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High Court of Australia |
REDFERN v. DUNLOP RUBBER AUSTRALIA LTD. [1964] HCA 9; (1964) 110 CLR 194
Constitutional Law (Cth)
High Court of Australia
Dixon C.J.(1), McTiernan(2), Kitto(3), Taylor(4), Menzies(5), Windeyer(6) and
Owen(7) JJ.
CATCHWORDS
Constitutional Law (Cth) - Trade and commerce among the States - Statute prohibiting contract or combination in relation to trade and commerce among States in restraint of or with intention to restrain such trade or commerce - Right of action by person injured by act in contravention of prohibition - Right to recover treble damages - Validity - Demurrer - The Constitution (63 & 64 Vict. c. 12), s. 51 (i.) - Australian Industries Preservation Act 1906-1950 (Cth), ss. 4 (1) (2)*, 11**.
HEARING
Melbourne, 1963, October 8-10; 1964, February 25. 25:2:1964DECISION
1964, February 25.2. It is convenient to state who are the plaintiffs by reference to the name of their firm or company and not as individuals. First, there is Highway Tyre Service of Dandenong; second, Pakenham Tyre Service of Pakenham; third, H.J. King Tyre Service of Melbourne which is a business of an incorporated company, H.J. King Enterprises Pty. Ltd., incorporated in Victoria. These three bodies were, according to allegations in the statement of claim, all engaged at the material times in carrying on the business of buying, selling and dealing in motor and cycle tyres and tubes. Each is alleged to have been "a trader", an expression adopted by the statement of claim as a description of those entering into a certain agreement governing the terms of retailing tyres. (at p206)
3. The defendants consist of five companies: first, Dunlop Rubber Australia Limited which manufactured tyres etc. at factories in New South Wales and in Victoria and sold them in those States for delivery across State borders and delivered them across State borders into warehouses for subsequent sale or delivery therefrom; second, B.F. Goodrich Australia Pty. Limited which manufactured tyres etc. at a factory or factories in the State of Victoria and sold them in the State of Victoria, sometimes for delivery across State borders from its factory or warehouses as the case may be, at other times for delivery into warehouses for subsequent sale and delivery therefrom; third, The Olympic Tyre & Rubber Co. Proprietary Limited which manufactured tyres etc. at its factories situated in Queensland and in Victoria and sold them in those respective States for delivery across State borders from its factory or warehouse as the case might be; fourth, Hardie Rubber Company Pty. Limited which manufactured tyres etc. at its factories situated in New South Wales and Queensland and sold them in those respective States for delivery across State borders or from its factories or warehouses to purchasers at places in other States, or delivered them to its warehouses in other States for subsequent sale and delivery therefrom; fifth, The Goodyear Tyre & Rubber Co. (Australia) Limited which manufactured tyres at its factory situated in New South Wales and sold them in that State for delivery across the State borders from its factory and warehouses and delivered them into its warehouses in other States for subsequent sale and delivery therefrom. It was alleged by the statement of claim (although I do not think it is of importance) that by reason of the matters hereinbefore referred to, each of the defendants was at all material times engaged in trade and commerce among the States of the Commonwealth. This allegation seems to regard the practice of inter-State trade as investing a party with a status. We are, however, concerned rather with transactions which fall within the legislative power. The statement of claim goes on to allege that before 8th May 1961 the defendants and each of them entered into a contract, or at all events became members of a combination among themselves, in respect of the distribution, sale and delivery of tyres etc. manufactured as aforesaid. The provisions of the contract are then alleged, showing that it purported to govern the fixation of prices for traders and the terms on which the goods should be retailed. It was alleged that all of this was done in restraint of, or with intent to restrain, trade and commerce among the States. Then it is alleged that each of the plaintiffs was injured in his trade by reason of the acts and things aforesaid. In substance, the damage in the case of each plaintiff was said to result from inability to obtain tyres etc. at wholesale prices and his ability to obtain them only at the prices established under the agreement. The total loss for stated periods was given in the case of each plaintiff. A separate claim for the treble damages was then made in the case of each plaintiff. In the result the claim for damages is given separately for each of the three plaintiffs but in each case it is for treble damages. (at p207)
4. On the part of the defendants a separate defence was delivered for each of the five defendants. In each case the defence includes a general demurrer to the statement of claim. Of course, grounds in law for the demurrer are stated (see O. 26, r. 2) but they are expressed as if they were the only grounds available and various traverses and pleas are given in the defence and for some reason treated as part of the proceedings before us. What we have in fact, however, is a demurrer or series of five demurrers set down under O. 26, r. 8(a), before the Full Court. (at p208)
5. Section 4 of the Australian Industries Preservation Act 1906-1950 provides that any person who enters into a contract, or is or continues to be a member of or engages in any combination, in relation to trade or commerce among the States - (a) in restraint of trade or with the intention to restrain trade or commerce; or (b) to the destruction or injury or with the intent to destroy or injure by means of unfair competition any Australian industry the preservation of which is advantageous to the Commonwealth, having due regard to the interest of producers, workers and consumers, is guilty of an offence. Every contract made or entered into in contravention of the section is declared to be absolutely illegal and void. (at p208)
6. Section 11(1) provides that any person who is injured in his person or property by any other person, by reason of any act or thing done by that other person in contravention of this Part of this Act, or by reason of any act or thing done in contravention of any injunction granted under this Part of this Act, may, in the High Court, before a Justice without a jury, sue for and recover treble damages. In support of the demurrer the defendants attack the validity of these provisions. As may be supposed, the attack takes the general ground that they are outside the trade and commerce power (s. 51(i.)). It appears to me to be completely clear that s. 4(1) creating the offence is valid. The first part of s. 4(1) expresses by the words "in relation to trade or commerce" the limitation of the class of act which it prohibits. No doubt the words "in relation to trade or commerce with other countries or among the States" are somewhat elastic but it must be borne in mind that the contract or combination must be in restraint of or with intent to restrain trade or commerce. Truly these words include in their natural meaning intra-State as well as inter-State commerce, but the words following "in relation to" are themselves explicitly limited to the words "trade or commerce with other countries or among the States". It therefore means on its literal construction that there must be a restraint or intention to restrain trade or commerce in the contract or combination and that the contract or combination must be in relation to inter-State or overseas trade and commerce. This, in my opinion, makes it completely clear that the law is dealing with trade and commerce with other countries and amongst the States. (at p208)
7. Turning to s. 11(1), that of course is a referential provision. Its reference is to any contravention of provisions in the Part. We may ignore the reference to the injunction for present purposes. The action for damages must be brought by a person injured by reason of any actual thing done in contravention of the Part. In this case s. 4 is picked out and it is alleged that things were done in contravention of s. 4 and that the three plaintiffs were injured. So far there is nothing constitutionally wrong or ultra vires. Nor, in my opinion, could there be any complaint on constitutional grounds if a right to recover compensation for the injury were granted. But that would be because in my opinion it is within the legislative power over trade and commerce with other countries and among the States to give a remedy for reparation in the case of private injury by violation of federal law. But the remedy given, while it may be said to include reparation, goes far beyond reparation; the remedy gives three times the amount of reparation and therefore it cannot be supported at all events in whole as a remedy compensating for injury done by the defendant's violation of federal law. The treble damages can be supported only as a means of enforcing or inducing compliance with federal law. It is in fact copied from the Sherman Act. The real cause for hesitating about s. 11(1) is that it provides for treble damages, even if this be a well known if somewhat antiquated method of inducing obedience to the law. No doubt that is why it was put in the provision of the Sherman Act. One may imagine that the method of enforcing federal law was thought to be a matter for consideration when this legislation was framed. The theory must be that a person injured might hesitate to sue if he had not the incentive of recovering three times his loss, and that the statute would be difficult to enforce if private persons were not induced to enter into legal proceedings for the purpose. On the whole I think that we should treat the inclusion of this provision as within the powers of the legislature. The main subject, suppression of restraint of trade and of monopolies, is, in my opinion, clearly within the subject of trade and commerce with other countries and among the States provided, of course, that intra-State trade is not included as a direct subject. And I think it may be said to be incidental to the purpose in view, because it provides an inducement to a private person to sue, which inducement at the same time offers a strong deterrent to the person contemplating a breach of the provision of the federal law. I am therefore of opinion that s. 11 is valid. (at p209)
