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Re: D. and R. BYRNES (NOMINEES) PTY LIMITED
And: THE CENTRAL QUEENSLAND MEAT EXPORT COMPANY PROPRIETARY LIMITED
No. QLD G38 of 1990
FED No. 203
Injunction
(1990) ATPR para 41-028
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)
CWDS
Injunction - mandatory interlocutory - applicant meat company seeking to
compel respondent meat company to continue supplying it with meat products -
alleged that the respondent discontinued supply to the applicant when the
applicant re-supplied the products to a competitor of a company associated
with the respondent - whether there is a serious question to be tried as to
the application of ss. 46 or 47 Trade Practices Act 1974 - balance of
convenience.
Trade Practices Act 1974 ss. 46, 47.
HRNG
BRISBANE
#DATE 4:5:1990
Counsel for applicant: Mr. P. Baston
instructed by: Primrose Couper Cronin Rudkin
Counsel for respondent: Mr. J. Muir QC and Mr. P. Dutney
instructed by: McCullough Robertson
ORDER
1. The respondent shall not until the trial
of this action or earlier order:
(a) refuse to deal with the Applicant and in
particular refuse to supply the Applicant
with primal meat product other than in the
ordinary course of the respondent's business,
provided that the respondent shall not be
obliged to extend credit to the applicant;
2. The costs of the interlocutory application be
reserved;
3. Each party have liberty to apply upon the
giving of three days' written notice to the other.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal
Court Rules.
JUDGE1
This is an application for an interlocutory injunction.
2. The applicant, D. and R. Byrnes (Nominees) Pty Limited, operates a meat
wholesaling and retailing business trading under the business name of "Byrnes
Wholesale Meats" from premises at 160-162 Mayers Street, Cairns. The
respondent, The Central Queensland Meat Export Company Proprietary Limited
(CQME) trades as a member of "The Angliss Group". It operates an abattoir and
meat wholesaling business from premises in Rockhampton. "The Angliss Group"
is a registered business name and the persons carrying on business under that
name include W. Angliss and Co (Australia) Pty Ltd, the respondent CQME, and
Queensland Meat Export Company Pty Ltd (QME).
3. The interlocutory injunction seeks to require the respondent, pending the
trial, from "continuing with the conduct complained of and set out in the
accompanying Affidavits". I take this to be an injunction the effect of which
is to require the respondent to supply the applicant with meat products on the
same basis that existed before the respondent decided to refuse to sell meat
products to the applicant.
4. The applicant says that the refusal by the respondent to supply meat to it
was because the applicant had supplied meat to a company having some connexion
with the applicant, which company was, and continues to be, in direct
competition with a company associated with the respondent. The applicant
claims that the refusal to supply is in breach of ss. 46, 47(3) and 48 of the
Trade Practices Act 1974, although reliance on s. 48 was not pressed at the
hearing.
5. For the purposes of this interlocutory proceedings, the facts, while in no
sense being finally determined, are as follows:
Raylee Frances Byrnes, the Managing Director of the applicant, is engaged
full-time in the Mayers Street operation. She and her husband, D'Arcy Thomas
Byrnes, have operated various businesses in the meat industry since 1961.
They initially purchased a small butcher shop in Atherton and in 1963 they
purchased a small slaughter yard some 13 kilometres from Atherton at Tolga.
That was upgraded in the years following to abattoir status and in about
August 1980 Mr. and Mrs. Byrnes opened the processing plant and meat hall at
the Mayers Street site in Cairns. She has worked full-time since then in the
operation of that business. In 1984 the Tolga abattoir was transferred to
Victor Byrnes, the son of Mr. and Mrs. Byrnes. The Tolga abattoir does not
have export status. The achieving of that status is said by Mrs. Byrnes to
involve capital expenditure of $1-2m.
6. The applicant from the Mayers Street site in Cairns conducts a large
wholesale operation and also operates a small retail outlet. It acquires the
entire chilled beef, veal and pig carcasses produced by the Tolga abattoir,
but the volume from that abattoir is insufficient to satisfy all the
applicant's requirements and, in particular, the need for high quality primal
cuts. The bulk of these cuts is purchased from other abattoirs, wholesalers
or brokers. The applicant supplies meat on a wholesale basis to butcher
shops, meathalls, supermarkets, restaurants, hotels and motels, tourist
resorts, the Navy and other government and institutional bodies and takeaway
food outlets. It competes with other meat wholesalers in Cairns for this
custom and, in particular, the tourist and hospitality trade.
