Leonard George Munday v ACT (No.2) [1999] ACTSC 8 (23 February 1999)

Last Updated: 17 June 1999

LEONARD GEORGE MUNDAY v ACT (No.2) [1999] ACTSC8 (23 February 1999)

CATCHWORDS

LAND - Licences - Members of the public licensed by the Territory to enter rubbish tip - Territory engaging in trade and commerce by issuing licences for a fee - Whether conditions of licence lawful under the Trade Practices Act 1974 (Cth) - Territory not to act inconsistently with Territory law, including Federal or common law.

RESTRICTIVE TRADE PRACTICES - Exclusive dealing - Whether exclusive dealing provisions of the Trade Practices Act 1974 (Cth) apply to the Territory's licensing of persons to enter tip - Whether Territory's acts have "substantially lessened competition" - "competition" - "market" - No evidence that competition substantially restricted - Trade Practices Act 1974 (Cth), s47(1), 47(9)(a)(c), 47(10), 47(13)(c).

RESTRICTIVE TRADE PRACTICES - Common law doctrine of reasonable restraint of trade - Whether terms of licence in restraint of trade - Whether doctrine applicable to terms of licence concerning the use of land - Whether doctrine applicable to restraints deemed "normal incidents of commerce" - Whether restraint reasonable - Whether invalid terms severable from licence agreement - Restraint on trading, bargaining and soliciting at tip held unreasonable and severable - Restriction on salvaging and scavenging held reasonable.

LAND - Licences - Plaintiff bargaining for goods at Territory rubbish tip in purported breach of licence - No right of territory to confiscate goods transacted in breach of licence terms - Licensor retains right merely to terminate or seek damages.

REMEDIES - Breach of licence - Termination not permissible for trivial breaches - Trivial conduct consistently repeated may justify termination.

LAND - Licences - Rights of Territory employees concerning licences of others to enter Territory land - Limitations on rights of Territory employees - Interpretation of s19(2)(c) of Crimes (Offences Against the Government) Act 1989 (ACT) - No authority to arrest or prosecute persons merely refusing to leave Territory land - Requirement for person to be trespasser - Section confers no power of arrest or detention.

Statute of Monopolies (1623) 21 Jac1 c.3

Australian Capital Territory (Self Government) Act 1988 (Cth), s23, 37

The Constitution, s51 (xxxi), 122

Trade Practices Act 1974 (Cth), s47(9)(a) and (c), 47(1), 47(10), 47(13)(c)

Crimes (Offences Against the Government) Act 1989, s19(2)(c)

Imperial Acts Application Act 1986 (ACT)

Re Residential Tenancies Tribunal of New South Wales and Henderson; Ex Parte The Defence Housing Authority [1997] HCA 36; [1997] 190 CLR 410, referred to

Newcrest Mining (WA) Limited v Commonwealth of Australia [1997] HCA 38; [1997] 190 CLR 513, referred to

Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union [1979] FCA 84; [1979] 42 FLR 331, referred to

Darcy v Allin (1602) 11 Co Rep 84b, referred to

News Ltd and Others v Australian Rugby Football League Limited and Others (1996) 139 ALR 193; (1996) 64 FCR 410, referred to

Queensland Wire Industries Proprietary Limited v The Broken Hill Proprietary Company Limited [1989] HCA 6; [1988] 167 CLR 177, at 187 referred to

Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) ATPR ¶40-876, at par 49,480, applied

Queensland Co-operative Milling Association v Pamag Pty Limited [1973] HCA 24; [1973] 133 CLR 260, at 263-4, 267, 268, 278, discussed and applied

Amoco Australia Pty Limited v Rocca Bros. Motor Engineering Co. Pty Ltd [1973] HCA 40; [1973] 133 CLR 288, at 293, 307, 313, 329, discussed and applied

Amoco Australia Pty Limited v Rocca Bros. Motor Engineering Co. Pty Ltd [No.2] [1975] HCA 1; [1973] 133 CLR 331, referred to

Hughes v Western Australian Cricket Association (Inc.) (1986) 69 ALR 660, applied

Adamson v New South Wales Rugby League Ltd [1991] FCA 425; (1991) 103 ALR 319, applied

Barlow v Neville Jeffress Advertising Pty Ltd [1994] TASSC 181; (1994) 4 Tas R 391, applied

Rentokil Pty Ltd v Lee [1995] SASC 5318; (1995) 66 SASR 301, applied

Greenhalgh v Composite Buyers Limited (1995) ATPR (Digest) ¶46-148, applied

Esso Petroleum Co. Ltd v Harper's Garage (Stourport) Ltd [1967] UKHL 1; [1968] AC 269, at 298, 335, considered

Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, at 342, considered

Quadramain Pty Limited v Sevastapol Investments Pty Limited [1976] HCA 10; [1975] 133 CLR 390, at 394, 401, 402, 405, 407, considered

Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1996) 141 ALR 687, at 695, considered

No. SC 320 of 1998

Coram: Higgins J

Supreme Court of the ACT

Date: 23 February 1999

IN THE SUPREME COURT OF THE )

) No. SC 320 of 1998

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: LEONARD GEORGE MUNDAY

Plaintiff

AND: THE AUSTRALIAN CAPITAL TERRITORY

Defendant

ORDER

Judge Making Order: Higgins J

Where Made: Canberra

Date of Order: 23 February 1999

THE COURT ORDERS THAT:

1. The plaintiff's application for an injunction against the defendant be refused.

2. The parties be granted leave to bring in short minutes of declarations in accordance with these reasons if required.

1. On 8 July 1998, I handed down a decision in the matter of Leonard George Munday v ACT [1998] SCACT62. I made certain rulings. The effect of those rulings was, so far as then necessary, to define the terms of the licence granted from time to time to the plaintiff to enter upon a public rubbish dump known as the Mugga Lane land fill area (the Tip).

