Australian Competition and Consumer Commission v Admiral Mechanical Services Pty Ltd - [2007] FCA 1085

FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Admiral Mechanical Services Pty Ltd [2007] FCA 1085
TRADE PRACTICES – price fixing arrangements – pecuniary penalties – injunctions – declarations – trade practice compliance program – contraventions admitted - pecuniary penalty – penalty agreed – some penalties contested – totality principle – reduction of pecuniary penalty due to co-operation – relevant factors to assessing pecuniary penalty
Federal Court of Australia 1976 (Cth) ss 21, 43(1)
Trade Practices Act 1974 (Cth) ss 4D, 45(2), 45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii), 45A, 76, 76(1), 77(2), 80, 80(1), 80(4), 80(5), 155(1)(a), 155(1)(b), 155(1)(c)
Fiss, ‘Against Settlement’ (1984) 93 Yale Law Journal 1073
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491
Australian Competition and Consumer Commission v ABB Power Transmission Pty Ltd (2004) ATPR 42-011
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238
Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd (2004) ATPR 41-983
Australian Competition and Consumer Commission v Foamlite (Australia) Pty Ltd (1998) ATPR 41-615
Australian Competition and Consumer Commission v George Weston Foods Ltd (2000) ATPR 41-763
Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801
Australian Competition and Consumer Commission v Gullyside Pty Ltd (2006) ATPR 42-097
Australian Competition and Consumer Commission v High Adventure Pty Ltd [2006] ATPR 42-091
Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2001) ATPR 41-816
Australian Competition and Consumer Commission v Ithaca Iceworks Pty Ltd (2002) ATPR 41-851
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301
Australian Competition and Consumer Commission v McMahon Services Pty Ltd (No 1) [2004] ATPR 42-022
Australian Competition and Consumer Commission v McMahon Services Pty Ltd [2004] ATPR 42-031
Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329
Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515
Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc (1999) 161 ALR 79
Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc (1999) 95 FCR 114
Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd (2001) ATPR 41-809
Australian Competition and Consumer Commission v SIP Australia Pty Ltd
(1999) ATPR
41-072

Australian Competition and Consumer Commission v Tubemakers of Australia Limited [2000] FCA 227
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd
(2000) ATPR
41-740

Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2000) ATPR 41-788
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2000) ATPR 41-789
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2001) ATPR 41-796
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd
(2000) ATPR
41-760

Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2000) ATPR 41-772
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2001) ATPR 41-810
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2001) ATPR 41-797
Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2001) ATPR 41-798
Australian Competition and Consumer Commission v Vales Wine Co Pty Ltd (1996) ATPR 41-528
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197
Forster v Jododex Australia Aust Pty Limited (1972) 127 CLR 421
Gardner v Dairy Industry Authority of NSW (1977) 138 CLR 646 (Note)
ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248
Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1
Minister for Industry, Tourism and Resources v Mobile Oil Australia Pty Ltd (2004) ATPR 41-993
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89
Trade Practices Commission v CC (NSW) Pty Ltd (No 3) (1994) ATPR 41-363
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Trade Practices Commission v ICI Australia Operations Pty Ltd (1991) 105 ALR 115
Trade Practices Commission v Mobil Oil Australia (1985) 4 FCR 296
Trade Practices commission v Pioneer Concrete (Vic) Pty Ltd (1985) ATPR 40-590
Trade Practices Commission v Santos Ltd (1993) ATPR 41-221
Trade Practices Commission v Stihl Chainsaws (Aust) Pty Limited (1978) ATPR 40-091
Trade Practices commission v TNT Australia Pty Ltd (1995) ATPR 41-375
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v ADMIRAL MECHANICAL SERVICES PTY LTD, AMEC AUSTRALIA PTY LTD, AMEC ENGINEERING PTY LTD, BUILDING SERVICES PTY LTD, CENTIGRADE WA PTY LTD, CMS ENGINEERING PTY LTD, DIRECT ENGINEERING SERVICES PTY LTD, ENVAR ENGINEERING AND CONTRACTORS PTY LTD, HADEN ENGINEERING PTY LTD, ACN 009 298 686 PTY LTD (FORMERLY HVAC CONSTRUCTION LIMITED), JAKO INDUSTRIES PTY LTD, LL NOMINEES PTY LTD, MECHANICAL PROJECT MANAGEMENT PTY LTD, NORFOLK GROUP HOLDINGS PTY LTD, RALIE PTY LTD, SCOTT MECHANICAL SERVICES PTY LTD, TYCO AUSTRALIA PTY LTD, STEPHEN LESLIE NELSON, DESMOND JOHN BARRIE, PAUL JUSTIN BLINCO, LINDSAY ROBERT ALBONICO, STEVEN CYGULIS, CHRISTOPHER SMITH, RICHARD JONES, WAYNE REDFERN, JOHN MARTIN ALLEN, LORENTZ EDWARD HENNY, JOSEPH BORIS BURMAZ, PETER JAMES HEALEY, MARTIN PAUL ROCHE, TREVOR BALLANTYNE, COLIN MARK LEWIS, GRAEME RUSSELL MCLEOD, VELCO ANTONY JAKOVICH, HORACE WAYNE PIERCE, IAN CURRIE FERGUSON, PETER CHARLES MOORE, BARRY NICHOLSON BROADLEY and PETER MICHAEL SCOTT
WAD 289 OF 2004
NICHOLSON J
25 JULY 2007
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 289 OF 2004

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

ADMIRAL MECHANICAL SERVICES PTY LTD
(ABN 45 074 566 591)
First Respondent

AMEC AUSTRALIA PTY LTD
(ABN 82 000 436 680)
Second Respondent

AMEC ENGINEERING PTY LTD
(ABN 73 003 066 715)
Third Respondent

BUILDING SERVICES PTY LTD
(ABN 74 065 143 900)
Fourth Respondent

CENTIGRADE WA PTY LTD (ABN 27 065 367 713)
Fifth Respondent

CMS ENGINEERING PTY LTD
(ABN 45 009 409 796)
Sixth Respondent

DIRECT ENGINEERING SERVICES PTY LTD
(ABN 50 008 700 178)
Seventh Respondent

ENVAR ENGINEERING AND CONTRACTORS PTY LTD (ABN 35 009 407 630)
Eighth Respondent

HADEN ENGINEERING PTY LTD
(ABN 59 000 964 173)
Ninth Respondent

ACN 009 298 686 PTY LTD
(FORMERLY HVAC CONSTRUCTION LIMITED)
Tenth Respondent

JAKO INDUSTRIES PTY LTD
(ABN 72 008 791 893)
Eleventh Respondent

LL NOMINEES PTY LTD
(ABN 66 081 797 177)
Twelfth Respondent

MECHANICAL PROJECT MANAGEMENT PTY LTD
(ABN 24 009 126 569)
Thirteenth Respondent

NORFOLK GROUP HOLDINGS PTY LTD
(ABN 22 076 421 755)
Fourteenth Respondent

RALIE PTY LTD
(ABN 11 009 444 857)
Fifteenth Respondent

SCOTT MECHANICAL SERVICES PTY LTD
(ABN 26 009 318 932)
Sixteenth Respondent

TYCO AUSTRALIA PTY LTD
(ABN 80 008 399 004)
Seventeenth Respondent

STEPHEN LESLIE NELSON
Eighteenth Respondent

DESMOND JOHN BARRIE
Nineteenth Respondent

PAUL JUSTIN BLINCO
Twentieth Respondent

LINDSAY ROBERT ALBONICO
Twenty-First Respondent

STEVEN CYGULIS
Twenty-Second Respondent

CHRISTOPHER SMITH
Twenty-Third Respondent

RICHARD JONES
Twenty-Fourth Respondent

WAYNE REDFERN
Twenty-Fifth Respondent

JOHN MARTIN ALLEN
Twenty-Sixth Respondent

LORENTZ EDWARD HENNY
Twenty-Seventh Respondent

JOSEPH BORIS BURMAZ
Twenty-Eighth Respondent

PETER JAMES HEALEY
Twenty-Ninth Respondent

MARTIN PAUL ROCHE
Thirtieth Respondent

TREVOR BALLANTYNE
Thirty-First Respondent

COLIN MARK LEWIS
Thirty-Second Respondent

GRAEME RUSSELL MCLEOD
Thirty-Third Respondent

VELCO ANTONY JAKOVICH
Thirty-Fourth Respondent

HORACE WAYNE PIERCE
Thirty-Fifth Respondent

IAN CURRIE FERGUSON
Thirty-Sixth Respondent

PETER CHARLES MOORE
Thirty-Seventh Respondent

BARRY NICHOLSON BROADLEY
Thirty-Eighth Respondent

PETER MICHAEL SCOTT
Thirty-Ninth Respondent

JUDGE:

NICHOLSON J

DATE OF ORDER:

25 JULY 2007

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.In accordance with directions given on the handing down of these reasons the following parties are required to file and serve consent or draft orders to give effect to these reasons by close of business on Tuesday, 31 July 2007:
(a)the 1^st and 18^th respondents in relation to pecuniary penalty;
(b)the 15^th, 37^th and 38^th respondents in relation to pecuniary penalty;
(c)the 16^th and 39^th respondents in relation to pecuniary penalty;
(d)the 11^th and 34^th respondents in relation to pecuniary penalty;
(e)the 5^th and 23^rd respondents in relation to pecuniary penalty;
(f)the 7^th, 26^th and 27^th respondents in relation to pecuniary penalty;
(g)the 13^th, 35^th and 36^th respondents in relation to all orders necessary; and
(h)the 10^th respondent in relation to all orders necessary.

