FEDERAL COURT OF AUSTRALIA

Aerial Taxi Cabs Co-operative Society Ltd v Lee

[2000] FCA 1628

Restraint of trade – whether by-laws of co-operative trading society in restraint of trade at common law – extent to which by-laws operated as restraint – whether validity of by-laws conferring powers to be determined by reference only to what they lawfully permitted – whether powers conferred by by-laws could only lawfully be exercised honestly, in good faith, reasonably and in unbiased fashion – whether absence of representative of non-members from body administering by-laws applicable to non-members rendered invalid by-laws otherwise reasonable.

Administrative law – bias rule of natural justice – rule of necessity.

Industrial law – whether contract can be “harsh” within s 127A(2) of Workplace Relations Act by reason of events occurring subsequent to entering into contract.

Workplace Relations Act 1996 (Cth), ss 127A(1), 127A(2)

Co-operative Societies Act 1939 (ACT), ss 16(7), 47(2)

Motor Traffic Act 1936 (ACT), s 6

Co-operative Societies Regulations 1945 (ACT)

Federal Court Rules, O 19 r 1(2), O 52 r 22(1)(a), O 52 r 22(3)

Buckley v Tutty (1971) 125 CLR 353 discussed

Eastham v Newcastle United Football Club Ltd [1964] Ch 413 referred to

Nagle v Feilden [1966] 2 QB 633 approved

Heron v Port Huon Fruitgrowers’ Co-Operative Association Ltd (1922) 30 CLR 315 discussed

Butt v Long (1853) 88 CLR 476 referred to

Adamson v New South Wales Rugby League Limited (1991) 31 FCR 242 referred to

Australian Football League v Carlton Football Club Ltd [1998] 2 VR 546 approved

Dickason v Edwards (1910) 10 CLR 243 referred to

Geraghty v Minter (1979) 142 CLR 177 followed

Kemp v New Zealand Rugby Football League Inc [1989] 3 NZLR 463 referred to

Cains v Jenkins (1979) 28 ALR 219 followed

R v Master and Wardens of the Company of Surgeons in London (1759) 2 Burr 892 [97 ER 621] discussed

Perre v Apand (1999) 164 ALR 606 referred to

Isherwood v Oldknow (1815) 3 M & S 382 [105 ER 654] referred to

Australian Workers’ Union v Bowen [No. 2] (1948) 77 CLR 601 applied

Finch v Herald & Weekly Times Ltd (1996) 65 IR 239 approved

Harding v EIG Ansvar Ltd (2000) 95 IR 349 approved

Forbes Disciplinary Tribunals 2^nd ed. at 49

Heydon The Restraint of Trade Doctrine 2^nd ed. Ch. 1

AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD t/a CANBERRA CABS v ROBERT ANDREW LEE

No A 21 of 2000

SACKVILLE, KATZ & KENNY JJ

15 NOVEMBER 2000

SYDNEY (HEARD AT CANBERRA)

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY

DISTRICT REGISTRY

A 21 of 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD t/a CANBERRA CABS APPELLANT
AND:	ROBERT ANDREW LEE RESPONDENT
JUDGE:	SACKVILLE, KATZ & KENNY JJ
DATE OF ORDER:	15 NOVEMBER 2000
WHERE MADE:	SYDNEY (HEARD AT CANBERRA)

THE COURT ORDERS THAT:

1 The appeal be allowed.

2 The primary Judge’s orders declaring by-laws 18 to 24 of the respondent’s By-laws invalid, restraining the respondent from acting in accordance with those by-laws and ordering the respondent to pay one half of the applicant’s costs of the proceeding be set aside.

3 In place of those orders of the primary Judge set aside, order that:

(a) the applicant’s claim based on common law restraint of trade be dismissed; and

(b) the applicant pay the respondent’s costs of the proceeding.

4 The respondent’s application for an extension of time within which to file and serve a notice of cross-appeal be dismissed.

5 The respondent pay the appellant’s costs, both of its appeal and of his application for an extension of time within which to file and serve a notice of cross-appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY

DISTRICT REGISTRY

A 21 of 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD

t/a CANBERRA CABS

APPELLANT

AND:

ROBERT ANDREW LEE

RESPONDENT

JUDGES:	SACKVILLE, KATZ & KENNY JJ
DATE:	15 NOVEMBER 2000
PLACE:	SYDNEY (HEARD AT CANBERRA)

REASONS FOR JUDGMENT

SACKVILLE J

1 I have had the advantage of reading the judgment of Katz J. I agree with the orders proposed by his Honour. I agree with his Honour’s reasons for dismissing the respondent’s application for an extension of time within which to file a notice of cross-appeal. I also agree, in general terms, with Katz J’s analysis of the restraint of trade issue. However, I wish to add some observations of my own on that issue.

2 The respondent’s restraint of trade argument seems to have changed in the course of the proceedings without the pleadings having been amended. Certainly the orders made by the primary Judge do not correspond either to the case pleaded or the relief sought by the respondent. It is perhaps for these reasons that the alleged restraint of trade is not precisely identified in either the pleadings or the two judgments delivered by the primary Judge.

3 The amended statement of claim alleged that a term of the agreement between the respondent and the appellant (“Aerial”), whereby the respondent agreed to abide by Aerial’s Rules and By-laws, was unfair and unlawful as a restraint of trade. The pleadings did not identify the agreement containing the impugned term, but the reference was presumably to the Driver’s Agreement, the terms of which are set out in Katz J’s judgment (at [40]). The amended statement of claim also alleged that the fines and penalties imposed on the respondent unreasonably restrained his trade, although the basis for that bald allegation was not elaborated.

4 The relief claimed by the respondent included a “determination” that Aerial had acted in unreasonable restraint of trade and had breached its agreement with the respondent. The amended application also sought orders quashing the fines and penalties that had been imposed on the respondent. The respondent made no claim for declaratory relief in relation to Aerial’s Rules or By-laws.

5 The judgment delivered by the primary Judge on 10 December 1999: [1999] FCA 1727 (the “first judgment”) implied that the restraint of trade relied upon by the respondent comprised the

“system where owner-operators make the substantive rules to be obeyed, make the rules concerning enforcement and administer the rules” (at [42]).

Later in the first judgment, however, his Honour referred to “the open-ended nature of the [respondent’s] commitment to abide by the By-laws” as a possible unreasonable restraint of trade. This reference rather suggests that his Honour considered that the Driver’s Agreement was the source of the alleged unreasonable restraint of trade and that the restraint was contractual in nature.

6 In the judgment delivered on 25 February 2000: [2000] FCA 157 (the “second judgment”), the primary Judge suggested that the restraint of trade was the complaints and discipline system maintained by Aerial. For example, he expressed himself to be

“unsatisfied that [Aerial] cannot have a satisfactory complaints and disciplinary system if there is any involvement of bailees in the administration of it” (at [10]).

His Honour appears to have regarded the complaints and discipline system as including the power vested in the Board of Aerial to make By-laws relating both to a code of conduct and the consequences of a breach thereof (Rule 70), although he rejected a contention that it was an unreasonable restraint for those he described as “bailee drivers” not to be involved in the making of disciplinary rules (second judgment, at [11]).

7 In the result, the primary Judge made a declaration that By-laws 18-24 were invalid. His Honour also restrained Aerial from acting in accordance with those By-laws. The declaration and orders were expressed in terms that render By-laws 18-24 invalid for all purposes, even where disciplinary action is taken against an owner-driver who is a member of Aerial.

8 The precise basis for orders in this form was not explained in detail in either of the judgments. However, the primary Judge appears to have taken the view that By-laws 18-24 imposed a restraint on the trade of non-member drivers, by providing for those drivers to be suspended from access to Aerial’s radio network either as a direct penalty (By-law 19(c)(4),(5)) or as the consequence of a failure to pay a fine (By-law 22). It is not clear whether his Honour regarded the other penalties authorised by By-law 19(c), such as a reprimand or a requirement to attend a refresher course, as unreasonable restraints on the trade of non-member drivers.

9 The fact that the orders made no reference to any agreement between Aerial and the respondent suggests that, in the end, the primary Judge did not consider that the restraint of trade was to be found in the Driver’s Agreement. His Honour applied the principle that a person adversely affected by the rules of an association, where those rules constitute an unreasonable restraint of trade, may obtain appropriate declaratory and injunctive relief, whether or not the person is a member of the association or contractually bound by the rules. This principle was endorsed in Buckley v Tutty (1971) 125 CLR 353, at 381, where the High Court cited with approval the decisions in Eastham v Newcastle United Football Club Ltd [1964] Ch 413 and Nagle v Feilden [1966] 2 QB 633. In those cases, persons who were neither members of, nor in contractual relations with, a particular body, were held to be entitled or arguably entitled to declarations that rules or practices of the relevant body were invalid as unreasonable restraints of trade or otherwise as contrary to public policy. If Aerial’s By-laws did constitute an unreasonable restraint of the respondent’s trade, his Honour was correct to hold that the fact that the respondent was not a member of Aerial was not a barrier to his obtaining appropriate declaratory and injunctive relief.

10 Nonetheless, as Katz J has pointed out, the declaration and restraining order made by the primary Judge are, on any view, framed too broadly. The only basis on which his Honour found that the restraint was unreasonable was that non-member drivers were not involved in the administration of the complaints system, that is no such driver was a member of the Supervisory Committee constituted under By-law 18. Assuming his Honour’s reasoning to be correct, that defect could not affect the application of By-laws 18-24 to owner-drivers who were members of Aerial. The orders made by his Honour would therefore require modification, even if the reasoning were to be upheld.