2. I found that it was a term of that licence that licensees were not permitted to scavenge for discarded materials. That term had been imposed by the defendant Territory in consequence of an agreement it had entered into with `Revolve', a recycling company.

3. However, I also found that the licence did not, in terms, purport to prohibit licensees from dealing with each other to transfer items of property from one to another whilst at the Tip.

4. Further, I held that, even if it was lawful to do so, the licence did not purport to authorise the Territory to acquire or confiscate property brought to the Tip. Such items remained the property of the owner until property was validly and intentionally transferred, whether to the defendant or to some other transferee.

5. Since 8 July 1998, perhaps unsurprisingly, signage at the Tip has altered. It is apparent that it is the Territory's objective to alter, to the disadvantage of the plaintiff, the terms of licences issued to members of the public to enter the area of the Tip where unwanted items are to be abandoned by their owners. To some extent the terms of entry have been simplified. They now read, relevantly, at the entrance:

"CONDITIONS OF ENTRY TO MUGGA LANE LANDFILL ARE THAT ENTRANTS MUST OBEY ALL SIGNS AND DIRECTIONS BY STAFF AND MUST NOT TRADE, SALVAGE, SCAVENGE, BARGAIN FOR OR SOLICIT FOR MATERIALS, GOODS OR WASTE WITHIN THE LANDFILL UNLESS WITHIN THE PREMISES OF REVOLVE, CORKHILL BROS, METALCORP."

6. Approaching the Tip area another sign appears:

"Conditions of entry into the tip area are that entrants must

* pay the relevant determined fee

* obey all signs and directions by staff

* proceed directly from the weighbridge to the tip face, upon arrival at the tip face tip any materials, goods or waste and then immediately leave the tip area

* not loiter within the tip area

* not trade, salvage, scavenge, bargain for or solicit for materials, goods or waste within the tip area."

7. A written notice in similar terms has been handed to individual entrants. It may be that not every entrant is given such a notice. In any event, that notice merely combines the information on each of the aforementioned signs.

8. The terms referred to on the second sign are also contained upon the back of the entry receipt.

9. In addition, the new conditions of entry were published in `The Canberra Times' on 29 August 1998.

10. It is clear that these revised conditions are intended to apply to entrants generally, not merely the plaintiff and others like him who have in the past engaged in scavenging at the Tip. It is also clear, and the plaintiff does not dispute this, that the terms of entry I have set out have been brought to his attention.

11. The plaintiff deposed that on 29 August 1998 he was asked to leave the Tip. It is not clear why he was asked to leave, but he left anyway.

12. He attended at the Tip again on 20 September 1998. He was then attending to dump waste. Whilst doing so, he noticed another person throwing away plastic bottles. He asked that person if he, the plaintiff, could have them. The person responded affirmatively and gave the plaintiff about twelve of these bottles. However, before the plaintiff could put them in his vehicle, a Tip attendant told the plaintiff that, if he put the bottles in his car, that was soliciting and the police would arrest him. I infer that the plaintiff defied this instruction, though his affidavit is not clear on this point. The police were called, though they arrived just as the plaintiff was leaving. The remaining bottles had been abandoned by the other person and, even by then, had been bulldozed into the ground.

13. The plaintiff raises several issues for determination, though not all of them were clearly articulated:

* Can the Territory lawfully restrict commercial activity at the Tip as it has purported to do?

* Was the Territory entitled to forbid the plaintiff from taking possession of goods given to him by the owner thereof?

* What is the role of s19(2)(c) of the Crimes (Offences Against the Government) Act 1989 in the enforcement of the terms upon which licensees are permitted to be, or remain, at the Tip?

* Is the Territory at liberty to enforce breaches of licence selectively?

Restrictions on activities at the Tip

14. The Territory could, of course, totally prohibit any access by members of the public to the Tip. It has chosen to permit access subject to payment of a fee and to the conditions already referred to. However, the Territory is not free to impose whatever conditions it chooses. Those conditions must be lawful. The Territory is, in licensing persons to have access to the Tip on payment of a fee, engaging in trade and commerce. Even the Commonwealth would be bound by Territory and Federal law applicable to such activity - see Re Residential Tenancies Tribunal of New South Wales and Henderson; Ex Parte The Defence Housing Authority [1997] HCA 36; [1997] 190 CLR 410.

15. Thus, for example, if the Territory sought to acquire or confiscate the property of licensees, otherwise than on just terms, the question of compliance with such a law under s51(xxxi) of The Constitution would arise; see, for example, Newcrest Mining (WA) Limited v Commonwealth of Australia [1997] HCA 38; [1997] 190 CLR 513. That is, the Territory is not empowered to acquire or confiscate property in the Territory otherwise than on just terms, and then only for a purpose in respect of which the Commonwealth Parliament has power to make laws. That would include the power to make laws for the purpose of the government of the Territory, such power being conferred on the Commonwealth by s122 of The Constitution. The Australian Capitla Territory (Self Government) Act 1988 (Cth) is itself an exercise of that latter power.

16. There is no suggestion that the terms of the licence given to members of the public are authorised by any enactment of the Legislative Assembly. Even if they were, however, s23 of the ACT (Self Government) Act 1988 (Cth), itself, expressly excludes from the powers of the Assembly the power to authorise the acquisition of property otherwise than on just terms. In light of the Newcrest decision, that provision is probably no more than declaratory. Further, the Assembly is not empowered to make an enactment which is inconsistent with any other law in force in the Territory, not itself being an "enactment" or a "subordinate law". Whether or not the Assembly has thus been denied power to amend the common law applicable in the Territory, it certainly has no power to amend a Federal law so applicable.