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

RELEVANT STATUTORY PROVISIONS 4

Source of contraventions 4

Penalties 4

Declarations 6

Injunctions 6

COURT’S APPROACH TO AGREEMENTS ON PECUNIARY PENALTIES 7

NATURE OF THE MARKET 10

NATURE OF THE ARRANGEMENTS AND UNDERSTANDINGS 10

COMPARATIVE POSITION OF RESPONDENTS 12

PART 1: NO PECUNIARY PENALTY SOUGHT 15

RESPONDENTS 8, 28 AND 29: ENVAR ENGINEERS AND CONTRACTORS PTY LTD (ENVAR), AND MESSRS BURMAZ AND HEALEY 15

PART 2: PECUNIARY PENALTY BELOW $100 000 17

RESPONDENTS 1 AND 18: ADMIRAL MECHANICAL SERVICES PTY LTD (ADMIRAL) AND MR NELSON 17

Pecuniary Penalty 20

RESPONDENTS 15, 37 AND 38: RALIE PTY LTD AND MESSRS MOORE AND BROADLEY 22

Costs 23

Pecuniary penalty 24

RESPONDENTS 16 AND 39: SCOTT MECHANICAL SERVICES PTY LTD (SCOTT MECHANICAL) AND MR SCOTT 28

Pecuniary penalties 30

PART 3: PECUNIARY PENALTY ABOVE $200 000 36

RESPONDENTS 2, 3 AND 19: AMEC AUSTRALIA PTY LTD, AMEC ENGINEERING PTY LTD AND MR BARRIE 36

Costs 37

Pecuniary penalty 37

RESPONDENTS 12 AND 20: LL NOMINEES PTY LTD AND MR BLINCO 42

Declarations, injunctions, costs and compliance 44

Pecuniary Penalties 45

PART 4: PECUNIARY PENALTY ABOVE $400 000 50

RESPONDENTS 6 AND 24: CMS ENGINEERING AND MR JONES 50

Pecuniary penalties 52

PART 5: PECUNIARY PENALTY ABOVE $500 000 57

RESPONDENTS 11 AND 34: JAKO INDUSTRIES PTY LTD AND MR JAKOVICH 57

Pecuniary penalties 58

PARTt 6: PECUNIARY PENALTY ABOVE $1 MILLION 65

RESPONDENTS 5 AND 23: CENTIGRADE WA PTY LTD (CENTIGRADE) AND MR SMITH 65

Pecuniary penalty 66

RESPONDENTS 7, 26 AND 27: DIRECT ENGINEERING SERVICES PTY LTD (DES) AND MESSRS ALLEN AND HENNY 73

Pecuniary penalties 74

RESPONDENTS 13, 35 AND 36: MECHANICAL PROJECT MANAGEMENT PTY LTD (MPM) AND MESSRS PIERCE AND FERGUSON 83

Declarations 88

Injunctions 90

Costs 90

Pecuniary Penalties 91

PART 7: PECUNIARY PENALTY ABOVE $2 MILLION 102

RESPONDENT 10: ACN 009 298 686 PTY LTD (FORMERLY HVAC CONSTRUCTION LIMITED) (‘HVAC’) 102

Conduct 104

Contraventions 105

Declarations 105

Costs 105

Pecuniary penalty 106

PART 8: OTHER INDIVIDUALS 111

RESPONDENT 25: MR REDFERN 111

Declarations and injunctions 111

Costs 111

Pecuniary penalty 111

RESPONDENT 30: MR ROCHE 113

Declaration and injunctions 113

Pecuniary penalty 113

RESPONDENT 31: MR BALLANTYNE 116

RESPONDENT 32: MR LEWIS 117

In relation to Centigrade 117

In relation to HVAC 118

Conduct on behalf of Centigrade 118

Conduct on behalf of HVAC 118

RESPONDENT 33: MR MCLEOD 119

In relation to MPM 119

In relation to HVAC 120

Conduct on behalf of MPM 120

Conduct on behalf of HVAC 121

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 289 OF 2004

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

ADMIRAL MECHANICAL SERVICES PTY LTD
(ABN 45 074 566 591)
First Respondent

AMEC AUSTRALIA PTY LTD
(ABN 82 000 436 680)
Second Respondent

AMEC ENGINEERING PTY LTD
(ABN 73 003 066 715)
Third Respondent

BUILDING SERVICES PTY LTD
(ABN 74 065 143 900)
Fourth Respondent

CENTIGRADE WA PTY LTD (ABN 27 065 367 713)
Fifth Respondent

CMS ENGINEERING PTY LTD
(ABN 45 009 409 796)
Sixth Respondent

DIRECT ENGINEERING SERVICES PTY LTD
(ABN 50 008 700 178)
Seventh Respondent

ENVAR ENGINEERING AND CONTRACTORS PTY LTD (ABN 35 009 407 630)
Eighth Respondent

HADEN ENGINEERING PTY LTD
(ABN 59 000 964 173)
Ninth Respondent

ACN 009 298 686 PTY LTD
(FORMERLY HVAC CONSTRUCTION LIMITED)
Tenth Respondent

JAKO INDUSTRIES PTY LTD
(ABN 72 008 791 893)
Eleventh Respondent

LL NOMINEES PTY LTD
(ABN 66 081 797 177)
Twelfth Respondent

MECHANICAL PROJECT MANAGEMENT PTY LTD
(ABN 24 009 126 569)
Thirteenth Respondent

NORFOLK GROUP HOLDINGS PTY LTD
(ABN 22 076 421 755)
Fourteenth Respondent

RALIE PTY LTD
(ABN 11 009 444 857)
Fifteenth Respondent

SCOTT MECHANICAL SERVICES PTY LTD
(ABN 26 009 318 932)
Sixteenth Respondent

TYCO AUSTRALIA PTY LTD
(ABN 80 008 399 004)
Seventeenth Respondent

STEPHEN LESLIE NELSON
Eighteenth Respondent

DESMOND JOHN BARRIE
Nineteenth Respondent

PAUL JUSTIN BLINCO
Twentieth Respondent

LINDSAY ROBERT ALBONICO
Twenty-First Respondent

STEVEN CYGULIS
Twenty-Second Respondent

CHRISTOPHER SMITH
Twenty-Third Respondent

RICHARD JONES
Twenty-Fourth Respondent

WAYNE REDFERN
Twenty-Fifth Respondent

JOHN MARTIN ALLEN
Twenty-Sixth Respondent

LORENTZ EDWARD HENNY
Twenty-Seventh Respondent

JOSEPH BORIS BURMAZ
Twenty-Eighth Respondent

PETER JAMES HEALEY
Twenty-Ninth Respondent

MARTIN PAUL ROCHE
Thirtieth Respondent

TREVOR BALLANTYNE
Thirty-First Respondent

COLIN MARK LEWIS
Thirty-Second Respondent

GRAEME RUSSELL MCLEOD
Thirty-Third Respondent

VELCO ANTONY JAKOVICH
Thirty-Fourth Respondent

HORACE WAYNE PIERCE
Thirty-Fifth Respondent

IAN CURRIE FERGUSON
Thirty-Sixth Respondent

PETER CHARLES MOORE
Thirty-Seventh Respondent

BARRY NICHOLSON BROADLEY
Thirty-Eighth Respondent

PETER MICHAEL SCOTT
Thirty-Ninth Respondent

JUDGE:

NICHOLSON J

DATE:

25 JULY 2007

PLACE:

PERTH

REASONS FOR JUDGMENT

These reasons relate to the consideration of the appropriateness of penalties and other relief for contraventions of the Trade Practices Act 1974 (Cth) (the Act). The contraventions were by mechanical services contractors who were in competition with each other in relation to the supply of commercial and industrial air conditioning services to builders and owners or would have been or likely to have been in such competition but for the provisions of the various arrangements or understandings into which they entered and which have attracted the proposed penalties and grant of relief.
RELEVANT STATUTORY PROVISIONS
Source of contraventions
The conduct in issue for the issues of penalty and other relief is conduct in contravention of ss 45(2)(a)(i) and (ii) and 45(2)(b)(i) and (ii) of the Act.
Penalties
In assessing the appropriate penalty, s 76(1) of the Act provides:
‘(1) if the Court is satisfied that a person:
(a)has contravened any of the following provisions:
(i)a provision of Part IV;
(ii)…
(b)has attempted to contravene such a provision;
(c)has aided, abetted, counselled or procured a person contravene such a provision;
(d)has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision;
(e)has been in any way, directly or indirectly or knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f)has conspired with others to contravene such a provision;
the Court may order the person to pay the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.’
In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52, 152-153, French J referred to a number of factors relevant to the fixing of penalty that have been canvassed in the cases:
‘1. the nature and extent of the contravening conduct;
2.the amount of loss or damage caused;
3.the circumstances in which the conduct took place;
4.the size of the contravening company;
5.the degree of power it has, as evidenced by its market share and ease of entry into the market;
6.the deliberateness of the contravention and the period over which it extended;
7.whether the contravention arose out of the conduct of senior management or at a lower level;
8.whether the company has a corporate culture conducive to compliance with the Act as evidenced by educational programs and disciplinary or other corrective measure in response to an acknowledged contravention; and
9.whether the company has shown disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.’
In Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515, Heerey J at 42,444-42,445 added the following further considerations:
1.similar conduct in the past;
2.the financial position of the respondents; and
3.the deterrent effect of the proposed penalty.
These items are not exhaustive: Trade Practices Commission v CC (NSW) Pty Ltd (No 3) (1994) ATPR 41-363 at 42, 723. Other factors may be relevant in a particular case.
In fixing the penalty, there is authority that the Court should have in mind the totality principle, the parity principle, general and specific deterrence and, to a lesser extent, the issue of capacity to pay.
The maximum penalty for each contravention (or involvement in contravention) is $10m for a corporation (s 76(1A)(b)) and $500 000 for an individual (s 76(1B). The parties have in each case had regard to these provisions in agreeing, subject to the concurrence of the Court, any quantum of penalty.
Declarations
It is well established that the Court has a wide discretion under s 21 of the Federal Court of Australia Act 1976 (Cth) to make binding declarations of right (see for example: Trade Practices Commission v Santos Ltd (1993) ATPR 41-221; Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89; RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164).
A declaration must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 per Mason CJ and Dawson, Toohey and Gaudron JJ at 581). The person seeking the declaration must have ‘a real interest’ and must be able to secure a proper contradictor, that is to say, someone presently existing who has a true interest to oppose the declaration sought (Forster v Jododex Australia Aust Pty Limited (1972) 127 CLR 421 per Gibbs J at 437). A declaration will not be granted if it will produce no foreseeable consequences for the parties (Gardner v Dairy Industry Authority of NSW (1977) 138 CLR 646 (Note).
Injunctions

The power to grant an injunction is drawn from s 80 of the Act.
It is clear that injunctions can be made under s 80 of the Act it is in the public interest to do so (Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [212] and [216]).
It is also clear from the terms of s 80(4) and s 80(5) of the Act that, although traditional equitable principles are not irrelevant, the jurisdiction to grant an injunction is wider under s 80 (4WD Systems 200 ALR at [216]. See also the comments of Lockhart J at 256-257 and French J at 268 in ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248).
I agree that the following matters arise for the Court when formulating injunctions pursuant to s 80 of the Act:
1.the Court, in exercising its powers, is exercising a public function and must have regard to the public interest. The Court has the responsibility to be satisfied that the orders proposed are not contrary to the public interest and are at least consistent with it; and
2.the Court’s power to grant injunctions under s 80 of the Act requires:
(a)a contravention or participation in a contravention in one of the various ways set out in s 80(1) of the Act;
(b)a sufficient nexus between the conduct alleged and the orders sought. This involves an evaluative judgement: Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 343 per Merkel J; and
(c)the orders and undertakings must be formulated with precision so that they are capable of being obeyed. The injunction should be capable of being expressed in sufficiently clear terms so it is capable of being complied with without the continual supervision of the Court (see Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 at 26, at [60]. See also Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc (1999) 95 FCR 114).
COURT’S APPROACH TO AGREEMENTS ON PECUNIARY PENALTIES
There are numerous decisions of this Court accepting that penalties agreed between the applicant and various respondents, when found by the Court to be within the range which it would consider appropriate, ought to be imposed. Although pecuniary penalties may be agreed they cannot be so imposed because they are defined and conferred by public law: Fiss, ‘Against Settlement’ (1984) 93 Yale Law Journal 1073 cited by French J in Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc (1999) 161 ALR 79 at 86.
In Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at 48-626, the Full Court (Branson, Sackville and Gyles JJ) accepted the following propositions in the reasoning in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285:
‘(i)It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act.
(ii)Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
(iii)There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of their facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
(iv)The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within the expertise (such as the ACCC’s views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more “subjective” matters.
(v)In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
(vi)Where the parties have jointly proposed a penalty, it will be not useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.’
Additionally, the Full Court in Mobil Oil (2004) ATPR 41-993 added the following points:
(a)The rationale for giving weight to a joint submission on penalty is the savings and resources for the regulator and the Court as well as the likelihood that a negotiated resolution will include measures designed to promote competition.
(b)It is open to a court, consistently with the reasoning in NW Frozen Foods 71 FCR 285, first to address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgement, determine whether the prepared penalty falls within the range.
(c)Such an approach is appropriate where there has been no suggestion that admissions or an agreed statement of facts had been tailored or modified to reflect the difficulties faced by the Australian Competition and Consumer Commission improving its case.
(d)It is necessary for the regulator always to explain to the Court the process of reasoning that justifies a discounted penalty: Australian Competition and Consumer Commission v Ithaca Iceworks Pty Ltd (2002) ATPR 41-851.
(e)There is nothing in the above statement of principles from NW Frozen Foods 71 FCR 285 which precludes the Court from requesting additional evidence or information or verifying the information provided. Further, if the absence of a contradictor inhibits the Court it may seek the assistance of an amicus curae or an intervenor. If the Court is disposed not to impose a penalty proposed by the parties it may, depending on the circumstances, be appropriate for each of them to be given the opportunity to withdraw consent to the proposed orders and for the matter to proceed as a contested hearing.
Additionally it is accepted in respect of each respondent that a principal object of a penalty under s 76 of the Act is deterrence, both general and specific: Trade Practices Commission v Stihl Chainsaws (Aust) Pty Limited (1978) ATPR 40-091 at 17,896; Trade Practices Commission v Mobil Oil Australia (1985) 4 FCR 296 at 298; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301; CSR Ltd (1991) ATPR 41-076 at 52,152.
An issue arises on whether incapacity to pay should limit the attainment of deterrence. In Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at [10] and [11] Merkel J said that giving significant weight to capacity to pay would not only produce anomalous outcomes but would also reward companies for carrying on business in a manner that resulted in them having few, if any, assets available to pay a penalty when it is imposed. However he also accepted that the issue of capacity to pay is of less relevance when balanced against the necessity of imposing a penalty that satisfies the objective of general deterrence. In Australian Competition and Consumer Commission v High Adventure Pty Ltd [2006] ATPR 42-091 at [11] the Full Court stated that in some cases the penalty may be so high that the offender will become insolvent but that such possibility should not deter the Court from doing its duty for otherwise the important object of general deterrence will be undermined.
Unless otherwise stated, the Court has been presented with an uncontroverted outline of legal principles, an agreed form of consent orders, an agreed statement of facts and joint submissions. These documents have been prepared and each of the matters approached with complete cognisance of the principles to which I have just referred.
It is against this background of general principle that I will approach each of the applications in relation to specific respondents.
NATURE OF THE MARKET
At the relevant time the average annual turnover for commercial and industrial air conditioning and mechanical services in Western Australia was $120m to $150m. There were relatively low profit margins on projects, a condition of the market since 1997. All of the contractors indicated a willingness to win jobs at below cost in order to maintain turnover. The low profits meant that a new entrant required significant financial assets in order to remain in the market. At the time of the contravening conduct, the contractors had a combined production capacity that exceeded the demand for commercial and industrial air conditioning services.
There were a limited number of personnel with mechanical contracting experience in the industry. Those who were so engaged were involved in a high degree of switching between companies.
NATURE OF THE ARRANGEMENTS AND UNDERSTANDINGS
The corporate respondents are Western Australian air conditioning and mechanical services contractors. The personal respondents are directors or employees of some of those corporate respondents. The allegations made by the applicant, and accepted by the respondents without trial, was that each of the corporate respondents, through such of the personal respondents associated with or employed by those corporate respondents, contravened the Act by making arrangements and arriving at understandings with other Western Australian contractors in the industry. This is said to have occurred in relation to a number of projects put to tender by the owners and builders, including building developers, of commercial and industrial buildings in Western Australia. These included high rise buildings, offices, hospitals, schools, shopping centres, cinemas, retail outlets and public buildings.
The most common form of arrangement or understanding reached were ‘Designated Tenderer Arrangements and Understandings.’ These were designed to ensure that the contractor who obtained the support or agreement of all other tenderers on a particular job would put in the lowest tender and therefore would win the job. These arrangements operated as follows:
1.the tenderers for a particular project would meet or otherwise discuss a forthcoming tender with a view to selecting a ‘designated tenderer’ from amongst themselves. Various arguments were advanced in favour of a particular firm being selected as the designated tenderer, including prior Designated Tenderer Arrangements or Understandings that had been made, the ‘need’ a tenderer had for a particular job and how well suited a tenderer was to a job;
2.if a tenderer was selected as the ‘designated tenderer’, it would then provide each of the other tenderers with a ‘cover price’. The cover price was the minimum price at which each of the other tenderers was to submit a tender;
3.the cover price meant that the designated tenderer was able to submit a tender price for itself that it knew to be lower than that of all of the other tenderers who were party to the Designated Tenderer Arrangement or Understanding. Given the fact that the assessment of tenders was usually very price sensitive, this greatly increased the likelihood of the designated tenderer ‘winning’ the project;
4.when formulating the cover prices, the designated tenderer was able to ensure that its own price was both the lowest and gave it a ‘reasonable profit margin’ for the job. Generally, the tenderers were aware of the ‘budget’ for a project and part of the understanding was that the designated tenderer’s own tender price would not exceed the budget. If it did exceed the budget, the other tenderers might refuse to participate, as this would mean the owners and builders might be suspicious of the unusually high tender process received; and
5.the tenderers would also agree not to reduce their tender prices during post-tender negotiations with the builders and owners, or at least not reduce their tender price below the designated tenderer’s tender price.
The Miscellaneous Arrangements or Understandings were made with other contractors in respect of particular projects.
The AMCA Members Arrangements and Understandings were made with a number of mechanical services contractors who were members of the Airconditioning and Mechanical Contractors Association through meetings held to discuss upcoming tenders for the supply of commercial and industrial air conditioning services at which there was agreement upon allocating forthcoming projects or endeavouring to do so.
Table Arrangements or Understandings were the result of agreements or understandings to allocate projects pursuant to the AMCA Members Arrangements or Understandings.
The HJ/KFC Group Arrangements or Understanding gave effect to an arrangement or understanding with a number of mechanical services contractors to discuss upcoming tenders and agree or endeavour to agree upon allocating forthcoming projects. HJ/KFC Arrangements or Understandings were the resulting agreements for designation of a tenderer.
The Harbour Town Arrangement or Understanding and the ABC Perth Arrangement or Understanding were agreements and understandings of the same character in relation to projects of those names.
The conduct of the respondents was deliberate and undertaken voluntarily with the understanding that it was illegal. They intentionally kept the conduct secret from the owners and builders who put the projects to tender.
COMPARATIVE POSITION OF RESPONDENTS
The following table shows the comparative position of the respondent corporations in respect of the offending conduct.

