Morphett Arms Hotel Pty Ltd v Trade Practices Commission & Nicholas Enterprises Pty Ltd [1980] FCA 62

CATCHWORDS

Trade Practices - Contracts, arrangements or understandings

restricting dealings or affecting competition - Fact finding, inferences, onus of proof, weight of evidence, acts done and statements made on behalf of a company, relevant market—relief, costs a matter of discretion -

Comment on meaning of "understanding".

Trade Practices Act 1974, sub-para 45(2) (a) (ii),

sub-para 45(2) (b) (ii), sub-s.84(2).

MORPHETT ARMS HOTEL PTY. LIMITED v. TRADE PRACTICES COMMISSTON and NICHOLAS ENTERPRISES PTY. LIMITED

No. G19 of 1979

Coram: Bowen C.J., Brennan and Deane JJ.

1 May 1980

Adelaide.

IN THE FEDERAL COURT OF AUSTRALIA)

)

SOUTH AUSTRALIA DISTRICT REGISTRY) No. G19 of 1979

GENERAL DIVISION

JUDGES MAKING ORDER:

DATE OF ORDER:

WHERE MADE:

) }

ON APPEAL from a Judge of the Federal Court of Australia

BETWEEN :

MORPHETT ARMS HOTEL PTY. LIMITED

Appellant

AND:

TRADE PRACTICES COMMISSION and NICHOLAS ENTERPRISES PTY. LIMITED

Respondents

Bowen C.J., Brennan and Deane JJ. 1 May 1980.—

Adelaide.

ORDER

THE COURT ORDERS THAT the appeal be dismissed with costs.

IN THE FEDERAL COURT OF AUSTRALIA)

) SOUTH AUSTRALIA DISTRICT REGISTRY) No. G19 of 1979

) GENERAL DIVISION )

ON APPEAL from a Judge of the Federal Court of Australia

BETWEEN:

MORPHETT ARMS HOTEL PTY. LIMITED Appellant

AND:

TRADE PRACTICES COMMISSION and NICHOLAS ENTERPRISES PTY. LIMITED

Respondents CORAM: Bowen C.J., Brennan and Deane JJ. ' Thursday 1 May 1980. _ REASONS FOR JUDGMENT BOWEN C.J.: We propose to give judgment forthwith. Li,

This is an appeal by Morphett Arms Hotel Pty. \ Limited against orders made by Fisher J. declaring that the appellant and another company, Nicholas Enterprises Pty. Limited, had each contravened sub-para 45(2) (a) (ii)

and sub-para 45(2)(b) (ii) of the Trade Practices Act

1974 ("the Act"), imposing upon the appellant a pecuniary

penalty of $5,000 to be paid to the Commonwealth, granting

consequential injunctive relief, and ordering that the appellant and Nicholas Enlerprises Pty. Limited pay three- quarters of the respondent Trade Practices Commission's costs of the proceedings at first instance.

Notwithstanding the clear and able argument of Mr. Johnston of Senior Counsel for the appellant, I am unpersuaded by any of the grounds of attack advanced either upon his Honour's findings insofar as they related to the appellant or upon the nature or form of the relief which he granted. Indeed, subject to what I say in these reasons, I am in agreement with his Honour's statement and application of the relevant principles of law and can see no grounds for interfering with either his findings of fact or the inferences which he drew from the facts which he found. I refer briefly to some of the particular matters which have been raised.

The principal argument advanced on-behaif of the appellant is that the effect of his Honour's findings was that there had been an understanding between the appellant and Nicholas Enterprises Pty. Limited, as operators, respectively, of the Morphett Arms Hotel and the Royal Oak Hotel, and that an understanding restricted to but those two companies was not only unlikely but was not in accordance with the case pleaded and sought to be made on behalf of the respondent Commission. In my view, however, this argument overlooks the fact that, as his Honour was at some pains to observe, different evidence was admissible against each of the respondents upon the hearing and the

finding of an understanding as against but two respondents

22/3

did not mean that that understanding was limited to projected action by those two respondents to the exclusion of all or any of the other respondents.

As I read his Honour's judgment, the understanding which he found was not that the Royal Oak and the Morphett Arms would lower their discounts on 5 December 1977, but rather that the discounters throughout the metropolitan area would lower their discounts together. Some may have resolved already to do so and this appears to be the case with the Norwood; some might have been prevailed upon to do so, as in the case of the approach to Mr. Ritchie; and some might have reached the understanding with other discounters at the Coopers Lunch, as his Honour found in the case of the Royal Oak and the Morphett Arms. The argument, though developed with some nicety, does not draw support from the judgment read as a whole.