17. The Executive, by virtue of s37 of that Act, may not act contrary to such laws.

18. It follows that if, as Mr Munday suggests, the terms of the licence agreement proposed by the signage are contrary to any law in force in the Territory, such as the Trade Practices Act 1974 (Cth) (TPA) or, indeed, the common law, then that term is not enforceable by the Territory any more than it would be open to any other person to impose or enforce such a term.

19. It is clear from the plaintiff's affidavits, both in this application and in the previous matter, that there is a market for goods which are about to be, or which have been, abandoned at the Tip. There is no doubt that to permit only one of the competitors for such materials to have access to them substantively lessens competition for such goods; see, for example, Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union [1979] FCA 84; [1979] 42 FLR 331.

20. However, the TPA does not prohibit conduct or agreements merely because the effect thereof is to lessen competition, even if it does so to the extent of conferring a monopoly.

21. Indeed, it was a traditional source of revenue raising for the executive government to sell monopolies. The practice was severely limited by the decision of Darcy v Allin (1602) 11 Co Rep 84b. In 1623, the Statute of Monopolies 21 Jac1 c.3, declared all monopolies illegal unless granted by letters patent to inventors. That proviso is now taken up by the Patents Act and copyright legislation. Neither the Statute of Monopolies nor its subsequent amendments, are continued in the Territory by the Imperial Acts Application Act 1986 (ACT).

22. There is nothing in the TPA, which I can discover, which prevents the Territory granting exclusive rights to persons to salvage at the Tip.

23. It is true that s47(9) of the TPA has some application to the decisions made by the Territory to grant, refuse or terminate licences to members of the public to enter upon the Tip.

24. Subsection 47(9) provides:

"(9) A corporation also engages in the practice of exclusive dealing if the corporation refuses to grant or renew, or exercises a power or right to terminate, a lease of, or a licence in respect of, land or a building or part of a building for the reason that another party to the lease or licence or, if that other party is a body corporate, a body corporate related to that body corporate:

?a? has acquired, or has not agreed not to acquire, goods or services, or goods or services of a particular kind or description, directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation;"

25. The practice of "exclusive dealing" is prohibited by s47(1) TPA.

26. The plaintiff is, clearly enough, a person granted a licence "in respect of land" from time to time by the defendant. The TPA regards "a corporation" in relation to the Territory as including an individual such as the plaintiff (see s6 TPA). The reference to "a competitor" of the Territory (or Revolve) is capable of embracing would-be scavengers (other than Revolve). It is possible to regard Revolve as "related to" the Territory. It is difficult, however, to apply the terms to other licensees who are offered the choice of supplying their unwanted goods either to the plaintiff or to the defendant (by abandoning them at the Tip face).

27. The Territory may not take proscribed action in relation to potential suppliers of goods; that is, those who attend at the Tip in order to abandon their goods, whether in favour of the Territory or a person such as the plaintiff. That is, it may not terminate a licence to be on the Tip on the ground that a person has supplied goods to the plaintiff rather than abandoning them to be considered for resale by Revolve or to be destroyed by the Territory.

28. However, there is no evidence that any such proscribed action has been taken against any of those persons. It is the plaintiff who has been threatened with such action and not for that reason. Further, even if s47(9)(a) or (c) of the TPA was applicable, the proscribed conduct must be shown to have had the purpose or effect of "substantially lessening competition" under s47(10). "Competition" is further defined in s47(13)(c), as being:

"...a reference to competition in any market in which the corporation engaging in the conduct or any other corporation the business dealings of which are restricted, limited or otherwise circumscribed by the conduct, or any body corporate related to either of those corporations, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the conduct, supply or acquire, or be likely to supply or acquire, goods or services."

29. Clearly, the conduct of the Territory affects the supply of goods to scavengers, such as the plaintiff. Insofar as such goods would be applied to the plaintiff's own use, it seems to me that "the market" would be unaffected. However, there is evidence that scavengers derive some income by reselling salvaged goods, inter alia, at trash and treasure markets held at various sites around the Canberra region.

30. The difficulty of defining the relevant "market" is illustrated by News Ltd and Others v Australian Rugby Football League Limited and Others (1996) 139 ALR 193; (1996) 64 FCR 410; see also Queensland Wire Industries Proprietary Limited v The Broken Hill Proprietary Company [1989] HCA 6; [1988] 167 CLR 177 at p. 187 per Mason CJ and Wilson J.

31. Perhaps the clearest definition is that offered by Wilcox J in Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) ATPR ¶40-876:

(49,480) "A market is the field of activity in which buyers and sellers interact and the identification of market boundaries requires consideration of both the demand and supply side. The ideal definition of a market must take into account substitution possibilities in both consumption and production. The existence of price differentials between different products, reflecting differences in quality or other characteristics of the products, does not by itself place the products in different markets. The test of whether or not there are different markets is based on what happens (or would happen) on either the demand or the supply side in response to a change in relative price."

32. In the present case it is open to conclude that there is a "market" for the supply of used goods which their owners are prepared to abandon or to sell at nominal or nearly nominal prices.

33. The source of demand for such goods would, no doubt, include persons who might resell them, with or without improvement, at second-hand shops, trash and treasure markets or from premises such as Revolve operates.

34. It clearly gives a competitive advantage to such retailers of used goods if they are able to obtain them at less cost than, say, by obtaining them at garage sales or trash and treasure markets.

35. It is certainly arguable that the terms imposed by the Territory on entrants to the Tip restricts or reduces competition for goods which otherwise would be dumped at the Tip. That competition is between Revolve, which is, for relevant purposes, "related to" the Territory, and persons such as the plaintiff. However, perhaps unsurprisingly, I have no real evidence upon which I can base a finding that such restriction on competition is "substantial", even assuming of course, that a breach of s47(9) of the TPA has occurred.