Relative Ranking in terms of all Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.

Relative Ranking in terms of total Value of All Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.

Ranking Respondent Resp No. Total No. of Collusive Jobs Ranking Respondent Resp No Total Value of Collusive Jobs

1 Centigrade 5^th 59 1 HVAC 10^th $69 925 870

2 Envar 8^th 41 2 Envar 8^th $57 237 837

3 HVAC 10^th 40 3 Centigrade 5^th $56 282 449

3 MPM 13^th 40 4 DES 7^th $48 088 600

4 Jako 11^th 30 5 MPM 13^th $42 379 515

4 DES 7^th 30 6 Jako 11^th $29 767 565

5 CMS 6^th 20 7 Haden 9^th $21 983 754

6 Scott Mechanical 16^th 14 8 Tyco / T O'Connor 17^th $21 733 176

7 Haden 9^th 12 9 Tyco / Designair 17^th $20 420 589

8 Tyco/ T O'Connor 17^th 11 10 AMEC Engineering 3^rd $6 662 760

8 Tyco / Designair 17^th 11 11 CMS 6^th $6 311 532

9 LL Noms/Mech Const 12^th 10 12 LL Noms/
Mech Const 12^th $6 295 603

10 Ralie 15^th 6 13 Scott Mechanical 16^th $3 063 161

11 Admiral Mechanical 1^st 5 14 Admiral Mechanical 1^st $1 977 850

12 AMEC Engineering 3^rd 2 15 Ralie 15^th $1 288 568

Haden and the two Tyco respondents are only alleged by the applicant at the time of the writing of these reasons. The fourth respondent and the applicant are in negotiations as to the extent of that respondents conduct and they have not been included in this table. The following table shows the comparative position of the respondent individuals:

Relative Ranking in terms of all Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.

Relative Ranking in terms of total Value of All Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.

Ranking Respondent Resp No Total No. of Collusive Jobs Ranking Respondent Resp No Total Value of Collusive Jobs

1 Smith 23^rd 59 1 Healey 23^rd $57 237 837

2 Healey 29^th 41 2 Smith 29^th $56 282 449

2 Burmaz 28^th 41 2 Burmaz 28^th $57 237 837

3 Ferguson 36^th 40 3 Ferguson 36^th $42 379 515

3 Pierce 35^th 40 3 Pierce 35^th $42 379 515

4 Jakovich 34^th 30 4 Jakovich 34^th $29 767 565

5 Redfern 25^th 25 5 Henny 27^th $29 472 717

6 Allen 26^th 21 6 Redfern 25^th $23 320 036

7 Scott 39^th 14 7 Albonico* 21^st $20 420 589

8 Blinco 20^th 12 8 Cygulis* 22^nd $19 610 010

9 Albonico* 21^st 11 9 Roche 30^th $17 730 538

10 Jones 24^th 10 10 Allen 26^th $15 595 218

11 Broadley 38^th 9 11 Blinco 20^th $12 958 363

12 Cygulis* 22^nd 8 12 Barrie 19^th $6 229 760

13 Roche 30^th 7 12 Lewis 32^nd $6 229 760

13 Henny 27^th 7 13 Jones 24^th $3 799 955

14 Moore 37^th 6 14 Scott 39^th $3 063 161

15 Nelson 18^th 5 15 Broadley 38^th $2 515 605

16 Barrie 19^th 1 16 Nelson 18^th $1 977 850

16 Lewis 32^nd 1 17 Moore 37^th $1 288 568

16 McLeod 33^rd 1 18 McLeod 33^rd $447 750

16 Ballantyne 31^st 1 19 Ballantyne 31^st $154 250
* In relation to Messrs Albonico and Cygulis they are included for jobs alleged (not jobs pressed) against them.
PART 1: NO PECUNIARY PENALTY SOUGHT
RESPONDENTS 8, 28 AND 29: ENVAR ENGINEERS AND CONTRACTORS PTY LTD (ENVAR), AND MESSRS BURMAZ AND HEALEY

During the period from April 1991 and continuing up to about May 2003, Envar made or arrived at:
1.27 Miscellaneous Arrangements or Understandings and gave effect to a provision or provisions of each of them;
2.five AMCA Members Arrangements or Understandings and subsequent AMCA Members Arrangements or Understandings and gave effect to them by making 40 Table Arrangements or Understandings.
3.40 Table Arrangements or Understandings and gave effect to a provision or provisions of each of them;
4.the Esplanade Hotel Convention Centre Arrangement or Understanding, the Harbour Town Arrangement or Understanding and the ABC Perth Arrangement or Understanding.
5.the Floreat Forum Shopping Centre Arrangement or Understanding and gave effect to a provision of it.
Some of these arrangements were outside of the penalty period and as with the other respondents are mentioned for completeness. Envar has also admitted that its making or arriving at and giving effect to the above arrangements or understandings constituted contraventions of ss 45(2)(a)(i) and (ii) and ss 45(2)(b)(i) and (ii) of the Act.
The arrangements and understandings were entered into in the same circumstances as those previously set out in relation to DES. The particulars of the conduct in that respect are more fully set out in the agreed statement of facts.
Envar’s financial details are as follows:

2003 2004

Turnover $11 041 957 $12 564 494

Net Profit Before Tax $134 362 $25 604

Per cent of Market Share 7.3 per cent 8.4 per cent

Net Assets $420 335 $350 560

No. of employees 29 30

Envar did not have a trade practices compliance program in place nor did it provide its executives, employees and other representatives with trade practices education or training at any material time during the relevant period. Following the applicant’s investigation, Envar entered into a contract with Watchdog Compliance on 7 June 2005.

In June 2003, Envar approached the applicant to propose resolution of this matter prior to the institution of proceedings on the basis of admitting to contraventions and consenting to appropriate orders.
Mr Burmaz was appointed managing director of Envar in February 1997. Mr Burmaz took over the role previously performed by Mr Healey.
Mr Burmaz has not been the subject of previous proceedings in respect of Pt IV of the Act. He has never been charged with, or convicted of, a criminal offence. He has not otherwise been prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty.
Mr Healey was a founding director of Envar and acted in the role of managing director of Envar until 5 February 1997, when Mr Burmaz joined Envar. Mr Healey then became, and remains, the Corporate Director of Envar.
Mr Healey has not been the subject of previous proceedings in respect of Pt IV of the Act. He has never been charged with, or convicted of, a criminal offence. He has not otherwise been prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty.
On 29 August 2005 orders were made by consent providing declaratory, injunctive and other relief in respect of these respondents. No pecuniary penalties were sought in respect of these respondents.
PART 2: PECUNIARY PENALTY BELOW $100 000
RESPONDENTS 1 AND 18: ADMIRAL MECHANICAL SERVICES PTY LTD (ADMIRAL) AND MR NELSON
To the authorities cited above Admiral and Mr Nelson add a reference to Australian Competition and Consumer Commission v Foamlite (Australia) Pty Ltd (1998) ATPR 41-615 at 47, 45 per Finkelstein J and Australian Competition and Consumer Commission v McMahon Services Pty Ltd (No 1) [2004] ATPR 42-022 at [115] per Lander J. These authorities are cited with respect to the proposition that an objective bench mark that has previously been used in the case of offending corporations to weigh up the severity of any penalty is the average after tax, annual profit of the trading corporation.
Admiral currently and at all relevant times, carried on the business of the design, manufacture, installation, commissioning and maintenance of heating, ventilating and air conditioning systems principally in the Perth metropolitan area.
Mr Nelson is the founder and managing director of Admiral. Mr Nelson was at all material times from 26 June 1996 a director of Admiral; he acted within the scope of his actual or apparent authority as a director, servant or agent of Admiral in respect of his conduct alleged herein.
Pursuant to the DSA Group Arrangement or Understanding, from about October 2000 to approximately October 2002, Admiral made and gave effect to five arrangements or understandings with the DSA Group Members, to allocate projects for the supply of commercial and industrial air conditioning services (the DSA Arrangements or Understandings).
The background for these offences is similar to that set out in relation to foregoing respondents. The precise involvement of these respondents is the subject of particular attention in the agreed statement of facts and the joint submissions.
During the period from October 2000 and continuing up to about October 2002, Admiral made:
1.the DSA Group Arrangement or Understanding and gave effect to it each time it made one of the five DSA Arrangements or Understandings to which it was a party; and
2.five DSA Arrangements or Understandings and gave effect to a provision or provisions of each of them.
Admiral’s commercial and industrial air conditioning installation services business’ turnover, net profit and net asset position is summarised in the table below:

Year Turnover Net profit Net Assets

2000/2001 $2.84m ($67 000) $48 941

2001/2002 $3 208 574 $49 501 $98 442

2002/2003 $2 279 036 $13 885 $119 626

2003/2004 $2 099 473 ($13 420) $71 206

Admiral has employed between four and eight staff during the 2001 to 2005 period.
Prior to 1 July 2000 Ruhr Nominees Pty Ltd as trustee for the Admiral Trust carried on the business of Admiral Mechanical Services. In the 1999/2000 year Admiral Trust had a net profit of $58 500.
After 1 July 2000, the Admiral Trust provided the services of Mr Nelson and his wife, Sharon Nelson, to Admiral Mechanical Services. The Admiral Trust’s beneficiaries are Mr Nelson, Mrs Nelson, their five children, Mrs Nelson’s mother, Admiral Mechanical Services and a local church. The Admiral Trust had a net profit of $4559, $40 928 and $38 410 respectively in the 2002, 2003 and 2004 financial years.
Admiral has a 50 per cent shareholding in a company called Admiral Services and Maintenance Ltd (ASM). Mr Nelson is a director of ASM. ASM was established on 1 July 2002. ASM’s net profit in 2003 was $95 025 on a turnover of $423 219. ASM’s net profit in 2004 was $153 278 on a turnover of $563 581. The figures include its share of the profit of ASM for those years.
Admiral co-operated with the applicant’s investigation. Mr Nelson was interviewed on a voluntary basis and has fully assisted in the preparation of his witness statement with respect to the relevant conduct. Admiral has admitted the conduct and agreed to consent orders.
Mr Nelson is the founder and sole director of Admiral. Admiral has been conducting business since 1989.
Mr Nelson is 43 years old. He is married with five dependent children. Mr Nelson’s wife, Shari, also works at Admiral assisting with the accounts.
Mr Nelson and his wife Shari’s taxable income for the period 1998 to 2004 is summarised below:

Year Taxable Income

Mr Nelson Shari Nelson

1998 $20 924 $20 700

1999 $31 826 $31 926

2000 $38 470 $38 223

2001 $39 096 $35 639

2002 $37 096 $31 207

2003 $27 696 $27 696

2004 $27 696 $27 696

Mr Nelson owns a vacant block of land, jointly with his wife in Mt Pleasant. The land was purchased for $560 000 in 1997 and is currently valued at approximately $900 000. The land is security for $470 000 in loans in Admiral’s and Mr Nelson and his wife’s names.
Mr Nelson has superannuation of $72 186 in the Nelson Superannuation Fund and a half interest with his wife in a one week time share at Busselton Beach valued at $10 000.
Mr Nelson has not been the subject of previous proceedings in respect of Pt IV of the Act. He has never been charged with, or convicted of, a criminal offence. He has not otherwise been prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty.
An affidavit filed by Mr Nelson, with which the applicant takes no exception, describes the circumstances in which he entered into the arrangements and understandings. Those circumstances included that one of Admiral’s major debtors had gone into administration owing Admiral $67 000. Further, he had been told that AMCA members wanted to keep him out of certain tender lists so that they could undercut him.
By the time he entered into the agreement in October 2000 he had been diagnosed with depression and was receiving counselling. He considers that the depression was a contributing factor to his involvement. Neither he nor Admiral received any benefit from his contravening conduct, Admiral not being awarded any of the contracts in question.
He said that Admiral has an overdraft facility which is invariably close to or fully drawn. The company is not in a position to increase its overdraft to meet any penalty. It pays a modest income for him and his wife. They consider that having their own business is important to them.
Mr Nelson referred to the fact that of his five children, four are quadruplets. He rents his home. He is also an elder of a church, that being the hub of his life.
As mentioned, consent orders between the applicant and this set of respondents were made on 29 August 2005. In relation to Admiral, orders were made relating to declarations, injunctions, a compliance program and costs. In relation to Mr Nelson, orders were made relating to declarations, injunctions and costs.
Pecuniary Penalty
The applicant proposes a pre-discount penalty of $70 000 in respect of Admiral and $7500 in respect of Mr Nelson. The discounted figures would be $49 000 and $5250 respectively. This represents a 30 per cent discount.
Counsel for Admiral and Mr Nelson submitted that these respondents are at the lowest level. While the proposed penalty in respect of Mr Nelson is not in dispute, it is said by the respondents that the penalty in relation to Admiral is not appropriate when true regard is had to the principle of parity.
In the course of his submissions, counsel for these respondents also stressed the degree of their co-operation, the circumstances of the commission of the offence including the health of Mr Nelson and the quality of his character as attested to by various references.
In relation to the issues concerning capacity to pay, reliance was placed on Foamlite (1998) ATPR 41-615 and McMahon [2004] ATPR 42-022.
Additionally, reference was made to the fact that the market share of Admiral was in the order of 1.6 per cent and that the period of the offending was only over two years with only one respondent being for a shorter period. Further, Admiral never secured a tender by its contravening conduct. In this context, it contends its past exemplary conduct had particular weight. I note in contra to this submission that although Admiral may not have secured a tender personally it was involved in the collusive behaviour and that it was only by all of the respondents’ involvement that the collusive behaviour could be successful.
In response, the applicant stressed the need for a significant general penalty. It submitted that a minimum in a price fixing case was that proposed in relation to Admiral.
In supplementary submissions the respondents here said there was no foundation upon which the Court should ‘fix the bottom end of that range at an arbitrary figure of $49 000’. I agree with the applicant that no such approach is inherent in the applicant’s submissions. Rather the applicant has sought to apply the relevant factors and principles to arrive at a figure which in its view reflects application of them.
The respondents also suggest that the applicant’s submission submits that the applicant is contending the legislation compels the Court to submit itself to a uniform regime of pecuniary penalties for nothing more than the sake of uniformity. I do not understand the applicant’s submissions as taking that approach.
Regard must also be had to the parities in relation to Admiral, namely that it is the second last in relation to total number of arrangements and in relation to total value of arrangements. The parities in respect of Mr Nelson are 15 of 16 of all arrangements and 16 of 19 for the total value.
Payment in instalments
Affidavits of Mr Nelson have addressed cashflow issues experienced by Admiral. Nevertheless in 2004/2005 Admiral’s turnover and net profit increased substantially and quite dramatically, resulting in an increase in gross profit from trading from $402 652 to $661 255. This enabled Admiral to reduce its loan liability. The net asset position of Admiral also improved from $71 206 to $250 760 during the same 12 months. Retained profits increased from $84 842 to $248 456. Taking also into account Admiral’s ownership of 50 per cent of the shares in Admiral Service and Maintenance Pty Ltd as well, it cannot be said that Admiral does not have a capacity to pay a pecuniary penalty from cash reserves or such reserves and borrowing. It is in the position where it has enjoyed substantially increased turnover, gross and net profit, assets and retained profits.
Nevertheless the applicant accepts that the Court would have proper regard to the appropriate factors yet sufficiently address any cashflow issues by ordering that the totality of the pecuniary penalties order and costs agreed against the Admiral respondents be paid in four annual instalments of $16 000 with the first such instalment being paid within thirty days of the relevant order being made (giving a grand total of $64 000 comprised of the sum total of a pecuniary of $49 000 against Admiral, $5240 against Mr Nelson and agreed costs of $10 000).
Determination of pecuniary penalty
In relation to Admiral the starting point of $70 000 viewed in the context of discount and instalments is clearly within the range.
As to Mr Nelson, I consider the range of penalty to be such as would include $7500, to which the discount should be applied resulting in an amount payable of $5250.
These pecuniary penalties should be paid together with agreed costs in the instalments proposed by the applicant.
RESPONDENTS 15, 37 AND 38: RALIE PTY LTD AND MESSRS MOORE AND BROADLEY
Ralie admitted that conduct by its directors Messrs Moore and Broadley, on its behalf in relation to the arrangements or understandings, constituted conduct by Ralie in contradiction of s 45(2) of the Act.
Messrs Moore and Broadley admitted that from 2000 to 2002 they were directly or indirectly knowingly concerned in, or party to, the contraventions by Ralie.
The Ralie respondents accepted that their conduct, constituting as it does contraventions (or involvement in contraventions) of s 45(2) read with s 45A and s 4D, was very serious. Such contraventions must be seen as amongst the most serious of the non-criminal contraventions of the Act.
The applicant regarded these contraventions as very serious. They were deliberate and covert and involved senior management of Ralie. However, Ralie is one of the smaller competitors in the relevant market. Ralie’s conduct, by reference to the number of projects involved and the dollar amount of the projects involved, is at the lower end in comparison with the other respondents in these proceedings.
I therefore agreed it was appropriate for the Court to exercise its discretion to make the proposed declarations
The proposed injunctions were consistent with the public interest. The Ralie respondents continue to operate in the industry.
I therefore agreed to the making of those consent orders presented by the parties.
Costs
Although the issue of costs was not addressed by those orders, the Court was informed by counsel for the Ralie respondents at the hearing that it had been agreed the respondents would pay the applicant’s costs to be taxed if not agreed. On 20 July 2007 I signed a consent order having the effect of fixing such costs in the sum of $1 200 in respect of Ralie and Messrs Broadley and Moore.
Pecuniary penalty
Nature and extent of contravening conduct
During the period from 2000 and continuing up to about 2003, Ralie made:
1.two (2) Miscellaneous Arrangements or Understandings and gave effect to a provision or provisions of each of them;
2.the DSA Group Arrangement or Understanding and gave effect to it each time it made one of the seven (7) DSA Arrangements or Understandings to which it was a party; and
3.seven (7) DSA Arrangements or Understandings and gave effect to a provision or provisions of each of them.
The applicants claim the relative ranking of Mr Moore is 14 of 16 for all arrangements and 17 of 19 for total value.
The relative ranking of Mr Broadley is 11 of 16 for all arrangements and 15 of 19 for total value.
Amount of loss or damage
The usual difficulties of quantification are encountered here.
Circumstances of the alleged contravention
Consistently with the description of the conduct generally, it occurred frequently and was widespread and entrenched in the industry.
Size and financial position of company
The following table contains a summary of the Ralie commercial and industrial air conditioning installation business annual turnover and profit during the years indicated:

Year ended 30 June Total Income Profit Before Tax Assets Liabilities Net Assets

2003 $111 3107 ($139 982) $323 828 $360 684 ($36 856)

2002 $2 219 157 $5 219 $706 943 $603 817 $103 126

2001 $2 111 808 ($58 538) $704 173 $606 266 $97 907

2000 $1 903 445 ($33 141) $508 813 $209 716 $158 445

Mr Moore founded Ralie in September 1994, when he and Mr Broadley bought the business of J.R Morgan & Company.
Mr Moore is 40 years of age and enjoys good health. He is married and has two dependent children aged 1 and 6. Mr Moore earns a salary of $60 000 per annum. He aims to work until retirement age (65) and will earn a similar annual income (with increases as the years progress) until retirement age has been attained. Mr Moore has negligible savings and together with his wife owns a modest home in Karrinyup that is mortgaged for an amount of $241 374.
Mr Broadley founded Ralie in September 1994, when he and Mr Moore bought the business of J.R Morgan & Company.
Mr Broadley is 60 years of age and enjoys good health. He is married and the last of his dependent children left home in May 2005. Mr Broadley earns a salary of $60 000 per annum. He aims to work until retirement age (65) and will earn a similar annual income until that age has been attained. Mr Broadley, together with this wife, owns a modest home in Bickley which they have recently paid off. He has negligible savings having recently contributed to his daughter’s wedding in May 2005.
The respondents’ submissions state that Ralie employs 9 people, several of these on a casual basis. Generally it does not tender for jobs valued at over $500 000 as it does not have the financial resources to do work above that size.
Degree of market power
Ralie held approximately 1-2 per cent of the total market in Western Australia during the relevant period of time.
Ralie considers itself a small company in comparison with its competitors, only Scott Mechanical reporting a smaller turnover.
Deliberateness and duration of conduct
The conduct was deliberate and undertaken voluntarily with the understanding that it was illegal.
Involvement of senior management
The contraventions of Ralie occurred as the result of the conduct of Messrs Moore and Broadley, both being its directors. At all relevant times Messrs Moore and Broadley were directors with significant control over Ralie’s operations in Western Australia.
Corporate culture
Ralie and Messrs Moore and Broadley have substantially co-operated with the applicant’s investigation. It has commenced to institute a compliance measure program through Watchdog Compliance Pty Ltd the program of which is consistent with the Australian standard for compliance programs.
Past conduct
None of Ralie, Messrs Moore and Broadley have previously been the subject of previous proceedings in respect of Pt IV of the Act.
Deterrence and capacity to pay
The respondent submits that the deterrence factor cannot be viewed in isolation from the respondent’s capacity to pay the penalty and the net effects of the size of the imposition. It is submitted that the conduct of the Ralie respondents is at the very lower end of the scale in comparison with other respondents. In addition Ralie’s profits before tax and net asset position for the period of the offending conduct (2000 to 2003) are said to be of significance.
Determination of pecuniary penalty
The applicant submits that the appropriate pecuniary penalties to be paid by each of the Ralie respondents are as follows:
1.Ralie – $70 000;
2.Mr Moore - $7000; and
3.Mr Broadley - $7000.
The respondents submit that the penalty range proposed by the applicant is so onerous as likely to have the effect of forcing Ralie into liquidation.
The respondent submits that as it is accepted by the applicant that Ralie and its operators were very minor players in the overall conduct, it is appropriate that penalties for them be at the lower end. Furthermore, as Ralie has a smaller turnover compared to its competitors and operates with tight profit margins, a moderate penalty is likely to have a significant deterrent effect on it engaging in similar conduct in the future. In this regard a penalty in the vicinity of $20 000 is both significant in light of Ralie’s circumstances as a deterrent and as an actual penalty.

It is submitted that due consideration should also be given to the financial impositions of Ralie’s significant legal costs as well as its obligation by way of agreement to pay the applicant’s legal costs to be taxed if not agreed.
Both Messrs Moore and Broadley have been remorseful and cognisant of their wrongdoing. They have been fully cooperative with the applicant and have made a considerable financial commitment to the implementation of a detailed compliance program. Both Messrs Moore and Broadley earn a modest income of $60 000 before tax. It is therefore submitted by the respondents that a penalty of $5000 as against each respondent (when viewed together with monies spent on legal representation and payment of the applicant’s costs) is a significant imposition and weighty deterrent.
Ralie is a notch above Admiral in the relative rankings. The Ralie starting point of $70 000 is favourable in that equates to the starting point for Admiral. However, the discounts offered to Admiral for co-operation are not proposed by the applicant in relation to Ralie and there is no evidence of a foundation for them.
I do not consider that the parity principle or the deterrence principle would permit of the starting point for Ralie being $20 000 or the penalties proposed for Messrs Moore and Broadley being reduced.
However, the parity principle would permit Ralie to have the same opportunities to pay by instalments as have been applied in the case of Admiral. This would assist in addressing the issue of financial hardship argued for Ralie.
Accordingly I find the pecuniary penalty against Ralie should be $70 000 and against each of Messrs Moore and Broadley the sum of $7000. These pecuniary penalties should be paid together with agreed costs in four annual instalments.
RESPONDENTS 16 AND 39: SCOTT MECHANICAL SERVICES PTY LTD (SCOTT MECHANICAL) AND MR SCOTT
In respect of these respondents, consent orders have been reached in relation to declarations and injunctions, a compliance program and costs. The respondents oppose the quantum of the pecuniary penalty proposed.
Scott Mechanical has admitted that the making of the arrangements or understandings and the giving effect to them is contrary to the provisions of ss 45(2)(a)(i) and (ii) and ss 45(2)(b)(i) and (ii) of the Act.
Mr Scott has admitted that he was directly or indirectly knowingly concerned in, or party to, the contraventions by Scott Mechanical of the Act.
For the purpose of these reasons the conduct in which Scott Mechanical and Mr Scott engaged may be described as similar to that previously set out in relation to DES. The exact conduct is set out in detail in the agreed statement of facts.
Scott Mechanical currently and at all material times carried on the business of the supply, installation, commissioning and maintenance of heating, ventilating and air conditioning systems principally in Western Australia.
It employs only one employee, being Mr Scott. From June 1988 he was a founding director of Scott Mechanical together with his wife. He acted within the scope of his actual or apparent authority as a director, servant or agent of Scott Mechanical in respect of his conduct.
The size of the company in terms of operating profit is currently nil. The company’s net asset position is $111 000. The total amount of invoices last financial year was $1 073 476.29. The monthly invoice records for June 2004 to date total $399 613.25. The balance still to be claimed on two current jobs is $25 113. There is money still owing to it in the amount of $52 154.76.
Below is a schedule showing income, profit before tax, assets and liabilities from the year ending 30 June 1999 to the year ending 30 June 2003.

Year ending Total Income* Total Profit/loss* Assets Liabilities Net Assets

30 June 1999 $340 180 $27 288 (L) $535 378 $150 994 $384 384

30 June 2000 $141 499 $38 005 (L) $458 334 $143 358 $314 976

30 June 2001 $168 115 $21 066 (L) $350 382 $118 804 $213 578

30 June 2002 $164 833 $44 024 (L) $441 856 $166 256 $275 600

30 June 2003 $128 959 $17 223 $341 501 $48 677 $292 824
Scott Mechanical did not have a trade practices compliance program in place nor did it provide its executives, employees and other representatives with trade practices education or training at any material time during the relevant period.

