Re Trade Practices Commission v George Weston Foods Limited; Allied Mills Industries Pty Limited; LA Coggan & Son Pty Limited; James Murray Ogilvie; Isabel Margaret Ogilvie; John Frederick Dallas [1980] FCA 16; (1980) 43 FLR 55 (11 March 1980)

FEDERAL COURT OF AUSTRALIA

Re: TRADE PRACTICES COMMISSION
And: GEORGE WESTON FOODS LIMITED; ALLIED MILLS INDUSTRIES PTY. LIMITED; L.A.
COGGAN & SON PTY. LIMITED; JAMES MURRAY OGILVIE; ISABEL MARGARET OGILVIE; JOHN
FREDERICK DALLAS [1980] FCA 16; (1980) 43 FLR 55
No. G16 of 1978
Trade Practices Act 1974 - Practice

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Davies, J.(1)

CATCHWORDS

Trade Practices Act 1974 - submission of no case to answer - whether the defendants should be required to elect not to call evidence - practice to be adopted and matters to be taken into account

Trade Practices - No case to answer - Submission of - Whether defendants required to elect first not to call evidence - Principles - Discretion of court - Under what circumstances discretion to be exercised.

Practice - Procedure - No case to answer - Submission of - Whether defendants must first elect not to call evidence - Principles - Discretion of court - Under what circumstances discretion to be exercised. Five of the defendants were the principal bakers in the Australian Capital Territory and they sold bread at the wholesale level to retailers. The Trade Practices Commission instituted proceedings against the defendants in the Federal Court of Australia alleging inter alia that the first, second and third defendants were parties to an arrangement or understanding whereby bread would be supplied by them to retailers in the Australian Capital Territory at wholesale prices agreed upon from time to time and that they gave effect thereto in breach of s. 45 of the Trade Practices Act 1974. The sixth defendant was alleged to have aided and abetted them. At the conclusion of the plaintiff's case the defendants sought to move for judgment on the ground that there was no case to answer. The plaintiff submitted in reply that the defendants should not be permitted so to move unless they elected not to call any evidence in the trial.

Held, that the defendants should be required to elect whether or not to adduce evidence in this trial.

Generally, justice is done by considering the state of the evidence for the purpose of giving judgment after all the parties have closed their case; but the court has a discretion which should be exercised only if justice to the parties would be achieved thereby.

Union Bank of Australia Ltd. v. Puddy, (1949) VLR 242; Humphrey v. Collier, (1946) VLR 391; Alexander v. Rayson, (1936) 1 KB 169; Laurie v. Raglan Building Company Ltd., (1942) 1 KB 152; Jones v. Dunkel [1959] HCA 8; (1959), 101 CLR 298; Stevenson v. Barham [1977] HCA 4; (1977), 136 CLR 190, followed.

Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. [1978] FCA 51; (1978), 40 FLR 74, distinguished.

Menzies v. Australian Iron & Steel Ltd. (1952), 52 SR (NSW) 62; Hummerstone v. Leary, (1921) 2 KB 664, considered.

HEARING

Canberra, 1979, June 1; October 19; 1980, March 3-7, 10-11. 11:3:1980

The plaintiff sued the defendants in the Federal Court of Australia alleging breaches of s. 45 of the Trade Practices Act 1974. The decision reported below deals solely with the defendants' motion for judgment on the ground that there was no case to answer and with the plaintiff's submission that the defendants should first be required to elect not to call evidence in the trial before the motion is entertained. The facts appear from the ruling.

G. G. Masterman Q.C., G. A. Crawford and P. S. Hastings, for the plaintiff.

M. H. McHugh Q.C. and I. A. Curlewis, for the first defendant.

T. R. Morling Q.C. and G. T Wood, for the second defendant.

A. R. Castan Q.C. and B. J. Doyle, for the third and sixth defendants.

F. H. Callaway, for the fourth and fifth defendants.

Solicitor for the plaintiff: B. J. O'Donovan (Commonwealth Crown Solicitor).

Solicitors for the first defendant: Stephen, Jacques & Stephen.

Solicitors for the second defendant: Sly & Russell.

Solicitors for the third and sixth defendants: Macphillamy, Cummins & Gibson.

Solicitors for the fourth and fifth defendants: Sneddon, Hall & Gallop.

E. F. FROHLICH

DECISION

The following reasons were delivered orally on 11 March 1980:

The defendants, by their counsel, seek to move for judgment on the ground that there is no case to answer. Mr. Masterman, senior counsel for the plaintiff, has submitted that counsel for the defendants should not be permitted so to move unless they elect not to call evidence in the trial.

