those letters to the Association meeting. Cn the face of the Minutes it is certainly a reasonablo inference that the recipients of the letters desired to obtain an cxpression of the Association's view before they made a decision as to how they would deal with the matter. And it is difficult to think that those who left the meeting would nol believe that the: could safely govern their conduct by reference to the altitude oxpressed relying on the others to do the same. Not much more can be necessary for an understanding. The class of business was such that mutual formal commitments would be unnecessary and understandings would be common. Cf Tov Performance Motors Pty. Lid. v. Ira Berk (Qld)

Pty. Lid. (1975) 24 FLR 290 where the nature of an arrangoment or

understanding in the context of the Trade Practices Act is discussed

These considerations are of course skowr to be real dy

lic. Lockhart then said that assuming that there was some arrangement or understanding between the defendants or some

of them the question arose as to what were its terms and whether

when his client refused to do business with the plainviff 1t was doing so pursuant to those terms or by way of independent decision. He emphasised that Mr. Shortell, in his conversation, is to be taken as emphasising that whatever any other traders nay Go or

say his Company just does not lile dealing with or through the plaintiff. However, on the evidence as it stands at present it would be fanciful to cenclude that Mr. Shortell and Mir. Gardiner failed to indicate both that they did not want tc deal with or through the plaintiff and that their comnetitors felt the same and/thes they had an arrangement or wnderstanding with their

competitors that they would not deal with or throuzyh brokezs.

In the result I think the contention of the plaintiff that it has good prospects of vroving thet there was an arran;ement or understanding between the defendants or some of them tnat tley would not deal with or through brokers including the plaintiff

and that their conduct has procceded in accordance tlorewvitnh, is wall

based. Mr. Locichart referred to the amendments of the Trade

Practices Act 1974 which were made by Act No. 81 of 1977 wuch came into force on 1 July 1977. He said that it was a consequence of those amendments that the plaintiff could not obtain relicf

in this action in respect of conduct of the cefendarts committed after 1 July 1977. He said that it followed from this thet tie plaintiff could not obtain relief by injunction in this action and that the most the plaint: ff could obtain in tris actica would

be some moderate damages in respect of conduct occerrine before 1 duly 1977. By virtue of the amendments to the Trade Practices Act

1974 which became effective on 1 July 1977, section 45 as it stood prior to that date was omitted from the Act and e rew section 45

was enacted. By virtue of sub-section (2)(b) of that section,

at was provided that a corperasion shall not give e7fsot tu a provision of a contract arrangement or understandin.,, rade o1 arrived at before or after the commencemert of the section if vhat provision is an exclusionary provision. It is izsortant to observe that a provision in an agreement between Troiht ca:vicrs whe are in competition with one anctrer to the effect thet ibres

will refrain frou making their services available to oe lhrourh

the agency of scme particular person is an exclusionary provision because its obvious purpose is tiat of pleverting reptrictars

or limiting the supply of services Le prarbicvlar perscns or particular persous in particular cirevmscane:s or on yurticuler conditions. Persons desiring te 1ogetzace turouch an egert or proker would, in my opinion, be comprenendcd within this

It is to be observed also that such a conlyeact arraiuge- ment or understanding would be in restraint of trade vitlin the meaning of section 45 as 1t stood before 1 Tuly 1977. This action was commenced before 1 July 1977. With a view te meotine the situation created by the arenduents of that date ths plaintiff sought leave to amond its statement of claim to anclvac an allegation that the defendants have continved to give effect to the contract arrangement or understanding alleged areinst trem

The application for leave to amend is nade pursuant to High Court RulosO 29R 1, which is in the following terms -

"(1) Tho Court or a Justice may, at any staze of Lhe prroceedines, ar by an his cndorsem plead:nss i Su allow a party to amend his cndorsement or pleadings in cuch marner, and on such terms, as 1s just.

(2) AL1L such amendments shall be rade as are necessary for the purpose of determining the real questicns in controversy between the parties."