Mr Scott’s gross income is $38 000. He owns a number of assets jointly including:
1.the family home ($275 000);
2.vacant land ($70 000);
3.three motor vehicles ($15 000, $28 000 and $6000);
4.hangars at Jandakot ($172 000 in total) and
5.hangar income ($24 600);
6.trailer boat ($9000);
7.shares ($45 000) and
8.contents and possessions ($35 000).
His liabilities included:
1.Jandakot Airport Holdings 2003/2004 ($28 500);
2.cost of living ($36 000 which is jointly covered); and
3.a security lodged with the Commonwealth Bank ($13 000).
Mr Scott is also responsible for the on going care of his daughter, who is in receipt of a disability pension. Ms Scott is intellectually disabled. Regarding her ability to use public transport, she was assessed as being unable to exercise personal survival skills, having much difficulty with social skills, education skills and recognition skills. Ms Scott’s skill levels will not improve with training and are permanent.
Mr Scott is himself currently undergoing review for his diabetic status. He also awaits knee replacement surgery on his arthritic knees.
Mr Scott has not been the subject of previous proceedings in respect of Pt IV of the Act. He has never been charged with, or convicted of, a criminal offence. He has not otherwise been prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty.
I considered the proposed consent orders in respect of declarations, injunctions, a corporate compliance program and costs between the applicant and respondents to be appropriate and made the orders on 29 August 2006.
Pecuniary penalties
The applicant seeks a pecuniary penalty order against Scott Mechanical in the amount of $75 000. As against Mr Scott, it seeks a pecuniary penalty order in the amount of $7000.
Nature and extent of conduct
From 1999 to May 2003, Scott Mechanical, through the conduct of Mr Scott, made or arrived at:
1.two Miscellaneous Arrangements or Understandings and gave effect to each of them;
2.the DSA Group Arrangement or Understanding and gave effect to it;
3.seven DSA Arrangements or Understandings and gave effect to each of them;
4.two HJ/KFC Group Arrangements or Understandings and gave effect to each of them; and
5.five HJ/KFC Arrangements or Understandings and gave effect to each of them.
In about October 2000 Scott Mechanical became a party to the DSA Group Arrangement or Understanding. The meetings for the DSA Group were held at Mr Scott’s premises in Midvale. As a member of the DSA Group, Scott Mechanical was a party to seven DSA Arrangements or Understandings during the period from November 2000 to about February 2002.
In July 2001, Scott Mechanical became a party to the first HJ/KFC Group Arrangement or Understanding, and remained so when Centigrade joined in approximately September 2001. During the period from July 2001 to about January 2003, Scott Mechanical was a party to five HJ/KFC Arrangements or Understandings.
The Designated Tenderer Arrangements or Understandings were highly organised and frequent, following an established pattern of conduct that had been ongoing in the industry for a considerable period of time. The development of the DSA Group Arrangement or Understanding and HJ/KFC Group Arrangement or Understanding resulted in an increase in the regularity of the conduct and the development of methods to best identify the projects for which Designated Tenderer Arrangements or Understandings could be made.
The following table sets out the Designated Tenderer Arrangements or Understandings that Scott Mechanical made and/or gave effect to through Mr Scott.

Total Projects

Arrangement or Understanding Type Made Gave effect Total value Won as the DT Total value of projects won

Misc 2 2 $365 621 Nil Nil

DSA 7 5 (1 project halted) $2 250 253 1 $1 065 185

HJ/KFC 5 4 $447 287 1 $85 140

Total 14 11 $3 063 161 2 $1 150 325

There is evidence that the market was at all times very price-sensitive. At this time, owners and builders were particularly aggressive in seeking reductions in tender prices. Consequently, this conduct was designed to directly circumvent those efforts and reduce the competitive pressures on price.
Similar conduct was widespread and entrenched in the industry, with all of the major contractors having been involved for some or all of the period.
Size of contravening company
Scott Mechanical was incorporated in June 1988. Mr Scott and his wife are and have always been the only directors. The shareholders are Mr Scott, his wife, Mrs Marilyn Fay Scott and Venecar Nominees Pty Ltd. Venecar Nominees Pty Ltd is trustee for the Scott Family Trust. Peter Scott and Marilyn Scott are the shareholders and directors of Venecar Nominees Pty Ltd. Mr Scott is currently the only employee of Scott Mechanical.
In 1998, Mr Scott was the only employee of Scott Mechanical. In 1989, Mr Scott employed a couple of installers directly but let them go in 1990 as there was insufficient continuing work to sustain them. For all intents and purposes, Mr Scott is a ‘one-man operation’.
Scott Mechanical is a minor player in the market.
Below is a schedule showing income, profit before tax, assets and liabilities from the year ending 30 June 1999 to the year ending 30 June 2003:

Year ending Total Income Total Profit/loss Assets Liabilities Net Assets

30 June 1999 $340 180 $27 288 (L) $535 378 $150 994 $384 384

30 June 2000 $141 499 $38 005 (L) $458 334 $143 358 $314 976

30 June 2001 $168 115 $21 066 (L) $350 382 $118 804 $213 578

30 June 2002 $164 833 $44 024 (L) $441 856 $166 256 $275 600

30 June 2003 $128 959 $17 223 $341 501 $48 677 $292 824
Degree of market power

Although difficult to reach a definite view, it is estimated that Scott Mechanical has a market share of approximately 0.4 per cent and 0.5 per cent, a share which has remained fairly static.
The majority of Scott Mechanical’s work is in the supply and installation of commercial and industrial air conditioning and mechanical services. Scott Mechanical has two or three regular small maintenance contracts and subcontracts that work to E W Perry & Co. The only other maintenance work performed by Scott Mechanical is in relation to warranties on installation projects done by Scott Mechanical.
Amount of loss or damage
Mr Scott’s evidence is that since his resignation from AMCA around July 1999, he has not won any consultancy tendered work. With no work in progress or available for quotation he considers a very serious financial situation faces Scott Mechanical. Of the net assets of the company, shown at $292 824, he states that $263 661 of that amount is by way of two unsecured loans.
Deliberateness of the contravention and duration
Scott Mechanical was involved in collusive conduct for a period between 1999 and 2003.
The conduct was deliberate and the parties including Mr Scott kept the conduct secret from the builders, owners, architects and consultants who put the projects to tender.
The applicant claims the first meeting of the DSA Group was held at Scott Mechanical’s premises at the invitation of Mr Scott and he was selected as the designated tenderer for the first DSA Arrangement or Understanding, being Christchurch Grammar. However, Mr Scott’s affidavit explains the meeting was initiated by another who requested to hold it at Scott Mechanical’s premises.
Involvement of senior management
The contraventions of Scott Mechanical arose solely from the conduct of Mr Scott who was a director and the effective owner of Scott Mechanical, having established it himself. At all material times, the conduct was instigated by Mr Scott on behalf of Scott Mechanical.
Company’s corporate culture
As far as the applicant is aware, Scott Mechanical has not implemented a compliance program or similar measures to address the trade practices issues raised by this conduct.
Co-operation
Mr Scott has co-operated with the applicant’s investigation by providing documents and voluntarily providing and signing a statement setting out his involvement in the conduct. In fact, Mr Scott signed a witness statement in September 2004 and has at all material times been fully frank and forthright in relation to his involvement in the conduct. Scott Mechanical and Mr Scott have admitted the allegations made against them and have agreed to the matter proceeding to a hearing in relation to final relief on a non-contested basis (except in respect to pecuniary penalties and costs) thus saving the Court and the applicant substantial time and expense.
Deterrence
The conduct has been widespread and entrenched so it is important for significant penalties to be awarded in order to deter others from engaging in similar conduct in the future.
Past conduct
Scott Mechanical and Mr Scott have not previously been subject of previous proceedings in respect of Pt IV of the Act.
Parity
In relation to parity, Scott Mechanical’s relative ranking in relation to the other respondents is shown in the relativity tables as 6 of 12 with respect to all arrangements and 13 of 15 with respect to total value.
The applicant submits that Scott Mechanical would be attracting at the discounted rate the fourth lowest penalty.
Mr Scott was 7 of 16 in respect of all arrangements and 14 of 19 in respect of total value.
Determination of pecuniary penalty
Counsel for the respondents relied on an affidavit of Mr Scott sworn on 8 August 2005. In that, Mr Scott states that his personal salary varies from and is an amount less than that stated above which came from the joint submissions and agreed statement of facts documents.
In his submissions, counsel for Scott Mechanical and Mr Scott stressed that the entity was a one person operation, Mr Scott had been very co-operative with the applicant, he otherwise had an impeccable record, he had illnesses to address and his daughter’s intellectual disability to be involved with and he experienced a decline in business. In particular, it was said it was necessary to have regard to the principle of parity.
I consider that viewed in relation to issues of parity the starting point for the pecuniary penalty for both Scott Mechanical and Mr Scott is within range. Counsel for the applicant said that represented a discount of 40 per cent from $125 000.
Mr Scott argued that he had been fully co-operative with the applicant, making full and frank admissions. This has been recognised in the 30 per cent discount applied by the applicant in respect of Mr Scott to arrive at the proposed penalty for him.
However, the financial circumstances of both Scott Mechanical and Mr Scott are such that parity dictates they be given the same opportunity to pay in instalments as applied to Admiral and Ralie and their relevant personnel.
Accordingly I find the penalty in respect of Scott Mechanical should be $75 000 and Mr Scott $7000. These pecuniary penalties should be paid together with agreed costs in four annual instalments.
PART 3: PECUNIARY PENALTY ABOVE $200 000
RESPONDENTS 2, 3 AND 19: AMEC AUSTRALIA PTY LTD, AMEC ENGINEERING PTY LTD AND MR BARRIE
During the period from June 1995 and continuing up to about October 1999:
1.the AMEC respondents made or arrived at five (5) Miscellaneous Arrangements or Understandings and gave effect to a provision or provisions of each of them and Mr Barrie:
(a)authorised or otherwise permitted Mr Blinco to make or arrive at one (1) Miscellaneous Arrangement or Understanding and give effect to of a provision or provisions of the same;
(b)gave effect to a provision or provisions of four (4) of them;
2.the AMEC respondents made or arrived at three (3) AMCA Members Arrangements or Understandings and Subsequent AMCA Members Arrangement or Understanding and gave effect to them by making seven (7) Table Arrangements or Understandings and Mr Barrie authorised or otherwise permitted:
(a)the making or arriving at of three (3) AMCA Members Arrangements or Understandings and Subsequent AMCA Members Arrangement or Understanding;
(b)giving effect to them by making six (6) Table Arrangements or Understandings
3.the AMEC respondents made or arrived at seven (7) Table Arrangements or Understandings and gave effect to a provision or provisions of each of them and Mr Barrie authorised or otherwise permitted:
(a)the making or arriving at of six (6) Table Arrangements or Understandings;
(b)giving effect to a provision or provisions of each of them.
The minute of consent proposes that the Court make the following orders:
1.declarations; and
2.injunctions,
against each of the AMEC respondents and Mr Barrie,
3.a pecuniary penalty; and
4.an order for costs,
against AMEC Engineering and Mr Barrie only, and
5.the implementation of a compliance program by way of a probation order, against each of the AMEC respondents only.
I considered the agreed declarations and injunctions satisfy the principles previously set out and agreed they should be made.
Costs
I accepted the minute with the proposed consent order concerning costs.
Pecuniary penalty
Upon consideration of the factors and circumstances referred to later in these joint submissions, the applicant and Mr Barrie have agreed that, subject to the agreement of the Court, the appropriate penalty is $15 000 and the applicant and AMEC Engineering have agreed that the appropriate penalty is $225 000. These amounts include a ‘discount’ of 25 per cent to reflect and acknowledge the cooperation of Mr Barrie and AMEC Engineering with the applicant and the saving in time and expense to the applicant and the Court in avoiding the need for a contested hearing in relation to liability.
The nature and extent of the contravening conduct
The following table sets out the value of the ‘designated tenderer’ arrangements or understandings that AMEC Engineering made and/or gave effect to through Mr Barrie’s conduct in authorising or otherwise permitting such conduct during the penalty period:

Arrangement or Understanding Type No. of Projects Total value No. selected as DT No. won as DT Total value of projects won

Miscellaneous 1 $6 229 760 0 0 $0

Table 1 $433 000 1 1 $433 000

Total 2 $6 662 760 1 1 $433 000

AMEC Engineering’s relative ‘ranking’ compared to the other respondents as shown above, is 12 of 13 in respect of all arrangements and 10 of 15 in respect of total value.
Since March 1994 Mr Barrie has been a director of AMEC Australia and since June 1996, a director of AMEC Engineering. He effectively controls, and at all material times controlled, AMEC Australia and AMEC Engineering. All of the arrangements or understandings to which AMEC Australia and AMEC Engineering were a party to were made or arrived at, or given effect to, by Mr Barrie on behalf of AMEC Australia and AMEC Engineering either directly or through authorising or otherwise permitting Mr Blinco to engage in the said conduct.
Mr Barrie’s conduct consisted of authorising or otherwise permitting the participation in telephone calls, the attending of meetings and committing the AMEC respondents to make or arrive at and in most but not all circumstances to give effect to the above arrangements or understandings.
The amount of loss or damage caused