11 The issues on the appeal were both narrowed and clarified by a concession made by Mr Sullivan QC, who appeared with Mr Harris for Aerial. Mr Sullivan conceded that By-laws 18-24 operated as a restraint of trade on the respondent. He based that concession on the proposition that the By-laws amounted to a fetter on the right of non-member drivers to engage in work because (but only because) the Supervisory Committee had the power to suspend the power of radio services to such drivers, either as a direct disciplinary measure or as a default sanction in the event that fines were not paid. Mr Sullivan also accepted that the By-laws would be held contrary to public policy and invalid unless they could be justified in accordance with principles accepted by the High Court in cases such as Buckley v Tutty. I did not understand Ms Keys, who appeared with Ms Warwick for the respondent, to dispute Mr Sullivan’s analysis.

12 The starting point for the application of the restraint of trade doctrine is the test laid down in Heron v Port Huon Fruitgrowers’ Co-Operative Association Ltd (1922) 30 CLR 315, at 324:

“‘The real test’ whether a contract is reasonable between the parties ‘is,’ in the language of Lord Birkenhead (McEllistrim v Ballymacelligott Co-Operative Agricultural and Dairy Society Limited [1919] AC 548, at 563), ‘does the restriction exceed what is reasonably necessary for the protection of the covenantee?’ Do the articles ‘impose upon the appellant a greater degree of restraint than the reasonable protection of the respondents requires’?”

In Buckley v Tutty (at 376) the High Court endorsed this approach and held that the language in Heron, which had been used in relation to a contractual restraint, could be applied, mutatis mutandis, to other restraints.

13 Aerial’s principal argument was that the composition of the Supervisory Committee was simply irrelevant to any consideration of whether Aerial had discharged the onus of demonstrating that the restraint afforded no more than adequate protection for its own interests. According to Mr Sullivan, two distinct inquiries have to be made:

· first, to determine precisely the nature and intended scope of the restraint; and

· secondly, to determine whether the party benefiting from the restraint has discharged its onus.

Mr Sullivan submitted that, if the restraint was constituted by a power to suspend access to Aerial’s radio system, the composition of the Supervisory Committee was a “false issue”.

14 I think it is correct that the first step in the analysis is to determine the meaning and intended scope of the impugned restraint: Butt v Long (1953) 88 CLR 476, at 484, per Dixon CJ (a case involving a contractual restraint). However, in considering the second question, namely whether the party benefiting from the restraint has discharged its burden, a court will take account of the effect of the restraint upon the covenantor or other persons adversely affected by it. As Wilcox J said in Adamson v New South Wales Rugby League Limited (1991) 31 FCR 242, at 266:

“although the primary question will always be the extent of the covenantee’s need for protection, it is impossible to leave out of account the effect of the restraint upon the covenantor…. The very notion of reasonableness involves a balancing of competing considerations. The more onerous the restraint, the more difficult it is for the person seeking to enforce the restraint to satisfy a court that it was, in all of the circumstances, no more than was reasonably necessary for the protection of his or her interests."

katz J

23 There is before the Court an appeal from part of a judgment given by a single Judge of the Court.

24 That appeal is by Aerial Taxi Cabs Co-operative Society Limited (“Aerial”) and is in substance against that part of the primary Judge’s judgment which, in favour of Mr Robert Andrew Lee, declared invalid, on common law restraint of trade grounds, certain by-laws which had been made by Aerial’s board of directors. (Also appealed against is a consequential injunction.)

25 There is also before the Court an application by Mr Lee for an extension of time within which to cross-appeal against that part of the primary Judge’s judgment which dismissed two claims that had been made by Mr Lee against Aerial, one under the Workplace Relations Act 1996 (Cth) (“the WRA”) and the other for breach of contract.

26 The submissions of each party on the application for an extension of time within which to cross-appeal included those submissions which would be made by that party on the cross-appeal, if an extension of time were granted. The latter submissions were made both to assist the Court in deciding whether to grant the extension of time being sought and, if the extension of time being sought were granted, to permit the Court to determine the cross-appeal immediately.

27 It is convenient to begin these reasons for judgment by setting out certain matters of a general nature concerning Aerial.

28 Aerial is a co-operative trading society registered under the Co-operative Societies Act 1939 (ACT) (“the Act”). It is unnecessary to say anything presently of the provisions of the Act, except that, typically for those of co-operatives legislation, they require a co-operative society to have Rules which serve as that society’s constitution before the society can be registered thereunder: see, in particular, s 16(7) of the Act.

29 Among Aerial’s objects, as appears from rule 6 of its Rules, are to organise and operate a taxi cab service in the Australian Capital Territory and to organise and operate a radio-telephone base station and office in connection with that taxi cab service. Those objects Aerial fulfils; indeed, Aerial is (and has for some time been) the only operator in the Australian Capital Territory of a taxi cab service which involves the taking of bookings from customers and the allocating from a radio-telephone base station of such bookings to taxi cabs then on call. At the time of the hearing before the primary Judge, Aerial’s taxi cab service appears to have involved about nine hundred taxi cab drivers, who were sharing among themselves the driving of about one quarter as many taxi cabs.

30 Pursuant to rule 10(1) of its Rules, Aerial’s membership is limited to persons licensed under the Motor Traffic Act 1936 (ACT) to use their motor vehicles as taxi cabs. So far as I am able to tell, there was no evidence before the primary Judge as to the number of Aerial’s members at the time of the hearing before him. However, it is apparent that some, but not all, members of Aerial are drivers, as well as owners, of taxi cabs (and thus are included among the nine hundred or so drivers to whom I referred above). As well, some members of Aerial have their taxi cabs driven for them by drivers who are not members of Aerial (such non-member drivers making up the remainder of the nine hundred or so drivers to whom I referred above).

31 Part 7 of the Rules establishes a board of seven directors of Aerial, whose function, according to rule 50(1) of the Rules, is to manage and control Aerial’s business and operations. Aerial’s directors must, among other things, be members of Aerial (rule 42(2)(a) of the Rules). The Rules do not prescribe a system for the election of directors, but impose on each board of directors a duty to determine a system for the election of directors at any annual general meeting at which directors are to be elected (rule 43(1) of the Rules). It is apparent from the Rules that only members are to be eligible to vote for directors: see, for example, rule 35 of the Rules, relating to quorum.

32 Part 4 of the Rules (rules 14 to 20) provides for the disciplining of Aerial’s members. Decisions as to whether Aerial’s members should be disciplined are to be made in the first instance by a standing committee called the Supervisory Committee, which is established under Pt 8 of the Rules. In particular, rule 55(1) of the Rules provides: “There shall be a Supervisory Committee consisting of three members of the Society, none of who[m] are Directors[,] and when available one nominee appointed by the Motor Registrar”. (Although there is no definition of the term in either the Act, the Co-operative Societies Regulations 1945 (ACT) (“the Regulations”) or Aerial’s Rules, the reference to “the Motor Registrar” in rule 55(1) of the Rules seems plainly to be a reference to the Registrar of Motor Vehicles under s 6 of the Motor Traffic Act.) The three members of the Supervisory Committee who are to be members of Aerial are usually to be chosen by election by the members of Aerial: see, generally, rules 55 to 58 of the Rules.

33 Part 4 of the Rules (rule 15) also provides for an appeal by an aggrieved member of Aerial against a decision of the Supervisory Committee. An appeal is to be heard and decided by an Appeal Committee, which must be established ad hoc by the chairman of Aerial’s board of directors once an appeal is lodged. Rule 16(2) of the Rules provides that the chairman is to nominate one director of Aerial and two other persons, neither of whom is a member, officer or employee of Aerial and each of whom has experience in either business, public administration, arbitration of disputes or legal matters, to constitute an Appeal Committee to hear an appeal.

34 Rule 70 of the Rules authorises Aerial’s board of directors to make by-laws. That rule provides:

“(1) The Board of Directors may make by-laws not inconsistent with these Rules, the Act or the Regulations to facilitate the proper, efficient and orderly functioning of the Society and, in particular, relating to:

…

(c) a code of conduct to be observed by drivers of taxi cabs (including members), which may include provisions relating to:

…

(ii) penalties for breaches of that code of conduct, including suspension of access to the radio system….”

35 Pursuant to rule 70 of the Rules, Aerial’s board of directors has made by-laws, which by-laws include both a code of conduct to be observed by drivers of Aerial taxi cabs (including, but not limited to, those drivers who are members of Aerial) and penalties for breaches of that code of conduct by such drivers, including suspension of access to Aerial’s radio system.

36 For instance, by-law 40 of the By-Laws contains twenty-five lettered paragraphs ((a)-(y)) listing obligations of “drivers”. (A “driver” is defined in an unnumbered provision near the start of the By-laws as meaning “a driver of an Aerial Taxi Cab” and as “includ[ing] any … owner who is the driver of an Aerial Taxi Cab”.) By-law 40 includes, for example, the following:

“Drivers will:-

…

(s) Not by means of [their] radio or otherwise, cause any interference with the operations of the Society….”

37 Further, so far as concerns suspension of access to Aerial’s radio system as a penalty for breach by a driver of, for instance, by-law 40 of the By-laws, by-law 19(c)(4) of the By-laws makes particular provision in that regard. I will not, however, simply set out now the text of by-law 19(c)(4) of the By-laws. Instead, since that provision is merely one of a number of provisions of the By-laws, all of which create an enforcement mechanism for, among others, by-law 40 of the By-laws and all of which were declared by the primary Judge to be invalid on common law restraint of trade grounds, I will set out now all of those by-laws, including by-law 19(c)(4). They are as follows:

“DISCIPLINE

SUPERVISORY COMMITTEE

18. There shall be a Supervisory Committee in accordance with the Rules of the Society[,] which state in part:-

‘There shall be a Supervisory Committee consisting of three members of the Society, none of whom are Directors[,] and when available one nominee appointed by the Motor Registrar[.]’