8. So far as the demurrer is based upon an argument that s. 4 or s. 11 is invalid, I think it must necessarily fail. (at p209)
9. The statement of claim is open to many objections but they are of a procedural character and they were not availed of by the demurring party, even if they could have been raised before us. On the whole I think we should ignore them. They are not properly raised by general demurrer and I think we are entitled upon the argument as presented in support of the demurrer simply to overrule the demurrer. (at p210)
McTIERNAN J. I agree with the judgment of the Chief Justice and his reasons. (at p210)
KITTO J. I agree in the judgment of the Chief Justice. (at p210)
2. The question whether the statement of claim alleges facts sufficient to give the plaintiffs a cause of action under s. 11 of the Act is not without its difficulty, but I have come to the conclusion that sufficient is alleged. (at p210)
3. Paragraph 20 alleges injury to the plaintiffs by reason of the acts or things previously mentioned, the injury consisting of damage resulting from inability to obtain tyres etc. at wholesale prices. This means that the plaintiffs suffered financial loss - were injured in their property - in that they had to pay more for their tyres etc. than they would have had to pay if the acts or things referred to had not been done. For such injury s. 11 gives a right to recover treble damages provided that the acts or things referred to were done in contravention of Pt II of the Act. Paragraph 19 points to s. 4 as the provision of Pt II which the plaintiffs say was contravened by the acts or things relied upon. The acts or things are described by par. 16, first as a contracting or combining to refuse to sell tyres etc. at wholesale prices (or at any price other than trade list price) to the plaintiffs at any place in Australia, and secondly as a refusal in combination to sell tyres etc. to the plaintiffs at any place in Australia and in particular from factories or warehouses in States other than Victoria for delivery across State borders into Victoria for delivery there to the plaintiffs. (at p210)
4. Bearing in mind that par. 6 alleges that the defendants were all or substantially all the manufacturers in Australia of tyres etc. sold in Australia, the first branch of par. 16 seems to me to mean that the defendants entered into a contract or engaged in a combination in relation to all trade, inter-State as well as intra-State, which made it practically impossible for the plaintiffs to purchase tyres etc. even in inter-State trade at wholesale prices or at prices less than trade list prices. Such a contract or combination is a contract or combination in relation to trade among the States, and is in restraint of trade, and must therefore be in contravention of s. 4(1). If, as par. 18 alleges, the contract was made, or the combination was engaged in, with intent to restrain trade or commerce among the States, that is an added reason for saying that the contract or combination was in relation to trade or commerce among the States, and reinforces the conclusion that the acts or things complained of were in contravention of s. 4(1). (at p211)
5. Then the second branch of par. 18 alleges not individual refusals by the defendants but a refusal by them all in combination. I take it to mean that the defendants together decided, and announced their decision and adhered to it, not to sell tyres etc. to the plaintiffs at wholesale prices or at any prices lower than trade list prices, whether in inter-State trade or not, and in particular not to do so by means of contracts requiring deliveries to the plaintiffs across State borders. If that is its meaning, once more there is an allegation that the defendants engaged in a combination which prevented the plaintiffs from buying tyres etc. in inter-State trade at prices lower than trade list prices. Such a combination is necessarily in relation to trade among the States and in restraint of trade, and as such must be in contravention of s. 4(1). As in the case of the first branch of the paragraph, the conclusion that what was done was in contravention of s. 4(1) is reinforced by the allegation of intent in par. 19. (at p211)
6. Paragraph 17 means, if I understand it aright, that even if there was no contract or combination or refusal directed against the plaintiffs specifically, that is to say one that was independent of the general contract or combination among the defendants which is alleged in par. 14, there was a refusal by way of giving the terms of the general contract or combination a particular application to the plaintiffs, and the refusal was as described in par. 16. If so, a cause of action under s. 11 is again alleged. (at p211)
7. I would therefore overrule the demurrers. (at p211)
TAYLOR J. This matter comes before us by way of several demurrers to the whole of the plaintiffs' statement of claim in a suit in which treble damages are sought pursuant to s. 11 of the Australian Industries Preservation Act 1906-1950, for business losses alleged to have been sustained by reason of certain alleged contraventions of s. 4(1) of the Act. The grounds of the demurrers are threefold and assert, in effect, that the statement of claim does not disclose any title to the relief claimed and, secondly, that if, and so far as sub-ss. (1) and (2) of s. 4 of the Act apply, affect, or relate to persons when not carrying on or engaged in trade and commerce among the States, they are in excess of the constitutional powers of the Commonwealth Parliament. Finally it is contended that the provisions of s. 11 are also ultra vires. (at p212)
2. As I see it the substance of the complaint of the plaintiffs, various combinations of whom operate each of three so-called "Tyre Services" at different places in Victoria, is that they have suffered business losses by reason of the refusal of the defendants between 8th May 1961 and 12th November 1961 to sell motor tyres to them at other than "trade list prices", those prices being in excess of the normal wholesale prices. This refusal is said to have taken place in combination and to have constituted a contravention of s. 4 of the Act and, accordingly, it is asserted that by reason of the provisions of s. 11 the plaintiffs are entitled to recover treble damages. It will be necessary to consider the allegations made in the statement of claim with rather more particularity but, before doing so, it is desirable to set out the provisions of s. 4(1) and (2) and s. 11(1) of the Act as they at present stand: "4(1) Any person who, either as principal or as agent, makes or enters into any contract, or is or continues to be a member of or engages in any combination, in relation to trade or commerce with other countries or among the States - (a) in restraint of or with intent to restrain trade or commerce; or (b) to the destruction or injury of or with the intent to destroy or injure by means of unfair competition any Australian industry the preservation of which is advantageous to the Commonwealth, having due regard to the interests of producers, workers and consumers, is guilty of an offence. (2) Every contract made or entered into in contravention of this section shall be absolutely illegal and void. 11(1) Any person who is injured in his person or property by any other person, by reason of any act or thing done by that other person in contravention of this Part of this Act, or by reason of any act or thing done in contravention of any injunction granted under this Part of this Act, may, in the High Court, before a Justice without a jury, sue for and recover treble damages for the injury." It will be seen from a perusal of these sections that if the plaintiffs are to succeed in overthrowing the demurrers it must appear from the statement of claim that some "act or thing" was done by the defendants in contravention of some valid provision of Pt II of the Act and, further, that the doing of that "act or thing" resulted in the damage complained of. The only provision of Pt II which the actions of the defendants are said to have contravened is s. 4(1) and, in general terms, the acts or things complained of are the making by the defendants of a contract or the engaging by them in a combination, in either case in relation to inter-State trade, in restraint of or with intent to restrain trade or commerce. (at p213)