7. Approximately 72% of a bullock consists of meat product; 40% of that meat
product constitutes primal cuts, which is meat taken from the beast which
forms the table cuts such as rump, cube-rolls (rib fillet), striploins
(sirloin) and tenderloins (eye fillet). More than 90% of the requirements of
the tourist and hospitality trade are primal cuts. The rest of the meat
product from the carcass is marketed by the applicant through its own retail
outlet and to butcher shops. The applicant says that approximately half of
its total meat purchases consists of primal cuts received in cartons.
8. There are four major meat processers in north Queensland. They are
Tancreds, A.M.H. Limited (AMH), Borthwicks, and The Angliss Group, which is
also known as the Vestey Group. Each of these concerns is involved in the
abattoir and wholesale distribution of meat throughout Queensland.
9. The applicant says that the north Queensland meat market is largely
serviced by wholesalers operating from Townsville and each of the four groups
has a presence in Townsville and compete for the wholesale meat trade. The
Angliss Group is represented in Townsville by QME and in Rockhampton by CQME,
the respondent. Each of the four groups, except The Angliss Group, is
represented in Cairns. The Angliss Group entity nearest to Cairns is QME in
Townsville.
10. QME has a small number of customers in the Cairns area. Prior to 29
January 1990, the transport company owned and operated by Uncle D'Arcy Pty Ltd
and known as North Coast Frig Lines transported QME product from Townsville to
Cairns and distributed that product on a weekly basis. Since 29 January 1990,
however, there has been no contact between QME and the transport company. The
managing director of Uncle D'Arcy Pty Ltd is Mr. D'Arcy Thomas Byrnes, the
husband of Raylee Frances Byrnes.
11. Tancreds, who have a wholesale outlet in Cairns, sell directly to the
tourist and hospitality industry and to butcher shops, in direct competition
with the applicant. Borthwicks do not have a wholesale outlet in Cairns, but
competes with the applicant by means of a weekly delivery service from their
abattoir in Bowen by means of large refrigerated transport. It supplies a
full range of meat products for supply directly to the market; Borthwicks has
a sales representative operating out of Cairns, and customers in the Cairns
area can also place orders with Borthwicks in Bowen.
12. AMH sells lot fed beef from their "Beef City" operation in Toowoomba into
the Cairns market. In or about 1987-88, AMH opened a depot in Cairns in
direct competition with the applicant. The applicant is thus in direct
competition with three of the four major participants in the meat processing
industry servicing north Queensland, and as a result it claims that it is
virtually impossible to buy product in the Cairns area to wholesale on terms
which would allow the applicant to operate competitively. The applicant says
that since its entry into the wholesale market in Cairns, there has been an
increase in competition and currently there is fierce competition between the
applicant and the other wholesalers to maintain market share. The annual gross
turnover of the Cairns operation of the applicant increased from $2.8m in the
financial year 1982-83 to $7.3m in the financial year 1988-89.
13. From about 1982 the applicant has had an extensive association with the
respondent, CQME. It is the circumstances attending the termination of this
association which gives rise to these proceedings.
14. In 1982-83, Mr. and Mrs. Byrnes had dealings with Peter Cobb, who was
then working in the sales department of the respondent. Mr. Cobb told the
Byrnes that the respondent's Rockhampton meatworks would be able to maintain
the applicant with a continuous supply of first class quality product and from
that time until 29 January 1990 the applicant has purchased supplies of
individually wrapped and vacuum packed rumps, vacuum packed cube-rolls,
striploins and tenderloins from the respondent. In addition, lesser cuts have
been purchased when these could not be supplied through the Tolga abattoir.
Initially the applicant's requirements for primal cuts were partially met from
other sources as well as CQME, but for more than five years the applicant has
been dealing almost exclusively with the respondent in respect of primal cuts,
except that grain fed meat, which is not able to be obtained from CQME, has
been obtained from a supplier in New South Wales.
15. The applicant says that, by the end of 1989, 80% of the applicant's
primal cut requirements was being obtained from the respondent, the balance
being obtained from the Tolga abattoir. The applicant says that in about 1988
Mr. Cobb informed them that their purchases had just then exceeded the million
dollar mark and that there were only one or two other customers who purchased
more product from CQME than the applicant. For the period 8 September 1989 to
25 January 1990, approximately $550,000.00 worth of product from CQME was
purchased by the applicant, the drop being attributed to the pilots' dispute.