19.a. Any driver who allegedly contravenes or fails to comply with any provision of the Rules or the By-laws may be informed by the dispatcher. The driver may be offered the option of taking two penalty points immediately or hav[ing] the matter referred to the Supervisory Committee as hereinafter provided.

b. Any driver summoned to appear before the Supervisory Committee will be notified in writing at least seven (7) days prior to the proposed hearing and be given details of any alleged breach of the Rules or By-laws to be discussed at the hearing. The driver may choose to either appear in person at the hearing to answer any charges, may call witnesses to give evidence on his behalf, or make written submissions to the Committee. Failure to appear before the Supervisory Committee or make written submission without reasonable excuse will incur suspension from the Radio Network and cancellation of PIN number. In the event of a subsequent non-appearance, the Supervisory Committee will have the discretion to suspend the driver until he appears or to make a decision on the alleged incident based on the information available.

c. If the Supervisory Committee is satisfied that a driver has contravened or failed to comply with a provision of the Rules or the By-laws the Supervisory Committee may-:

(1) Reprimand the driver and/or

(2) Require the driver to attend all or part of the Aerial Taxi Cabs Co-operative Society Limited approved driver training course for refresher training and/or

(3) Fine the driver an amount not exceeding $1,000.00 and/or

(4) Suspend the provision of the radio services to that driver and/or that operator’s taxi cab or cabs for a period not exceeding four (4) weeks, and/or

(5) Recommend to the Board that the driver be suspended from access to the radio network and/or

(6) Impose a suspended sentence and/or

(7) Recommend to the Board that the matter be referred to the Motor Registrar, and/or

(8) Award the driver demerit points where the Committee considers a monetary fine to be inappropriate.

The driver concerned is to be notified in writing of that decision and the reasons.

APPEALS

20. The Appeal[ ] Committee will consist of:

(1) A Director, and

(2) Two (2) other persons, neither of whom is a member or an officer or employee of the Society and each of whom has had experience in:

(a) Business; or

(b) Public administration; or

(d) Legal matters[.]

21. Any driver aggrieved by any decision of the Supervisory Committee under these By-laws may within seven (7) days after being notified of the decision appeal to the Chief Executive against that decision. Such an appeal may be on the grounds of innocence of the charge or severity of the punishment. The Chief Executive shall cause the appellant to be given at least seven (7) days[’] notice of the Appeal Committee’s meeting stating the time and place at which his appeal is to be heard. The appellant will have the same rights in relation to the appeal as he has under Subsection 19.b..

22. Any fine imposed on a driver shall be paid within fourteen (14) days of it[s] being imposed. In the event of an appeal the fine will be held over until the result of the appeal is notified. Subsequent to the Appeal Committee decision any fine imposed shall be paid within fourteen (14) days. If the fine is not paid within this period the driver may be suspended from the provision of the radio services until the fine is paid.

23. The Appeal Committee may:-

(1) Confirm the decision of the Supervisory Committee, or

(2) Vary the decision of the Supervisory Committee, or

(3) Annul the decision of the Supervisory Committee, or

(4) Hear the matter de novo.

In varying the decision of the Supervisory Committee the Appeal Committee shall have the same powers as the Supervisory Committee has under the Rules and By-laws.

COSTS OF APPEALS

24.(1) If an appellant is substantially successful in his appeal:

(a) The appointment costs of the appeal; and

(b) The reasonable legal costs, as determined by the Appeal Committee, incurred by the appellant in the appeal, are borne by the Society.

(2) In any other case, the Appeal Committee may order that the appellant bear the whole, or a specified part[,] of the appointment costs of the appeal.

(3) In this By-law ‘Appointment costs of the appeal’ means so much of the costs incurred by the Society in engaging the persons referred to in paragraph 20 as is attributable to the appeal.”

38 I do not understand it to be the intent of by-law 18 of the By-laws that there should be two Supervisory Committees, one for the purpose of the Rules and another for the purpose of the By-laws; rather, I understand the Supervisory Committee referred to in the By-laws to be intended to be the same body as the Supervisory Committee referred to in the Rules.

39 Mention should also be made now of by-law 16 of the By-laws, which provides, “Drivers are required to sign an agreement to abide by the Rules and By-laws of Aerial … prior to driving a taxi operating in Aerial’s fleet.” I have already mentioned (see [36] above) the definition of “driver” in the By-laws. That definition is said to be the one to be used “unless the context [or] the subject matter otherwise indicates or requires”. To my mind, the subject matter of by-law 16 of the By-laws does otherwise indicate. It seems plain to me that the requirement in that part of by-law 16 of the By-laws which I have quoted above was intended to be applicable only to those drivers who were not members of Aerial, it being unnecessary to require member drivers to sign a separate agreement to abide by Aerial’s Rules and By-laws.

40 Turning now to the facts of the present matter, it is sufficient for present purposes to refer to the following. Mr Lee, although he has for some time been a driver of Aerial taxi cabs, is not a member of Aerial. On 15 April 1994, he signed an agreement of the sort contemplated by by-law 16 of the By-laws. That agreement was written on Aerial letterhead, was headed “Driver[’]s Agreement” and provided as follows:

“In consideration of being given bailment of a taxi(s) bearing Aerial taxi cab markings and belonging to a member of the Aerial Taxi Cabs Co-Operative Society Limited (‘The Society’) and of being permitted to use such of the Society’s facilities, including its radio system, as is agreed, I hereby agree to comply with the By-laws, a copy of which I have this day received, or as amended by the Society in accordance with its Rules from time to time. I hereby consent, as part of my bailment, to any breach of those By-laws by me being dealt with under the disciplinary procedures of the Society as set out in Part 4 of the Rules of the Society which, for the purposes of this agreement, shall be interpreted as though I were a member of the Society. I further agree to abide by any decision made in accordance with these procedures and that any monetary penalty imposed may be recovered from me as a debt due to the Society in a court of competent jurisdiction.”

41 As well as being signed by Mr Lee, the agreement was also signed by Mr Gary Whitby, a member of Aerial who was said to be the owner of taxi cab number 163. Aerial was not expressed to be a party to the agreement.

42 Since signing the driver’s agreement, Mr Lee has driven Aerial taxi cabs for a number of Aerial’s members, during which time he has been subjected on a number of occasions to the disciplinary provisions of the By-laws. That led, among other things, to the suspension of the provision to him of Aerial’s radio services for certain periods and, ultimately, to his bringing the proceeding heard by the primary Judge. At the time of that proceeding, Mr Lee was, by arrangement with Mr Les Wassell, who was a member of Aerial, driving taxi cabs belonging to Mr Wassell.

43 In the proceeding before the primary Judge, Mr Lee first made one, then later two and then ultimately three claims. At first, he sought, pursuant to subs 127A(2) of the WRA, review of a contract to which Aerial and he were both parties, on the ground that that contract was either unfair or harsh or both. Next, he claimed that Aerial had breached that contract. Finally, he made a claim of invalidity of that contract on the ground that it was an unlawful restraint of trade at common law. The contract concerned in all three of Mr Lee’s claims was that said to be constituted by the driver’s agreement.

44 It is convenient now to explain, in the order to which I have referred to them above, how the primary Judge disposed of each of Mr Lee’s claims.

45 Subsection 127A(2) of the WRA provides that application may be made to the Court to review a “contract” on the ground that it is unfair or harsh or both. The term “contract” is defined in subs 127A(1) of the WRA as meaning:

“(a) a contract for services that:

(i) is binding on an independent contractor; and

(ii) relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract; and

(b) any condition or collateral arrangement relating to such a contract.”

46 Mr Lee’s case before the primary Judge was that the driver’s agreement (see [40] above) constituted a contract between Aerial and him which was either unfair or harsh or both within the meaning of the WRA. In putting forward such a case, Mr Lee relied on par (a) of the definition of “contract” in subs 127A(1) of the WRA or, in the alternative, on par (b) of that definition. So far as par (a) was concerned, Mr Lee’s case was that the driver’s agreement constituted a contract within that paragraph. So far as par (b) was concerned, Mr Lee’s case was that the driver’s agreement was a collateral arrangement relating to a contract of the type described in par (a), namely, a contract between Mr Wassell and him concerning his driving of Mr Wassell’s Aerial taxi cabs.

47 The primary Judge rejected Mr Lee’s submission that the driver’s agreement constituted a “contract for services”, as that term is used in par (a) of the definition of “contract” in subs 127A(1) of the WRA. As well, the primary Judge rejected Mr Lee’s submission that Mr Wassell and he were parties to a “contract for services”, as that term is used in par (a) of the definition of “contract” in subs 127A(1) of the WRA. The primary Judge therefore concluded that the driver’s agreement did not constitute a “contract” within the meaning of subs 127A(1) of the WRA. That being so, the primary Judge found it unnecessary to determine whether the contract constituted by the driver’s agreement was either unfair or harsh or both within the meaning of the WRA.

48 Turning now to Mr Lee’s breach of contract claim, it is plain that the primary Judge found considerable difficulty in understanding precisely what the nature of that claim was. His Honour said about the claim:

“I confess to finding the applicant’s case on this basis confusing as a matter of pleading and as a matter of argument. Insofar as it relates to the manner in which the By-laws have been operated, I can find no evidence of breach, assuming validity. Insofar as the applicant makes a point about differences between the Rules, on the one hand, and the By-laws, on the other, whilst there is a technical argument based upon the wording of the Driver’s Agreement, it does not bear any scrutiny. It is obvious that the procedure which applies to the driver is the By-law procedure, but that cannot be looked at in isolation from the fact that it is picking up a system which is also applicable to members for wider purposes than breach of the By-laws. In my opinion, insofar as there is any relevant difference between the Rules and By-laws, it is plainly the By-laws which prevail so far as the applicant is concerned.

I agree with counsel for the respondent when he submitted that some of the arguments which seem to have been advanced under this head … were misconceived. The applicant is not a member of the respondent and has no role in relation to the administering by it of its own Rules and By-laws except insofar as the applicant’s interests are directly affected.