3. In relation to these matters several questions arise. First and foremost is the question of the meaning of the words in s. 4(1) "in relation to trade or commerce . . . among the States" and it is, I think, convenient to deal with this point at once. The purpose of the section is to destroy contracts which operate in restraint of, or made with intent to, restrain trade or commerce and to render unlawful any such contract or the formation of, or the participation in, any combination having that effect or formed with that intention. But the operation of the section is restricted to contracts and combinations "in relation to trade and commerce with other countries or among the States". To my mind a contract or combination is, within the meaning of the section, in relation to such trade and commerce where it can be seen that, according to its tenor, the contract will operate directly on some activity which constitutes some part of such trade or commerce or where it appears that the designed activities of the combination will so operate. So understood the section would appear to be within power. But the further objection is taken that a contract or combination may, at one and the same time, be in relation to inter-State and intra-State trade and commerce and that it is beyond the legislative competence of the Commonwealth Parliament to render such contracts or combinations wholly unlawful. This, it is said, is what s. 4(1) purports to do in such a case and so it is contended that the section travels beyond constitutional power. In my view this argument must be rejected. The object of the section is the protection of inter-State and overseas trade and commerce and there can be no question that legislation on this topic is within Commonwealth legislative power. Nor can I see that legislation can be said to transcend constitutional power where it purports to make unlawful agreements or combinations which, in the sense in which I have used the term, relate generally and without discrimination both to inter-State and intra-State trade. Once it be conceded that the Commonwealth Parliament may legislate to prohibit or declare unlawful contracts and combinations of a particular character in relation to trade and commerce with other countries and among the States it is not, I think, a valid objection that some such contracts or combinations may be found to relate also to other matters. Nor is the objection taken independently to the provisions of s. 11 sustainable. Indeed I find it difficult to see any ground upon which the provisions of that section can be thought to be invalid for they purport to do no more than to provide a particular form of sanction in relation to other provisions of Pt II of the Act which, in considering this ground of objection, must be taken to be valid. If, as I think, the provisions of s. 4(1) are valid and have the operation which I have ascribed to them then it seems to me clear that the provisions of s. 11 are valid and operative in so far as they relate to any contravention of the earlier section. Accordingly I agree that to the extent to which the demurrers are based upon the alleged invalidity of the relevant provisions of the Act they must fail. (at p214)
4. It is, therefore, necessary to consider whether the matters alleged in the statement of claim disclose a right in the plaintiffs to the damages which they claim. In short the question may, I think, be stated by asking whether it appears sufficiently, or at all, from the statement of claim that the injuries of which the plaintiffs complain resulted from some "act or thing" done by the defendants in contravention of s. 4(1). In this connexion it should be observed that a number of "acts or things" are alleged by the statement of claim commencing with the general allegations appearing in par. 14 and then proceeding to what may be called the more particular allegations appearing in pars. 16 and 17. (at p214)
5. These three paragraphs are prefaced by a number of allegations apparently designed to show that each of the defendants was, in some measure, engaged in inter-State trade. I refer particularly to pars. 8 to 12. Whether the draftsman of these paragraphs has achieved his purpose is, I think, open to question. However, I am prepared to assume that he has and to accept for the purpose of the demurrers that some unspecified part of the business activities of the defendants, as alleged, constituted trade or commerce among the States. But, subject to one matter to which I shall refer presently, there is nothing to suggest that any dealings between the plaintiffs and the defendants at any time constituted any part of such trade and commerce. (at p214)
6. It is against this background that par. 14 alleges that "at some time prior to the 8th day of May 1961 the defendants and each of them entered into a contract among themselves and/or became members of or engaged in a combination among themselves in respect of the distribution sale and delivery of tyres etc. manufactured by them". The allegations contained in par. 15, which sets out the provisions of the alleged contract "and/or" the objects of the combination, disclose the arrangement, if it may be so called, as a general trade agreement providing for the fixing of wholesale prices, trade list prices, trade-in allowances, retail prices and, generally, the terms and conditions upon which tyres should be sold both by wholesale and retail. It is also alleged that the arrangement provided that "any trader who committed any breach or was guilty or was adjudged by the defendants or any of them or any person or persons acting on behalf of the defendants or of any of them to have been guilty of any breach or non-observance of the terms and conditions of trade prescribed by any of the defendants should therupon become ineligible to be supplied with tyres etc. at wholesale prices by any of the defendants and should thereafter be eligible to obtain tyres etc. from any of the defendants at trade list prices only and that each defendant should thereafter refuse to sell in any State of the Commonwealth of Australia to any such trader tyres etc. at wholesale prices or other than trade list prices for delivery whether in that State or across State borders from or into any other State of the Commonwealth of Australia to or on account of that trader". I find it unnecessary to traverse the provisions of par. 15 in detail for it is clear they do not allege an arrangement which of its own force affected the rights of the plaintiffs or caused any injury or loss to them. Nor, I should add, is any allegation made that the injuries of which the plaintiffs complain resulted from the making of this arrangement. Nevertheless I agree that the arrangement, which I use as a convenient term to cover both "contract" and "combination", was an arrangement "in relation to trade and commerce among the States" and that it was in restraint of trade within the meaning of s. 4 (1) (a). However it is importance to stress the fact that the initial contract or combination was not in any sense self-executing as regards the plaintiffs or any other traders. The arrangement as alleged did not purport to impose any contractual obligations upon them nor were the sanctions which it contemplated imposed automatically by force of the arrangement itself. What it contemplated was a common course of action by the defendants in relation to individual traders in any of the events specified in sub-pars. (vii), (viii) and (ix) of par. 15 and it seems clear enough to me that if and when an occasion for common action should arise the common action taken might, according to the circumstances in which it was taken, be common action wholly in relation to inter-State trade or wholly in relation to intra-State trade. (at p215)
7. With, apparently, a full appreciation that neither the making of the contract nor the formation of the combination alleged in par. 14, although in contravention of s. 4 (1), could not be substantiated as the "act or thing" giving rise to the injuries complained of, the statement of claim proceeds to make two further allegations of a combination between the defendants. Paragraph 16 alleges that "the defendants and each of them on or about the 8th day of May 1961 and thereafter until the 12th day of November 1961 contracted and/or combined among themselves to refuse to sell or deliver and did in fact in combination among themselves refuse to sell or deliver tyres etc. at wholesale prices or at any price other than the trade list price to the plaintiffs or any of them at any place in Australia". Alternatively par. 17 alleges that "the refusal by the defendants and each of them to sell or deliver to the plaintiffs or any of them as alleged in paragraph 16, was done in the execution of the contract referred to in paragraph 14 and/or in the course of and as part of the engaging by the defendants and each of them in the combination" referred to in that paragraph. But whether regard is had to the provisions of par. 16 or the alternative allegations made in par. 17, what is alleged is further common action by the defendants on and after 8th May 1961. That common action was a refusal in combination to sell tyres to the plaintiffs at other than trade list prices. This, it is said, took place in contravention of s. 4 (1) and it must be taken to constitute the "act or thing" said to have been done in contravention of Pt II of the Act and which gave rise to the plaintiffs' alleged injuries. On this view the question arises whether this further combination was in relation to trade and commerce among the States. Clearly enough as alleged in par. 16 it was not. It is not suggested in the statement of claim that any of the dealings of the plaintiffs or between the plaintiffs and the defendants ever formed part of such trade and commerce and the additional claim made in par. 16 - that "in particular (the defendants) refused to sell or deliver tyres etc. from their factories and/or warehouses situate in States other than Victoria for delivery across State borders into Victoria for delivery there to the plaintiffs or any of them" - carries the matter no further. So far as appears, all dealings between the plaintiffs and the defendants had been in the course of intra-State trade and an agreement between the defendants to refuse to sell tyres to the plaintiffs cannot be converted into an agreement in relation to inter-State trade by a refusal to accede to a request for supplies from another State. I doubt, however, whether the concluding words of par. 16, upon close analysis, carry the matter as far as this. (at p216)
