Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd

The Appellant, Castlemaine Tooheys brewed beer in Brisbane. In North Queensland the appellant maintains regional depots at Rockhampton, Mackay, Townsville and Cairns. Retailers in the North Qld area had (subject to minor exceptions) a choice of two methods for acquiring CT's beer: take delivery from one of the regional depots; or arrange for beer to be delivered to their premises from the brewery. If this method was chosen CT would engage the carrier and arrange transportation (this was arranged through CT's 'preferred carrier' (at the time, Queensland Railfast Express (QRX)). The buyer would be invoiced for a total price, although the invoice would list freight separately.

Subject to limited exceptions North Qld retailers were not permitted to take delivery directly from the brewery at Brisbane. The respondent (Williams) was a carrier who wished to carry CT's beer to North Qld.

Williams claimed that CT's arrangements amounted to exclusive dealing contrary to s 47 of the Act.

Williams argued that a retailer who bought beer to be delivered to its premises by QRX 'acquired' QRX's services because it received the benefit of those services. This was notwithstanding the absence of a contractual arrangement with QRX. Williams also argued that the services of QRX were 'forced' on the retailer because the commercial reality was that they had to accept the terms offered by CT. It was, therefore, argued that CT supplied beer 'on condition' that the retailer acquired services of QRX (third line forcing)

CT's arrangement regarding carriage constituted exclusive dealing. Injunction granted and judgment for damages ($20,000)

Decision of Justice Wilcox upheld by the majority (Sweeney and Lockhart JJ (Fox J dissenting)).

Chief Justice Gibbs

Noted the questions raised were 'not without difficulty':

[para 7] ... It is clear enough that it was not a condition of the supply of beer to retailers generally in North Queensland that it be delivered by QRX. Retailers might, if they wished, purchase from the regional depots in North Queensland and some retailers did. There were commercial advantages in buying the beer from Brisbane, but it was not right to say that in reality a retailer was forced to accept delivery by QRX. However, when a retailer wished to have the beer delivered from the brewery, the appellant required, as a prerequisite to granting supply, that the appellant itself should arrange delivery. The appellant supplied the beer on that condition.

[para 8] However, the condition was not that the retailer should accept the services of QRX. The condition was that the appellant should arrange the carriage of the beer and should deliver it to the retailer ... In other words the condition was that the appellant would deliver the beer which it sold to its destination in North Queensland. It was of course clear that if [CT] had itself carried the beer there would have been no exclusive dealing within s 47. The position was not altered when the appellant arranged for a third person to carry on its behalf. In those circumstances the services were acquired by the appellant and not by the retailer. No doubt in a loose sense the retailer received a benefit from the services, but in truth what the retailer acquired was the beer and not the services of the carrier. Certainly there was no condition that it should acquire (even in the sense of accept) those services. [emphasis added]

CJ Gibbs concluded that if the services of QRX were acquired by the appellant (CT) there would be no breach of s 47(6). As he was of the opinion that the services were acquired by CT he concluded that there was no breach.

His Honour further noted that the question of whether the conduct had the effect of lessening competition was not relevant when considering s 47(6) and (7) - and continued:

[para 10] The practice whereby a seller of goods arranges for their delivery by himself or an agent is ancient and well known, and if it had been intended to render that practice unlawful that result could have been achieved by the use of clear words.

His Honour also expressed agreement with CT's submission that, when it delivered beer, it supplied both goods and services and that, as a result of s 4C this had the effect of making the whole transaction a supply of goods for purposes of s 47(6).

Section 4C(c) states: 'a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both'

CJ Gibbs concluded that the conduct in question was not a practice of exclusive dealing within s 47.

Justice Wilson

Agreed with reasons of Gibbs CJ and added two observations:

His Honour expressed the view that the appellant's submission based on s 4C derived 'added support from the definition of "services" in s 4(1) of the Act.'

Section 4 relevantly provided: "'services' includes any rights (including rights in relation to, and interests in, ... personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, ... but does not include rights or benefits being the supply of goods ...".

His Honour noted:

[para 2] The Act clearly contemplates that services may accompany the supply of goods in such a way as to constitute a single transaction properly described as a supply of goods. It follows that an act or series of acts, once characterized for the purposes of the Act as a supply of goods, cannot also be a supply of services. ... Thus a contract for the supply and fitting of a windscreen to a motor vehicle has been held to fall within a market in which persons supply goods rather than services: Cool v. O'Brien Glass (1981) 35 ALR 445 ... It may not always be easy to make the characterization, the task being to identify, from all the circumstances of the case, the precise legal obligation undertaken by the supplier of the goods.