The claim for breach of contract is rejected.”

49 Coming finally to Mr Lee’s common law restraint of trade claim, the primary Judge dealt with that claim in two stages, first, by interlocutory reasons dated 10 December 1999 and, secondly, by final reasons dated 25 February 2000.

50 Although, as I have already mentioned (see [43] above), it was Mr Lee’s claim before the primary Judge that it was the contract constituted by the driver’s agreement which was invalid as being an unlawful restraint of trade at common law, the primary Judge devoted no attention in his interlocutory or final reasons to that claim. Instead, in his interlocutory reasons, the primary Judge characterised, as constituting a restraint of Mr Lee’s “trade”, Aerial’s “complaints and discipline system” as it was applicable to drivers. (There was no dispute that driving taxi cabs for profit, as Mr Lee did, fell within the notion of “trade” for present purposes: see Buckley v Tutty (1971) 125 CLR 353 at 371 (Barwick CJ and McTiernan, Windeyer, Owen and Gibbs JJ).) By his Honour’s reference to Aerial’s “complaints and discipline system” as it was applicable to drivers, it is apparent that he was referring either to some or to all of Aerial’s By-laws, although, if the former, he did not, in his interlocutory or final reasons, identify precisely which ones.

51 Having characterised that system as a restraint of Mr Lee’s “trade”, his Honour then, under the heading “Reasonableness between the parties”, identified in his interlocutory reasons two principal issues. Those were whether the complaints and discipline system as it was applicable to drivers was reasonably related to Aerial’s objects and whether it afforded no more than adequate protection to Aerial’s interests. His Honour noted that Aerial bore the burden of persuasion on both of those issues, citing Adamson v New South Wales Rugby League Limited (1991) 31 FCR 242 at 289-90 (Gummow J).

52 On those two issues, his Honour first expressed himself as “quite satisfied that a system of the kind under consideration is necessary in the interests of the respondent in conducting an efficient business”. He then said that that system “goes no further than is necessary” in those interests. Importantly, however, his Honour’s acceptance that the system went no further than was necessary in Aerial’s interests was expressed to be “subject to some specific matters”. He then identified and discussed those specific matters as follows:

“My major concern is whether it is reasonable to subject a driver to a system where owner-operators make the substantive rules to be obeyed, make the rules concerning enforcement and administer the rules, with no contribution to the process by the driver concerned or anyone else in the same interest. What may be reasonable between members may not be reasonable so far as outsiders are concerned (although cf McEllistrim v Ballymacelligot Co-operative Agricultural & Dairy Society Ltd [1919] AC 548)[.]

My concerns are alleviated by reason of the fact that the By-laws apply to owner-operators who drive as well as to drivers and are thus unlikely to discriminate between owners as a class and drivers as a class. Furthermore, the substantive rules in question are related to the practical operation of a radio network, rather than to traditional industrial issues such as shifts, rights of pay and so on. Furthermore, the fact that a majority of the Appeal Committee is constituted by outsiders is a significant safeguard.”

53 About the passage which I have just quoted, I make the following comments.

54 First, his Honour was not using the word “rules” in the first paragraph of that passage in a technical sense, as referring to certain of Aerial’s Rules, but rather was using it in a generic sense, as referring to those By-laws which constituted Aerial’s complaints and discipline system applicable to its drivers. So much appears from his Honour’s references in the second paragraph of the passage both to the By-laws and to “the substantive rules”.

55 Secondly, his Honour was using the word “driver” in the first paragraph of that passage as referring only to Aerial’s non-member drivers, like Mr Lee. So much appears from his references in the second paragraph of the passage to, on the one hand, “owner-operators who drive” and, on the other hand, “drivers”.

56 Thirdly, when his Honour referred in the first paragraph of that passage to an absence of contribution by the non-member driver concerned to the process of administration of the substantive by-laws to be obeyed, his Honour plainly did not mean to say that the by-laws constituting Aerial’s complaints and discipline system applicable to its drivers did not afford such drivers natural justice. Almost immediately before the passage in his reasons which I am now discussing, his Honour had said, “The present scheme affords natural justice appropriate to the situation”. (That particular holding was conceded by Mr Lee on the appeal to have been correct, at least in so far as the requirements of natural justice include the hearing rule.) Thus, his Honour’s real concern, so far as regarded an absence of contribution to the process of administration of the substantive by-laws to be obeyed, was with the absence of contribution to that process by anyone else in the same interest as the non-member driver concerned.

57 Fourthly, his Honour’s concern expressed in the first paragraph of that passage about an absence of contribution to the process of administration of the substantive by-laws to be obeyed by anyone other than the non-member driver concerned who was in the same interest as that non-member driver appears to have been about the qualifications of those charged with making disciplinary decisions. In particular, his Honour appears to have been concerned about the absence from the Supervisory Committee of any person(s) representing the interests of non-member drivers. So much is inferable from, among other things, his Honour’s observation in the second paragraph of that passage that “the fact that a majority of the Appeal Committee is constituted by outsiders is a significant safeguard”. His Honour was there referring to the provisions of by-law 20 of the By-laws, set out in [37] above. (His Honour did not refer to the place on the Supervisory Committee of a person to be appointed by the Registrar of Motor Vehicles: see by-law 18 of the By-laws, also set out in [37] above.)

58 Fifthly, those matters to which his Honour referred in the second paragraph of the passage as alleviating those concerns which he had expressed in the first paragraph of the passage demonstrate that his major concern with Aerial’s complaints and discipline system applicable to its drivers was that the Supervisory Committee, composed as it was, would, in the administration of the by-laws constituting that system, make decisions which discriminated against Aerial’s non-member drivers. For his Honour to have focused on the respects in which Aerial’s system might fail to protect the interests of non-member drivers appears to me to have been substituting a different question for the one posed by the common law restraint of trade doctrine.

59 The primary Judge then concluded:

[A]lthough I am clearly of the view that the principal submission of the applicant, namely, that regulation of drivers should be left to the public authorities rather than to the respondent, should not be accepted, I am not satisfied that it is appropriate to entirely exclude [non-member] drivers as a class from any involvement in the disciplinary system in order to do no more than protect the reasonable interests of the respondent. The respondent has therefore failed to justify the restraint. However, I am concerned that the manner in which the issue has arisen has not given the respondent an adequate opportunity of meeting this particular point. The issue was added by amendment very late. … [N]o particular evidence or submissions were directed to it by the applicant. I propose to give the respondent the opportunity of further addressing that point by evidence or submission if so advised.”

60 In sum, his Honour’s provisional view at the time of his interlocutory reasons was that, subject to one exception only, Aerial had discharged its burden of persuading him that those of its by-laws which constituted its complaints and discipline system applicable to drivers both were reasonably related to Aerial’s objects and afforded no more than adequate protection to Aerial’s interests. That single exception was that Aerial had not discharged its burden of persuading him that the exclusion of its non-member drivers “as a class from any involvement in the disciplinary system” applicable to its drivers afforded to its interests no more than adequate protection.

61 His Honour’s final reasons were delivered after Aerial had taken up the opportunity extended to it by his Honour in the passage from his reasons which I have quoted in the next preceding paragraph.

62 Having heard from Aerial on the issue to which, as his Honour said, no particular evidence or submissions had been directed at the first hearing by Mr Lee, his Honour’s final view on that issue was as follows:

“I must confess that my mind has fluctuated as to the result, as I can see merit in the submissions on either side. In the end, however, I remain unsatisfied that the respondent cannot have a satisfactory complaints and disciplinary system if there is any involvement of bailees [that is, of non-member drivers] in the administration of it. Therefore it [that is, Aerial] has not carried the onus of establishing that the restraints, in their present form, do not go beyond what is reasonably necessary for its protection.”

63 It is apparent, however, that part of the major concern which his Honour had expressed in his interlocutory reasons had dissipated by the time of his final reasons. It will be recalled (see [52] above) that, in his interlocutory reasons, his Honour had expressed concern, not only about the administration of the substantive by-laws to be obeyed, but also about the making of by-laws, both the substantive ones to be obeyed and those concerning enforcement. In his final reasons, however, his Honour said, “I was not persuaded that it is necessary to have any bailee involvement in the making of the disciplinary rules. My concern lies with the administration of them”.

64 In the course of his final reasons, the primary Judge discussed a number of submissions made by Aerial at the second hearing. It is convenient to refer to his discussion of two of those submissions.

65 First, among Aerial’s submissions was one that no case could be found in the books in which a rule of an organisation, applicable to non-members, had been held invalid as being an unlawful restraint of trade at common law merely by reason of the fact that the body charged with administering the rule did not include any representative(s) of such non-members. As to that submission (which appears to me to have been correct as a matter of fact), his Honour said that it “is a reasonable foundation for judicial caution, but does not grapple with the principle involved. After all, no taxation without representation has a long and honourable history.”

66 His Honour’s response to that submission suggests that he considered that the slogan, “No taxation without representation”, exemplified the principle involved in the case before him. I find it difficult to accept that. The slogan, “No taxation without representation”, appears to have had its origins in colonial America in the 1760s. It was used then as a shorthand description of a legal argument that the Imperial Parliament lacked the power to make taxation laws which bound persons who had had no entitlement to vote for the members of that Parliament. (That legal argument regarding the law making powers of the Imperial Parliament was never accepted in Australian law.) Transposed to the present situation, the slogan would suggest an inability in Aerial’s board of directors, which, as I have already mentioned (see [31] above), is elected only by Aerial’s members, to make by-laws adversely affecting the interests of Aerial’s non-member drivers. However, as I have also already mentioned (see [62] above), that is a proposition which his Honour expressly rejected, saying that it was unnecessary to have any non-member driver involvement in the making of the disciplinary by-laws. His Honour’s reference to the slogan appears to suggest, as did his interlocutory reasons, that he was concentrating, not on whether the absence of non-member driver representation from Aerial’s Supervisory Committee afforded more than adequate protection to Aerial’s interests, but rather on whether the absence of non-member driver representation from Aerial’s Supervisory Committee afforded less than adequate protection to the interests of non-member drivers. To ask oneself the latter question would be to ask the wrong one.