36. Therefore, I am not able to find that the plaintiff has established that the conduct of the Territory in insisting upon the anti-competitive terms of the licences it is prepared to grant, and has granted, to the plaintiff, is guilty of "exclusive dealing" contrary to s47(9) of the TPA.

Restraint of trade

37. However, it does appear that the terms of the licence to which a would-be entrant is required to agree, include a promise not to engage in trading goods or in conduct leading to the trading of goods. That is a term in restraint of trade. The common law regards such terms as unlawful unless they are reasonable. The common law in relation to restraint of trade is expressly preserved by s4M(a) of the TPA.

38. As a result, the matter not having been addressed at the hearing in October 1998, I gave the parties an opportunity to address that issue. They have done so.

39. I am grateful for those submissions. The doctrine of restraint of trade does not prevent a person validly agreeing to forgo competitive rights. In Queensland Co-operative Milling Association v Pamag Pty Limited [1973] HCA 24; [1973] 133 CLR 260, an exclusive dealing agreement, ancillary to a loan agreement, was held not to offend the common law doctrine. The case involved a contract of loan sought by the respondent to establish a bakery business. As a condition of the loan, the respondent agreed with the appellant that it would acquire all its supplies exclusively from the appellant as long as the appellant was able to provide the same at fair and reasonable prices.

40. Menzies J, at pp. 263-4, noted that such a term undoubtedly attracted the doctrine of restraint of trade. It must therefore "...answer to the test of reasonableness having regard to the interests of both the parties and the public". However, the covenant, in his Honour's view, passed that test. There was no discernible public interest in the source of the respondent bakery's flour. The price was required to be "reasonable". The advantage gained by the appellant was not out of proportion to the price it had paid.

41. Walsh J noted the test of reasonableness should not be regarded as passed, at p. 268, "...unless it is found that the restraint gives no more than adequate protection to the party in whose favour it was imposed". His Honour agreed that the covenant appeared reasonable in the interests of both the parties and the public.

42. Stephen J also agreed as to the effect on the public interest, noting at p. 278 that:

"...There is...no evidence to suggest that the effect of the covenant will operate in any way contrary to the public interest, that it will create a monopoly, will increase prices or will otherwise operate in a manner which, at least to those not expert in matters economic, may suggest injury to the public..."

43. His Honour, having carefully considered the nature and duration of the trade tie, considered that it had also been reasonable as between the parties. The critical elements of that conclusion seem to have been the equal bargaining position of the parties and the mutual benefit of the agreement overall, confined as it was to supply of materials at a reasonable price.

44. The same volume contains other challenges to restraint of trade clauses. In Amoco Australia Pty Limited v Rocca Bros. Motor Engineering Co. Pty Ltd [1973] HCA 40; [1973] 133 CLR 288, at issue was a condition by the builder and lessor of a petrol station requiring the lessee to purchase only the lessor's products at a fixed rebate on current prices. Walsh J, with whom McTiernan ACJ agreed, found the restraint was not shown to be reasonable. It imposed minimum purchase requirements. The bargain must be looked at in its entirety, his Honour said. It is not enough to regard the bargain as reasonable merely because the parties freely entered into it, then believing it suited their interests. His Honour, at 307, stated:

"...if a restraint is imposed which is more than that which is required (in the judgment of the court) to protect the interests of the parties, that is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interest..."

45. Whilst not deciding whether a decision to take a "tied" lease of land as opposed to accepting a "tie" on land, not then subject to it, would fall within the doctrine, Gibbs J agreed with the conclusion to which Walsh J had come.

46. On appeal to the Privy Council, the decision of the High Court was affirmed (Amoco Australia Pty Limited v Rocca Bros. Motor Engineering Co. Pty Ltd [No.2] [1975] HCA 1; [1973] 133 CLR 331).

47. Hughes v Western Australian Cricket Association (Inc.) (1986) 69 ALR 660, affirmed the proposition that the doctrine of restraint of trade applies in relation to persons who derive income, from the sport they play, whether or not it forms the whole or part only of their income, and whether or not the restraint arises from a contract between the party affected and the party imposing the restraint. It was also applicable independently of any claim pursuant to the TPA. The applicant had been "banned" under the WACA rules for playing in South Africa. The rule itself was challenged as offending the doctrine of restraint of trade. It was a refusal to contract with the applicant rather than the enforcement of a contract which was at issue. In the view of Toohey J, the rule was not shown to be reasonable for the protection of the objects of the Association, nor was it in the public interest:

(703) "...which lies...in having every opportunity to see first class cricketers in action."

48. A similar result followed in Adamson v New South Wales Rugby League Ltd [1991] FCA 425; (1991) 103 ALR 319. The "draft" of players, designed to give equal access by participating rugby league clubs to first grade players, was held invalid. It did not offend the TPA but it was in restraint of the players' trade. It was effected by an agreement between the League and the Clubs. However, the players were, in the absence of justification of the restraint as "reasonable", entitled to the relief sought. That was, of course, a decision of a Full Court of the Federal Court. It is binding upon me.

49. That such clauses may be severed from agreements containing them has been affirmed in Barlow v Neville Jeffress Advertising Pty Ltd [1994] TASSC 181; (1994) 4 Tas R 391 per Green CJ, Cox and Slicer JJ; Rentokil Pty Ltd v Lee [1995] SASC 5318; (1995) 66 SASR 301 per Doyle CJ, Matheson and Debelle JJ; Greenhalgh v Composite Buyers Limited (1995) ATPR (Digest) ¶46-148, Federal Court of Australia per Davies, Einfeld and Sackville JJ. The secondary nature of the terms in question is such that they are really peripheral to the licence agreement as a whole. If invalid they would clearly be severable.