8. The alternative provisions of par. 17, however, seek to find the relationship between the later common action on the part of the defendants and inter-State trade and commerce in the fact as alleged that what was done was done "in the execution of the contract referred to in paragraph 14 and/or in the course of and as part of the engaging by the defendants and each of them in the combination" referred to in that paragraph. But these expressions can mean no more than that the defendants, having agreed upon a common course of action in relation to individual traders in certain events, proceeded on and after 8th March 1961 to take that common action in relation to the plaintiffs whose dealings with the defendants or otherwise are not alleged to have constituted any part of inter-State trade and commerce. As I see the original arrangement it was a common agreement on matters of trade policy which, though it envisaged the necessity in certain events of further common action in individual cases, did nothing of its own force to affect the rights of the plaintiffs or any other traders. Yet it was rendered unlawful by the provisions of s. 4 because it could be said to relate, inter alia, to inter-State trade. But the further common action against individual traders might, according to the character of the activities affected thereby, relate, in some cases, to inter-State trade only and, in others, to intra-State trade only. Nevertheless it is asserted that a refusal in combination to sell to an individual trader whose activities are entirely confined to intra-State trade, would, because of the antecedent agreement, constitute a refusal in combination "in relation to" inter-State trade. In my view this contention should be rejected. The later common action in the individual case postulated would in no way operate on any activity constituting some part of inter-State trade. In the present case the common action contemplated in the events alleged in par. 15 was a refusal in combination to sell tyres "at wholesale prices or other than trade list prices". Can it be said that a sale to such a trader at trade list prices in pursuance of a common agreement of the character alleged in par. 14 would constitute part of inter-State trade and commerce or that it would be a sale "in relation to" such trade and commerce? To my mind the contention involved in this enquiry cannot be seriously entertained. Why then should a refusal in combination to sell to such a trader at wholesale prices be regarded as a refusal "in relation to" inter-State trade? For my part I can see no reason why it should and accordingly I am of the opinion that neither par. 16 nor par. 17 alleges a contract or combination in contravention of s. 4 (1). I should add that I do not regard the allegations in par. 18 as carrying the matter any further. The allegation that the combinations alleged in two preceding paragraphs were "in restraint . . . of trade or commerce among the States" is simply an allegation as to the legal effect of the combinations alleged whilst the allegation that they were entered into and engaged in with intent to restrain such trade is inadequate to invest them with the character of combinations "in relation to" such trade and commerce. Since the matters alleged in pars. 16 and 17 must be taken to be the "acts or things" giving rise to the plaintiffs' alleged injuries the demurrers should, in my view, be allowed. (at p218)
MENZIES J. Each of the defendants has demurred to the whole of the plaintiffs' statement of claim in an action in which the plaintiffs are claiming treble damages on the footing that they were injured in their property by acts of the defendants and each of them done in contravention of Pt II of the Australian Industries Preservation Act 1906-1950. Section 11 of the Act does purport to create such a cause of action and the defendants in the first place assert the invalidity of that section and of s. 4, which is the section in Pt II which the plaintiffs claim that the defendants have contravened. (at p218)
2. The scheme of Pt II of the Act is to create a number of offences punishable by pecuniary penalty (ss. 4 to 9); to authorize the Court to grant injunctions restraining the carrying out of any contract or combination forbidden by s. 4 (s. 10); and to give any person injured by any act in contravention of ss. 4 to 9 or an injunction granted under s. 10 a cause of action for special damages (s. 11). This has been the scheme of Pt II of the Act since its enactment in 1906 but in 1909 and 1910 its provisions were substantially modified by amendment. Section 11, however, stands as originally enacted. (at p218)
3. It is desirable at the outset to state the effect of s. 4 as it was
originally enacted and of the amendments made to it in 1910.
As enacted in
1906 the effect of s. 4 (1) was to prohibit the making or the entering into of
any contract or the being party to or
engaging in any combination "in relation
to trade or commerce with other countries or among the States" either (a)
"with intent to
restrain trade or commerce to the detriment of the public" or
(b) "with intent to destroy or injure by means of unfair competition
any
Australian industry the preservation of which is advantageous to the
Commonwealth . . . " The principal amendments made to s.
4 (1) in 1910 were
(1) by inserting in par. (a) before the words "with intent to restrain" the
words "in restraint of or"; (2) by
omitting the words "to the detriment of the
public"; (3) by inserting in par. (b) before the words "with intent to destroy
or injure"
the words "to the destruction or injury of or". Section 4 was
further amended by adding a new sub-section, viz:-
"(3) It shall be a defence to a proceeding for an offence under
paragraph (a) of sub-section (1) of this section, and an answer to an
allegation that a contract was made or entered into in restraint
of, or with
intent to restrain, trade or commerce, if the party alleged to have
contravened this section proves -- (a) that the matter
or thing alleged to
have been done in restraint of, or with intent to restrain, trade or commerce,
was not to the detriment of the
public, and (b) that the restraint of trade or
commerce effected or intended was not unreasonable." (at p219)
4. The only other amendment to which I think it necessary to refer is to the introduction in 1909 of ss. 7A, 7B and 10A. (at p219)
5. It was with the Act as amended in 1909 that the case of The King and The
Attorney-General of the Commonwealth v. Associated Northern
Collieries -- to
adopt its earliest title --
[1911] HCA 73; (1911) 14 CLR 387 (Isaacs J.); [1912] HCA 58; (1912) 15 CLR 65 (FC) ; and (1913) 18 CLR 30
(PC)
was concerned and the validity of s. 4 -- which
was vital to the success
of
the proceedings -- was assumed at every stage. Earlier,
in Huddart, Parker
& Co. Pty. Ltd. v. Moorehead
[1909] HCA 36; (1909) 8 CLR 330 where the validity of the
section was not called
into question, two members of the Court had stated that
it was
within legislative authority: see Barton J. (1909) 8 CLR, at p 360
and
Higgins J. (1909) 8 CLR, at p 409 . It seems to me that the
assumption made in
these earlier cases was correct and that s. 4(1)
was valid because the only
contracts and combinations with which
it was concerned were "in relation to
trade or commerce with other
countries or among the States". That being so, it
was unnecessary
to consider reading into pars. (a) or (b) any limitation to
restrict
the intents there referred to the restraint of inter-State or
overseas trade or to the detriment of or injury to such Australian
industry as
fell within the description of inter-State or overseas
trade or commerce.
Parliament has power, subject to express limitations,
to forbid the making of
any contracts or the engaging in
any combination in relation to overseas or
inter-State trade if the phrase
"in relation to" involves, as I think it does,
that what
is forbidden is directly related to inter-State or overseas trade or
commerce
so that the law is with respect to that trade or commerce.