16. The product from CQME is colour coded, some of the rumps being marked
with a blue spot and others with a green spot. According to the applicant this
is a quality differentiation; the blue spot being of better quality than green
spot. This is disputed by the respondent, who says that the colour coding is
not based on quality per se, but is a denotation of the type of animal from
which the meat product comes; the blue marking indicating that the meat
product is from a steer, the green spot that it is from a cow, or an orange
spot if it is young beef. Mr. Cobb says that the blue spot is a better quality
than the green spot, but only for the reason that meat from a steer is
generally of better quality than meat from a cow. He says that the quality of
cattle generally increases as one goes south. The colour coding developed by
The Angliss Group has no reference to geographical origin; it applies
throughout The Angliss Group. It is a marketing system for the convenience of
customers, indicating the type of beast from which the meat product comes
rather than necessarily being an indication of quality. Mr. Cobb says that,
by and large, good quality meat product from export abattoirs is
interchangable with the Angliss product or, in particular, the meat product
from the CQME abattoir at Rockhampton.
17. However, the applicant says that it has created a demand amongst its
customers for the product from CQME, saying that its customers place orders
using the description "blue spot" or "green spot". As indicated, however, the
respondent says such a labelling is not distinctive of the CQME product.
18. The other major factual circumstance attending the refusal by the
respondent to supply meat product to the applicant arises out of the wholesale
operations conducted by Uncle D'Arcy Pty Ltd from premises in Townsville.
19. Mr. and Mrs. Byrnes for some time have owned a commercial property in
Townsville fitted with cold rooms and suitable for use as a meat wholesale
operation. Since 1984 these premises had been let to a meat wholesaler known
as Gilbertsons, which is a large meat producer and wholesaler based in
Victoria. In or about early 1989 Gilbertsons ceased operations in north
Queensland and vacated the Townsville premises. Shortly thereafter, Uncle
D'Arcy Pty Ltd commenced trading from the Townsville premises as a meat
wholesaler, under the business name "Uncle D'Arcy Wholesale". The wholesaling
under that business name was in direct competition with QME of The Angliss
Group. Uncle D'Arcy Wholesale in Townsville is managed by a Mr. Rod Sinclair.
The applicant supplied Uncle D'Arcy Wholesale with meat product from the
respondent, also a member of The Angliss Group.
20. Shortly after Uncle D'Arcy Wholesale commenced operations in Townsville,
Mr. Byrnes was contacted by Mr. Cobb on behalf of CQME by telephone and told
by him that, if the applicant continued to supply CQME product to Uncle D'Arcy
Wholesale for wholesaling or retailing in the Townsville area, all supplies of
the CQME product to the applicant would cease. Mr. Sinclair had also been
contacted by a representative of CQME and told that if sales of the CQME
product in Townsville by Uncle D'Arcy Wholesale continued, supply of the CQME
product to the applicant would cease. Subsequent to that conversation, Uncle
D'Arcy Wholesale ceased to wholesale or retail CQME product supplied to it by
the respondent in the immediate Townsville area.
21. It seems at the very least arguable that this tri-partite arrangement or
understanding contains an exclusionary provision within the meaning of that
term in s. 4D of the Act, and that the parties to the arrangement or
understanding contravened s. 45(2) of the Act.
22. I am satisfied that the respondent, CQME, made it plain to the applicant
and to Uncle D'Arcy Wholesale that it would refuse to supply CQME product to
the applicant except on condition that the applicant would not supply CQME
product to Uncle D'Arcy Wholesale for sale in the Townsville area. As a
consequence of this stipulation by CQME, the applicant supplied CQME product
to Uncle D'Arcy Wholesale but Uncle D'Arcy Wholesale in Townsville did not
supply any CQME product in the Townsville area. The refusal to supply except
on this basis was to protect the Townsville outlet of The Angliss Group, QME,
from competition by Uncle D'Arcy Wholesale.
23. However, it is not that arrangement which is the subject of this
litigation. In January, 1990, as a result of a request from Mr. D'Arcy
Byrnes, the applicant supplied a small quantity of CQME product to Uncle
D'Arcy Wholesale for the purpose of the wholesaling of that product by Uncle
D'Arcy Wholesale to a customer in Charters Towers, which is some 150 kms. west
of Townsville.