50. The terms seeking to restrain persons entering the Tip from scavenging or dealing with each other for goods are clearly in restraint of trade. If the doctrine applies, those terms and those dependent on them, are prima facie unlawful. They would require justification. They would need to meet the test of reasonableness. The onus of establishing reasonableness lies upon the party asserting the validity of the restraint.

51. Mr Erskine addressed the issue by advancing two contentions. The first relied upon Esso Petroleum Co. Ltd v Harper's Garage (Stourport) Ltd [1967] UKHL 1; [1968] AC 269. In that case, the respondents, in purchasing two garages, agreed to purchase all motor fuels, for resale by them, from the appellants. The respondents, after a time, sought to sell lower priced fuels from other suppliers from their sites. One tied arrangement was for five years, the other for twenty-one years.

52. The contention was that, as the appellant had a prior right to forbid entry upon the land in question entirely, the respondent was not restrained but rather merely granted less than full licence to trade as he pleased upon the land. Mr Erskine cited, in particular, the dictum of Lord Reid at p. 298:

"It is true that it would be an innovation to hold that ordinary negative covenants preventing the use of a particular site for trading of all kinds or of a particular kind are within the scope of the doctrine of restraint of trade. I do not think they are. Restraint of trade appears to me to imply that a man contracts to give up some freedom which otherwise he would have had. A person buying or leasing land had no previous right to be there at all, let alone to trade there, and when he takes possession of that land subject to a negative restrictive covenant he gives up no right or freedom which he previously had."

53. Nevertheless, Lord Reid was of the view that the agreement in the Esso Petroleum case was subject to the doctrine of restraint of trade. What were excepted from the doctrine, in Lord Reid's opinion, were restrictive covenants running with the transfer of a freehold or leasehold interest in land.

54. His Lordship's dictum, though obiter, was adopted in Queensland Co-operative Milling Association v Pamag Pty Limited [1973] HCA 24; (1973) 133 CLR 260.

55. Walsh J at 267 merely observed:

"...the dicta in Esso Petroleum Co. Ltd v Harper's Garage (Stourport) Ltd [1967] UKHL 1; [1968] AC 269, to the effect that the doctrine applies only where a man contracts to give up some existing right or freedom, have no application to the facts of the present case."

56. The exclusion suggested by Lord Reid was not applied to the facts of Amoco Australia Pty Limited v Rocca Bros. Motor Engineering Co. Pty Ltd [1973] HCA 40; [1973] 133 CLR 288. In that case, the owner of land had agreed to erect and operate a service station on the land. To effect that agreement, it leased the site to a supplier and the supplier agreed to grant an underlease to the owner. The underlease contained a covenant to obtain supplies of petroleum products only from the supplier. It was accepted by Menzies J that Esso Petroleum was distinguishable. The owner had possession of the land before the lease and underlease were entered into. Nevertheless, his Honour did say:

(293) "Nor do I think that the doctrine based upon public policy which requires a restraint of trade to be reasonable can have no application where the covenant in restraint of trade is given by someone starting a new business in relation to future trading."

57. Gibbs J merely observed, at p. 313:

"...I do not find it necessary to consider whether an unjust repudiation by a purchaser or lessee in such circumstances should be prevented by holding that a transaction of that kind is not subject to the doctrine of restraint of trade or by treating it as subject to the doctrine and upholding the covenant as reasonable."

58. Stephen J dissented, but in doing so ventured a broad view of the application or not of the doctrine in the circumstances referred to by Lord Reid:

(329) "If a rationale for my view of the application of the doctrine is to be sought it may lie in this; where an existing freedom is surrendered the courts will examine the circumstances and will refuse to enforce that surrender if it be not reasonable; where, however, viewed as a practical question and apart from legal forms or theoretical possibilities, it appears that there has not been any surrender of a pre-existing right nor any acceptance of a restraint operating after the commercial relationship between the parties has ended or otherwise unconnected with that relationship, the doctrine of restraint of trade will have no application."

59. That, as I have said, was a minority view in relation to the issue as to the application of the doctrine at all to such circumstances, rather than the virtual automatic passage, or not, of such an agreement through the barrier of reasonableness. It does suggest to me, however, that, as the doctrine is based on public policy, no narrow or technical view of the contractual arrangement should be taken in considering what, if anything, the party whose freedom to trade is restricted has, or has not, surrendered.

60. The issue as to whether the doctrine could apply to restrictions on the contract of service of a TV presenter, forbidding her from accepting engagements elsewhere was considered in Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337. The restraints were found to be reasonable. The Court of Appeal (Meagher, Handley and Cripps JJA) merely noted that, consequent upon, inter alia, dicta in the Esso Petroleum case:

(342) "There is much to be said for the view that no question of restraint of trade arises at all in this case, but we will consider the submissions of the appellants on the assumption that it does."

61. The applicability question was more directly addressed in Quadramain Pty Limited v Sevastapol Investments Pty Limited [1976] HCA 10; [1975] 133 CLR 390. The owner of two blocks of land transferred them subject to a covenant that lot 2 would not be the subject of an application for a liquor licence. Lot 1 was then used as a hotel. The respondent was a lessee from a transferee of lot 2. The appellant was the transferee of lot 1. The respondent applied for a liquor licence contending that the restrictive covenant was void or unenforceable.

62. Barwick CJ considered no restraint of trade was involved. His Honour held that the Esso Petroleum case:

(394) "...supports the conclusion that an existing covenant, to which the purchaser of the land subject to the covenant is not a party or a privy, is not a contract in restraint of trade."