At times
the argument before us proceeded as though the power conferred
upon Parliament
by s. 51(i.) of the Constitution is no more than a power to be used for the
protection or development of inter-State or overseas trade or commerce or the
benifit
of those engaging therein. The power is not so restricted. It is a
power to make laws with respect to overseas trade and commerce
and, subject
only to express limitation, it extends to forbidding inter-State or overseas
trade or commerce itself or anything occurring
in or directly affecting such
trade or commerce. In Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1 the
contention
that Commonwealth
legislative power over banking was a limited
power was made by the plaintiffs and
rejected by the Court. Dixon
J. (as he
then was),
having referred to the authorities establishing that the grant of
legislative power
in s. 51 is plenary in its quality, said: "For the reasons I
have indicated, I am unable to accept the view that the word 'banking' should
have ascribed to it anything but the wide meaning and flexible application of
a general expression designating, as a subject of legislative
power, a matter
forming part of the commercial economic and social organization of the
community" (1948) 76 CLR, at p 334 . What
is true of the banking power is, of
course, true of what may be called Parliament's first and most general power
and authority is
not wanting that this trade and commerce power has a "wide
meaning and flexible application": Australian Coastal Shipping Commission
v.
O'Reilly (1962) 107 CLR 46 ; O'Sullivan v. Noarlunga Meat Limited (1954) 92
CLR 565, at p 597 ;
although it has never been regarded
as having the scope
which
the Supreme Court of the United States has attributed to the trade
and
commerce power in the United States
Constitution, for this Court has always
insisted that the distinction between intra-State trade and commerce on the
one hand and inter-State trade
and commerce on the other is established by the
Constitution itself and must be observed: see, for instance, Wragg v. State of
New South Wales [1953] HCA 34; (1953) 88 CLR 353 . In my opinion,
therefore, s. 4(1) was
valid as enacted. Furthermore, I consider that the 1909 and 1910 amendments
thereto were valid and that the resulting amended
subsection, as it now
stands, is valid. All the amending legislation did was to modify the
description of contracts or combinations
"in relation to trade or commerce
with other countries or among the States" in which participation -- to use a
compendious word --
is forbidden by the sub-section. That part of the sub-section necessary and
sufficient for its validity was left untouched. It follows
that I regard s.
4(1) of the Act, as it stands, as a valid law and I do so notwithstanding that
there is not in either (a) or (b) any limitation confining
the trade, commerce
or industry to be protected from restraint, injury or destruction to that
which falls within the conception of
inter-State or overseas trade or
commerce. A consequence of this view is that, if a contract or combination is
"in relation to trade
or commerce with other countries or among the States",
the sub-section can validly apply to participation in it, notwithstanding
that
it is in relation to other matters as well. Thus, participation in one
combination in restraint of overseas, inter-State and
intra-State trade is
validly within the scope of the section. This too, it seems, was assumed in
The King and the Attorney-General
of the Commonwealth v. Associated Northern
Collieries (1911) 14 CLR 387 for the Vend covered all coal raised from
the
Newcastle mines:
see (1911) 14 CLR, at p 440 . It was, however, strenuously
argued
that it is beyond the power of Parliament
to prohibit participation
in
a contract or combination unless it is wholly or at least
mainly in relation
to overseas or inter-State
trade and commerce. It
is, of course, clear that
Commonwealth power over trade and
commerce can only extend to such intra-State
trade
and commerce as is
inseparably connected with inter-State trade and
commerce,
but full acceptance of this limitation is quite consistent
with
according
to the Commonwealth power to prohibit or regulate acts
which relate
to intra-State trade and commerce if they relate
to inter-State
or overseas
trade and commerce as well. If registration
of persons engaged in inter-State
transport were to be required
on terms
not contrary to s. 92, that requirement
would apply to a person engaged in both inter-State and intra-State transport
as well as to a person engaged solely
in inter-State transport. Similarly,
persons dealing in firearms in the course of inter-State and intra-State trade
would not escape
the operation of a Commonwealth law requiring the
registration of persons dealing in firearms in the course of inter-State
trade.
Again, if registration of contracts fixing prices of goods sold in the
course of inter-State trade were required, that requirement,
if valid, would
apply to any contract whereby prices were fixed for overseas, inter-State and
intra-State trade. A licence to use
a patent would not be put beyond the reach
of Parliament by including in it provisions relating to the manufacture of
non-patented
articles. If a bank should choose to conduct hire-purchase
business, or any other business, as well as banking, its solvency is a
matter
that would remain within the scope of the Parliament's banking power. It is
true that the constitutional distinction between
overseas and inter-State
trade and other trade would enable a person engaged in trade to make
arrangements relating to his intra-State
trade free from control under
Commonwealth legislation but it does not enable such a person, by making
arrangements relating to trade
generally, to put those arrangements beyond
Commonwealth control if they do relate to inter-State or overseas trade. (at
p221)
6. Accordingly, I consider that s. 4 validly applies to contracts or combinations in relation to overseas or inter-State trade notwithstanding that they are in relation to intra-State trade as well and that s. 4(1) does validly operate in accordance with its terms and without importing any unexpressed limitation into pars. (a) or (b). (at p222)
7. The attack upon the validity of s. 11 finally came to rest, I think, upon the contentions that Commonwealth power did not extend to give to a person injured by the contravention of Commonwealth law a right of action for damages, treble or otherwise, unless the injury was in respect of something which it was otherwise within Commonwealth power to protect, and that in any event it was outside Commonwealth power to authorize the awarding of treble damages to a person injured by a contravention of Commonwealth law which, without any provision of Commonwealth law, would give the person injured a cause of action for ordinary damages under State law. I have not found any reason for denying to the Commonwealth Parliament power to give to a person injured by a contravention of Commonwealth law a right of action for injuries so suffered. I regard the granting of such a right of action as incidental to the power to legislate with respect to the subject under which the law imposing the restriction is validly made. So a law authorizing an action for damages for breach of patent would be valid as incidental to the power conferred by s. 51(xviii.); a law entitling a person to recover damages suffered by reason of the posting of a dangerous article in contravention of the Post and Telegraph Act would be valid as incidental to the power conferred by s. 51(v.); a law entitling a person to recover damages suffered by reason of the carrying of explosives by air in contravention of regulations would be valid as incidental to the power to control civil aviation under s. 51(i.) and (xxix.) and s. 122; and, to take an analogy which is perhaps closer to the present case, I consider that it would be incidental to the power conferred by s. 51(i.) if the Commonwealth were to grant to any person injured by reason of the contravention of a prohibition against doing something defined as a dangerous practice, in the course of inter-State trade, a right of action for any damages suffered by reason of the doing thereof. Furthermore, there need be no other connexion between the person injured and Commonwealth power beyond the circumstance that the person responsible for the injury was acting in contravention of valid Commonwealth law. To refer back to one of the examples which has been given, it would not matter if the person injured by reason of the contravention of a prohibition against the carrying of explosives upon aeroplanes were a passenger in the aeroplane wrecked by an explosion or an inmate of a house upon which an aeroplane, wrecked by an explosion, crashed. It is no objection to the exercise of Commonwealth power over those who are subject to it that they are controlled for the benefit of other persons. It could hardly be thought, for instance, that members of the defence forces could not be controlled for the benefit of the civilian population. I conclude, therefore, that in this case, if a person not engaged in inter-State trade is injured by an act in contravention of s. 4, Commonwealth power does extend to give the person injured a right of action. (at p223)