Counsel do not rely upon any specific provision of the Federal Court Act 1976 or of the rules, but reference was made to rule 1 of order 35 and also to the inherent powers of the Court. Rule 1 of order 35 provides that the Court may at any stage of the proceeding, on the application of any party, pronounce such judgment or make such order as the nature of the case requires. Counsel for all parties are agreed that section 79 of the Judiciary Act 1973 does not apply to this hearing and that, in considering these application, I am not, as was Mr. Justice Fisher, in Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. 1978 ATPR 17,956, bound by the practice of the Supreme Court in the area where the trial takes place.

The mainstream of authority on the practice to be adopted is clear. In The Union Bank of Australia Limited v. Puddy 1949 VLR 242, Mr. Justice Fullagar examined the practice adopted in the United Kingdom, in Victoria and in other states of Australia. At page 244 his Honour said:

". . . I think it must be taken to be now established as a general rule of practice that, in trials by a Judge without a jury, a decision will not be given on a submission of either character unless the defendant announces that he calls no evidence."

His Honour was referring to submissions that there is no evidence to support the plaintiff's case or that there is some evidence but the Court should not act upon it. His Honour went on to say, at page 245, that:

". . . although the general rule appears now to be well established, it is like all rules of practice, not inflexible."

His Honour referred to the statement of Mr. Justice Gavan Duffy, with whom the Chief Justice Sir Edmund Herring agreed, in Humphrey v. Collier 1946 VLR 391, at page 402, that:

". . . such should be the general practice is I think very desirable but I do not think the presiding Judge should be left without discretion in the matter. There might be occasions when a strict adherence to it would result in unnecessary loss of time and money."

Mr. Justice Fullagar added two observations of his own to the authorities which he had cited. At pages 245-6, he said:

"In the first place, as Goddard LJ pointed out, something may turn on the nature of the case itself. For instance, in actions for negligence it is commonly not the direct effect of evidence but the inferences that may be drawn from it that are in issue, and the cases show that the discretion should be exercised with the greatest caution. On the other hand, where, as in the case before me, fraud is alleged, it may often be wrong to suggest that a party should submit himself to cross-examination before it is seen that there is really some evidence against him. In the second place, it would seem that the exercise of the discretion must generally involve an estimating of probabilities. If I accede to the application made to me, I may save the parties a great deal of time and expense, or I may cause them much greater expense and delay in the event of a new trial being ordered. In order to assess these probabilities, it seems to me that it must generally be necessary to form some preliminary estimate of the evidence before ruling as to whether the submission is to be entertained without election."

The general practice adumbrated by his Honour has been clearly stated in the United Kingdom in Alexander v. Rayson (1936) 1 KB 169 and in Laurie v. Raglan Building Company Limited (1942) 1 KB 152. It has been enunciated in the High Court of Australia by Mr. Justice Windeyer in Jones v. Dunkel [1959] HCA 8; 101 CLR 298 at p.313 and, more recently, by Mason and Jacobs JJ in Stevenson v. Barham [1977] HCA 4; 136 CLR 190 at pp.202-3. There, their Honours, with whom in this respect the Chief Justice and Mr. Justice Stephen agreed, said:

"We would not apply to objections to jurisdiction the general rule that a defendant should be called upon to elect whether or not he will call evidence before he is permitted to submit that there is no case to answer. The traditional practice whereby a defendant is permitted to take a preliminary objection to jurisdiction and to argue it without being put to his election is quite at odds with a suggestion that a defendant should be compelled to elect before taking an objection to jurisdiction. Even the general rule that a defendant should be called upon to elect before submitting that there is no case to answer must give way to particular circumstances. The discretion of a court to determine the case at an early stage, when appropriate, has been repeatedly asserted. (See Young v. Rank (1950) 2 KB 510; Ramsden v. Ramsden (1954) 1 WLR 1105 at p.1107; Union Bank of Australia Ltd. v. Puddy (1949) VLR 242; Sampson v. Edwards (1949) VLR 6)."

The practice also is followed in New South Wales. See Supreme Court Procedure New South Wales by A.V. Ritchie, note 34.8.1.