Mr. Lockhart urged that the statute which mir¢ht have given the plaintiff a right to relief in respect of conduct of the defendants before 1 July 1977, namely sec. 45(2) of the Trade Practices Act as it then stood, had been repealed. Assuming that by sec, 8 of the Acts Interpretation Act 1901 the right to damages in respect of such conduct survived, those demaeges would be moderate and not likely to attract an exercise of discretion in favour of the plaintiff in the matter of security for costs. But the right to an injunction in respect of that conduct would be lost because similar conduct committed after 1 July 1977 would not be a contravention of the repealed sec. 45(2), the only section relied upon in the action as pleaded. Such conduct if wrongful was so only because of the terms of section 45(2) as enacted on 1 July 1977. For tne plaintiff to albtenot to rely upon thet section was to introduce a cause of action which did

It 18s perfectly true that if the plaintiff seeks an injunetion in respect of conduct since 1 July 1977 he must do so by reference to the threat of continuing unlawful conduct as at

the date at which he seeks the making of the injunction.

If and when that date arrives conduct proscribed by the provisions of sec. 45(2) as in force prior to 1 July 1977 and not otherwise would not be unlawful, At that date conduct of the kind in question will be vnlawful only if it contravenes the provisions of sec. 45(2) as enacted on 1 July 1977. fo include a claim for relief in respect of conduct made unlawful then, for the first time, would appear to be a new cause of action. But I

Section 2 of the Act concerning a claim for damascs has not been amended in any way material to the point presently at issuc. And sec. 80 of the Act concermming the srent of injunctions has siso suffered no amendwent which is material, Accordingly the grant of an injunction derends on the conduct in question being a contravention of Part IV or Part V of the Act. It is by that section that the cause of actior concerning Lhe remedy of injunction is defined. It was under that secticn that the

action was first brought. It is under it that the action proceeds.

When the plaintiff sceks to amend the statemont of claim as proposed lne amendment does no more than indicate that the conduct of the dcfendant continuing es alleged since 1 July 1977 is conduct which at all times at which it was or is committed constituted a contravention of Fart IV of the Act and is thercfore actionable pursuant to section 80. To be actionablu at the date of the writ the alleged conduct was required to be conduct proseribed by section 45(2) as it existed prior to 1 July 1977.

It is so alleged in the statement of claim. The arendment seeks to raise the point/ ine conduct allesed against the defendants as being unlawful by reference to section 45(2) as originally enacted is also proscribed by section 45(2) as enacted on 1 July 1977. This appears to follow from the terms of the later enactment. Included in what is proscribed by it is the giving effect to a contract arrangement or underslandng containing an exclusionary

prevision whether made or entered into before or after 1 July

To achieve the remedy of injunction the plaintiff must show at the trial that what is threatened is a continuing contravention of Part IV of the Act. In what I think is the

relevant sense in relation to the present question, this is the

cause of action uvor which these »roceedings were layncked.

The amendment propesed makes it clear that in the same sense that eause of acticn is still pursued at this stage and is still avallable by virtue of the eraciment of the new sec. 45(2)

1 duly 1977. The sutstantive law as to the rigits and cuties

oz the parties in respect of all the relevant conduct of ithe defendants alleged to be unlawful whether committed before or after 1 July 1977 has not changed by reason of the amendment of that date. It does not appear to me that the principles uvon wnich an amendment to plead a carvse cf action erising after action brought should te refused require that the amendment sought in

It appears to me that it is just to permit the plaintiff to make the desired amendment. Also such an amendment is necessary for the purpose of determining tie real questions in coutroversy between the prtics, namely whether the conduct of ihe defendants since 1 July 1977 constitutes the giving offect by them of the contract arrangement or understanding which was made prior to the issue of the writ herein. Reference may be made to Wigens v. Edwards (1973) 47 ALJR 586; Baldry v. Jackson (1976) 1 NSWLR 19, 27-28; Whe Fairport (1967) P.167 and ausfield Pty.Ltd.

v. Leyland Motor Corporation ot Australia Lid. (Ro.2) (1977) 14 ALR 457, 461, 464.