8. As to the second ground upon which the validity of s. 11 was attacked, I shall assume without deciding that, independently of s. 11, a person injured by a contravention of s. 4 could, without being empowered by the Commonwealth, recover the actual damages so caused in a State court. Making this assumption, however, I am not prepared to deny to the Commonwealth the power to authorize a person injured to recover treble damages in this Court. To expose an offender to the risk of treble damages at the suit of a person injured by the commission of an offence is a device to discourage law-breaking that has a long history, particularly in this branch of the law. Section 4 of the Statute of Monopolies 1623 is an early example. This provided that an aggrieved person should recover treble damages with double costs and any attempted interference with an action therefore laid the offender open to the penalties or praemunire. Section 7 of the United States Sherman Act 1890 is another example. If the Commonwealth Parliament can confer upon a person injured by a contravention of Commonwealth law a right of action for actual damages, then all that can be said against going further and conferring a right of action for treble damages is that it is thereby made clear that the object of the legislation is not merely to recoup the person injured for his loss; it is also to discourage law-breaking by a means that is centuries old. I find no reason to doubt that it is within the competence of Parliament to adopt such means as Parliament chooses to ensure that the laws which it is authorized to make will be observed and that breaches will be brought before the Court for punishment as well as for the compensation of those injured thereby. Although the Commonwealth Parliament's legislative power is limited to defined subjects, it is with respect to those subjects as full as that of a legislature with unlimited powers, save only to the extent that the Constitution itself either expressly or by necessary implication imposes its own limitations. (at p223)
9. For the reasons which I have given, I regard s. 11 as within the power of the Commonwealth to make laws incidental to inter-State and overseas trade and commerce. (at p223)
10. Before leaving the constitutional aspects of this case it is perhaps desirable to say that I have not gone beyond the matters argued before us and that, in particular, I have not adverted to what was suggested but not argued, viz. that the statements in James v. The Commonwealth [1935] HCA 38; (1935) 52 CLR 570, at p 599; (1936) AC 578, at p 626 , to the effect that the provisions of the Act do not contravene s. 92, are now open to question. (at p224)
11. The remaining matter is whether the statement of claim sufficiently alleges a cause of action under s. 11. The basic elements of such a cause of action are (1) that the defendants have acted in contravention of s. 4 of the Act and (2) that by reason of such acts the plaintiffs have been injured in their person or property in a particular sum. The statement of claim in an action under s. 11 should set out precisely and concisely facts which if proved at the trial will establish these two elements. It is, however, easier to state that what is required is a statement in a summary form of the material facts upon which the plaintiffs rely for their claim but not the evidence by which those facts are to be proved than it is in a case like this to formulate a statement of claim strictly in accordance with the precept. In a case where what the plaintiffs are seeking to make out is that all the defendants have made a contract or contracts and engaged in a combination or combinations in contravention of the section because each contract or combination is (1) in relation to trade and commerce among the States and (2) in restraint of and with intent to restrain trade or commerce, it seems to me necessary that the statement of claim should, after the usual formal allegations, state, as to any contract relied upon, the parties thereto, when it was made and sufficient of its terms to show in the context of other facts pleaded that (i) it was in relation to trade and commerce among the States and (ii) it was in restraint of trade or commerce. The allegation that the contract was made with intent to restrain trade or commerce would ordinarily be stated separately. Similarly, as to each combination relied upon, what is required is a statement of the parties thereto, when each became a party, and the facts which, when taken together, show that the combination was in relation to trade or commerce among the States and was in restraint of trade. Again the intent to restrain trade and commerce would be separately stated. The difficulty that, as I see it, the pleaders of the statement of claim here met was in the statement of what, if proved, would show that each contract or combination alleged was "in relation to trade or commerce . . . among the States" as these words are used in the opening words of s. 4(1), and was "in restraint of . . . trade or commerce" as these words are used in s. 4(1)(a). (at p224)
12. The pleading, it seems to me, is not free from formal defects but here we are concerned with demurrers, not pleading summonses. By demurring to the whole of the plaintiffs' statement of claim the defendants have overlooked any defects in form and taken the stand that on the facts alleged - however confusedly - the plaintiffs have no cause of action. The issue between the plaintiffs and the defendants is whether it is apparent on the face of the statement of claim that it is bad in substance because it does not contain the allegations of fact necessary to establish the cause of action given by s. 11 of the Act. The initial problem is, therefore, to ascertain what facts are alleged in the statement of claim. (at p225)
13. Paragraph 1 identifies the plaintiffs. In par. 2 it is alleged, with a
wealth of unnecessary detail, that each of the plaintiffs
is and was at all
times material engaged in the business of buying, selling, dealing in,
retreading and repairing motor and cycle
tyres and tubes involving the
purchase of retread rubber and other rubber materials called "tyres etc".
Paragraph 2 for the most
part does contain allegations of fact which, for the
purposes of the demurrer, must be taken to be admitted. Paragraphs 3 and 4
identify
the defendants. Paragraphs 5 to 12 relate to the business carried on
by the defendants and allege neither precisely nor tersely they
were at all
times material manufacturers of tyres etc. which were sometimes sold "at
volume discount prices" and sometimes at higher
"trade list prices" and that,
except between 8th May and 12th November 1961, the defendants and each of them
sold tyres etc. to the
plaintiffs at volume discount prices. It is also
alleged that the tyres etc. sold by the defendants "constituted all or
substantially
all the tyres etc. manufactured in Australia which were sold in
Australia" - but the significance of this to the cause of action,
as distinct
from the proof of injury, is not apparent. It is also alleged that it was part
of the business of the defendants and
each of them to manufacture tyres etc.
and to sell them in the State of manufacture for delivery to purchasers in
other States and
to move tyres etc. from the State of manufacture to
warehouses in other States for sale therefrom. For the most part, what is
alleged
in pars. 8 to 12 are matters of fact. Paragraph 13 is different. It
asserts that, by reason of the earlier allegations, "each of
the defendants
was at all material times engaged in trade and commerce among the States of
the Commonwealth of Australia". This is
a proposition of mixed fact and law
which the demurrer does not admit and may be disregarded for present purposes.
To do this does
not, however, detract from what is alleged in pars. 8 to 12 -
that is, that contracts for sale for delivery inter-State were made
and the
carriage of goods from State to State occurred in the course of business of
each defendant. In par. 14 a contract or combination
is alleged made prior to
8th May 1961 to which the defendants and each of them were party "in respect
of the distribution sale and
delivery of tyres etc. manufactured by them as
aforesaid". This seemingly refers back to pars. 8 to 12 which, in so far as
they allege
contracts for delivery inter-State to buyers and the movement of
tyres etc. from State to State for sale there, do allege actual
inter-State
trade. I consider, therefore, that the contract or combination alleged in par.
14 is sufficiently alleged to have been
"in relation to trade or commerce . .
. among the States". In par. 15 three things are attempted. Firstly, to state
the terms of
the contract alleged in par. 14 which reveal that it was "in
restraint of trade". Secondly, to state the objects of the combination
in par.
14 to show either that it was in restraint of trade or that those who engaged
in it did so "with intent to restrain" trade,
or both. Thirdly, to allege that
the contract and combination was in restraint of, and was intended to
restrain, inter-State trade.