63. McTiernan J stated, simply, that the doctrine of restraint of trade, as the Esso Petroleum case, in his Honour's view, made clear, did not apply to "a Tulk v Moxhay covenant" ((1848) 1 Ph.774).

64. Gibbs J accepted that view of Esso Petroleum but also regarded it as "settled" that the doctrine does apply (at p. 401) "...to a restraint which extends only to the use of a particular piece of land...".

65. His Honour, however, preferred the rationale for that view expressed by Lord Wilberforce in the Esso Petroleum case. That view was that such restrictive covenants were "...part of the structure of a trading society" ([1968] AC at 335). If, in any individual case, the restraint went beyond such an accepted societal norm, then "...this should be examined in the light of public policy" (op.cit).

66. Gibbs J concluded:

(402) "The conclusion that the rules relating to restraint of trade do not apply to restrictive covenants given by a person purchasing or leasing land should be accepted as correct, at least as a general rule.... When a purchaser, with a view to obtaining a particular piece of land, which he could not otherwise acquire, or could acquire only on paying a greater price, freely gives to the vendor a covenant, for the benefit of other land of the vendor, that he will not use the land purchased for the purpose of trade generally or for the purpose of a particular trade, there is, speaking generally, no possible reason of public policy that would require such a covenant to be invalidated."

67. Stephen J, whilst agreeing that the covenant was valid and enforceable, avoided expressing a view on the "...limits of application of the doctrine against restraints of trade or the principles upon which those limits depend" (p. 405). His Honour concurred with Gibbs J that the doctrine did not strike down the covenant in question.

68. Mason J agreed with Gibbs J on the question of the application, or otherwise, of the doctrine of restraint of trade to the covenant.

69. Jacobs J recognised that restrictive covenants, whilst burdening some land by restraining trade to be carried on upon it, have been traditionally regarded as permissible. They might preserve the amenity of a residential neighbourhood or provide a balance of services in a particular development. Yet, as his Honour observed:

(407) "...if covenants restrictive of the use of land were regarded as wholly outside the common law principles governing restraints of trade, the purposes of the common law principle could be frequently defeated by framing the covenant or contract in restraint of trade so that it attached to the use of land."

70. His Honour pointed out that the basis of the doctrine of restraint of trade was the protection of the public interest in maintaining the structure of a trading society. This supports a view that the doctrine is available to be applied, but some situations are so much accepted as normal incidents of commerce that no proof that the restraint in question is reasonable in the interests of the parties and the public is called for. On the facts of the particular case, his Honour found the covenant in question was not reasonable. Murphy J agreed.

71. The effect of this decision was commented upon by French J in Forestview v Perpetual Trustees (1996) 141 ALR 687. Speaking of the majority view, his Honour said, at 695:

"Those judgments reached their conclusion through two approaches. The first was that a purchaser taking land under a restrictive covenant takes a qualified interest in the land and yields no existing freedom. The restraint of trade doctrine which applies to restraints on existing freedoms therefore has no application. The second was that restrictive covenants affecting trade on the burdened land are accepted as part of the structure of a trading society and are therefore exempt from the doctrine. Gibbs J who wrote the principal judgment in Quadramain, seemed to prefer the latter approach (at CLR 401) but it was unnecessary to choose between them as the outcome was the same (ibid, at CLR 402). Barwick CJ preferred the former approach (at CLR 394), McTiernan J relied upon both approaches: at CLR 398. Stephen and Mason JJ generally agreed with Gibbs J."

72. I would respectfully agree with his Honour's analysis of the majority view in Quadramain. The "preferred view" to which his Honour referred was also the basis for the minority opinion.

73. Forestview Nominees was considered on appeal by the High Court: [1998] HCA 15; (1998) 72 ALJR 621. That consideration was limited to the effectiveness of the covenant in question to burden the land. The question of the applicability of the doctrine of restraint of trade was not considered.

74. The distinction between an acceptance, for valuable consideration, of a restraint on a pre-existing freedom to trade, attracting the doctrine, and a contract for a limited freedom to trade which does not attract it, is not, to my mind, a satisfactory distinction. It seems to me more satisfactory to view certain categories of restraint as self-evidently reasonable, as the view of Gibbs J in Quadramain would suggest, thus not attracting the requirement to establish reasonableness.

75. In the present case, however, even if the view was to be taken that a restraint on a pre-existing freedom to trade was essential, that would, on the evidence, not be the case here.

76. It was common ground that, prior to the grant of sole scavenging rights to Revolve, persons, including the plaintiff, would scavenge over the Tip area and take and sometimes resell items they found there. They would bargain between themselves, and with persons seeking to abandon goods, for the right to have them. That freedom has been curtailed by the actions of the Territory in imposing restrictions on the activities of persons entering upon the Tip. It is unrealistic, in my view, to look at each licence as if it bore no relationship to any other. Restraint of trade is, as the authorities disclose, to be viewed broadly.

77. Further, a consideration of the terms of a licence to be upon land is quite a different matter from the transfer of an enduring interest in it. The right of entry onto the Tip area is, as Mr Erskine conceded, little different to permitting patrons to enter and view a sporting event. It would, no doubt, be reasonable for a sporting promoter of that event to licence, say, food and drink vendors and lend value to such licences by limiting unauthorised competition. However, that does not mean that the test of reasonableness has no application. Rather it will readily be perceived to have been passed by such an arrangement.

78. It does not seem to me that the arrangement between the Territory, Revolve and persons entering the Tip area to dump unwanted items, is so much part of the structure of a trading society as to be exempt from, or to automatically satisfy, the doctrine of restraint of trade.