In the case of Mr Smith, I have made provision for payment by instalments, particularly taking into account his personal family circumstances. There are personal circumstances to be weighed in the case of both Mr Pierce and Mr Ferguson. I consider that it is appropriate in the light of those circumstances that the pecuniary penalty should be paid in three equal annual instalments.
PART 7: PECUNIARY PENALTY ABOVE $2 MILLION
RESPONDENT 10: ACN 009 298 686 PTY LTD (FORMERLY HVAC CONSTRUCTION LIMITED) (‘HVAC’)
The tenth respondent (‘HVAC’) was a wholly owned subsidiary of HVAC Ltd ACN 074 619 266 (‘HVAC Ltd’). HVAC Ltd was incorporated on 27 June 1996 and HVAC was registered as an unlisted public company limited by shares on 1 March 1998.
The directors of HVAC Ltd included Mr Glenn Tucker.
On 27 June 2003, Mr Tucker incorporated the company Tec Plus Ltd (ACN 105 311 662).
On 30 June 2003, Mr Tucker ceased to be a director of HVAC.
On 4 July 2003, HVAC sub-contracted its air conditioning and minor process construction contracts to Tec Plus Ltd.
HVAC maintain that once those contracts were sub-contracted to Tec Plus Ltd, HVAC ceased ‘active’ trading in air conditioning and minor process construction projects. All records and files (including historical) were transferred to Tec Plus Ltd and the associated employee positions were terminated.
On 7 July 2005, HVAC converted to a proprietary company limited by shares and its name was changed to ‘HVAC Construction Pty Ltd’.
On 22 September 2005, HVAC changed its name to ‘ACN 009 298 686 Pty Ltd’.
HVAC was placed into voluntary liquidation on 22 December 2005.
Messrs Francis and Ryan of Taylor Woodings, Accountants practicing in the area of insolvency and corporate recovery have been appointed as joint and several liquidators of the tenth respondent.
On 7 March 2006, the Court granted the applicant leave to proceed with the proceeding against the tenth respondent.
On 6 June 2006, the Court granted the applicant leave to change the name of the tenth respondent to ACN 009 298 686 Pty Ltd (formerly HVAC Construction Ltd).
By letter dated 22 September 2006 to the Court, Mr Francis advised that he was unable to enter a plea on behalf of the tenth respondent. The applicant was subsequently advised by Taylor Woodings that the liquidator would neither consent to nor oppose the orders sought by the applicant. It remains the situation that the liquidator does not consent nor oppose the orders sought by the applicant.
By letter dated 21 May 2007, the liquidator of the tenth respondent advised the solicitors for the applicant that he consented to the proceeding being conducted ‘on the papers’.
By letter dated 23 May 2007, the liquidator of the tenth respondent advised the solicitors for the applicant that that respondent consented to the issues raised in point 7, 8 and 9 of a letter to the tenth respondent from the solicitors of the applicant dated 19 April 2007. Those points read as follows:
‘7In addition, we consider that there are issues which should not on any view be contentious and which we suggest can appropriately be the subject of agreement. These matters, such as:
·whether HVAC was a tenderer for a particular project,
·who its representative was,
·when the tender occurred, HVAC’s tender price,
·the identity of the other tenderers; and
·whether HVAC was successful tenderer
are ‘ancillary’ in nature and do not go to the heart of whether there was a contravention.
8We have prepared a table, which is attached, which provides our evidence of some of these ancillary matters. This table was produced from the documents appearing in the List of Documents which were filed and served upon HVAC. This table also provides details as to whether the Court has made a declaration that a respondent made and/or gave effect to the arrangement for HVAC.
9If agreement can be reached in relation to the above by way of such issues being the subject of admissions the Court’s role can be limited to assessing whether arrangements or understandings existed, whether HVAC was a party, and if so, whether such arrangement or understanding gave rise to contraventions of s45 of the Trade Practices Act. Such agreement will also minimise (or potentially eliminate) the need for the making of orders in relation to discovery, which if such orders are made will give rise to both parties incurring legal costs in circumstances where such costs may be otherwise minimised or avoided.’
The applicant has brought to the Court the following:
·Submissions filed 5 July 2007;
·Outline of legal principles applicable to various forms of relief filed on 5 July 2007;
·Minute of proposed orders with respect to the tenth respondent filed on 5 July 2007;
·Affidavit of Mr Beigel sworn and filed on 5 July 2007; and
·Affidavit of Mr Beigel sworn on 2 July 2007 (four volumes).
The tenth respondent, through its liquidator, has filed the affidavit of Mr Francis sworn on 28 June 2007 and filed on 29 June 2007.
Conduct
During the period from June 1995 and continuing up to about January 2003, HVAC:
1.made or arrived at twenty-four (24) Miscellaneous Arrangements or Understandings and gave effect to a provision or provision of each of them. However, nine (9) of the Miscellaneous Arrangements or Understandings were made or arrived at and given effect to more than six (6) years prior to HVAC being added as a party to the respondents (s 77(2) of the Act) and consequently no penalty may be imposed in respect of that conduct as it preceded December 1998.
2.made or arrived at five (5) AMCA Members Arrangements or Understandings and Subsequent AMCA Members Arrangements or Understandings and gave effect to them by making thirty (30) Table Arrangements or Understandings.However, three (3) of the AMCA Members Arrangements or Understandings were made or arrived at and given effect to more than six (6) years prior to the HVAC being added as a party to the respondents (s 77(2) of the Act) and consequently no penalty may be imposed in respect of that conduct as it preceded December 1998.
3.made or arrived at thirty (30) Table Arrangements or Understandings and gave effect to a provision or provisions of each of them.However, eight (8) of the Table Arrangements or Understandings were made or arrived at and given effect to more than six (6) years prior to the HVAC being added as a party to the respondents (s 77(2) of the Act), and consequently no penalty may be imposed in respect of that conduct as it preceded December 1998.
4.made or arrived at each of the Esplanade Hotel Convention Centre Arrangement or Understanding, the Harbour Town Arrangement or Understanding and the ABC Perth Arrangement or Understanding.
Contraventions
HVAC does not dispute or oppose the conduct admitted by its directors, servants or agents, namely Messrs Lewis, Ballantyne and McLeod on its behalf in relation to the arrangements or understandings referred and declared by the Court, constituted conduct by HVAC in contravention of s 45(2) of the Act which are detailed below.
Declarations
It is appropriate for the Court to exercise its discretion to make the proposed declarations because there are sufficient consequences flowing from the making of such declarations as:
1.this is a case involving the public interest such that the declarations will serve to vindicate the applicant’s claim that HVAC contravened or were directly or indirectly knowingly concerned in, or party to, contraventions of the Act, and may be of some assistance to it in future in carrying out the duties which are conferred upon it by the Act; and
2.the declarations will serve to mark the Court’s disapproval of particular conduct engaged in contravention of the Act (Tobacco Institute (No 2) 41 FCR 89 at 268).
Costs
It is appropriate for costs to be awarded in the proposed amount.
Pecuniary penalty
Following consideration of the factors and circumstances referred to in these submissions, the applicant submits that the appropriate pecuniary penalty to be paid by HVAC is $2 740 000.
The nature of the contravening conduct
This has been set out above.
The amount of loss or damage caused
As with the other respondents it is not known what the tender prices would have been in the absence of the arrangements or understandings, and it is therefore difficult to quantify the loss or damage caused by the Designated Tenderer Arrangements or Understandings.
The circumstances of the alleged contravention
The Designated Tenderer Arrangements or Understandings occurred frequently and once the AMCA Members Arrangements or Understandings were made or arrived at, they became more organised. The making of designated tenderer arrangements or understandings followed an established pattern of conduct that had been ongoing in the industry for a considerable period of time. The advent of the AMCA Members Arrangements or Understandings underlined how entrenched this conduct had become in the air conditioning industry.
The development of the AMCA Members Arrangements or Understandings resulted in an increase in the regularity of the conduct and the development of methods to best identify the projects for which designated tenderer arrangements or understandings could be made. Through its representatives, HVAC attended the Unofficial AMCA meetings pursuant to the AMCA Members Arrangements or Understandings from the inception of the AMCA Group in 1997 until meetings ceased in May 2003, following the intervention of the applicant. HVAC was a long standing and influential participant in these collusive arrangements.
Projects falling outside the scope of the AMCA Members Arrangements or Understandings were, from time to time, the subject of Miscellaneous Arrangements or Understandings.
Most if not all of the ‘major players’ (that is, larger contractors) in the market, were at one time or another, involved in the conduct. As a consequence, it was easier to make arrangements or understandings, as there were comparatively few situations where non-participating companies would be found on tender lists. HVAC was a ‘major player’ being one of the ‘big six’ participants.
The market was at all material times very price-sensitive. At this time, owners and builders were particularly aggressive in seeking reductions in tender prices. Consequently, this conduct was designed to directly circumvent those efforts and reduce the competitive pressures on price.
The conduct was widespread and entrenched in the industry, with all of the major contractors having been involved for some or all of the period.
The size of the contravening company and financial position of the contravening company
HVAC was subsidiary of HVAC Ltd, prior to being placed in liquidation. HVAC Ltd describes itself as a process, steel fabrication, construction and maintenance solutions provider, having successfully completed 2550 projects. HVAC Ltd has clients around Australia and claims to have sales in excess of $35 000 000 a year. HVAC Ltd currently employs about 110 employees.
The turnover of HVAC was as follows:
1.1996-1997      $8 151 000
2.1997-1998      $15 508 000
3.1998-1999      $9 472 000
4.1999-2000      $13 989 000
5.2000-2001      $6 082 000
6.2001-2002      $8 332 000
7.2002-2003      $7 191 000
The degree of power
It is estimated that at the relevant time the average annual turnover for commercial and industrial air conditioning and mechanical services in Western Australia was $120m to $150m. HVAC held approximately 9 per cent of the total market in Western Australia during the relevant period of time.
The deliberateness of the contravention and period it extended
The conduct was deliberate and undertaken voluntarily with the understanding that it was illegal. The parties (including HVAC) intentionally kept the conduct secret from the owners and builders who put the projects to tender.
HVAC was involved in the collusion conduct for a period between 1998 and 2003.
Whether contraventions by senior management or lower level
The contraventions of HVAC occurred as the result of the conduct of Messrs Tucker, Lewis, Ballantyne and McLeod who were its directors, servants or agents.
Parity principle
The relative ranking tables show HVAC is 3 of 12 for all arrangements and 1 of 15 for total value.
Deterrence
The conduct as a whole has been widespread and entrenched, involving contractors supplying the bulk of the commercial and industrial air conditioning services in Perth. For that reason it is important for significant penalties to be awarded in order to deter the contractors from engaging in the conduct in future.
Capacity to pay
The issue of capacity to pay is, although a relevant factor, of less relevance when balanced against the necessity of imposing a penalty that satisfies the objective of general deterrence.
The appropriate range
In this case, the applicant submits a penalty of $2 740 000 to the Court for its approval as being within an appropriate range for HVAC in all the circumstances.
Penalties over $2 million have been set against companies in situations of blatant cartelisation of a market (for example, see ABB Power Transmission (2004) ATPR 42-011; Roche Vitamins Australia (2001) ATPR 41-809; CSR Ltd (1991) ATPR 41-076; Pioneer Concrete (1985) ATPR 40-590 and TNT Australia (1995) ATPR 41-375 and associated cases (known as the Transformers, Vitamins, Concrete and Express Freight cartels respectively), repeat contraventions, and where the company was otherwise a very large company which acted as a clear ring leader (eg Tyco (2000) ATPR 41-740 and associated Tyco cases (the Queensland Fire Protection Case).
The applicant states there are a number of other penalty decisions which provide a guide as to the applicable range in this instance. For example:
1.as noted above, Tyco (2000) ATPR 41-740 and associated Tyco cases (the Queensland Fire Protection Case) with a penalty of $1.4 million;
2.in another recent decision, Midland Brick Co (2004) 207 ALR 329, a penalty of $1 million was awarded against a company. The Court set the $1 million penalty having regard to several factors including the need for the penalty to act as a deterrent but not be so high as to be oppressive, the co-operation of the parties with the applicant, the absence of evidence of any loss and the revenue of the company. In this case, unlike HVAC, the two colluding parties had a monopoly on the product so there was no alternative supplier. The estimated annual revenue for the company was approximately $53 million -$58.5 million. The penalty was imposed for two contraventions of s 45(2)(a)(ii) of the Act (much fewer than is the case here) and there was no allegation against the relevant company of a provision of the relevant arrangement or understanding being given effect to; and
3.other cases with penalties within this range include Tubemakers of Australia [2000] FCA 227; Safeway Stores 75 FCR 238 and George Weston (2000) ATPR 41-763.
Accordingly, it is submitted to the Court that the proposed penalty of $2 740 000 for HVAC is within the appropriate range.
HVAC has the highest total value ($69m) by a wide margin (the next being Envar at $57m). It engaged in 40 collusive jobs. It cannot be said that the proposed starting point of $2.74m, when considered in relation to DES, is beyond range. No discount is proposed and there are no circumstances apparent to make that inappropriate. HVAC is a large corporation which had 9% of the total market. The impact on that market of the arrangements to the top value in issue can only have been considerable, taking into account also the length of the engagement in the market in that respect. A penalty of $2 740 000 is appropriate in this instance when the matters going to the seriousness of the conduct referred are considered.
As the evidence is that HVAC has gone into liquidation, no purpose would be served by consideration of payment by instalments.
PART 8: OTHER INDIVIDUALS
RESPONDENT 25: MR REDFERN
Between December 1996 and November 1999, Mr Redfern was the Construction Manager of Environ/T O’Connor and the State Manager of Tyco Australia and from November 1999 to January 2007 he was the director and a shareholder of CMS.
Mr Redfern’s conduct consisted of participating in telephone calls, attending meetings and committing Environ/T O’Connor, Tyco Australia and CMS at the relevant times, to make or arrive at and give effect to all of the above arrangements or understandings. Mr Redfern’s involvement in the alleged conduct began from June 1997 and lasted until about May 2003.
The following table sets out the value of the ‘designated tenderer’ arrangements or understandings that Mr Redfern made or arrived at on behalf of T O’Connor and CMS during the penalty period:

Arrangement or Understanding Type No. of Projects Total value No. selected as DT No. won as DT Total value of projects won

Total 25 $23 320 036 12 7 $6 686 645
Declarations and injunctions

The parties agreed to the declarations and injunctions to be imposed upon Mr Redfern and submitted their proposal in a minute of consent orders. These orders sought were made on 13 June 2007.
Costs
The parties also agreed that Mr Redfern should pay the applicant’s costs in the amount of five thousand dollars ($5000). This order was also made.
Pecuniary penalty
The applicant and Mr Redfern reached an agreement as to the pecuniary penalty to be submitted to the Court for its approval. The parties submitted that the penalty sought was within the appropriate range in all the circumstances.
The applicant and Mr Redfern agreed that the appropriate penalty to be imposed was forty five thousand dollars ($45 000).
Parity
As regards Mr Redfern’s comparative level of involvement in the conduct, it is noted that Mr Redfern was not the only individual who participated on behalf of Environ/T O’Connor, Tyco Australia and CMS at the relevant times, and that Mr Jones was also involved. The relativity tables show he was 5 out of 16 for all arrangements and 6 out of 19 for total value.
Whether contraventions by senior management or lower level
Mr Redfern was one of the most senior managers at Environ/T O’Connor, Tyco Australia and CMS and had significant control over these companies’ operations in Western Australia at the relevant times.
Co-operation
Mr Redfern has co-operated with the applicant’s investigation admitting his liability and has saved the parties and the Court the substantial time and expense associated with a contested hearing.
Past conduct
Mr Redfern has not previously been the subject of previous proceedings in respect of Part IV of the Act. Mr Redfern has also never been charged with, or convicted of, a criminal offence, or prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty.
Determination of pecuniary penalty
Having considered the circumstances I was of the view that the agreed pecuniary penalty is within the appropriate range and made the order accordingly.
RESPONDENT 30: MR ROCHE
Mr Roche worked as an estimator for the ninth respondent (Haden Engineering Pty Ltd) in Western Australia from 1985-1995, he then became the State Manager for the Building Services Division from 1996-2000. Mr Roche’s job as an estimator for Haden was to prepare estimates for expressions of interest and requests for quotes or tenders. It is agreed between the parties that on any occasion that Mr Roche acted on behalf of Haden he also acted in accordance with Haden’s instructions, which I take to be a reference to the instructions of more senior management within the company.
Mr Roche’s conduct consisted of participating in telephone calls, attending meetings and committing Haden to making or arriving at and giving effect to the above arrangements or understandings.