I propose to follow the practice established by these authorities. It is not a practice based upon historical accident but rather upon a clear understanding as to the proper manner in which justice is achieved at a trial. Generally, justice is not done by considering the state of the evidence before all the parties have closed their case. It is inconvenient to the judge to form conclusions of fact during the course of the trial; the drawing of inferences from sparse evidence is often a very difficult and fallible method of arriving at the truth of the matter; argument on the submission often delays the hearing; and the consideration of the submission and perhaps appeal on the interlocutory order may further delay it. Generally, it is better that a judge should come to his conclusions of fact only at the close of the evidence and for the purpose of giving judgment. In those cases where the discretion not to put a defendant to an election has been exercised, there has generally been a sound reason why justice would best be done by considering the submission and, if allowing it, by bringing the action to a premature end. Such a case may arise where the issue does not depend on the resolution of a subtle state of facts or where the evidence for the plaintiff is so palpably inadequate that it would appear to be an unnecessary waste of time and money to continue the trial. There are other such cases where the discretion should be exercised. I do not wish to circumscribe the discretion. Nevertheless, the discretion should not be so exercised unless justice to the parties would thereby be achieved.

In the present case, four main allegations are made against the defendants, five of whom are the principal bakers of bread in the Australian Capital Territory, and one of whom, Mr. Dallas, is alleged, in substance, to have aided and abetted them. The first allegation, in paragraph 13(a) of the amended statement of claim, reads:

"13.(a) Prior to, on and subsequent to 1st October 1974 Weston, Allied and Coggan and each of them were parties to an arrangement or understanding whereby bread would be supplied by such defendants to retailers in the Australian Capital Territory at wholesale prices (before deduction of discounts and rebates) agreed upon from time to time."

The second allegation, in paragraph 16(a) of the amended statement of claim, reads:

"16. Further or in the alternative:

(a) In or about December 1976 Weston, Allied, Coggan and the Ogilvies and each of them made an arrangement or entered into an understanding whereby Weston, Allied, Coggan and the Ogilvies and each of them agreed to increase by 2 cents (before deduction of discounts and rebates) on and from 30th December 1976 or thereabouts the wholesale prices at which bread would be supplied by such defendants to retailers in the Australian Capital Territory."

The third allegation, in paragraph 17(a) of the amended statement of claim, reads:

"17. Further or in the alternative:

(a) In or about May or June 1977 Weston, Allied, Coggan and the Ogilvies and each of them made an arrangement or entered into an understanding whereby Weston, Allied, Coggan and the Ogilvies and each of them agreed to increase by 1 cent (before deduction of discounts and rebates) on and from 2nd June 1977 the wholesale prices at which bread would be supplied to retailers by such defendants in the Australian Capital Territory."

The fourth allegation is that, at various stages on and after 30 December 1976, the parties gave effect to the three arrangements or understandings which I have mentioned. Most of the allegations are made under section 45 of the Trade Practices Act 1974 as it appeared before the amendment which took effect on 1 July 1977. Some of the allegations which relate to giving effect to the arrangements or understandings extend beyond 1 July 1977 and are made under section 45 of the Act as it now stands. The evidence which has been given on behalf of the plaintiff is sparse. To establish the arrangements or understandings, counsel for the plaintiff presently relies substantially upon evidence as to parallel conduct.

The defendant bakers sell bread at the wholesale level to retailers. The evidence has established to this point of time that each of such defendants provided to each of the retailers with which it or they deal a recommended retail price list and that the wholesale price charged for the bread sold at the wholesale level was calculated by allowing discounts and rebates upon that recommended retail price. It is an agreed fact that, on 30 December 1976, the first, second, fourth and fifth defendants and, on 4 January 1977, the third defendant, raised their respective recommended retail prices by two cents per loaf of bread. It is a further agreed fact that, on 2 June 1977, all the baker defendants raised their respective recommended retail prices by one cent per loaf. It is an agreed fact that no alteration to the discounts and rebates allowed was made by reason of this increase.

Counsel for the plaintiff relies upon inferences to be drawn from this conduct and also upon inferences to be drawn from press releases issued shortly before the increases in the recommended retail prices by the defendant Mr. Dallas, who, in the press releases, said that he was speaking on behalf of the baking industry in the Australian Capital Territory. These press releases are presently not evidence against the defendants other than the first defendant, and Mr. Dallas; but this is not to say that, if further evidence is given, they will not be proved to have been authorised by other defendants and admitted into evidence against them. Presently, no explanation of the parallel conduct has been given and there is no fact established which, in itself, explains the increase in the recommended retail prices on the days mentioned.