67 Secondly, Aerial submitted at the second hearing before the primary Judge that “the composition of the Appeal Committee is effectively the answer to the complaints by the applicant”. His Honour described that as “a powerful point”, but rejected it nevertheless. Among the things which he said about it was that “the absence of any bailee from administration of the system may have effects which are subtle and which may not be either perceived or corrected on appeal”. That response reinforces in my mind the conclusion which I have earlier expressed that his Honour’s real concern in the matter was about the composition of the Supervisory Committee and possible discrimination against non-member drivers in decision making by that body.

68 Having reached the conclusion that, in one respect only, namely, in the composition of the Supervisory Committee, Aerial had failed to satisfy its burden of persuading him that the disciplinary system applicable to its non-member drivers was no more than adequate to protect its interests, his Honour then declared invalid by-laws 18 to 24 of the By-laws and granted a consequential injunction.

69 His Honour did not discuss in his final reasons why it was specifically by-laws 18 to 24 of the By-laws which were to be declared invalid. However, since his Honour did not declare invalid the entirety of Aerial’s By-laws, he must have applied a doctrine of severability to them. No doubt, by-laws 18 and 19 were declared invalid because they dealt directly with the Supervisory Committee, which could not, in his Honour’s view, be composed as was contemplated in the By-laws for the performance of its disciplinary functions under those By-laws regarding drivers. I infer that by-laws 20 to 24 were declared invalid because they were consequential on by-laws 18 and 19. However, since a doctrine of severability was being applied to the By-laws, it is not clear to me why by-laws 18 to 24 were declared invalid simpliciter, that is to say, in their application both to member and to non-member drivers, instead of just in their application to non-member drivers.

70 Having concluded for present purposes my discussion of the primary Judge’s reasons, I turn now to the submissions which were made on the appeal on the validity of by-laws 18 to 24 of the By-laws in their application to non-member drivers.

71 In substance, Aerial’s submissions on the appeal can be summarised in the following five propositions:

· The primary Judge erred in defining the restraint of trade involved in the present matter as encompassing all of those by-laws which fell within the description of Aerial’s complaints and discipline system applicable to drivers. In particular, by-law 18 of the By-laws, which stated the qualifications for membership of the Supervisory Committee, was no part of the relevant restraint. That restraint was instead properly to be defined as consisting only of those provisions of the By-laws authorising the imposition by the Supervisory Committee of sanctions on a driver for breaches of discipline, in particular, the sanction of suspension from the radio system.

· The reasonableness between the parties of that conferral of authority on the Supervisory Committee to impose sanctions was to be tested only by what could lawfully be done in the exercise of that authority.

· The Supervisory Committee, no matter what its composition might be, was in any event confined by law in its ability, in any individual instance, to exercise its authority to impose those sanctions. It could only lawfully exercise that authority honestly, in good faith, reasonably and in an unbiased fashion.

· The confinement by law in that way of the Supervisory Committee’s authority to impose sanctions rendered its composition irrelevant in determining the reasonableness between the parties of that conferral of authority.

· Alternatively, if the composition of the Supervisory Committee was a relevant matter, then such confinement by law of the Supervisory Committee’s decision making power in individual instances meant that the present restraint, being otherwise reasonable between the parties (as the primary Judge had held), was not made unreasonable merely by virtue of the Supervisory Committee’s composition.

72 Turning now to Mr Lee’s submissions on the appeal, both written and oral, I have read both the former and a transcript of the latter a number of times since having first read the former and heard the latter at the time of the hearing of the appeal. After careful examination and re-examination of those submissions, I regret to say that I am unable to regard them as having been responsive to those submissions of Aerial on the appeal which I have just summarised. Instead, they amounted in large measure to an attempt to support that part of the judgment below which was under appeal by the repetition of submissions which had been put to and rejected by the primary Judge. That attempt was impermissible, because the requisite notice of contention had not been filed and served in a timely way: see O 52, r 22(3) of the Federal Court Rules (“the FCRs”); and because no application was made to the Court for an extension of time in that respect. As to the balance of Mr Lee’s submissions on the appeal, they consisted of extraneous material.

73 In those circumstances, it is necessary for me to attempt to deal with Aerial’s submissions on the appeal without such assistance as I might have gained from their being directly answered by Mr Lee.

74 As to Aerial’s first proposition, I accept that it is correct to limit the restraint required to be considered in the present matter only to those provisions of the By-laws which authorise the imposition by the Supervisory Committee of sanctions on a driver for breaches of discipline. However, although it does not matter in the present case, given the nature of the question for determination, I would not further limit that restraint so that it encompasses only the Supervisory Committee’s authority to suspend access to the radio system. I would instead treat it as including the Supervisory Committee’s authority to impose all of the sanctions authorised to be imposed by it. To take an example, the required attending by a driver of a training course (see by-law 19(c)(2)) could prevent him or her from “trading” when he or she would otherwise have been able to do so. I note also that Forbes (Disciplinary Tribunals (2^nd ed.), 49, [4.16]) appears to consider that the imposition of a fine or even of a reprimand (as permitted in the present case to be imposed by by-laws 19(c)(3) and (1) respectively) can amount to an unlawful restraint of trade at common law in certain circumstances.

75 As to Aerial’s second proposition, I accept that Aerial correctly submitted that an examination of the relevant provisions of the By-laws should be conducted by reference only to what they lawfully permit to be done under them, rather than by reference as well to anything which might be purportedly done under them, but unlawfully. Although Aerial cited no authority in support of that proposition, it appears to me that its correctness is supported by the reasons for judgment of Barwick CJ in Geraghty v Minter (1979) 142 CLR 177. That case concerned a clause in a partnership agreement forbidding certain of the partners from carrying on, after any termination of the partnership, a business similar to that of the partnership. The prohibition was limited both as to time and as to physical proximity to the partnership’s office. Barwick CJ said (at 179) that the question to be determined was: “did the clause provide at the time it was given no more than reasonable protection of the interest of those in whose favour it was entered into, bearing in mind its possible operation according to its terms properly construed?” (emphasis added); and see also his Honour’s reference at 181 to the necessity to determine the question there under consideration by reference to the clause’s terms “properly construed”.

76 As to Aerial’s third proposition, I accept that Aerial was correct in its submission (which was, in one sense, a concession) that those provisions authorising the Supervisory Committee to impose sanctions on drivers for breaches of discipline only lawfully permit the imposition of such sanctions if the imposition occurs honestly, in good faith, reasonably and in an unbiased fashion.

77 In support of that submission, Aerial relied on a number of cases, in particular: Australian Football League v Carlton Football Club Ltd [1998] 2 VR 546 (VCA: Tadgell and Hayne JJA and Ashley AJA); Kemp v New Zealand Rugby Football League Inc [1989] 3 NZLR 463 (HC: Henry J); and Cains v Jenkins (1979) 28 ALR 219 (FCA: JB Sweeney, St John and Keely JJ). I consider that those cases do support that submission.

78 For instance, in the most recent of them, the Australian Football League case, a challenge was made to a particular decision by the tribunal constituted to deal with allegations of breaches of discipline by AFL players. That decision had been one to suspend a certain player for a certain number of matches. The challenge to the decision, which was brought by the player concerned together with his club, was based on an alleged breach of contract by the AFL (although, according to Tadgell JA (see at 548) “it might perhaps have been possible” to have based it instead on common law restraint of trade grounds). (I note that, in the present case, Mr Lee stands, as was found by the primary Judge, in a contractual relationship with Aerial, which relationship is similar to that between the player and the AFL in the Australian Football League case.) Among the circumstances identified by Tadgell JA as ones in which the tribunal’s suspension decision could be set aside by a court were those in which “the effect of the decision is unreasonably in restraint of trade” or in which the decision was “a decision that is seen not to be made in good faith, or to be the product of bias or other dishonesty” (at 550).

79 Having accepted the correctness of the first three of Aerial’s propositions, I consider that it matters little in the present case whether one says that the composition of the body authorised to impose the sanctions is relevant or irrelevant in determining the reasonableness between the parties of the provisions presently being considered. In either case, the provisions, if otherwise reasonable between the parties, are not, in my view, rendered unreasonable between them merely by the composition of the body which administers them. The confinement by law of that body’s powers ensures that outcome. However, I do not consider that that outcome means that if the effect of a particular decision of the Supervisory Committee in the course of administering the provisions were unreasonably to restrain Mr Lee’s “trade”, then he could not successfully challenge that particular decision. In my view, he could. (I add that, if the Supervisory Committee’s composition is relevant, then the fact that that body was intended to include among its number what the primary Judge described, in the context of the Appeal Committee’s membership, as “an outsider” would, it appears to me, lend further support to the conclusion which I have reached.)

80 I note that I find no inconsistency between the conclusion which I have expressed above and the decision of the High Court in Buckley v Tutty. That was a case where, unlike the present, the content of the rules under challenge was such that they were characterised, by reason of that content alone, as an unlawful restraint of trade. In those circumstances, it is not surprising that an argument, by those seeking to uphold the validity of the rules, that “the apparent severity of the rules may be mitigated by the decision of” a body which administered them was rejected (see at 379). The same comment may be made about the decision of a Full Court of this Court in Adamson v New South Wales Rugby League Limited: see, in particular, the discussion in the reasons of Wilcox J (at 278-79) and Gummow J (at 291) of the significance of the existence of the Appeals Board for the validity of rules the content of which had already marked them as being in unlawful restraint of trade.

