FEDERAL COURT OF AUSTRALIA

Su v Direct Flights International Pty Ltd [1999] FCA 1844

PLEADINGS AND PARTICULARS – application to strike out parts of statement of claim – trade practices – pleading of contravention of Trade Practices Act 1974 (Cth) s 46 – whether sufficient facts pleaded to found claim that alleged conduct engaged in for proscribed purpose

Trade Practices Act 1974 (Cth) s 46

Robert Hicks Pty Ltd v Melway Publishing Pty Ltd (1999) ATPR 41, referred

Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [1999] FCA 664, cited

CHAN CUONG SU t/as AUSVIET TRAVEL v DIRECT FLIGHTS INTERNATIONAL PTY LIMITED AND AIRNET INTERNATIONAL PTY LIMITED

NG 459 OF 1998

LEHANE J

24 DECEMBER 1999

SYDNEY

THE COURT ORDERS THAT:

1.         The motion of the first and second respondents filed on 16 July 1999 be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is the third occasion on which I have been required to consider the adequacy of the applicant’s pleading.  On each of the previous occasions the respondents were substantially successful: the judgments are reported at (1998) ATPR 41‑662 and (1999) ATPR 41‑677 and it is unnecessary to repeat what I have said in them about the background of the proceeding or the general structure of the pleading.  It is sufficient to record that, consistently with the second of the earlier judgments, the proceeding has been dismissed against the two airlines which were the third and fourth respondents.  The applicant has filed a further amended statement of claim in which he alleges, against the remaining two respondents, facts which, he says, support claims based (only) on s 46 of the Trade Practices Act 1974 (Cth).  The respondents seek an order striking out the further amended statement of claim.  Their notice of motion seeking an order to that effect was filed on 16 July 1999, and the motion has been dealt with on written submissions only.  The course of those submissions has been a lengthy, and in some respects, an unfortunate one.  It is unnecessary to deal with the history in detail; the final set of submissions, however, was delivered only on 16 December 1999.

2                     The submissions in support of the motion rely on one matter only.  It is said that the new pleading does not sufficiently plead facts relevant to an essential element of a claim based on s 46, namely that the conduct complained of be engaged in for one of the proscribed purposes.  The allegation against the first respondent of facts material to its purpose is to be found in par 32 of the further amended statement of claim, but that paragraph can be understood only by reference to par 31.  Accordingly, I shall set out both paragraphs in full:

“31.     The Applicant alleges that during the peak seasons for the years 1993, 1994, 1995, 1996, 1997 and 1998 the First Respondent was and continues to be in breach of s46(1)(c) of the Trade Practices Act in that it took advantage of its substantial degree of power in the Market Second Stage as defined in paragraph 29 in that during these years it:

(a)       supplied and distributed seats on peak season direct flights only to those travel agents chosen by the First Respondent;

(b)       limited the number of travel agents to whom it would supply the said seats;

(c)        controlled the price at which it would supply the said seats to those travel agents;

(d)       controlled the number of said seats supplied to the chosen travel agents;

(e)        in or about 1993 and 1994 refused to supply the said seats to certain travel agents, including the Applicant;

(f)        in or about 1996 refused to supply the said seats to certain travel agents, including the Applicant;

(g)       in or about 1997 refused to supply the said seats to certain travel agents, including the Applicant;

(h)       in or about 1998 refused to supply the said seats to certain travel agents, including the Applicant;

(i)        at the beginning of the peak seasons for years 1994, 1995, 1996, 1997 and 1998 the First Respondent issued price lists for the said seats for those peak seasons only to certain travel agents;

(j)        in or about early 1998 the First Respondent refused to supply such a price list for the 1998 peak season to the Applicant;

(k)       in or about June 1998 the First Respondent placed advertisements in almost all the Vietnamese newspapers which advertised to the public the names of the chosen travel agents from whom potential customers could obtain seats on the said flight.  These advertisement[s] did not contain the name of the Applicant’s business;

(l)        at all material times the [First Respondent] was aware that the Applicant could only obtain seats on the said direct flights from either the First or the Second Respondent;

(m)      at all material times the First Respondent was aware, by reason of its relationship to the Second Respondent as pleaded in paragraph 16 above, that the Second Respondent had also refused to supply seats to the Applicant for the relevant peak seasons.