In my view, it would be unsatisfactory to determine the issues involved in this case upon the evidence which is at presently before the Court. To come to a conclusion at the present time, would involve the drawing of inferences from meagre facts, facts which arguably call for an explanation and which have not been explained. I do not wish to indicate that I have formed any view that they should be explained or that necessarily any inference will be drawn against the defendants if they are not explained. I have no view on that matter. Nevertheless, I think that Mr. Masterman might reasonably put an argument that the increases which took place on the particular days call for an explanation. I am further of the view that, if the facts alleged in the statement of claim are established, the plaintiff will have an arguable case on the law. I have not attempted to form any concluded view as to whether, if those facts are established, the plaintiff will succeed. It is sufficient, at the present time, that I think that the plaintiff will have an arguable case.

In my view, justice would best be done by calling upon the defendants to elect whether or not to call evidence so that the submission of no case to answer, if it is made, proceeds upon the whole of the evidence which is to be taken into account in this action.

Mr. Callaway, counsel for the fourth and fifth defendants submitted that the evidence was exceptionally incomplete. I agree that the evidence is meagre but, in my view, it is not so poor that it leads me to the conclusion that the plaintiff is most unlikely to establish a case. Mr. Callaway further submitted that, in the exercise of my discretion, I should deal with the defendants in this case as was done by Mr. Justice Fisher in the Trade Practices Commission v. Nicholas Enterprises Pty. Ltd., cited above. However, in that case, his Honour felt that he was bound by the provisions of section 79 of the Judiciary Act 1973 to follow the practice which he understood to prevail in the South Australian Supreme Court. In my view, there is no sound reason for following that practice in an instance where I am not so bound, and I think that I should follow the mainstream of authority which I have already mentioned.

Mr. Callaway submitted that I should take into account the probable length and expense of these proceedings if it runs its full course, and I have done so, but I am of the view that this is not a case where I can say that unnecessary time and expense would be incurred if the trial proceeds. Indeed, I think that, if I were to deal with the submission without requiring an election to be made, unnecessary time and expense could be wasted in the hearing and determination of that submission.

Mr. Callaway submitted that this is an action for a penalty and akin to a criminal prosecution and that I should follow the criminal practice. I think that I should not do so, but I do take into account as a matter to be considered that, in this civil action, a breach of the Trade Practices Act 1974 is alleged and that the allegation is one which calls for a standard of proof consistent with the seriousness of the allegation made. It is sufficient for me to refer to what was said by Mr. Justice Fisher in Trade Practices Commission v. Nicholas Enterprises Pty. Ltd., 1979 ATPR 18,333, at pages 18,352-3.

Mr. Callaway further submitted that, as the plaintiff's case is based upon circumstantial evidence, it will work a considerable hardship to the defendants to require them to be put on their election because, if put to their election, a very fine judgment will have to be made. If direct evidence of the circumstances in which the increases in price came about is given, the nature of the case will change from one in which inferences are drawn from sparse facts to one in which direct evidence as to the events which occurred is considered. It is true that an election will be a matter of very considerable significance to the defendants but I do not think that that is a particular reason why they should not be put upon their election. In my view, it is preferable that evidence be obtained from persons who have direct knowledge of material facts rather than that inferences be drawn from meagre publicly known facts.

Mr. Morling, counsel for the second defendant adopted the submissions of Mr. Callaway but further submitted that I should give significance to the provisions of section 155 of the Trade Practices Act 1974 which provide a means by which the Trade Practices Commission the plaintiff may obtain evidence of relevant facts. It has been put with some vigour that counsel for the plaintiff has not tendered any responses made to any section 155 notices which may have been relevant to the defendants. I have taken that matter into account but I think that it is a matter which has more significance on the question whether or not any adverse inference should be drawn from what might otherwise appear to be unexplained facts. However, I have formed no particular view as to its significance in that respect.

Counsel for the defendants otherwise in general adopted the points put by Mr. Callaway.

The evidence against some defendants is weaker than the evidence against others. However, if further evidence is given, the strength of the evidence against a particular defendant may well alter. In Menzies v. Australian Iron & Steel Ltd. & Hill 52 NSWSR 62 and Hummerstone v. Leary (1921) 2 KB 664, it was established that, in such a circumstance, it is undesirable that one or more of the defendants should be dismissed from the action prior to the reception of all the evidence.

I think that I need say nothing further about the facts or about the submissions of law which were put and I think it would be undesirable for me to do so. On the whole, I am of the view that justice will best be done if I require the defendants, at this stage, to elect whether or not they will adduce evidence in the trial.