24. On a Friday late in January 1990 and prior to 29 January 1990, Mrs.
Byrnes received a telephone call at the Cairns premises from a sales
representative employed by the respondent at Rockhampton, who complained of
the activities of Uncle D'Arcy Wholesale and, in particular, the sale by Uncle
D'Arcy Wholesale of CQME product in Charters Towers. Mrs. Byrnes indicated
that this conduct was not in breach of the requirement from The Angliss Group
in respect of the wholesaling of CQME product in the Townsville area. The
sales representative, a Mr. Davies, indicated that the call had been prompted
by complaints received from QME in Townsville. Mrs. Byrnes asked why the
prohibition applying to the wholesaling of CQME meat by Uncle D'Arcy Wholesale
in the Townsville area had been extended to include Charters Towers. Mr.
Davies indicated that that aspect should be discussed with the sales manager,
Mr. Cobb, when he returned to the CQME Rockhampton office.
25. On Monday 29 January, an order was placed by the applicant with the
respondent by telephone, and later that afternoon Mr. Byrnes received a
telephone call at the applicant's Cairns premises from Mr. Cobb, who informed
Mr. Byrnes that The Angliss Group would no longer supply the applicant with
meat product. A further order was placed on 6 February and subsequently Mr.
Davies telephoned Mrs. Byrnes to inform her that the respondent would not deal
with the applicant. On the following day, a further order was placed, which
was followed by a telephone call from Mr. Cobb, the sales manager of CQME.
Mr. Cobb told Mrs. Byrnes that the respondent would not deal with the
applicant, and that this was the result of a directive received from The
Angliss Group head office. He said that she should forget about CQME, QME or
any other Angliss Group company as a supplier, as they would never deal with
the applicant again and she should just get on with her business and try to
find alternative suppliers.
26. On 12 February 1990, an order was faxed to CQME at 10.54 a.m. and a fax
in reply was received at 2.29 p.m. from CQME in Rockhampton, returning that
order with the notation "the status quo remains".
27. Since the respondent has refused to supply the CQME product to the
applicant, the applicant says that it has endeavoured to find an alternative
product. Mrs. Byrnes says that she has been unable to supply the "blue spot"
product, on which the applicant had established a market, and thus has had to
supply, where possible, alternatives which she says "have not been acceptable
to customers". She says that she is having difficulty finding a suitable
product. She has resorted to a supplier in New South Wales but claims that
this is more expensive and that the applicant is finding it difficult to
retain custom. She says that during the five months period 8 September 1989
to 29 January 1990, the applicant purchased on average approximately
$28,000.00 worth of product from the respondent. Since 29 January 1990 to 27
March 1990, the applicant had purchased approximately $8,000.00 per week worth
of alternative product.
28. On 20 February 1990 (although the date is incorrectly recorded on the
facsimile message) Mrs. Byrnes communicated with Mr. Cobb in the following
terms:
"Peter is the Company still keeping us on the Black
Ban List? Surely selling some cartons of your
meat into Charters Towers wasn't exactly crime of
the Century? Surely a little of the old forgive and
forget could be applied. After all you did say we
were one of your better payers and hadn't we
reached the million dollar mark?
The Company's Black Ban is really hurting us
because after all we did tend to put all of your
meat in our Basket so to speak.
Anyhow if you're allowed could you please send the
following:-
1 Pallet Blue cor Rump 1 pallet Green cor Rump
Can add to the list if you're selling.
Kind Regards"
29. On 5 March 1990, Mr. Cobb wrote to Mr. and Mrs. Byrnes. The letter is
important not least for indicating the nature of the relationship that existed
prior to the events of January 1990, but also indicating that the reason for
the refusal to supply was the view by the respondent that, in supplying the
applicant with CQME product, it was supporting a major competitor of its
associate, QME . The letter is in the following terms:
"Dear Darcy and Raylee,
Sorry I did not reply to your fax,
however I have been interstate and felt I should
write to you personally.
I am afraid the situation of supply
remains a negative issue and product from
Rockhampton is still not available to ship north.
I suppose in hindsight the transition could have
been handled in a more diplomatic fashion, however
if QME in Townsville view you as a major
competitor then one could accept that Byrnes
Wholesale Meats has been an effective force in the
North.