It was argued on behalf of the defendants that 1% was not sufficient for the plaintiff to establish that there was

a contract arrangement or understanding in restraint of trade which offended against the provisions of sec. 45(2) as in force before 1 July 1977, and that the defendants or some of them

gave effect thereto, but that it must also show that the previs sion

Was such that the restraint was likely to have a significant

effect on competition between the parties to tne contract arrangement or understanding. For present purposes the material

consideration appears to me to be that the intervention of a

broker advising users of freight services and whose business is to seelz competitive quotations and lowest rates available must have a significant effect cn competiticn. The kind of intervention envisaged vould facilitate "shopping around" ancne the defendants, Frima facie that process must significantly affect competition. When it was gaid to lir. Wise of the fifth defendant by Mr. Stock that the defendant's salesmen just call on clients with their race schedules and attempt to get the client to spend more moncy, Mir. Wise said, "Yes put that's good, what you went to do is lower our rates ~ why don't you get ous

and get higher rates." The decision in Drade Practices Commisuion vw

The ultimate question is whether the order for security for costs meade last May should be discharged or varied. This is a matter for the exercise of discretion according to the princinvles

outlined in my reasons for making the original order.

. The matter depends upon the provisions of sec. 56 of the Federal Court of Australia Act 1976 and sec. 363 of the

It is relevant that I am now satisfied - (a) that the plaintiff's claim is a bone fide one, (b) that there is a good prospect that the plaintiff will succeed in obtaining relief by injunction ,damages and declaration against the defendants or most of them, and

(c) that the damages recoverable may be substantial.

(a) on the basis that the plaintiff's claim is well Lounded then the wrongful conduct cf the defendants may be seen to have

contributed significantly to the plaintiff's impecunious

But at this stage a factor has emerged of a more subtle significance, This is a case in which it is said for the defendants that 1t is or may be true that they will not deal with or through the plaintiff, but the wnaninity of attitude should be regarded merely as the sum vcotal of individral decisions of the various defenéants made according to commercial considerations

of significance exclusively to the individuals concemed.

But the evidence Sefore the Court contradicty tis and pert of that ewidence is in the form of statements made by rersorns of importence whicn on their face show quite clearly that the

allegations of the plaintiff are true and that Lhe representatives of those engaged in this induslry nad uo compunction in entering into the arrangement or understanding alleged or saiving effect

to it. The arransement or understancing was quite unlawful ard

as far as appears it is still being observed by various defendants.

The Trade Practices Act lays down rules according to s#hich

the commercial conduct of menbers of the public are to proceed.

The intention is to promote competitive trade on fair conditions. When the largest traders in sone industry contravene thuge rules

an unacceptable element of dominance may well creep in - ard if

it does the kind of situation whicn arises when lecal relicf is sought is different in nature from that in litiz,,ation between andividual parties on matters of contract anéthe like. Itisa contest between an indivicual and a group with great strength

which may well operate oppressively. Justice as undersscod in |

the context of the Trade Practices Act must, it seens to me, be

concerned with those elements of the situation. Accordingly

in a case such as that before the Court declarations by representatives of members of the group concerned which reflect

a complete disregard of the rules la1zd down by the Trade Practices Act, which is supported by the proceedings disclosed by the

Minutes of the N.F.F.4. assume a particular importance.

Tr current circumstances I have to balance the possibility of the defendants being put to the expense of being unsuccessfully sued by the impecunious plaintiff, against tke likelihood that that plaintiff has a good cause of acticn for very substantial relief against a group of defendants who ere

s the evidence appears, in the relevant respects, conducting their business in concert and unlawfully with a view to the exclusion of the plairtiff from the opportunity to conduct

its busiress according to the rules laid down by the law.

Having regard to the matters referred reasons I am of opinion that on balance ccnsideration of the justice of the situation requires that the plaintiff be relieved from giving security for costs in respect of various of the

With respect to the 12th defondant, (Tradex Transrert Pty. Ltd.) the Managing Director, Mr. Strang, has submitted an affidavit in which he states that the letters of 15 June 1976 and 13 July 1976 said to have been sent by the plaintiff to it, outlining the proposals of the plaintiff for trading with it as a broker, were not in fact received. He states that his company did receive a letter from the pleintiff's solicitors

dated 12 October 1976 making certain claims against it. Me

explains why he decided trat this lettcr shovlc not be answered

and that explanation is not wnacceptable, certainly as the evidence at present stands. It is of more importance that