81 Before concluding my reasons on the appeal, I wish to return to a submission recorded by the primary Judge as having been made by Aerial at the second hearing before him, which submission his Honour, although characterising it as “a reasonable foundation for judicial caution”, did not ultimately act on. That was the submission that no case could be found in the books in which a rule of an organisation, applicable to non-members, had been held invalid as being in unlawful restraint of trade at common law merely by reason of the fact that the body charged with administering that rule did not include any representative(s) of such non-members. I have already said (see [65] above) that that submission appears to me to have been correct as a matter of fact. However, the matter appears to me to go further merely than there being no such case. Not only is there no such case, but, if the view taken of the matter by the primary Judge were correct, it would follow that numerous cases decided over a very long period of time must have been wrongly decided.

82 In chapter one of his book, The Restraint of Trade Doctrine (2^nd ed.), Heydon QC (now Heydon JA of the New South Wales Court of Appeal) traced, from the end of the sixteenth century, the history of the application of the common law restraint of trade doctrine to the rules of organisations, beginning with the by-laws of guilds. Among the cases dealt with by him are many in which rules of such organisations, such rules being applicable to non-members and being administered without any representation on the administering body on behalf of those non-members, were held valid in the face of common law restraint of trade attacks. The most obvious examples of such rules were those regulating admission to membership of such organisations, but other such rules involved, for instance, the ability merely to become apprenticed to a member of such organisations.

83 One case in the latter category was R v Master and Wardens of the Company of Surgeons in London (1759) 2 Burr 892 [97 ER 621]. The Surgeons’ Company had enacted a by-law requiring men wishing to become apprenticed to members of the company to be tested in Latin by at least one of the company’s governors. A mandamus was sought against the company, requiring it to accept as an apprentice of a member of the company a man who had failed his Latin test before one of the company’s governors. In its return to the mandamus, the company relied on the by-law, the validity of which the prosecutor in turn impugned. According to the report (at 897 [ER 623]), after counsel for the prosecutor had concluded his submissions,

“Mr. Serjeant Hewitt contra, was rising up, to speak in support of the return.

But Lord Mansfield said it was too plain to argue.

Whereupon, per Cur. Return allowed.”

84 The Surgeons’ Company case was referred to with approval in modern times by Lord Denning MR in the English Court of Appeal’s decision in Nagle v Feilden [1966] 2 QB 633 (the reasons of Lord Denning MR (and of Salmon LJ) in the latter case being themselves referred to with approval recently by McHugh J in Perre v Apand (1999) 164 ALR 606 at 627, note 83 and accompanying text). Nagle did not involve a challenge to a rule of an organisation, but rather, in effect, to a particular decision made under that rule. Rule 17 of the Rules of Racing, made by the Jockey Club, conferred on the stewards of the Jockey Club the powers both to grant licences to horse trainers and to withdraw those licences. The holding of such a licence did not confer membership of the Jockey Club, but was necessary before horses one trained could participate in races organised by the Jockey Club. Ms Nagle, in effect, complained of the stewards’ decision to refuse to grant her a licence, a decision which, she claimed, had been made solely on the ground of her sex. The Jockey Club sought summary dismissal of Ms Nagle’s claim, but the Court of Appeal refused it. In the course of giving his reasons for refusing summarily to dismiss Ms Nagle’s claim, Lord Denning said (at 644-45),

“The common law of England has for centuries recognised that a man [!] has a right to work at his trade or profession without being unjustly excluded from it. He is not to be shut out from it at the whim of those having the governance of it. If they make a rule which enables them to reject his application arbitrarily or capriciously, not reasonably, that rule is bad. It is against public policy. The courts will not give effect to it.”

In support of that analysis of the law, Lord Denning relied in part on the Surgeons’ Company case. It is apparent that his Lordship’s analysis necessarily proceeded on the basis that those who have the governance of a trade or profession may lawfully make rules by which they authorise themselves to decide whether someone should be shut out from that trade or profession, provided only that those rules do not purport to authorise them to act “arbitrarily or capriciously, not reasonably” in making such exclusionary decisions.

85 It appears to me that cases such as the Surgeons’ Company case would have been wrongly decided and that Lord Denning’s analysis of the law in Nagle v Feilden would have been wrong if the approach of the primary Judge in the present case were correct.

86 I conclude my reasons on Aerial’s appeal by referring to the case of Isherwood v Oldknow (1815) 3 M & S 382 [105 ER 654]. In that case, the question was whether a statute of 1540 should be construed as authorising, by instruments such as wills and family settlements, the conferral of certain powers on persons in the position of the plaintiff. Since the time of the statute of 1540, conveyancers had, in reliance on that statute, been including such powers in such instruments. In the course of construing the statute to accord with that practice of conveyancers, Lord Ellenborough CJ asked (at 397 [ER 660]), “Can we imagine that these learned persons should, for so long a series of years, treat nullities as realities and as having vital operation?” It appears to me that a similar question may equally be asked in the present case regarding the decisions of the judges on the validity, in the face of common law restraint of trade attacks, of the rules of organisations applicable to non-members, but administered by bodies including no representative(s) of such non-members.

87 For the reasons which I have given above, I would allow Aerial’s appeal against the primary Judge’s declaration that by-laws 18 to 24 of its By-laws are invalid and his consequential injunction, set aside that declaration and injunction and dismiss Mr Lee’s application in so far as it was based on common law restraint of trade grounds.

88 I turn now to Mr Lee’s application for an extension of time within which to cross-appeal against the primary Judge’s dismissal of his breach of contract and WRA claims.

89 Order 52, r 22(1)(a) of the FCRs provides for the filing by a respondent to an appeal of a notice of cross-appeal. In the absence of an extension of time within which to do so, such notice is to be filed within twenty-one days after the service on the respondent of the notice of appeal. On 29 May 2000, Mr Lee filed a notice of cross-appeal against the primary Judge’s dismissal of his WRA and breach of contract claims and then, on 21 June 2000, filed an application for an extension of time within which to file a notice of cross-appeal (no doubt, the notice of cross-appeal already filed). Although, by filing his application for an extension of time, Mr Lee was acknowledging that he had been served with Aerial’s notice of appeal more than twenty-one days before 29 May 2000, in breach of O 19, r 1(2) of the FCRs, he put on no affidavit in support of his application. Thus the Court has no evidence before it in proper form as to either how great an extension of time Mr Lee now requires or his reason(s), if any, for not having filed his notice of cross-appeal in time.

90 However, from the Bar table, Mr Lee’s counsel informed the Court that, Aerial’s notice of appeal having been served on Mr Lee on 24 March 2000, its appeal had come on before a single Judge of the Court for directions on 28 March 2000, at which time she (Mr Lee’s counsel) had foreshadowed an intention on Mr Lee’s behalf to cross-appeal. She further informed the Court that the directions given on that day in relation to preparation for hearing of the appeal and any cross-appeal led her to believe, in effect, that Mr Lee had been granted in advance an extension of time within which to file his notice of cross-appeal until immediately before the time for the settling of the appeal papers.

91 Accepting that information as correct for present purposes, it thus appears that the extension of time which Mr Lee requires is about six weeks or so and that the reason for his failure to file a notice of cross-appeal in accordance with the requirements of the FCRs was a misunderstanding by his counsel as to the effect of those requirements.

92 It is convenient now, as part of the process of determining Mr Lee’s application for an extension of time, to consider the merits of his proposed cross-appeal.

93 I will deal first with Mr Lee’s proposed cross-appeal in so far as it relates to the primary Judge’s dismissal of Mr Lee’s breach of contract claim.

94 Mr Lee’s position on that aspect of the proposed cross-appeal is that the driver’s agreement constituted a contract between Aerial and himself, which contract Aerial afterwards breached in a number of respects. Although I have already set out the terms of the driver’s agreement (see [40] above), it appears to me to be convenient for present purposes to set out part of them again, separated by me into three lettered paragraphs. They provide:

“[A] … I … agree to comply with the By-laws … as amended by the Society in accordance with its Rules from time to time.

[B] I … consent … to any breach of those By-laws by me being dealt with under the disciplinary procedures of the Society as set out in Part 4 of the Rules of the Society which, for the purposes of this agreement, shall be interpreted as though I were a member of the Society.

[C] I … agree to abide by any decision made in accordance with these procedures and [also agree] that any monetary penalty imposed may be recovered from me as a debt due to the Society in a court of competent jurisdiction.”

95 One of the breach of contract arguments which Mr Lee wishes to raise on the proposed cross-appeal is that the effect of the sentence in the driver’s agreement which I have lettered [B] is that he is not liable to be dealt with for any alleged breach by him of the By-laws under the disciplinary procedures set out in the By-laws themselves, but is instead only liable to be dealt with for any alleged breach by him of the By-laws under the disciplinary procedures set out in the Rules. Since he has purportedly been dealt with for alleged breaches by him of the By-laws under the disciplinary procedures set out in the By-laws, it follows that Aerial has breached the contract constituted by the driver’s agreement.

96 I regard the proposed argument as plainly untenable. It is apparent that the effect of the consent given by Mr Lee in the relevant sentence of the driver’s agreement was to expand the scope of the disciplinary procedures under which he could be dealt with, so as to include, not only those disciplinary procedures under the By-Laws, but also those disciplinary procedures under the Rules, rather than to confine the scope of the disciplinary procedures to those under the Rules. Indeed, if the sentence had the effect contended for by Mr Lee, one might wonder why it had been thought appropriate to have the By-laws contain any disciplinary procedures at all.

97 Another of the breach of contract arguments which Mr Lee wishes to raise on the proposed cross-appeal is that the effect of the second part of the sentence in the driver’s agreement which I have lettered [C] is that, if a monetary penalty is imposed on him for breach of the By-laws, that penalty can only be enforced by suing him for it in the ordinary courts; in particular, its non-payment cannot be made the basis for suspending him from the radio system until it is paid. Since his non-payment of monetary penalties imposed on him for breach of the By-laws has purportedly been made the basis for suspending him from the radio system until they were paid, it follows that Aerial has breached the contract constituted by the driver’s agreement.