In this case the relevant transactions 'encompassed no more than a supply of goods'. Each supply

[para 3] ... was a single transaction which could not be broken up into its several elements of sale and delivery without doing violence to the reality. Delivery to the premises was an essential and therefore inseparable concomitant of the supply of the beer. In different circumstances it might well be appropriate to characterize the delivery of the goods as the supply of a service. But not here. No question of supplying a service arises.

His Honour further noted that the effect of omitting from third line forcing conduct (as defined in s 47(6)(7)) the requirement that it have the purpose or effect of substantially lessening competition was to 'give added weight to the proscription of the conduct described in those sub-sections' - but that 'the fact remains that the capacity of the sub-sections to have a broader operation does not suffice to bring the present case within their reach. [para 4]

Justice Brennan

His Honour explained the transaction as follows:

[para 4] The sale of beer by the brewer to the licensees is a supply by way of sale. The supply by way of sale occurs at a licensee's premises when the beer is delivered. There is no supply by the brewer to a licensee at the brewery door in Milton. When QRX picks up the beer at the brewery door, there is no sale; no appropriation of beer to an agreement for sale; no transfer of property in the beer. QRX takes possession of the beer under its contract with the brewer; the brewer is the bailor, the carrier its bailee.

[para 5] Once it is appreciated that the beer transported by QRX is supplied by the brewer to a licensee only at the licensee's premises, it is impossible to suppose that the transport services rendered by QRX are acquired by the licensee. The beer supplied at the licensed premises may be described as "delivered beer" to distinguish it from beer at the brewery door, but the delivery services supplied by QRX are acquired by the brewery, not by the licensee. The licensee acquires only delivered beer. It must be remembered that in the Act unless a contrary intention appears -

" a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with ... services ..." (s.4C(c)).

As the supply of delivered beer is a supply of goods and as "services" are defined to exclude "rights or benefits being the supply of goods" (s 4(1)), the supply of delivered beer cannot be "services". The licensee acquires no services, either from the brewer or from QRX. [emphasis added]

6. Section 47(6) applies only when there are two contracts or arrangements: the first, between the corporation which supplies and the person who acquires goods or services; the second, which may be made directly or indirectly, between the person who acquires those goods or services and a third person. Here there is no contract or arrangement, whether direct or indirect, between a licensee who acquires delivered beer from the brewer and QRX pursuant to which the licensee acquires delivery services from QRX. From start to finish QRX's contract or arrangement is with the brewer alone. In so far as the licensee derives a benefit from the delivery of beer to his premises, he acquires that benefit from the brewer and not from QRX. It is submitted that a person may acquire services simply by accepting them, and that a licensee accepts delivery services by QRX. But a licensee does not accept any services from QRX; the licensee accepts the delivered beer supplied to him by the brewer. If it were legitimate (and it is not) to distinguish between the beer supplied and the delivery services, nevertheless the licensee would accept both the beer and the delivery services from the brewer under the contract of sale of the beer. The brewer does not seek to force licensees to accept the services of a carrier nominated by the brewer. The brewer simply asserts its right to choose the carrier to deliver its beer to the point of sale at the licensee's premises in discharge of its obligation to the licensee to deliver the beer there. The position is no different from what it would be if the brewer's own employees delivered the beer. [emphasis added]

His Honour distinguished the case of Re Ku-ring-gai Co-operative Building Society (No.12) Ltd. [1978] FCA 50.

[para 7] In that case, co-operative building societies required their members to whom moneys were advanced on mortgage to effect policies of insurance with nominated companies to cover the respective interests of the mortgagor and the mortgagee in the mortgaged property. The mortgagor took out a policy with a nominated insurer. The practice was held to contravene s 47. If the insurance had been effected by the mortgagee rather than the mortgagor to cover only the mortgagee's interest in the mortgaged property rather than the interests of mortgagor and mortgagee - a situation which would have been analogous to the present case - the decision may well have been different:....

[para 8] In this case there is no condition of supply by the brewer that the respective licensees should acquire any services from QRX. There is no acquisition of services, directly or indirectly, by the respective licensees from QRX. There is no contract or arrangement between a person acquiring goods supplied by a corporation and a third person. The provisions of s 47(6) are not satisfied.

 

Justice Deane

Agreed with the judgment of Brennan J.

 

 

Justice Dawson

Agreed with the judgments of the Gibbs CJ and Wilson J.

 

Go to full case at AustLII

Articles

Stephen Corones, 'The Impact of the Castlemaine Tooheys Case' [1987] 1(5) Australian Business Lawyer 3