Over the years, I, personally have viewed
our relationship as more than just one of a
business nature. The openness and trust by
yourselves had created a friendly atmosphere where
everyone was working towards a common goal.
Whilst you were marketing in Cairns, the
company tolerated the situation but when you moved
into Townsville it 'was considered that Rockhampton
was supporting a major competitor, thefore
politically, we were seen to be operating against
company policy.
The pressure to cease trading became
overwhelming. Darcy and Raylee, I feel a deep
sense of loss and sorrow that our relationship has
ended this way, however I will always value your
friendship and if and when I next visit Cairns, I
trust that I may call to say hello.
All the best for the future"
A postscript to that letter was in these terms:
"Darcy, please address the outstanding balance on your a/c."
In this respect it should be said that the applicant was always a good
customer of the respondent in terms of its financial obligations and that,
while an amount is outstanding on that account, non-payment of that amount is
not a basis for the refusal to supply. Further, the applicant, through its
counsel, has undertaken to pay any outstanding balance prior to the resumption
of supplies to the applicant from the respondent.
30. It does not seem to be in dispute that when Uncle D'Arcy Wholesale opened
a wholesaling business in Townsville, the respondent stipulated that the
applicant would not be supplied with CQME product in Cairns, if Uncle D'Arcy
Wholesale competed with QME in Townsville by wholesaling in that area CQME
product obtained from the applicant. For present purposes I am satisfied that
the supply by Uncle D'Arcy Wholesale to Charters Towers was seen as a breach
of this arrangement and subsequently the respondent has refused to supply the
applicant in Cairns with any CQME product.
31. The question is whether in those circumstances there is a serious
question to be tried as to the application of ss. 46 or 47 of the Trade
Practices Act 1974, and, if so, whether the balance of convenience lies in
favour of the grant of an interlocutory injunction, which is in the nature of
a mandatory injunction requiring the performance of positive services.
32. Section 46(1) of the Trade Practices Act 1974 provides:
"A corporation that has a substantial degree of
power in a market shall not take advantage of that
power for the purpose of -
(a) eliminating or substantially damaging a
competitor of the corporation or of a body
corporate that is related to the corporation
in that or any other market;
(b) preventing the entry of a person into that
or any other market; or
(c) deterring or preventing a person from
engaging in competitive conduct in that or
any other market."
33. Section 47(3)(a) and (f) of the Act relevantly provides:
"A corporation also engages in the practice of
exclusive dealing if the corporation refuses -
(a) to supply goods or services to a person;
...
for the reason that the person or, if the person
is a body corporate, a body corporate related to
that body corporate -
...
(f) in the case of a refusal in relation to the
supply or proposed supply of goods, has
re-supplied, or has not agreed not to
re-supply, goods,...acquired from the
corporation to any person,..."
34. The application is based on ss. 46 or 47 of the Trade Practices Act 1974
but the operation of s. 45 in the circumstances revealed by the material
appears to me to be possible of application. It was not however the
applicant's case and, in those circumstances, it would be inappropriate to
consider any order based on that provision. If there is a supply of goods on
condition that there will not be a re-supply of a particular kind, (that kind
of re-supply being a source of competition to an associated company of the
first supplier), it could be an interesting question whether the cessation of
supply for breach of the stipulation would constitute a "giving effect" to the
original exclusionary arrangement.
35. So far as s. 46 is concerned, it is necessary to define the market in
which the defendant is thought to have a substantial degree of power. In
Queensland Wire Industries Pty Ltd v. Broken Hill Proprietary Co Ltd (1989)
167 CLR 177 at 187, Mason C.J. and Wilson J. said:
"The analysis of a s. 46 claim necessarily begins
with a description of the market in which the
defendant is thought to have a substantial degree
of power. In identifying the relevant market, it
must be borne in mind that the object is to
discover the degree of the defendant's market
power. Defining the market and evaluating the
degree of power in that market are part of the
same process, and it is for the sake of simplicity
of analysis that the two are separated."
Deane J. said at 195:
"Section 46(4) provides that a reference in s. 46
to a market is a reference to a market for goods
or services. The Act does not otherwise seek to
define what is meant by the word 'market'. That
is not surprising since the word is not
susceptible of precise comprehensive definition
when used as an abstract noun in an economic
context. The most that can be said is that
'market' should, in the context of the Act, be
understood in the sense of an area of potential
close competition in particular goods and/or
services and their substitutes (cf Re G. and M.