98 Again, I regard the argument as plainly untenable. It is apparent that the effect of the agreement given by Mr Lee in the relevant sentence of the driver’s agreement was to expand the means of enforcement of a monetary penalty imposed on him, so as to include, not only suspension from the radio system, but also an action in debt, rather than to confine the means of enforcement of a monetary penalty imposed on him to an action for debt. Indeed, if the sentence had the effect contended for by Mr Lee, one might wonder why it had been thought appropriate that there exist any provision at all for suspension from the radio system for non-payment of a monetary penalty.

99 Another of the breach of contract arguments which Mr Lee wishes to raise on the proposed cross-appeal is, in effect, that any breach of the bias rule of natural justice in the administration of the By-laws concerning him is a breach by Aerial of the contract constituted by the driver’s agreement and that breaches by Aerial of the bias rule of natural justice have occurred in the administration of the By-laws concerning him. It was submitted in his written submissions on the proposed cross-appeal that the bias rule of natural justice had been breached by Aerial in two respects in the administration of the By-laws concerning him: first, Aerial was “both investigator/prosecutor and judge in the same cause”; and, secondly, Aerial “benefitted [sic] from the fines imposed against [sic]” Mr Lee.

100 Before dealing with those submissions by Mr Lee, I should say something of what the evidence before the primary Judge disclosed about disciplinary proceedings which had been taken against Mr Lee. (I emphasise that what I am about to say is not exhaustive as to those disciplinary proceedings which have been taken against Mr Lee. I refer presently only to those disciplinary proceedings relevant to Mr Lee’s proposed bias arguments.)

101 According to that evidence, Mr Lee was found by the Supervisory Committee on three occasions to have breached Aerial’s By-laws and, on each of those three occasions, was fined by it in consequence. On each of those three occasions, Mr Lee appealed the Supervisory Committee’s decision to an Appeal Committee, with the result that the fine was reduced on the first of the three occasions, but not on the second or third.

102 On the first occasion, the Supervisory Committee, on 11 August 1997, found Mr Lee to have used a number other than his own identifying number when contacting the dispatcher. (According to the evidence before the primary Judge, that finding was made on the basis of Mr Lee’s own admission.) The Supervisory Committee then fined him $200, suspended for twelve months. An Appeal Committee, on 24 March 1998, reduced that fine to $100, suspended for twelve months from the date of the Supervisory Committee’s decision.

103 On the second occasion, the Supervisory Committee, on 1 June 1998, found Mr Lee to have brought Aerial into disrepute. (Again, according to the evidence before the primary Judge, that finding was made on the basis of Mr Lee’s own admission, perhaps an admission that (to use his own words) he had “told off” a hotel employee as a result of some dispute between them while Mr Lee was on duty.) The Supervisory Committee then fined Mr Lee $250. The imposition of that fine had the effect of ending the suspension of his earlier $100 fine. As I have already mentioned, an Appeal Committee dismissed his appeal, on 6 October 1998.

104 On the third occasion, the Supervisory Committee, on 23 November 1998, found Mr Lee to have indicated that his taxi cab was vacant and available for hire when he already had passengers in it. The Supervisory Committee then fined him $300. As I have already mentioned, an Appeal Committee dismissed his appeal, on 10 August 1999.

105 Thus, after the third of the three occasions which I am presently discussing, Mr Lee had been fined a total of $650. However, the evidence before the primary Judge as to whether Mr Lee ever paid those fines is scanty. According to an affidavit of Mr Lee’s, sworn on 3 September 1999 and read before the primary Judge,

“On about 3 February 1999, I was suspended from the radio network because I had not paid the fines imposed upon me by the Respondent. I was re-instated to the network on about 1 March 1999 when I started paying money to the Respondent by way of ‘installments’ [sic] toward the total amount of fines imposed upon me by the Respondent.”

I infer from that evidence that Mr Lee paid at least some of the $350 which was owing as of March 1999, but how much of it I have no way of knowing. (The $300 fine imposed by the Supervisory Committee on 23 November 1998 was not owing by Mr Lee as of March 1999, because, at that time, he had on foot an appeal to an Appeal Committee from that decision: see by-law 22 of the By-laws, set out in [37] above.)

106 Turning now to Mr Lee’s proposed bias arguments, it was not clear to me on the hearing of Mr Lee’s application for an extension of time whether he persisted with his written submission of breach of the bias rule of natural justice in that Aerial was both investigator/prosecutor and judge, but, if he did, I regard the argument as untenable.

107 To speak, as Mr Lee did in his submissions, of Aerial’s being both investigator/prosecutor and judge, is to misstate the nature of the relevant inquiry, which is whether any individual who was a judge in the matter was also an investigator or prosecutor or both in the matter. Thus the proposed argument in respect of which Mr Lee is in part seeking an extension of time would necessarily fail.

108 However, even if one were to assume in Mr Lee’s favour that his proposed argument were one of breach of contract by Aerial by reason of bias on the part of some member(s) of the Supervisory or Appeal Committees, the proposed argument would still, it appears to me, face an insuperable obstacle.

109 I am aware of no evidence before the primary Judge that any person who was a decision maker on either the Supervisory Committee or an Appeal Committee on any of the three occasions on which Mr Lee was dealt with by those committees had had any function whatsoever to play in either investigating or prosecuting the allegations against him. So far as the evidence before the primary Judge went, all that it suggested was that, on all three occasions, the matter had come before the Supervisory Committee by a reference from Aerial’s Chief Executive Officer, who gave unchallenged evidence that, having referred the matter to the Supervisory Committee, he had no further role to play in the Committee’s deliberations.

110 Yet a further difficulty with Mr Lee’s assumed proposed argument would be that, as he conceded on the hearing of his extension of time application, it would be essential to the success of any bias argument which he might make on the proposed cross-appeal that he establish actual bias, rather than merely the existence of a reasonable apprehension of such bias. Even if there had been any evidence before the primary Judge that some member(s) of either the Supervisory Committee or an Appeal Committee on any of the three occasions on which Mr Lee was dealt with by those committees had been both investigator/prosecutor and judge, that evidence would not necessarily have established actual bias on the part of the member(s) concerned. Much would depend on the precise nature of that evidence.

111 So far as concerns Mr Lee’s proposed argument that Aerial’s being the beneficiary of the fines imposed on Mr Lee meant that it had breached the bias rule of natural justice, which rule was imported into its contract with Mr Lee, that proposed bias argument, like the first proposed bias argument, appears to me to misstate the nature of the relevant inquiry. That inquiry is whether any individual who was a decision maker on either the Supervisory Committee or an Appeal Committee on any of the three occasions on which Mr Lee was dealt with by those committees was actually biased against Mr Lee by reason of Aerial’s being the beneficiary of any fines which might be imposed on him. Thus, again, the proposed argument in respect of which Mr Lee is in part seeking an extension of time would necessarily fail.

112 However, even if one were to assume in his favour that his proposed argument were one of breach of contract by Aerial by reason of actual bias on the part of members of the Supervisory or Appeal Committees, the proposed argument would still, it appears to me, face an insuperable obstacle.

113 Mr Lee expressly agreed in the driver’s agreement to the application to him of Aerial’s By-laws, which By-laws expressly required, as a qualification for membership of the relevant committees by some of the persons on them, membership of Aerial and which also expressly contemplated Aerial’s being the beneficiary of any fines imposed under those By-laws. In those circumstances, any implied importation into the contract of the bias rule of natural justice must be subjected to a situation expressly provided for in the By-laws. Accordingly, an allegation of actual bias against those members of the Supervisory or Appeal Committees who were also members of Aerial by reason of the fact that an organisation of which they were members would be the beneficiary of any fines which they might impose would necessarily fail. (I note, incidentally, that the primary Judge recorded in his final reasons that, before him, Mr Lee had accepted that he had not raised by his pleadings as a separate head of invalidity of the By-laws on common law restraint of trade grounds the fact that, under them, fines which were imposed were paid to Aerial.)

114 The approach which I have taken in the preceding paragraph echoes that taken by Sir Owen Dixon in Australian Workers’ Union v Bowen [No. 2] (1948) 77 CLR 601 at 630, in the context of an attack on a disciplinary decision of a trade union’s internal tribunal on the ground that its members had been both prosecutors and judges in respect of the decision. Sir Owen said that there was no substance in the contention. He continued,

“The reason lies in the constitution of the union. In choosing as a domestic forum a governing body and in authorizing it to make inquiries and investigations of such a kind the rules necessarily bring about, if they do not actually contemplate, such a situation.”

That passage was quoted with approval by JB Sweeney and St John JJ in Cains v Jenkins at 227.

115 (I add that, even if the point which I have just made were not an insuperable obstacle to the success of Mr Lee’s assumed proposed argument, actual bias on the part of those members of the relevant committees who were also members of Aerial would not be proven merely by the fact of such dual membership (whatever might be the position if one were inquiring into the existence of a reasonable apprehension of bias). It will be recalled (see [37] above) that the maximum fine which can be imposed on a driver under the by-laws is $1,000 (while Mr Lee was actually fined sums of $200 (later reduced to $100), $250 and $300). There was also evidence before the primary Judge from which one may infer an annual income for Aerial of between $3.5M and $4M. The fact that a member of a relevant committee who was also a member of Aerial might, by voting to fine a driver the maximum fine, increase the annual income of an organisation of which he or she was a member by about one-fortieth of one percent hardly seems calculated to persuade one of actual bias on the part of that member. The point is even weaker when one considers the fines actually imposed on Mr Lee.)