Mic. Strang stated that if before receipt by him of the letter of 12 October 1976 the twelfth defendant had been approached by the plaintiff witn an offer of business he would have considered such offer on its merits. Presumably this attitude is 2 continuing one and on this basis it is wy view tnet the order for security for cosus in favour of tue twelrth defendant should not be disturbed. If this basis shoulé turn ovt to be fallacious the mattez of security for costs in respect of the tweirth

by lir, Surcherg It was submitted/tiat the same view shovld be taken

with respect to the seventh defendant, kayne Wickless. It was

pointed out that even during the middle and lalter part or 1977 two divisions of the seventh defendant had performed carrying services for users pursuant to contracts which a representative of the plaintiff had or was understood by the division concerned to have arranged. It was said that whatever night have otherwise been thcevght consideration of these events made it improbable that the seventh defendant was party to the alleged understanding between the defendanis or that notwithatanding that it was a party it had not end did not intend to give effect to it. There is force in this contention but considering such evidence of these carrying contracts as is before the Court I em unable to think that hey support any positive inference as to the improbability referred to. The

contracts were made during the course of the current proceedings.

It is difficult, therefore, from the mere fact that they were made,

to feel that their making and fulfillment has particular signifi

It 18 clear that the seventh deferdant is an acwlve menrer of N.F.P.A. It was representcd by one ct two persons al cach meeting at which the proposels of the plaintiff wers dealt wi and must be well avwere that other members woula expect 1+ to act

in accordance with tho view repeatedly conrirmed at those rrvetings,

and it must be that it itself would cxzpect that the other nombers

would do the same - and il is a company of such starding that such expectation would be likcly to be respected end te ovtain

respect. In these circumstances it appears to m2 that what is most sigrificant in relation to what the seventh defendant has

put forward is not tkat one or more of its divis.ons did some

work for or in assoc.ration with the plaintiff but "he omicsion

to indicate whetter or not the seventh defendant is willin; to deul with or through the pluintiflf contrary to the terms of tho views expressed at the I].F.F.A. mestines. This dcferdani nes taken the trovble to file affidavits detailing the worl which

its divisions have cone for or in association vwitn the plaintiff. Although these effidavits tond to create the impression that 20 regards itself as exempt from the views expressed at the N.v¥.F.A. neetings and any arrangement or wnderstanding that might be thought tc arise therefrom and that it 2s prepared to deal with or throveh the plaintiff in the ordinary course of business there is no

statement to that effect by a senior officer of tne seventh

Again, of all the forty carrying companies sa1d by lr. Gardiner to have been at the meeting in May when Mr. Housman was placed in the chair and to have agreed upon a common policy, it would be more than surprising that the seventh defendant was

not one of them. The case against the seventh defendant does not necessarily /depend upon proof that it or others acting in concert with 1%

have actually given effect to the clleged contract arrangemont ov understanding. As well as an injunction the pleint.ifr seeks declaratory relief. In tne circumstances therefore, having rerard to the considerations set forth herein, 1 think thet the order for

security 1n favour of tho seventh defendant shculd be 4ischaracd,

It was submitted for the L[itth defendant that it was not shorn that it was a party tc the alleged contract arrangement

or understanding or had given effect to it. Honever, Lecavse of the presence of ile, Wise at relevant meetings cf X.P.T.A. and the conte1t of the statements meade by Mr. Wise trefe cred regard it es very probable thet this cefondant vas larity to the

understanding allezed and would regulate its ecnduct accordinglr.

Sinilar comments are applieable to the eighth defendant who offered

no ev1icence ard made no submissions receuliar te its owr position.

Mr. N. C'Brien represented that defendant ab the N.F.F.A. meetings

As to the sixth defendant (Brambles) the Brembles crouv was represented at all relevant meetings of the N.9P.F.A. fhe cormems

above concerning the standing and influence in the industry of the

seventh defendant (Mayne Nickless) are fully applicable to the sixth

There is of course a question of identification of the

actual defendants with the actual membersnip of N.F.F.A. At the

hearing of this application no real point vas made concerning this matter, I think it was the view of all parties that the aqvestion was one of form rather than substance.