The following table sets out the value of the ‘designated tenderer’ arrangements or understandings that Mr Roche made or arrived at and/or gave effect to on behalf of Haden during the penalty period:

Arrangement or Understanding Type No of projects Total Value No selected as DT No won as DT Total value of projects won

Total 7 $17 730 538 1 1 $2 835 403
Declaration and injunctions

The parties have consented to orders for declarations and injunctions against Mr Roche. I consider that it is appropriate for these orders to be made.
Pecuniary penalty
The applicant is seeking the imposition of $28 000 as a pecuniary penalty against Mr Roche for these contraventions. The respondent claims that a penalty of no more than $5250 should be imposed upon Mr Roche.
Financial position
Mr Roche’s gross income is $78 900 plus a car allowance of $15 000.
Mr Roche owns:
(a)50 per cent of the family home (in joint ownership with his wife). The family home is valued at approximately $690 000;
(b)a 50 per cent share (in joint ownership with his wife) of a share portfolio with an approximate current value of $150 000; and
(c)a 2006 Holden Calais motor vehicle with an approximate value of $30 000.
Mr Roche’s liabilities comprise a 50 per cent share (with his wife) of the outstanding negative balance of the National Australia Bank Home Equity facility which stands at approximately $250 000.
Mr Roche is also responsible for a 19 year old son who is a full-time student at The University of Western Australia undertaking an engineering/commerce degree.
Parity
The relativity tables show Mr Roche as 13 of 16 for all arrangements and 9 of 19 for total value.
The applicant claims in regards to Mr Roche’s comparative level of involvement in the conduct that he was the only individual who participated on behalf of Haden. I note that Mr Roche alludes in his affidavit, to which there was no objection, that his predecessor had knowledge and involvement in past collusive arrangements.
Mr Roche’s counsel also submitted that if Mr Roche had remained an employee of Haden (he was made redundant for reasons other than his part in the TPA contraventions) he would have received the same leniency from the applicant that applies to Haden and its senior management. In this regard it was also noted that Mr Roche was only involved in 7 of the 13 collusive transactions of Haden over a period of marginally less than 12 months, Haden having been involved since at least June 1995.
Mr Roche also states that he was only an employee and not a senior manager of Haden and should therefore have a pecuniary penalty commensurate with other respondents who were merely employees. This issue will be discussed in more detail below.
The deliberateness of the contravention and period it extended
The applicant claims that the conduct was deliberate and undertaken voluntarily with the understanding that it was illegal. Mr Roche intentionally kept the conduct secret from the owners and builders who put the projects to tender. Mr Roche also notes himself that he was initially uncomfortable with what was being asked of him by the other contractors, demonstrating his knowledge of at least the possibility of illegality.
As has been previously noted it was understood between all of the participants that the meetings and the existence of the arrangements or understandings were secret and should not be revealed to anyone outside the group. There were regular communications with competitors for the purpose of making or arriving at, and giving effect to, those arrangements or understandings.
Whether contraventions by senior management or lower level
The applicant submitted that Mr Roche was one of Haden’s most senior officers in the relevant market, being Western Australia. At all relevant times Mr Roche had significant control over Haden’s relevant operations in Western Australia.
Mr Roche’s counsel stressed that Mr Roche was not a principal of Haden and was merely an employee on a salary. It was also submitted that no benefit was gained by Mr Roche from the collusive conduct of Haden and that Mr Roche should be considered an employee because he was in essence just following the instructions of the head office in NSW and did not have the freedom ordinarily held by a manager.
Mr Roche in his affidavit claimed that pressure was applied to him by the Head Manager in NSW to commit Haden to the collusive arrangements; being newly appointed to the position of manager in WA Mr Roche considered that his position was tenuous if he did not comply with the demands of the NSW Manager. The suggestion being that Mr Roche was under duress when he engaged in the infringing conduct.
In my view it is the case that Mr Roche was the senior relevant manager in Western Australia. He chose to follow instructions from head office rather than decline to act if he thought the conduct was illegal. The responsibility cannot be avoided by him by pleading he acted under orders.
Co-operation
Mr Roche has co-operated with the applicant’s investigation admitting his liability and has saved the parties and the Court the substantial time and expense associated with a contested hearing.
Past conduct
Mr Roche has not previously been the subject of previous proceedings in respect of Part IV of the Act.
Determination of the pecuniary penalty
The person immediately above Mr Roche in ranking of total value was Mr Redfern at $23m. He, with engagement in 25 arrangements, has a pecuniary penalty of $45 000. Immediately below Mr Roche in the same table was Mr Allen at $15m total value. His pecuniary penalty was $25 000. These considerations, viewed in the context of all relevant circumstances, would support a penalty in the range sought by the applicant.
However, Mr Roche was with Haden, as to which the Court has not received any submissions. The Court has been told that Haden will be the beneficiary of leniency, with no pecuniary penalty being sought. If that is the case it is difficult to see why a person such as Mr Roche acting on behalf of Haden and at its instruction would not also be the beneficiary of leniency. While Mr Roche may not have been with Haden as a manager or employee at the time of Haden’s co-operation, the action taken by Haden to co-operate could arguably accrue to all persons engaged in the making of the arrangements to which the co-operation related. Therefore I hold over the position of Mr Roche for consideration when submissions are available concerning Haden and relating specifically to why, if that is the case, the Court should not take into account the application of leniency to Haden in fixing a pecuniary penalty for Mr Roche.
RESPONDENT 31: MR BALLANTYNE
Mr Ballantyne on behalf of HVAC, on two (2) occasions between October 1998 and November 2000, and the representatives of the other corporate respondents which had been invited to tender for the projects, met with each other and/or spoke by telephone to discuss each project and to see if they could make or arrive at, in relation to the tenders they would be submitting for each project, a Miscellaneous Arrangement or Understanding.
Mr Ballantyne admitted that in relation to the Parmelia Hilton and Perth Concert Hall projects he made or arrived at the Miscellaneous Arrangement or Understanding relating to those projects on behalf of HVAC.
The relativity tables show Mr Ballantyne as 16 of 16 for all arrangements and 19 of 19 for total value.
The applicant and Mr Ballantyne filed a minute of proposed consent orders in relation to declarations, injunctions, pecuniary penalties and costs. At the time of filing the consent documents Mr Ballantyne was 44 years old, in reasonably good health and there was no reason why his earning capacity would be negatively affected in the future.
Upon consideration of the factors and circumstances referred to I agreed with the parties’ proposal that the appropriate pecuniary penalty should be $3500. This amount included a ‘discount’ of approximately 30 per cent to reflect and acknowledge the cooperation of Mr Ballantyne with the applicant and the saving in time and expense to the applicant and the Court in avoiding the need for a contested hearing in relation to liability.
The consent orders were made on 15 February 2006.
RESPONDENT 32: MR LEWIS
In relation to Centigrade
Mr Lewis was:
1.from March 1998 until November 1999 employed as the Business Development Manager of Centigrade; and
2.from March 1998 until November 1999, acting within the scope of his actual or apparent authority as a director, servant or agent of Centigrade in respect of his conduct alleged herein.
In May of 1999, Centigrade, through the conduct of Mr Lewis, made or arrived at two (2) Miscellaneous Arrangements or Understandings and gave effect to each of them.
In relation to HVAC
Mr Lewis was:
1.from June 1994 until March 1998, employed as the General Manager of HVAC; and
2.from June 1994 until March 1998, acting within the scope of his actual or apparent authority as a director, servant or agent of HVAC in respect of his conduct alleged herein.
Between December 1996 and June 1997, HVAC, through the conduct of Mr Lewis made or arrived at:
1.two (2) Miscellaneous Arrangements or Understandings and gave effect to each of them; and
2.four (4) Table Arrangements or Understandings and gave effect to each of them.
Conduct on behalf of Centigrade
Mr Lewis admitted that in relation to the Belmont Cinemas project and the ECU Science and Thermal project, he made or arrived at the Miscellaneous Arrangement or Understanding relating to those projects on behalf of Centigrade.
Conduct on behalf of HVAC
Miscellaneous Arrangements or Understandings
Mr Lewis admitted that in relation to the Subiaco Railway Tunnel and Station Project and Lakeside Cinemas project, he made or arrived at the Miscellaneous Arrangement or Understanding relating to that project on behalf of HVAC.
Table Arrangements or Understandings
Mr Lewis also admitted that in relation to the Bunbury Centre Point Shopping Centre, the Park Royal Extensions, the Kalgoorlie Boulder Airport and the Dogswamp Shopping Centre that he made or arrived at the Table Arrangement or Understanding relating to those projects on behalf of HVAC.
The relativity tables state Mr Lewis was 16 of 16 for all arrangements and 12 of 19 for total value.
The applicant and Mr Lewis filed a minute of proposed consent orders in relation to declarations, injunctions, pecuniary penalties and costs.
Mr Lewis had been employed on a contract by contract basis for the preceding 4 years, his employment could thus be described as uncertain in some respects, he was employed by a labour agency at the time of the filing of the documents. Mr Lewis’s annual income was $63 400 and his wife’s annual income is approximately $50 000. They have annual living costs in the order of $108 000 and a net value of assets of $655 750. Mr Lewis also has two young adult dependants that are studying.
After consideration of these factors I agreed with the parties that the appropriate penalty was $5250. This amount included a ‘discount’ of approximately 30 per cent to reflect and acknowledge the cooperation of Mr Lewis with the applicant and the saving in time and expense to the applicant and the Court in avoiding the need for a contested hearing in relation to liability.
The orders for declaration, injunctions and costs were made on 31 January 2006. The order for penalty was made on 23 February 2006.
RESPONDENT 33: MR MCLEOD
In relation to MPM
Mr McLeod was:
1.from July 1996 until August 2000, employed as an engineer and project manager at MPM;
2.from 4 June 1998 until 28 June 2000, a director of MPM; and
3.from July 1996 until August 2000, acting within the scope of his actual or apparent authority as a director, servant or agent of MPM in respect of his conduct alleged herein.
In October of 1998, MPM, through the conduct of Mr McLeod, gave effect to a provision or provisions of one (1) Miscellaneous Arrangement or Understanding.
In October 1997, MPM, through the conduct of Mr McLeod, gave effect to a provision or provisions of one (1) Table Arrangement or Understanding.
In relation to HVAC
Mr McLeod was:
1.from September 2000 until June 2003, employed as a project manager at HVAC; and
2.from September 2000 until June 2003, acting within the scope of his actual or apparent authority as a servant or agent of HVAC in respect of his conduct alleged herein.
In or about October 2003, HVAC, through the conduct of Mr McLeod, gave effect to a provision or provisions of one (1) Table Arrangement or Understanding.
Conduct on behalf of MPM
Miscellaneous Arrangement or Understanding
Mr McLeod admitted that in relation to the Perth Concert Hall project that he made or arrived at the Miscellaneous Arrangement or Understanding relating to that project on behalf of MPM.
Table Arrangements or Understandings
Mr McLeod admitted that in relation to the Whitford City Shopping Centre Tenancies - Stage 2 project that he made or arrived at the Table Arrangement or Understanding relating to that project on behalf of MPM.
Conduct on behalf of HVAC
Table Arrangements or Understandings
Mr McLeod admitted that in relation to the BCMS & VAV Upgrade project that he made or arrived at the Table Arrangement or Understanding relating to that project on behalf of HVAC.
The relativity tables show Mr McLeod as 16 of 16 for all arrangements and 18 of 19 for total value.
Mr McLeod was one of HVAC’s more senior officers. At all relevant times Mr McLeod had significant input and influence over HVAC’s operations in Western Australia.
Mr McLeod’s total gross assets (including assets shared with his wife) is $1 079 250. The annual income of the McLeod household is $105 936 with the annual estimated expenditure being $99 036. Mr McLeod has two dependent children. Mr McLeod’s affidavit sets out the circumstances of his contravening conduct and the results that have flowed from his involvement with the respondent companies.
The applicant and Mr McLeod filed a minute of proposed consent orders in relation to declarations, injunctions, pecuniary penalties and costs. The parties agreed on $3,500 as the pecuniary penalty for Mr McLeod.
I considered the minute in the light of the parties’ joint submissions and I formed the view that the orders, and in particular the penalty sought, was within the appropriate range and were consistent with Mr McLeod’s conduct. The orders were made on 29 August 2006.