Stephens Cartage Contractors Pty Ltd (1977)
ATPR 17, 445 at p 17,460."
36. By s. 4E the substitutability of one product for another has to be taken
into account.
37. Dawson J. at 199 said:
"A market is an area in which the exchange of goods
or services between buyer and seller is
negotiated. It is sometimes referred to as the
sphere within which price is determined..."
He later observed:
"The basic test involves the ascertainment of the
cross-elasticities of both supply and demand, that
is to say, the extent to which the supply of or
demand for a product responds to a change in the
price of another product."
38. It seems to me that, at best for the applicant, the market is to be
identified as the market for primal cuts of beef in Queensland, excluding
western Queensland. In respect of this issue, the applicant has been buying
from central Queensland and New South Wales and, while the applicant says that
consistent supplies of high quality primal cuts of meat can be obtained only
from large abattoirs, about 20% of its primal cuts have been obtained from the
Tolga abattoir. Borthwicks, one of the significant entities, supplies
wholesalers in Cairns from its Bowen abattoir, and AMH supplies wholesalers
from meatworks in Townsville and Toowoomba and has closed its meatworks in
Cairns and Mareeba. Further, the zonal system which previously effected the
geographical limits of supply, was removed in 1985.
39. On the material in this case, I am not satisfied that there is a north
Queensland market in respect of the wholesale supply of meat. The primary
complaint concerns the supply of meat from central Queensland to Cairns.
40. Mr. Cobb, who gave oral evidence before me and who, on that appearance
and on the material deposed to by him, impresses me as a decent and honest
man, indicated that there were at least twenty export abattoirs in Queensland
from which the applicant could obtain supplies and, in addition, there are
export abattoirs in New South Wales. He asserted that the price would not
differ materially between abattoirs whether in Queensland or New South Wales
and that, while the respondent is principally engaged in export, it also sells
to customers throughout Australia, including Western Australia and the
Northern Territory.
41. More importantly, in relation to the question of whether there is a
substantial degree of power in the market however defined, the evidence is
that the respondent's share of the processing of primal meats in Queensland is
only from 7-8% and only about 15% when added to other members of The Angliss
Group. I accept that there is a degree of interchangeability of meat from one
abattoir to another, although the evidence clearly suggests that there is a
general improvement in the quality of beef as one goes south.
42. On the evidence then it seems to me that no substantial degree of power
has been established in respect of what I find to be a market at least as
broad as coastal Queensland. In my opinion, a 7% share of a competitive
market, or even a 15% share, indicates that the respondent lacks an essential
element of s. 46, viz. that the respondent has a substantial degree of market
power.
43. In the light of the degree of market share and, correspondingly, the
degree of power of the respondent in the market for wholesale primal cuts, I
am unable to conclude that there is an arguable question as to the application
of s. 46.
44. As to s. 47, it is at least seriously arguable that the respondent has
engaged in the practice of exclusive dealing as defined in s. 47(3) of the
Act. Relevantly, within the provisions of that sub-section, it is arguable
that the respondent has refused to supply goods to the applicant for the
reason that the applicant has re-supplied goods acquired from the respondent
to Uncle D'Arcy Pty Ltd trading as "Uncle D'Arcy Wholesale" in Townsville.
Alternatively, it is at least a serious question to be tried whether the
respondent has refused to supply goods to the applicant for the reason that
the applicant has not agreed not to re-supply goods acquired from the
respondent to Uncle D'Arcy Pty Ltd. The affidavit evidence from Mr. Byrnes
and Mr. Sinclair and the correspondence of Mr. Cobb, to which reference has
been earlier made, points strongly towards this conclusion.
45. It was said on behalf of the respondent, however, that there is no
actionable conduct under s. 47 because of the provisions of sub-section (10).
Sub-section 10 provides:
"Sub-section (1) does not apply to the practice of
exclusive dealing constituted by a corporation
engaging in conduct of a kind referred to in
sub-section (3)...unless
(a) the engaging by the corporation in that
conduct has the purpose or has or is likely
to have the effect of substantially
lessening competition;
..."
46. It was submitted that the conduct of the respondent neither had the
purpose nor the likely effect of lessening competition in the relevant market.