32.       Further, the Applicant alleges that during the peak seasons for the years 1994, 1995, 1996, 1997 and 1998 the First Respondent was and continues to be in breach of s46(1)(c) of the Trade Practices Act in that it took advantage of its substantial degree of power in the Market as defined in paragraph 29 above for the purpose of deterring or preventing the Applicant from engaging in competitive conduct in the said market in that:

(a)       by reason of its conduct as pleaded in paragraph 31(a) to (h) above, the First Respondent prevented the Applicant from supplying seats to existing and potential customers;

(b)       by reason of its conduct as pleaded in paragraph 31(a) to (h) above, the First Respondent prevented the Applicant from supplying the prices of the said seats to existing and potential customers;

(c)        by reason of its conduct as pleaded in paragraph 31(k) above, the First Respondent prevented the public in general and potential customers of the Applicant in particular, from being aware that the applicant was able and willing to supply the said seats;

(d)       further, or in the alternative to sub‑paragraph (c) above, the First Respondent by its conduct as pleaded in paragraph 31(k) above, implied to the public in general and potential customers of the Applicant in particular that the said seats were available only through those travel agents named in the advertisement and therefore that the said seats were not available from the Applicant.”

3                     The corresponding allegations against the second respondent, though not precisely identical, are similar and it is unnecessary to set out the relevant paragraphs.

4                     The respondents’ submissions are simple: they say that the applicant has, in substance, pleaded only the effect or result of the impugned conduct, not the purpose for which he says the respondents engaged in it.  It will, of course, be a rare case in which an applicant has direct evidence of a respondent’s purpose such as to permit the precise allegation of particular facts which, if established, would clearly indicate what the respondent’s purpose was.  Commonly, an applicant would rely on s 46(7) of the Trade Practices Act:

“(7)     Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in sub‑section (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.”

5                     A recent example of a case in which a proscribed purpose was established in that way is Robert Hicks Pty Ltd v Melway Publishing Pty Ltd (1999) ATPR 41‑668 (see the discussion of the principles by Merkel J at 42,522 to 42, 525; an appeal from his Honour’s decision was dismissed: Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [1999] FCA 664).  Section 46(7) applies directly, of course, at trial, when all the evidence is in.  The position of an applicant at the pleading stage is, of course, rather more difficult.  The applicant does not then have the benefit of discovery.  The best that usually can be done is to allege observable facts on the basis of which, if they were established, an inference of purpose might be made. 

6                     In assessing the adequacy of the present pleading it is not appropriate, I think, to limit consideration only to those paragraphs in which purpose is directly alleged.  For example, par 27, which is not directly referred to in the paragraphs alleging purpose, pleads that:

“In or about 1998 the Applicant attempted to obtain seats for clients on direct flights between Sydney and Saigon from both the First and Second Respondents.  Both the First and Second Respondents obstructed and prevented the Applicant from obtaining seats in that:

(a)       both the First and Second Respondents refused to supply the Applicant with an updated lists of fares for the flights;

(b)       both the First and Second Respondents knew or ought to have known that these fare lists were necessary to the Applicant to enable him to inform clients of the fare structure and sell tickets;

(c)        contrary to usual industry practice both the First and Second Respondents refused to supply the Applicant with seats on credit;

(d)       contrary to usual industry practice both the First and Second Respondents would only supply the Applicant with seats on direct flights if he paid for them by cash or bank cheque.”

No doubt the respondents might properly seek particulars of such an allegation.  It may also be that the applicant will wish to give further consideration to the cross-references in par 32 and par 36 of the pleading.  For present purposes, however, the significant matters are, I think, first, that purpose is now directly alleged (in earlier versions of the statement of claim it was not); and, secondly, facts are alleged which indicate (if they are established) not merely outright refusal to supply seats but a course of conduct, from which purpose might be inferred, by which the respondents did not consistently simply refuse to supply seats other than to their chosen distributors but, on occasion, while apparently being prepared to supply to others (including the applicant), would do so only on unusually onerous conditions.  If those matters were established (and if nothing else were established), I think an inference would be open that underlying the respondents’ conduct was the proscribed purpose alleged.  That is sufficient for present purposes.

7                     For that reason the order sought by the respondents will be refused.  The respondents should pay the applicant’s costs of the motion.  The matter has been listed on 7 February 2000 for further directions.

Associate:

Dated:              24 December 1999