It is not surprising that so ambitious an
enterprise as to bring all these matters together in one paragraph should
result in some
confusion, but this result is something that goes to form
rather than substance. It seems to me that, if a contract with terms as
set
out in par. 15 were made, it would be in restraint of trade and if the objects
of a combination were those set out therein, it
would be in restraint of trade
and it could be inferred that those who knowingly engaged in a combination
with such objects would
intend to restrain trade. Paragraph 16 alleges a
contract and combination between the defendants made on or about 8th May 1961
and
operating until 12th November 1961. It is as follows:-
"16. The defendants and each of them on or about the 8th day of May, 1961 and
thereafter until the 12th day of November, 1961 contracted
and/or combined
among themselves to refuse to sell or deliver and did in fact in combination
among themselves refuse to sell or deliver
tyres etc. at wholesale prices or
at any price other than the trade list price to the plaintiffs or any of them
at any place in Australia
and in particular refused to sell or deliver tyres
etc. from their factories and/or warehouses situate in States other than
Victoria
for delivery across State borders into Victoria for delivery there to
the plaintiffs or any of them." It will be observed that again
the pleaders
have sought to combine a number of allegations in the one paragraph with less
than happy results. It is alleged that
there was a contract or combination "to
refuse to sell or deliver" to the plaintiffs or any of them at any place in
Australia and
it is alleged that the defendants did "in combination among
themselves" refuse to trade with the plaintiffs. There is not in this
paragraph any allegation that the contract was in relation to trade or
commerce among the States but, because the words "in combination"
have been
used in relation to the allegation of refusal to sell or deliver from States
other than Victoria into Victoria, there is,
I think, an allegation that the
combination alleged related to some trade and commerce among the States.
Paragraph 17, assuming that
in par. 16 it is alleged that the refusal to trade
there alleged was in execution of the contract referred to therein, alleges
alternatively
that it was in execution of the contract referred to in par. 14
and was part of engaging in the combination therein alleged. Paragraph
18 is
as follows:-"18. Each of the contracts referred to in paragraphs 14 and 16
hereof, was made and entered into, and/or each of
the combinations referred to
in pars. 14 and 16 hereof was engaged in by the defendants and each of them in
restraint of or with
intent to restrain trade or commerce among the States".
In so far as this paragraph refers to the intent of the defendants, it is
an
allegation of fact and it follows that the demurrer admits that the contracts
referred to in pars. 14 and 16 were made and the
combination therein referred
to were entered into and engaged in by the defendants with intent to restrain
trade or commerce among
the States. In so far as par. 18 alleges that each of
the contracts or combinations referred to in pars. 14 and 16 were in restraint
of trade, it does not seem to me to be an allegation of fact which the
demurrer admits. The assertion is no more than a conclusion
from the terms of
the contracts alleged and the objects of the combinations alleged and is a
statement of the kind referred to by
Dixon C.J. in South Australia v. The
Commonwealth [1962] HCA 10; (1962) 108 CLR 130, at p 142 , viz. one involving a legal
conclusion
which should
be disregarded in dealing with a demurrer. Paragraph
19 purports, no doubt, to be a statement in summary form of the
plaintiffs'
causes of action but it cannot stand on its own. In particular,
it contains no
allegation that the "contracts and/or
combinations"
referred to were in
relation to inter-State trade. Injury to the
plaintiffs in their property by
reason of contraventions
of s. 4
of the Act is alleged in par. 20. Although
the making and the carrying
out of the contracts as alleged and the entering
into
and
engaging in the combinations as alleged are pleaded separately, it
may
be that each group of allegations relates to the one set
of
circumstances
and that eventually what is proved to have been done must
be looked at as a
whole in order to judge whether the
plaintiffs
have been injured by any
contravention of the Act. See for instance
Continental Ore Co. v. Union
Carbide & Carbon
Corporation [1962] USSC 114; (1962)
370 US 690 (8 Law Ed 2d 777) . The
plaintiffs are therefore entitled in these demurrer proceedings to rely upon
the generality
of
par. 20 of the statement of claim and it is not necessary to
find elsewhere therein a precise linking up of what
is alleged as
a
contravention and particular injury. (at p228)
14. From the foregoing detailed examination of the statement of claim, I have come to the conclusion that it is defective in substance in that it is not alleged that the contract referred to in par. 16 was in relation to trade or commerce among the States but otherwise its defects are those of form, and that facts are alleged which, if admitted without more, would establish (1) a contract or combination in relation to trade and commerce among the States made or engaged in by the defendants and each of them before 8th May 1961 in restraint of and with intent to restrain trade and commerce; (2) the carrying out of that contract or combination prior to 8th May 1961 and thereafter until 12th November 1961; (3) a combination entered into by the defendants and each of them on or before 8th May 1961 and engaged in until 12th November 1961 in relation to trade and commerce among the States and in restraint of or with intent to restrain trade and commerce; and (4) injury suffered by each defendant in his property by reason of the making of the contract and the entering into and engaging in the combinations previously stated. (at p228)
15. It follows that the demurrer, which is not limited to the only defect of substance which I have found in the statement of claim, should be overruled. (at p228)
WINDEYER J. I have no doubt that s. 4(1)(a) of the Australian Industries Preservation Act 1906-1950 is a valid enactment of the Commonwealth Parliament, being a law with respect to trade and commerce with other countries or among the States. The offence it creates depends upon the contract or combination impeached being in relation to overseas or inter-State trade or commerce, and "being in restraint of or with intent to restrain trade or commerce". That means that the contract or combination must first answer the statutory description by being in relation to overseas or inter-State trade or commerce. But, as I construe the enactment, it is not necessary either to its validity or its meaning that, in order to constitute the offence, the trade or commerce which the contract or combination restrains or which is intended to be restrained should be either wholly - or indeed, I think, at all - restricted to overseas or inter-State trade or commerce. To determine whether a contract or combination is one in relation to overseas or inter-State trade or commerce, its full legal effect must, of course, be considered. It must fall fairly within that description. The connexion with overseas or inter-State trade or commerce must not be so remote or insignificant that there is no real relationship. (at p229)
2. Section 11 of the Act is also, in my opinion, within power and valid. Such a provision is a not unknown method of ensuring compliance with the law. (at p229)
3. I agree in what has been said by other members of the Court on the two aspects mentioned above; and do not wish to say more. (at p229)
4. As to the statement of claim: Each defendant has separately demurred. If it appears that the facts alleged in the statement of claim do not show a cause of action, or claim for damages, to which effect can be given by the Court, the demurrer must succeed. Otherwise it must fail: see O. 26, r. 1 of the Rules of Court. I can see there may be great difficulties if the case goes to trial upon issues arising out of this statement of claim, as it is now framed. It seems to me in various places to make double allegations, and confused and imprecise statements, and to make allegations of law mixed with allegations of fact, and I am inclined to think too that par. 16, concerning the alleged arrangement, however it should be described, of 8th May 1961, is as it stands insufficient to bring that transaction within the prohibition of the Act. But we are not now concerned with the issues of fact for trial or with whether the statement of claim is embarrassing. This is not an application to strike it out. A demurrer in this Court must be on the ground stated in the Rules - not on any matter which might at common law have been a ground for special demurrer. Moreover, although the defendant pleaded and demurred we are not concerned with and cannot look at the defence. According to O. 26, r. 10, and on general principles, it ought not to have been included in the demurrer book. (at p229)
5. The demurrers are to the whole of the statement of claim. Despite the difficulties that are likely to arise if the plaintiffs do not better formulate their claim before trial, I do not think it can be said that the facts alleged do not show a cause of action and claim for damages to which the Court could give effect as against the parties demurring. (at p229)
6. I would therefore overrule the demurrers. (at p229)