Nor am I able to accept the argument that, in finding that the appellant had arrived at, and given effect to, an understanding, his Honour misapprehended or wrongly applied the onus of proof which rested upon the respondent Commission. It is, in my view, clear from his Honour's judgment that he did not, as was suggested, either reverse the onus of proof or fail ultimately to address his mind to the question whether, in the light of all the admissible evidence and bearing in mind the onus which rested on the Commission, a finding that the appellant had arrived at and given effect to an understanding should be made.

Notwithstanding the submission made to the contrary on

2 fA

behalf of the appellant, I agree with his Honour that the onus of proof was not Lhal applicable to criminal proceedings.

It was argued on behalf of the appellant that his Honour misapprehended the evidence of the witnesses Ritchie and Richards. In particular, it was said that the evidence in chief of Ritchie, when read in the context of his cross-examination, was far more vague and indefinite than his Honour had appreciated. Consideration of the whole of his evidence fails to convince me that his Honour misapprehended or erred in relation to it. Nor, in my view, did his Honour attach any undue weight to the evidence of Richards which was of lesser significance.

It was next argued on behalf of the appellant that his Honour was in error in treating certain things which were done and statements which were made by a director of the appellant, Mr. Palmer, as having been done and made on behalf of the appellant. His Honour held that he was entitled to take that approach, both by reason of the provisions of sub-s.84(2) of the Act and by reason of his conclusion that Palmer had actual authority to speak on behalf of the appellant, at least in respect of pricing, including the granting of discounts and allowances. In my view, the evidence fully warranted a finding of actual authority and it was not necessary for his Honour to rely upon the provisions of sub-s.84(2) of the Act. It is unnecessary now to determine the scope of that sub-section or whether its provisions would be properly applicable in

the circumstances of the present matter.

ee /5

Not only was his Honour entitled to make his ultimate findings by reference to the evidence as to the acLlivities of Palmer in the manner to which he referred to it. He was also, in my view, entitled to make the use he made of the failure to call Palmer as a witness.

The final general submissions advanced on behalf of the appellant to which I would make specific reference related to his Honour's findings as to the relevant market and to the existence of competition between the Royal Oak and Morphett Arms Hotel. I do not think that the appellant has made good the attack on these grounds. In the light of his Honour's findings as to the relevant market and the existence of competition between the Royal Oak and Morphett Arms Hotels, I am further of the view that his Honour was correct in the use he made of s.45A of the Act.

The appellant made an independent attack upon two of the particular orders which his Honour-made. It was submitted that it was inappropriate and unnecessary for his Honour to have granted an injunction in the circumstances of the case. This was a matter within his Honour's discretion. Having regard to the provisions of sub-s.80(4) of the Act,

I am not persuaded that any ground has been made out for interfering with his exercise of that discretion. As to the form of the injunction, although it is desirable that an injunction be as specific as the circumstances of the case permit, the form of the order here is not open to objection, having regard to the nature of the case made against the

Royal Oak and the Morphett Arms.

---/6

It was also submitted that the order as to costs made against the appellant and Nicholas Enterprises Pty. Limited should be replaced either by an order as to a lower proportion of the respondent Commission's overall costs or by separate orders, each in respect of a lower proportion, against the appellant and Nicholas Enterprises Pty. Limited which as appears from fresh evidence admitted on this appeal is now in liquidation. However, I can see no grounds for interfering with the order which his Honour made which was, in my view, within a discretion which has not been shown to have miscarried.

I wish to add one qualification to my general statement of agreement with his Honour's reasons and findings insofar as they relate to the appellant. That qualification is in respect of the nature of an "understanding" for the purposes of s.45 of the Act. Fisher J. reached the conclusion that it is a necessary ingrédient of such an "understanding" that there be an element of mutual commitment between two or more parties in the sense that each must have accepted an obligation qua the other or others. As at present advised, it seems to me that one could have an understanding between two or more persons restricted to the conduct which one of them will pursue without any element of mutual obligation, insofar as the other party or parties to the understanding are concerned. It is not, however, necessary that I reach or express any final view on this question since Mr. Justice Fisher's view that such an element of mutual commitment was required plainly imposed a

heavier burden on the respondent Commission, and thereby

favoured the appellant.

-2-/7

The appet

costs.

~7TF-

be dismissed with

ain my views

1 should,

Zi certify that this andthe 19 (6 preceding pages are a true copy of the Reasons for Jud.ronu herein of rae Honour :

the Chief Judge, Sir Hagel Bos ven} "Ais Henouy Me Teste Brennan and "} canoe, Me Tostjee. Deans.

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