116 I turn now to another of the breach of contract arguments which Mr Lee wishes to raise on the proposed cross-appeal. It will be recalled that, in the sentence in the driver’s agreement which I have lettered [A], Mr Lee agreed to comply with Aerial’s By-laws, whether in the form in which they were at the time of his signing of the driver’s agreement or as amended subsequently. It was asserted in submissions by Mr Lee that the By-laws had been amended after he had signed the driver’s agreement to add additional drivers’ obligations and that he had been subjected to disciplinary proceedings as a result of alleged infringements of two such additional obligations, which proceedings had resulted in the imposition of sanctions on him. Mr Lee then submitted that, by the imposition of sanctions on him for breach of two provisions of the By-laws added only after he had signed the driver’s agreement, Aerial had breached the contract constituted by the driver’s agreement.

117 That proposed argument lacks substance.

118 First, the Court was not taken by Mr Lee on the hearing of his extension of time application to any evidence which had been before the primary Judge which established that the two particular drivers’ obligations the subject of this submission had been added after Mr Lee had signed the driver’s agreement. As to one of those two obligations, namely, the wearing of the official Aerial uniform, the evidence which was before the primary Judge does appear to me to have established that that obligation was added after Mr Lee had signed the driver’s agreement. As to the other of them, however, namely, not, by use of his radio, interfering with Aerial’s operations, the evidence which was before the primary Judge appears to me to have established that it had been in place long before Mr Lee had signed the driver’s agreement.

119 Secondly, even on the assumption that both of the two particular drivers’ obligations the subject of the submission presently under discussion had been added to the By-laws after Mr Lee had signed the driver’s agreement, the Court was given no explanation as to how it was proposed to be argued that to apply those obligations to Mr Lee amounted to a breach of the contract constituted by the driver’s agreement. Indeed, given Mr Lee’s express promise in the driver’s agreement to comply with Aerial’s By-laws as amended from time to time, to apply those obligations to Mr Lee seems to have been entirely in accord with the contract between Aerial and him, unless it was submitted (and it was not) that that particular promise by Mr Lee was unenforceable against him for some reason.

120 I come now to the final respect in which Mr Lee wishes to argue on the proposed cross-appeal that Aerial has breached the contract constituted by the driver’s agreement.

121 Section 47(2) of the Act limits a co-operative society’s ability to impose a fine exceeding one dollar on one of its members for infringement of its rules until certain procedural requirements have been complied with. One of those procedural requirements is that the member be given an opportunity of showing cause to the society’s board of directors why the fine should not be imposed. It was submitted on Mr Lee’s behalf that Aerial had breached s 47(2) of the Act on the occasions on which he had been fined, a breach which, in some way left unexplained, amounted simultaneously to a breach by Aerial of the contract constituted by the driver’s agreement.

122 Mr Lee accepted, on the hearing of his application for an extension of time within which to cross-appeal, that he had not relied before the primary Judge on any breach of contract argument based on s 47(2) of the Act. It was also apparent that Aerial could well have conducted the hearing before the primary Judge differently if Mr Lee had relied on that argument at that time. In those circumstances, the Court announced at the hearing of Mr Lee’s extension of time application that it would, regardless of its attitude to his application otherwise, refuse him an extension of time for the purpose of making such an argument on the proposed cross-appeal. That being the case, it is unnecessary for me to say anything further about the proposed argument.

123 It will be apparent from all that I have said thus far about Mr Lee’s various proposed breach of contract arguments (apart from his proposed argument based on breach of s 47(2) of the Act) that I regard them all as being without merit. In those circumstances, it appears to me that the convenient course is simply to refuse Mr Lee an extension of time within which to file his notice of cross-appeal, in so far as that notice would seek reversal of the primary Judge’s dismissal of his breach of contract claim.

124 There remain only for consideration Mr Lee’s arguments on the proposed cross-appeal regarding his claim under the WRA.

125 It will be recalled (see [47] above) that the primary Judge rejected Mr Lee’s WRA claim on the basis that he had not established that the driver’s agreement constituted a contract within the meaning of subs 127A(1) of the WRA. On the hearing of Mr Lee’s application for an extension of time, the Court had the benefit, not only of the submissions which the parties proposed to make on that issue on the cross-appeal, if an extension of time were granted, but also of the submissions which the parties proposed to make on the merits of Mr Lee’s application, assuming that the driver’s agreement did constitute a contract within the meaning of subs 127A(1) of the WRA.

126 Focusing in the first instance on the latter proposed submissions, Mr Lee’s primary submission was that it was “essentially…the same facts and contentions which arise in the context of restraint of trade and breach of contract” which established the unfairness or harshness or both of the contract constituted by the driver’s agreement. However, as a secondary submission, Mr Lee submitted that “the fines, penalties and suspensions imposed on” him by Aerial “are harsh because the fines/penalties/suspensions are severe in comparison with” his “earnings in his trade as a taxi driver”.

127 Given the views which I have already expressed on the restraint of trade and breach of contract aspects of the present matter, it follows that I cannot accept that anything said by Mr Lee on either of those aspects could assist him in properly persuading the Court (or the primary Judge, if the matter were to be remitted to him) that the driver’s agreement, assuming it to constitute a contract within the meaning of subs 127A(1) of the WRA, was either unfair or harsh within the meaning of that provision.

128 That leaves only Mr Lee’s proposed secondary submission that the “the fines, penalties and suspensions imposed on” him by Aerial were “harsh” within the meaning of subs 127A(1) of the WRA because they were “severe in comparison with” his “earnings in his trade as a taxi driver”.

129 That proposed submission would necessarily fail, because the WRA confers on this Court no jurisdiction to determine whether any fines, penalties or suspensions imposed on Mr Lee by Aerial were harsh. The WRA confers only a jurisdiction to determine whether a contract was harsh.

130 However, even if one were to assume in Mr Lee’s favour that his proposed submission were one of harshness of the contract constituted by the driver’s agreement by reason of the imposition on him of various fines, penalties and suspensions, it would still, it appears to me, face an insuperable obstacle.

131 So far as concerns that proposed submission, it would, of course, be essential to its success for Mr Lee to establish that, on its proper construction, subs 127A(2) of the WRA authorised the Court to form an opinion that a contract was harsh, not only when entered into, but also if made so by subsequent events.

132 However, that construction of subs 127A(2) of the WRA was rejected by North J of this Court (sitting, however, as a Judge of the Industrial Relations Court of Australia when it, rather than this Court, had the relevant jurisdiction): see Finch v Herald & Weekly Times Ltd (1996) 65 IR 239 at 251, where his Honour said of s 127A, “It is concerned only with unfairness and harshness at the time the contract was made”. More recently, the construction given to s 127A(2) by North J has been approved in this Court: see Harding v EIG Ansvar Ltd (2000) 95 IR 349 at 357, where, after referring approvingly to North J’s reasons in Finch, Spender J said,

“Section 127A is concerned only with unfairness and harshness at the time the contract was made. Considerations of unfairness or harshness … do not[,] at any time later than when the contract was made, apply in a consideration of an application under s 127A.”

133 I can foresee no practical likelihood of Mr Lee’s persuading the primary Judge (assuming the present matter were to be remitted to him) that both North and Spender JJ were plainly wrong in the construction which they gave to the relevant provision. Nor, as at present advised, do I consider that the construction which their Honours both gave to the relevant provision was wrong, whether plainly or otherwise.

134 I add that, even if, contrary to the view which I take, it were open to Mr Lee to seek to persuade the Court that the contract constituted by the driver’s agreement had become harsh subsequent to its entry into, I find it very difficult to see how the fact, if it be the fact, that the imposition on him of various sanctions for breaches of the By-laws caused him economic hardship would mean that the contract constituted by the driver’s agreement had become harsh. Any suggested harshness in that respect would appear to me to be removed by the circumstance that the economic hardship had been caused by Mr Lee’s own breaches of Aerial’s by-laws.

135 It will be apparent from what I have said above that, just as with his breach of contract arguments on the proposed cross-appeal, I regard Mr Lee’s arguments of contractual unfairness or harshness under the WRA as being of little merit. In those circumstances, it appears to me that I need not say anything about his arguments on the question whether the driver’s agreement did constitute a contract within the meaning of subs 127A(1) of the WRA. The appropriate course is simply to refuse in its entirety his application for an extension of time within which to file a notice of cross-appeal.

136 The orders which I propose are thus as follows: Aerial’s appeal be allowed; the primary Judge’s orders declaring by-laws 18 to 24 of Aerial’s By-laws invalid, restraining Aerial from acting in accordance with those by-laws and ordering Aerial to pay one half of Mr Lee’s costs of the proceeding be set aside; in place of those orders, order that Mr Lee’s claim based on common law restraint of trade be dismissed and that Mr Lee pay Aerial’s costs of the proceeding; Mr Lee’s application for an extension of time within which to file a notice of cross-appeal be dismissed; and Mr Lee pay Aerial’s costs, both of its appeal and of his application for an extension of time within which to file and serve a notice of cross-appeal.

I certify that the preceding one hundred & fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz.

Associate:

Dated: 15 November 2000

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY

DISTRICT REGISTRY

A 21 of 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD

t/a CANBERRA CABS

APPELLANT

AND:

ROBERT ANDREW LEE

RESPONDENT

JUDGE:	SACKVILLE, KATZ & KENNY JJ
DATE:	15 NOVEMBER 2000
PLACE:	SYDNEY (HEARD AT CANBERRA)

REASONS FOR JUDGMENT

kenny J

137 I have had the advantage of reading in draft the reasons for Judgment prepared by Katz J. I agree with them and with the orders proposed by his Honour.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate:

Dated: 15 November 2000

Counsel for the Appellant:	Mr A Sullivan QC and Mr C Erskine

Solicitor for the Applicant:	Chamberlains Law Firm

Counsel for the Respondent:	Ms J Keys and Ms T Warwick

Solicitor for the Respondent:	Capital Lawyers

Date of Hearing:	7 August 2000

Date of Judgment:	15 November 2000

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