OWEN J. The first question for determination is whether ss. 4(1)(a) and 11(1) of the Australian Industries Preservation Act are a valid exercise of the power to make laws with respect to trade and commerce with other countries and among the States. Section 4(1)(a) makes it an offence for any person to make or enter into any contract or to be or to continue to be a member of or to engage in any combination in relation to trade or commerce with other countries or among the States in restraint of or with intent to restrain trade or commerce. And, by sub-s. (2), every contract made or entered into in contravention of the section is declared to be absolutely illegal and void. Section 11(1) gives any person who is injured in his person or property by any other person by reason of any act or thing done by that other person in contravention of Pt II of the Act the right to sue for and recover treble damages in the High Court subject to the written consent of the Attorney-General to the bringing of such action being first obtained (s. 14(2)). (at p230)
2. The plaintiffs' statement of claim is based upon s. 11(1) and the section in Pt II of the Act which is said to have been contravened is s. 4(1)(a) so that if either of those sections is ultra vires, the demurrer must succeed. (at p230)
3. The attack upon s. 4(1)(a) is based, in the first place, upon the use in it of the words "in relation to". The constitutional power is to make laws "with respect to" inter-State and overseas trade or commerce and a law expressed to be made "in relation to" such trade or commerce, covers, so it is put, a wider field than the Constitution permits. I cannot agree that this is so. "A power to make laws 'with respect to' a specific subject is as wide a legislative power as can be created. No form of words has been suggested which would give a wider power.": per Latham C.J. in the Banking Case [1948] HCA 7; (1948) 76 CLR 1, at p 186 . Nor do I agree with a further submission that the Commonwealth Parliament's power to forbid contracts or combinations in restraint of trade is limited to contracts or combinations relating only to overseas or inter-State trade. Contracts or combinations in restraint of inter-State or overseas trade may, in my opinion, be made the subject of legislation by the Commonwealth Parliament, notwithstanding the fact that they may also relate to intra-State trade. The words in s. 4(1)(a) "in relation to trade or commerce with other countries or among the States" sufficiently confine the operation of the section to the classes of contracts and combinations with which it is constitutionally competent for the Commonwealth Parliament to deal, namely those which relate to overseas and inter-State trade or commerce. And, if they do so relate, it is not, in my opinion, to the point to say that they relate also to intra-State trade or commerce. (at p231)
4. As far as I am aware, this is the first occasion on which the validity of s. 4(1)(a) has been questioned but opinions on that subject were expressed by members of this Court many years ago in Huddart Parker & Co. Pty. Ltd. v. Moorehead [1909] HCA 36; (1909) 8 CLR 330 . Since then the section has been amended in certain respects but not in a way which affects this question. Barton J. said: "Section 4(1)(a) and 7(1) of the Australian Industries Preservation Act 1906, which apply only to the second of these appeals, are not called in question. They are, indeed, in terms and in meaning, clearly within the legislative authority with regard to 'trade and commerce with other countries and among the States' given by the Constitution in s. 51(i.)" (1909) 8 CLR, at p 360 . And Higgins J., referring to the same two sections, said: "These sections are admittedly laws 'with respect to' inter-State and foreign trade within s. 51(i.) of the Constitution; and it is only because they do regulate such trade that they are valid" (1909) 8 CLR, at p 409 . Although those statements were made in a case in which validity was conceded, they show that, in the opinion of both Barton and Higgins JJ., the concession was rightly made and I agree that it was. (at p231)
5. A further argument was based upon the fact that par. (a) of s. 4(1) is not expressed to be limited to restraints of or an intent to restrain overseas or inter-State trade. It speaks in general terms of trade or commerce and it was submitted that the paragraph, if construed as applying to all trade or commerce, took the sub-section outside power. To save it from destruction, therefore, the word "such" should be read into the paragraph before the words "trade or commerce". Read in this more limited fashion, the result would be, it was said, that the statement of claim would be demurrable since it does not allege that the plaintiffs were engaged in inter-State or overseas trade or commerce and there could therefore be no contravention of Pt II of the Act causing injury to them or to their property. The answer is, in my opinion, that once it is found that s. 4(1) is sufficiently linked with s. 51(i.) of the Constitution by the use of the words "in relation to trade or commerce with other countries and among the States", it is unnecessary to seek a further link in par. (a) or to narrow the meaning of that paragraph in the way suggested. In other words, the Parliament may validly enact a law forbidding the making of contracts or the formation of combinations in relation to overseas or inter-State trade or commerce which in fact restrain or are intended to restrain trade or commerce, be it overseas, inter-State or intra-State in character. (at p232)
6. Two reasons have been advanced in support of the submission that s. 11 is invalid. It is said that it is a law with respect to damages and the right to sue for them and, for this reason, is beyond power. If, however, it is not invalid for that reason the cause of action which it creates is given to all persons injured by the contravention of the Act by another person whether the injured person is engaged in inter-State, overseas or intra-State trade or commerce or is not engaged in trade or commerce at all. Neither of these reasons affords grounds for holding that the section is invalid. The section is not to be read in isolation. It is part of a legislative scheme and an action based upon it is in the nature of a penal action designed both to compensate the injured person and to punish those who act in contravention of the Act and thereby cause injury to others. One of its purposes is to discourage persons from contravening the Act and to encourage those who are injured by such contraventions to take action to uphold the law. Provisions such as s. 11(1) have long been associated with legislation of the kind to which the Australian Industries Preservation Act belongs. Section 4 of the Statute of Monopolies (21 Jac. 1 c. 3) provides an example. Section 7 of the Sherman Act provides another. In my opinion s. 11(1) is a valid exercise of power. (at p232)
7. It becomes necessary then to consider whether there is to be found in the statement of claim a sufficient statement of the facts necessary to be proved to support the cause of action. In a case of this kind the essential allegations are, in my view, these: (1) That the defendants were parties to a contract or were members of or engaged in a combination; (2) That such contract or combination related to inter-State or overseas trade or commerce; (3) That the contract or combination was in restraint of trade or commerce or that the defendants entered into the contract or became or continued to be members of the combination with intent to restrain trade or commerce; and (4) That by reason thereof the plaintiffs suffered damage. (at p232)
8. The statement of claim is a confused and confusing document but I think that there can be extracted from it a sufficient allegation of the necessary ingredients of the cause of action. Paragraph 1, when read with par. 15, alleges that each of the plaintiffs was a person engaged in the business of "selling and dealing with tyres for resale". Paragraph 14 alleges that the defendants were the parties to a contract or the members of or engaged in a combination "in respect of the distribution, sale and delivery of tyres manufactured by them" in various States of the Commonwealth, and pars. 8 to 12 sufficiently allege that such contract or combination related to inter-State trade or commerce. Paragraph 15 alleges the terms of the contract and the objects of the combination and the terms and objects described would make the contract one in restraint of trade or the combination a combination in restraint of trade. Paragraph 16 alleges that another and later contract was made between the defendants to refuse to sell or deliver tyres at wholesale prices to the plaintiffs and that the defendants refused to sell or deliver tyres for delivery to the plaintiffs across State borders. It alleges further that the defendants in combination refused to sell or deliver tyres to the plaintiffs across State borders at wholesale prices. Paragraph 17 alleges that the refusal to sell or deliver to which par. 16 refers was done, "in the alternative to par. 16", in the execution of the contract earlier alleged in par. 14 or in the course of the "engaging by the defendants and each of them in the combination" referred to in that paragraph. Paragraph 20 alleges that the plaintiffs were injured in their property by reason of the defendants' contraventions of s. 4 of the Act. (at p233)
9. For these reasons I am of opinion that the demurrer should be overruled. (at p233)
ORDER
Demurrers overruled.
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