79. There are two relevant restraints of trade. The first is upon the obtaining of abandoned goods by scavenging. The second is from dealing with others who have ownership and control over goods, for possession of those goods before they become abandoned.

80. Mr Erskine submits that these restraints are reasonable.

Are the terms of the restraint reasonable?

81. A starting point for a judgment as to reasonableness is the recognition that both the public and the parties affected by the restraint are entitled to freedom from a restraint that is not reasonable from one, other or both perspectives.

82. It was accepted in argument that the public has an interest in the promotion of the recycling of used goods and materials. There is also a more general public interest in promoting self-reliance amongst those members of the public, often otherwise dependent on social security payments, by permitting them access to a source of income for themselves, as well as the opportunity to obtain goods which may be of use to them at little or no cost. The plaintiff is an example of that class of person. His evidence supports the view that there are not inconsiderable numbers of others in his position. The very activity of such commerce engaged in by those persons provides another positive community benefit.

83. The Territory, on the other hand, pointed to certain benefits arising out of the proposed restraints. First, the Territory, as the manager of the land, has the right, if not the duty, to gain as much revenue for the community as it reasonably can. Thus it is reasonable to require users of the Tip to pay an entry fee and to licence, for a fee, organisations, such as Revolve, to scavenge for items considered resaleable.

84. As my judgment in Munday v ACT (No.1) noted, the Territory has the right to fence the land upon which the Tip is located. It has the right to restrict entry, though that right is, itself, subject to limitations imposed by law. As Mr Erskine conceded, the conditions to be imposed on entrants could not, and, indeed, are not intended to, confiscate or acquire goods and materials brought to the Tip before the owners abandon them. Mr Erskine submits that the restraints are reasonably required to protect the value of the rights the Territory has conferred upon Revolve.

85. Second, Mr Erskine submitted, the Tip is primarily used as a place for the disposal of waste materials. The area is a land fill area. Bulldozers operate relatively constantly to plough in waste materials. Scavengers are, to an extent, at risk of injury either from the direct operation of heavy machinery or from the dumped materials themselves. Revolve personnel will, he suggests, be better equipped and more safety conscious.

86. The plaintiff does not dispute that there is a degree of competition with Revolve but suggests that that better serves the purpose of recycling. It does appear, as I noted in my previous judgment, that recycling would be better served by scavengers being at least entitled to pick over goods and materials Revolve has rejected or passed over.

87. However, I recognise that there would be a clear practical difficulty in arranging such a regime without setting aside some time, after members of the public have dumped items and after Revolve has selected items, for other scavengers, such as the plaintiff, then to examine, and take their choice, from what remains.

88. As to the safety issues, the plaintiff suggests that, as he has been scavenging for thirty years, he is well aware of the need to avoid injury and how to do it. He says that Revolve employees are more at risk than he is.

89. There is much force in that submission. It becomes even more forceful if, for example, the restriction on the right to scavenge is to be regarded as a reasonable restraint. That would keep the plaintiff, and those like him, no closer to the Tip face than those who attend to dump waste materials.

90. Beyond that, The Territory would, even apart from the express terms of the licence issued to each entrant, have the right to evacuate the area in the case of some special hazard. The right to give (reasonable) directions to entrants, including Revolve employees, is a reasonable condition, not, in any event, itself a restraint of trade.

91. There is no evidence from the Territory, though it has employees at the Tip often, if not constantly, that any actual hazard has been created by the presence over the years of scavengers, even during that period of time when both Revolve employees and other scavengers competed to take possession of dumped items.

92. It may be noted that the plaintiff does not complain that Revolve has been given exclusive scavenging rights. He bid for such rights himself. He does make the point that it should not exclude the freedom for others to pick over items Revolve has rejected or passed over. However, I have noted that there may be practical difficulties in granting that limited freedom.

93. The plaintiff also complains of discriminatory treatment both in the tender process for scavenging rights and in the operation of the Tip. I reiterate that those complaints are beyond the scope of these proceedings. I make no finding as to their justification or otherwise.

94. The authorities to which I have referred make it clear that, save in those situations where the issue of reasonableness does not arise, it is for the party asserting the validity of a restraint of trade condition to satisfy the court of its reasonableness.

95. Even a restraint reasonable in the interests of the party imposing it may constitute an unreasonable burden on another. It may fail the public interest test.

96. In the present case, the Territory seeks, by the terms of its licence, to prohibit trading between entrants. Part of that restraint is the term that each person entering may only approach the Tip face to dump items and then depart forthwith. That, in itself, is not a condition in restraint of trade. However, it is apparent that its only substantive purpose is to support those conditions which are in restraint of trade by restricting the freedom of persons to remain on the Tip area so as to obtain, or bargain for, goods and materials. Despite Mr Erskine's persuasive argument to the contrary, I am convinced that the term in question is not warranted by public safety or even convenience. As I have noted, it is imposed to support the restraint on trade. It is aimed at the plaintiff and those like him. The power of Tip employees to give reasonable directions to persons on the land suffices to serve public safety and convenience. A good example of the latter would be instructing "loitering" vehicle drivers to move on, so as to allow others to deposit their waste at the Tip face. There is no evidence, however, that vehicle congestion is, or ever has been, a problem, or, if a problem, related to scavengers.