The extent of the market and the respondent's comparatively minor place in it,
and the availability of the product from other sources, was said to show that
the conduct is not likely to lead to a lessening of competition and the
respondent had no relevant purpose.
47. I am satisfied that the reason for the refusal of supply to the applicant
by QCME was to protect the Townsville outlet of The Angliss Group from
competition from Uncle D'Arcy Wholesale. The fact that a corporation thinks
that conduct of that kind will have that effect is some evidence that the
company had the capacity, by the adoption of that course, to effect that
consequence. I am satisfied that there is a serious question to be tried as
to whether the purpose of the conduct of the respondent was the purpose of
substantially lessening competition for QME.
48. As to the balance of convenience, it was said on the respondent's behalf
that it was at present unable to supply the applicant because it was, due to
climatic conditions, behind in supplying its existing export customers. It
was further submitted that any order which might be made would require
constant supervision by the court, including supervising real difficulties in
relation to price and availability of the product. The financial
impecuniosity of the respondent and those behind it not being in issue, it was
submitted that damages would be an adequate remedy.
49. The assessment of damages often presents difficulties, but the problem
seems accentuated in the present case. The difficulties in securing
compliance with any order are not to be discounted, but the basic fact is that
all the applicant is seeking is the return to the significant and apparently
successful commercial relationship that had, until 29 January 1990, been on
foot for more than five years. If the preservation of the "status quo"
pending trial is the appropriate order, I am of the opinion that that object
calls for the restitution of the relationship that existed prior to the
decision of the respondent to alter it by refusing to supply.
50. As to the suggestion that there has been delay in the application, it was
said that supply had ceased from the end of January. Having regard to the fax
of 20 February and the response in the letter of 5 March, I am not satisfied
that there is any substance in this complaint. The commercial fact is that
for more than five years the applicant has been a good and valued customer of
the respondent. I acknowledge there are inherent difficulties associated with
the grant of a mandatory injunction, particularly in a commercial area.
However, such is my view of Mr. Cobb that I am of the opinion that a
commercial relationship on the same straightforward and fair basis as
previously existed between the respondent and applicant would be the
consequence of a mandatory interlocutory injunction to restore supply by the
respondent to the applicant on the same basis as existed prior to the
cessation of supply at the end of January 1990.
51. It was submitted on behalf of the respondent that because the relief
being sought was in effect a mandatory injunction, a much higher degree of
proof is required of an applicant than for a prohibitory injunction. Reliance
was placed on the observations in Midland Milk Pty Ltd v. Victorian Dairy
Industry Authority (1988) 82 ALR 279 where the observations of Megarry J. in
Shepherd Homes Ltd v. Sandham (1971) 1 Ch 340 at 351, (which were approved by
Gibbs C.J. in State of Queensland v. Australian Telecommunications Commission
(1985) 59 ALR 243 at 245) were noted by Foster J.. The views expressed by
Gibbs C.J. in the State of Queensland v. Australian Telecommunications
Commission Case, were considered by Gummow J. in Businessworld Computers Pty
Ltd v. Australian Telecommunications Commission (1988) 82 ALR 499, where his
Honour concluded that he was not bound by the judgment of Gibbs C.J. I repeat
my respectful agreement with the observation of Gummow J. in that case, as I
expressed in Carson v. The Minister of Education (1989) 88 ALR 467 at 478-480.
52. There is in this case a public interest element. The provisions of the
Trade Practices Act 1974, speaking generally, do not address merely the
interests of commercial rivals.
53. In all the circumstances, I think the balance of convenience favours the
grant of interlocutory relief. I recognize the difficulties that attend the
definition and supervision of an order of the court to that effect, but this
strikes me as a strong case and it is not to be presumed that the respondent
will attempt to flout the order of the court by a policy of deliberate
obstruction or non-cooperation. I will, of course, require the usual
undertaking as to damages. The liquidation of the presently outstanding
account between the applicant and the respondent as a pre-condition of the
grant of relief is also necessary. I have earlier expressed my confidence in
the sales manager of the respondent, Mr. Peter Cobb.
54. I invite the parties to bring short minutes of orders to give effect to
my view that, pending the determination at the trial or earlier order, the
respondent ought forthwith, on the conditions earlier indicated being
satisfied, supply meat product from its abattoir in Rockhampton to the
applicant on the same basis or in the same manner as it had prior to 29
January 1990.
55. I reserve the costs of the interlocutory application.