I certify that the preceding five hundred and sixty one (561) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.
Associate:
Dated: 25 July 2007

Counsel for the Applicant: Mr S Owen-Conway QC with
Mr N Gvozdin

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the 7^th, 26^th and 27^th Respondents: Mr J Beach QC w Mr C McLeod

Solicitor for the 7^th, 26^th and 27^th Respondents: Deacons

Counsel for the 8^th, 28^th and 29^th Respondents: Mr J Hammond

Solicitor for the 8^th, 28^th and 29^th Respondents: Hammond Worthington

Counsel for the 16^th and 39^th Respondents: Mr HA Atlas

Counsel for the 16^th and 39^th Respondents: Atlas Legal

Counsel for the 1^st and 18^th Respondents: Mr GA Rabe

Solicitor for the 1^st and 18^th Respondents: Williams Ellison

Counsel for the 5^th and 23^rd Respondents: Mr P Tottle w Ms Y Fang

Solicitor for the 5^th and 23^rd Respondents: Tottle Partners

Counsel for the 15^th, 37^th and 38^th Respondents: Mr L Margaretic

Solicitor for the 15^th, 37^th and 38^th Respondents: Havilah & Associates

Counsel for the 32^nd Respondent: Mr N Friedman

Solicitor for the 32^nd Respondent: Friedman Lurie Singh & D'Angelo

Counsel for the 31^st Respondent: Mr N Friedman

Solicitor for the 31^st Respondent: Friedman Lurie Singh & D'Angelo

Counsel for the 13^th, 35^th and 36^th Respondents: Mr C Colvin SC

Solicitor for the 13^th, 35^th and 36^th Respondents: Clayton Utz

Counsel for the 12^th and 20^th Respondents: Mr A Metaxas

Solicitor for the 12^th and 20^th Respondents:

Arthur Metaxas & Co

Counsel for the 11^th and 34^th Respondents: Mr G H Murphy with Mr K J Murphy

Solicitor for the 11^th and 34^th Respondents:

Murfett & Co

Counsel for the 6^th and 24^th Respondents:

Mr M J McPhee

Solicitor for the 6^th and 24^th Respondents:

Michell Sillar McPhee

Counsel for the 30^th Respondent:

Mr S C Scott

Solicitor for the 30^th Respondent:

Stables Scott

Dates of Hearing: 8 - 10 August 2005, 12-13 December 2005, 15 February 2006, 26 April 2006, 7 June 2006, 19 September 2006 & 14 May 2007.

Date of Judgment: 25 July 2007

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 289 OF 2004

JUDGE:	NICHOLSON J
DATE OF ORDER:	25 JULY 2007
WHERE MADE:	PERTH

RELEVANT STATUTORY PROVISIONS	4
Source of contraventions	4
Penalties	4
Declarations	6
Injunctions	6
COURT’S APPROACH TO AGREEMENTS ON PECUNIARY PENALTIES	7
NATURE OF THE MARKET	10
NATURE OF THE ARRANGEMENTS AND UNDERSTANDINGS	10
COMPARATIVE POSITION OF RESPONDENTS	12
PART 1: NO PECUNIARY PENALTY SOUGHT	15
RESPONDENTS 8, 28 AND 29: ENVAR ENGINEERS AND CONTRACTORS PTY LTD (ENVAR), AND MESSRS BURMAZ AND HEALEY	15
PART 2: PECUNIARY PENALTY BELOW $100 000	17
RESPONDENTS 1 AND 18: ADMIRAL MECHANICAL SERVICES PTY LTD (ADMIRAL) AND MR NELSON	17
Pecuniary Penalty	20
RESPONDENTS 15, 37 AND 38: RALIE PTY LTD AND MESSRS MOORE AND BROADLEY	22
Costs	23
Pecuniary penalty	24
RESPONDENTS 16 AND 39: SCOTT MECHANICAL SERVICES PTY LTD (SCOTT MECHANICAL) AND MR SCOTT	28
Pecuniary penalties	30
PART 3: PECUNIARY PENALTY ABOVE $200 000	36
RESPONDENTS 2, 3 AND 19: AMEC AUSTRALIA PTY LTD, AMEC ENGINEERING PTY LTD AND MR BARRIE	36
Costs	37
Pecuniary penalty	37
RESPONDENTS 12 AND 20: LL NOMINEES PTY LTD AND MR BLINCO	42
Declarations, injunctions, costs and compliance	44
Pecuniary Penalties	45
PART 4: PECUNIARY PENALTY ABOVE $400 000	50
RESPONDENTS 6 AND 24: CMS ENGINEERING AND MR JONES	50
Pecuniary penalties	52
PART 5: PECUNIARY PENALTY ABOVE $500 000	57
RESPONDENTS 11 AND 34: JAKO INDUSTRIES PTY LTD AND MR JAKOVICH	57
Pecuniary penalties	58
PARTt 6: PECUNIARY PENALTY ABOVE $1 MILLION	65
RESPONDENTS 5 AND 23: CENTIGRADE WA PTY LTD (CENTIGRADE) AND MR SMITH	65
Pecuniary penalty	66
RESPONDENTS 7, 26 AND 27: DIRECT ENGINEERING SERVICES PTY LTD (DES) AND MESSRS ALLEN AND HENNY	73
Pecuniary penalties	74
RESPONDENTS 13, 35 AND 36: MECHANICAL PROJECT MANAGEMENT PTY LTD (MPM) AND MESSRS PIERCE AND FERGUSON	83
Declarations	88
Injunctions	90
Costs	90
Pecuniary Penalties	91
PART 7: PECUNIARY PENALTY ABOVE $2 MILLION	102
RESPONDENT 10: ACN 009 298 686 PTY LTD (FORMERLY HVAC CONSTRUCTION LIMITED) (‘HVAC’)	102
Conduct	104
Contraventions	105
Declarations	105
Costs	105
Pecuniary penalty	106
PART 8: OTHER INDIVIDUALS	111
RESPONDENT 25: MR REDFERN	111
Declarations and injunctions	111
Costs	111
Pecuniary penalty	111
RESPONDENT 30: MR ROCHE	113
Declaration and injunctions	113
Pecuniary penalty	113
RESPONDENT 31: MR BALLANTYNE	116
RESPONDENT 32: MR LEWIS	117
In relation to Centigrade	117
In relation to HVAC	118
Conduct on behalf of Centigrade	118
Conduct on behalf of HVAC	118
RESPONDENT 33: MR MCLEOD	119
In relation to MPM	119
In relation to HVAC	120
Conduct on behalf of MPM	120
Conduct on behalf of HVAC	121

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 289 OF 2004

JUDGE:	NICHOLSON J
DATE:	25 JULY 2007
PLACE:	PERTH

Relative Ranking in terms of all Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.				Relative Ranking in terms of total Value of All Arrangements or Understandings made or arrived at (ie Miscellaneous, Table, HJ/KFC, DSA, Bottom Line and Floreat Forum) during the penalty period.
Ranking	Respondent	Resp No.	Total No. of Collusive Jobs	Ranking	Respondent	Resp No	Total Value of Collusive Jobs
1	Centigrade	5^th	59	1	HVAC	10^th	$69 925 870
2	Envar	8^th	41	2	Envar	8^th	$57 237 837
3	HVAC	10^th	40	3	Centigrade	5^th	$56 282 449
3	MPM	13^th	40	4	DES	7^th	$48 088 600
4	Jako	11^th	30	5	MPM	13^th	$42 379 515
4	DES	7^th	30	6	Jako	11^th	$29 767 565
5	CMS	6^th	20	7	Haden	9^th	$21 983 754
6	Scott Mechanical	16^th	14	8	Tyco / T O'Connor	17^th	$21 733 176
7	Haden	9^th	12	9	Tyco / Designair	17^th	$20 420 589
8	Tyco/ T O'Connor	17^th	11	10	AMEC Engineering	3^rd	$6 662 760
8	Tyco / Designair	17^th	11	11	CMS	6^th	$6 311 532
9	LL Noms/Mech Const	12^th	10	12	LL Noms/ Mech Const	12^th	$6 295 603
10	Ralie	15^th	6	13	Scott Mechanical	16^th	$3 063 161
11	Admiral Mechanical	1^st	5	14	Admiral Mechanical	1^st	$1 977 850
12	AMEC Engineering	3^rd	2	15	Ralie	15^th	$1 288 568

2003	2004
Turnover	$11 041 957	$12 564 494
Net Profit Before Tax	$134 362	$25 604
Per cent of Market Share	7.3 per cent	8.4 per cent
Net Assets	$420 335	$350 560
No. of employees	29	30

Year	Turnover	Net profit	Net Assets
2000/2001	$2.84m	($67 000)	$48 941
2001/2002	$3 208 574	$49 501	$98 442
2002/2003	$2 279 036	$13 885	$119 626
2003/2004	$2 099 473	($13 420)	$71 206

Year	Taxable Income
Mr Nelson	Shari Nelson
1998	$20 924	$20 700
1999	$31 826	$31 926
2000	$38 470	$38 223
2001	$39 096	$35 639
2002	$37 096	$31 207
2003	$27 696	$27 696
2004	$27 696	$27 696

Year ended 30 June	Total Income	Profit Before Tax	Assets	Liabilities	Net Assets
2003	$111 3107	($139 982)	$323 828	$360 684	($36 856)
2002	$2 219 157	$5 219	$706 943	$603 817	$103 126
2001	$2 111 808	($58 538)	$704 173	$606 266	$97 907
2000	$1 903 445	($33 141)	$508 813	$209 716	$158 445

Year ending	Total Income*	Total Profit/loss*	Assets	Liabilities	Net Assets
30 June 1999	$340 180	$27 288 (L)	$535 378	$150 994	$384 384
30 June 2000	$141 499	$38 005 (L)	$458 334	$143 358	$314 976
30 June 2001	$168 115	$21 066 (L)	$350 382	$118 804	$213 578
30 June 2002	$164 833	$44 024 (L)	$441 856	$166 256	$275 600
30 June 2003	$128 959	$17 223	$341 501	$48 677	$292 824

Total Projects
Arrangement or Understanding Type	Made	Gave effect	Total value	Won as the DT	Total value of projects won
Misc	2	2	$365 621	Nil	Nil
DSA	7	5 (1 project halted)	$2 250 253	1	$1 065 185
HJ/KFC	5	4	$447 287	1	$85 140
Total	14	11	$3 063 161	2	$1 150 325

Year ending	Total Income	Total Profit/loss	Assets	Liabilities	Net Assets
30 June 1999	$340 180	$27 288 (L)	$535 378	$150 994	$384 384
30 June 2000	$141 499	$38 005 (L)	$458 334	$143 358	$314 976
30 June 2001	$168 115	$21 066 (L)	$350 382	$118 804	$213 578
30 June 2002	$164 833	$44 024 (L)	$441 856	$166 256	$275 600
30 June 2003	$128 959	$17 223	$341 501	$48 677	$292 824

*Arrangement or Understanding Type*	*No. of Projects*	*Total value*	*No. selected as DT*	*No. won as DT*	*Total value of projects won*
*Miscellaneous*	1	$6 229 760	0	0	$0
*Table*	1	$433 000	1	1	$433 000
*Total*	2	$6 662 760	1	1	$433 000

Arrangement or Understanding Type	No. of Projects	Total value	No. selected as DT	No. won as DT	Total value of projects won
Total	25	$23 320 036	12	7	$6 686 645

Arrangement or Understanding Type	No of projects	Total Value	No selected as DT	No won as DT	Total value of projects won
*Total*	7	$17 730 538	1	1	$2 835 403

Counsel for the Applicant:	Mr S Owen-Conway QC with Mr N Gvozdin
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the 7^th, 26^th and 27^th Respondents:	Mr J Beach QC w Mr C McLeod
Solicitor for the 7^th, 26^th and 27^th Respondents:	Deacons
Counsel for the 8^th, 28^th and 29^th Respondents:	Mr J Hammond
Solicitor for the 8^th, 28^th and 29^th Respondents:	Hammond Worthington
Counsel for the 16^th and 39^th Respondents:	Mr HA Atlas
Counsel for the 16^th and 39^th Respondents:	Atlas Legal
Counsel for the 1^st and 18^th Respondents:	Mr GA Rabe
Solicitor for the 1^st and 18^th Respondents:	Williams Ellison
Counsel for the 5^th and 23^rd Respondents:	Mr P Tottle w Ms Y Fang
Solicitor for the 5^th and 23^rd Respondents:	Tottle Partners
Counsel for the 15^th, 37^th and 38^th Respondents:	Mr L Margaretic
Solicitor for the 15^th, 37^th and 38^th Respondents:	Havilah & Associates
Counsel for the 32^nd Respondent:	Mr N Friedman
Solicitor for the 32^nd Respondent:	Friedman Lurie Singh & D'Angelo
Counsel for the 31^st Respondent:	Mr N Friedman
Solicitor for the 31^st Respondent:	Friedman Lurie Singh & D'Angelo
Counsel for the 13^th, 35^th and 36^th Respondents:	Mr C Colvin SC
Solicitor for the 13^th, 35^th and 36^th Respondents:	Clayton Utz
Counsel for the 12^th and 20^th Respondents:	Mr A Metaxas
Solicitor for the 12^th and 20^th Respondents:	Arthur Metaxas & Co
Counsel for the 11^th and 34^th Respondents:	Mr G H Murphy with Mr K J Murphy
Solicitor for the 11^th and 34^th Respondents:	Murfett & Co
Counsel for the 6^th and 24^th Respondents:	Mr M J McPhee
Solicitor for the 6^th and 24^th Respondents:	Michell Sillar McPhee
Counsel for the 30^th Respondent:	Mr S C Scott
Solicitor for the 30^th Respondent:	Stables Scott
Dates of Hearing:	8 - 10 August 2005, 12-13 December 2005, 15 February 2006, 26 April 2006, 7 June 2006, 19 September 2006 & 14 May 2007.
Date of Judgment:	25 July 2007