97. That condition would not be of concern if the conditions which it supports were reasonable. I find nothing reasonable in a condition which would prevent one licensee from trading goods with another. They are not goods then available to Revolve. They might never become so. Revolve might not want them. The owner might decide not to abandon them. It is, however, certain that the person who asks for and accepts them wants them. No right of Revolve, as conferred by its agreement with the Territory, is infringed. The public interest and those of the licensees is satisfied. The Territory loses nothing. Its fee from Revolve is neither increased nor diminished. It is highly unlikely, and certainly not the subject of any evidence before me to the contrary, that future licence fees would be in any way diminished. That condition is not shown to be reasonable. It, and the condition supporting it, requiring immediate departure, are therefore void. It may well be reasonable to require persons attending in vehicles to proceed directly to the Tip face, tip their waste, and then to clear the area so as to permit others to do likewise. However, I am not satisfied that it is reasonable to require persons whose vehicles are safely out of the way, and who are present at the Tip face for the purpose of dealing with other attendees for goods and materials, to "immediately leave" the area. Nor is it reasonable to construe "immediately" as forbidding conversation with other attendees, even if it may be related to bargaining. There is no reasonable basis for prohibiting "loitering" in the absence of any public safety or other reasonable concern other than restraining trade.

98. It follows that the first sign imposes, in part, conditions which are contrary to the doctrine of restraint of trade and are not demonstrated to be reasonable. That part is that which imposes the purported prohibition of trading, bargaining or soliciting. The prohibition on salvaging or scavenging for goods is, however, reasonable. That condition directly impinges on the scavenging rights to abandoned goods granted to Revolve. It supports the exclusive rights granted to Revolve. It may be that the Territory has only belatedly acted to support those rights by forbidding others from competing with Revolve, but that does not render it unreasonable for it now to do so. Clearly an enforceable right to first choice of abandoned materials is superior in value to one which is not enforceable. A history of enforcement will enable a higher fee to be commanded in the future. That revenue to the Territory itself is a matter of public interest.

99. The remaining signs and notices merely repeat the previously considered terms.

100. The above reasons answer the question of the power of the Territory, as manager of the Tip, to enter into contractual arrangements with, and restrict commercial activity at, the Tip. I express no view as to whether the Legislative Assembly could, by an enactment, authorise the Territory to enter into agreements which offend the doctrine of restraint of trade as preserved by the TPA. As subsidiary terms, the terms I consider void are plainly severable.

Was the Territory entitled to forbid the plaintiff from taking possession of goods given to him at the Tip?

101. The decision I have made in relation to the first question requires this question to be answered in the negative.

102. However, even if the plaintiff and the person passing goods to him had been in breach of the terms of the licences respectively given to them, it does not follow that Tip employees are entitled either to confiscate the goods in question or to require that they be dumped. If it was the case that the plaintiff was, by bargaining for goods from another, committing a breach of his licence agreement with the Territory, that fact did not affect the validity of his agreement with that other attendee. It may enable the licence to be terminated or damages sought for breach. It did not affect the validity of the offending transaction.

What is the remedy for breach of licence?

103. Ordinarily, the grantor of a licence to another to enter upon land may, if the breach is serious enough, terminate it. As with any other contract, it may not be terminated because of trivial breaches, though, if damage is suffered, an action for damages will lie. I am not asked by the Territory to adjudicate as to what breaches of licence, even assuming the licence to contain all the terms imposed by the Territory, would warrant termination. It may also be the case that conduct, trivial in itself, becomes reasonable cause for termination if repeated. It could be made so by express agreement so long as the condition, the breach of which would entail that consequence, was itself valid.

104. The plaintiff complains of the frequent invocation against him of s19(2)(c) of the Crimes (Offences Against the Government) Act 1989. It should be emphasized to all concerned that this section does not authorise the arrest and/or prosecution of persons who, being upon Territory land or in Territory buildings, are asked to leave but refuse to do so. It is a pre-condition of such an offence that the person in question is, or has become, a trespasser.

105. Naturally, some activities reasonable, for example, at the Tip, would be inappropriate and reasonably forbidden within other premises so as the more readily to lead to the valid revocation of a licence to be upon or within those premises.

106. Further, the section itself merely creates an offence. It does not create or confer any power of arrest or detention. A police officer might well, depending on the circumstances, exercise his or her discretion merely to prosecute by way of summons or to take no action at all, leaving the parties to their civil remedies.

107. It is important for Territory employees to be aware, not only of their rights in relation to licences for others to be upon Territory land, but also the limitations on those rights.

Selective enforcement of breaches of licence

108. There is no obligation on the Territory to enforce the terms of licences in any particular case. I noted in my previous decision (Munday v ACT (No.1)) that, by and large, administrative acts which are discriminatory may be dealt with either by the Ombudsman or, in a limited number of cases, by the Discrimination Commissioner.

109. However, there may be some consequences which follow from selective enforcement. If, for example, all attendees, other than the plaintiff, were permitted to trade with each other without interference, that may amount to a representation founding an estoppel against that term being enforceable against the plaintiff even if otherwise valid. It could amount to a waiver of it generally. However, neither of those questions needs to be addressed in the present case.

110. The evidence does not enable me to make any finding concerning this issue. Nor am I satisfied that Territory employees have acted in any unreasonably discriminatory manner. It is not, in my view, necessary to answer this question.

Remedies

111. The plaintiff seeks an injunction. As I said in my previous judgment, such a remedy would not issue, as of course, against a body politic such as the Territory. It is, instead, assumed that, declarations having been made as to the law and its application to the facts as found, the Territory will conform to the law.

112. If the parties wish it, I will give leave to them to bring in short minutes of any declaration considered necessary to give effect to these reasons or ancillary thereto.

I certify that this and the twenty-five (25) preceding pages are a true copy of the Reasons for Judgment herein of his Honour, Justice Higgins.

Associate:

Date: 23 February 1999

Counsel for the plaintiff: Litigant in person

Counsel for the defendant: Mr C Erskine

Solicitors for the defendant: ACT Government Solicitor

Dates of hearing: 6 October & 20 November, 1998

Date of judgment: 23 February 1999