I next turn to ceal with an apylication on behalf of the 'plaintiff and Willian James Frewen and Noel Edward Stock that kr, Frewen and Mr. Stock be joined as plaintiffs co that they may pursue a course of action for damages in respect of alleged contraventions of the provisions of Part IV of the Act which arc said to be of "ne same nature as those allcged by the plaintiff and to have c' rred while they carried on business as

Tianaremcnt T.T. CG. /Ocnsullants prior to March 1976. No real season wes

advanced as to why this aprlication should not be granted.

It was however submitted chat such joinder should be treated as irrelevant to the wxercise of the discretion of the Court in relation to the order for security for costs, J accen this submission and have exercised my discretion as thevgh no

application for joinier had been made or granted. The judgquent

of Megarry V.C. in Pearson v. Naydler /T9777 1 V.L.R. €o9

: t was ergued for the defendants that the plainsiff should in any event be ordered to pay tre costs of tre epplicai

for vrelrer against the order staying the action pending Lhe providing of security for costs. It was pointed out wat the new matertal had been available to the plaintiff at the time vhen the defendants' applications for security for costs were peard. It is to be observed however that had the material in questicn been provided to the Court et the hearing of those

avplicaiions the hearing thereof woulc have extunded for a

It is to be noted also that in the circumstances of this case an order for payment of costs by the plaintiff which the plaintiff was required to meet forthwith might be quite as

cffective to preveut the plainviff from pursuing it as would a

In all the circumstances I think it proper to order t}

the defendants! costs of those proceedings, except to the extent

they include the amount of additional costs which world

been incurred in relation to their applications for a stay of

proceedings peuding the wrovisiui uf security Tor vo uss Mmict was heard iu April 1977 uad the telerial pul before ihc Court in the present prccecdiuys ton bes placcé tefore the Court shall be paid by che plairtiff in any event but thes tamatica aud

payment thereof be stajed peadin: farther order and Mat the

amount of the sazd additicnal ecstTs be cosus in the cause.

It vemains tc. consider an avplication for a stay of this action by the tenth umd ezesntn cetendants ~ nding the provision by the plaintiff? of scovvity "or the costs of tnose deCendants. The material before the Court does nut indicate tiat these defondanis have entered anec a coniract erransenéent ov understandin> in contravention of Part LY of the Act or have given effect ts any such arrangciony. The plaintilrl is an unfinancial cunpany. Accordincly I think 1% proper to ord3r vuat, in respect of the tenth ard clevenlu defondents, and subyect to such further order as nay be rade herein, tne action be s vatil security Sor the costs of such defeidants is provided in

tke total sum of #2,000 to the satisfuct.on of the Registrar.

fu cT pan bh © ct ct fa in) kg a eal a fe fox [a tH F od4

that this orde:> may involve the defendants or some of them in the

expense of successfully defending this action is in the mind of

the Court. That would be on the basis that such defendants were

not involved in any arvangenent with other defendants which o7fend

the Trade Practices Act and accordingly were free to deal with

and through the plainliff by reference to the comrerciel merits would

of any proposed transactions. Naturally such a defendant Abyect to

subjected to 5 claim for ar injunction to restrain it fron

& doing what it is no doing and is not intending to do.

Heveng regard to tne c.reumstinces oF tre ence ot! to what was said to the Court by parties in tiese proceediris the Court would entertain an application by any defoidaie tn reimpuse the stay on that defendant citing to tne Court tiruch Counsel an assurance that it is not a paity to any contiveu

arrangement or understandi e any way frou dotng bus.ness with cr throvgh whe pleiniz tf, cand will consider and deal vith ery business proporals prt Perec « by the plaintiif on their commercial merils and give quotuciows as vequested by the plaintiff for the carriage of fecipht "Lr

the plaintiff or freight users for whom it may be acwin,, were

such carriage is wilhin the scope of business ordinarily undertaken by the defendant in question. The natvi7 of tre assurance in contemplation would not be that 1% was an undewtalins with legal cousequences. Its observance would be volvntary but

of course if it were not observed the stay of procercings would

Liberty to apply herein generally is resgerv72d to ali

parties. I certify for counsel including senior coumsel.

the certicy thai his an. t he 7 24 . wy ee te te ne] Ve pw ras 7 roa toa ee oe rool te wee tka