Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd
[1999] FCA 533
•30 APRIL 1999
FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v Amcor Printing Papers Group Ltd [1999] FCA 533
AUSTRALIAN COMPETITION & CONSUMER COMMISSION v AMCOR PRINTING PAPERS GROUP LIMITED & ORS
NG 1245 of 1998
JUDGE: SACKVILLE J
PLACE: SYDNEY
DATE: 30 APRIL 1999
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 1245 OF 1998
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND:
AMCOR PRINTING PAPERS GROUP LIMITED
First RespondentVISY PAPER PTY LTD
Second RespondentANTHONY NOTT
Third RespondentWILLIAM GUTHRIDGE
Fourth RespondentDAVID ROACH
Fifth RespondentJUDGE:
SACKVILLE J
DATE OF ORDER:
30 APRIL 1999
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The motion filed on 26 March 1999 by the first, third and fifth respondents be dismissed.
2.The applicant (“ACCC”) be given leave to file a further amended statement of claim in or substantially in the form of the pleading annexed to the ACCC’s motion filed on 28 April 1999.
3.The ACCC pay seventy-five per cent of the fifth respondent’s costs of the motion filed on 26 March 1999 and of the motion filed on 28 April 1999.
4.Subject to Order 3, the first and third respondents and the ACCC each bear its or his own costs of the motion filed on 26 March 1999.
5.The ACCC pay the costs (if any) of the first, third and fifth respondents thrown away by the filing of the amended statement of claim on 22 April 1999 and of the further amended statement of claim referred to in Order 2.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 1245 OF 1998
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND:
AMCOR PRINTING PAPERS GROUP LIMITED
RespondentVISY PAPER PTY LTD
Second RespondentANTHONY NOTT
Third RespondentWILLIAM GUTHRIDGE
Fourth RespondentDAVID ROACH
Fifth Respondent
JUDGE:
SACKVILLE J
DATE:
30 APRIL 1999
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The Proceedings
The applicant (“ACCC”) has instituted proceedings in which it alleges that the first respondent (“Amcor”) and the second respondent (“Visy”) made an arrangement that contained an exclusionary provision, in contravention of s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) (“TP Act”). The ACCC also alleges that Amcor contravened s 45(2)(b)(i) of the TP Act, by giving effect to the exclusionary provision.
In substance, the ACCC’s claim is that Amcor and Visy, each of which conducts a business of acquiring recyclable waste paper, agreed in July 1996 that Amcor should cease acquiring waste paper from the Flagstaff Group Ltd (“Flagstaff”), one of the main suppliers of recyclable waste paper in the Illawarra region. It is said that Amcor gave effect to the arrangement by ceasing its efforts to obtain recyclable waste paper from Flagstaff.
The ACCC has joined three individual respondents in the proceedings. At the relevant times, the third respondent (“Mr Nott”) was the General Manager, Export and Trading, of Amcor; the fourth respondent (“Mr Guthridge”) was the National General Manager of Visy; and the fifth respondent (“Mr Roach”) was the New South Wales State Sales Manager of Amcor. The ACCC alleges that, in various ways, the individual respondents were knowingly concerned in, or party to, one or more contraventions by Amcor and Visy of s 45(2)(a) or (b) of the TP Act.
On 26 March 1999, Amcor, Mr Nott and Mr Roach filed a motion seeking to strike out certain paragraphs of the statement of claim. To do this, they rely on Federal Court Rules (“FCR”), O 11, r 16.
In consequence of the filing of the motion, the ACCC sought and was granted leave to file an amended statement of claim. The amended statement of claim satisfied the concerns of Amcor and Mr Nott about the way in which the case had been pleaded against them. Accordingly, they have not persisted with their motion, except on the issue of costs.
Mr Roach, however, has taken the position that the ACCC’s amended statement of claim does not address satisfactorily the pleading defects identified by him. Mr Tonking filed written submissions on behalf of Mr Roach, which identified the principal defect in the amended statement of claim as being the failure to plead actual knowledge of the essential elements of the principal contravention, as required by the authorities: Yorke v Lucas (1985) 158 CLR 661, at 670.
Mr Roach’s written submissions prompted the ACCC to put forward a draft further amended statement of claim (“the draft statement of claim”) which (so it was said) addressed the concerns expressed in Mr Roach’s written submissions. The draft statement of claim was provided to Mr Roach’s legal representatives the day before the hearing of the motion was to take place.
At the hearing, Mr Tonking indicated that he wished to press the strike out application, although he accepted that attention should be focussed on the draft statement of claim, rather than the amended statement of claim that had been filed on 22 April 1999.
Mr Catterns QC, who appeared with Mr Kerr for the ACCC, ackowledged that, in these circumstances, the appropriate course was for the ACCC to seek leave to file the draft statement of claim. He foreshadowed that a motion to that effect would be filed. Mr Tonking agreed that this was the appropriate course and accordingly directed his submissions to the terms of the draft statement of claim.
As will be seen, in the course of the oral argument, the ACCC sought further to amend its draft statement of claim. Thus the ACCC’s motion, as ultimately filed, seeks leave to file a further amended statement of claim which I shall describe as “the second draft statement of claim”.
The Legislation
Section 45(2) of the TP Act relevantly provides as follows:
“A corporation shall not –
(a) make a contract or arrangement, or arrive at an understanding, if –(i)the proposed contract, arrangement or understanding contains an exclusionary provision;
...
(b)give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision-
(i)is an exclusionary provision;
...”.
The expression “exclusionary provision” is defined in s 4D(1):
“A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if –
(a)the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any two or more of whom are competitive with each other; and
(b)the provision has the purpose of preventing, restricting or limiting –
(i)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons;
...
by all or any of the parties to the contract, arrangement or understanding...”.
Section 76 provides for pecuniary penalties:
“(1) If the Court is satisfied that a person –
(a) has contravened a provision of Part IV [including s 45];
...(e)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision;
...
the Court may order the person to pay to 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...”.
Section 80 empowers the Court to grant injunctive relief if the circumstances identified in s 76(1)(e) are found to exist: see s 80(1)(e).
The Draft Statement of Claim
It is convenient to commence by outlining the relevant allegations in the draft statement of claim.
The ACCC pleads that, by July 1996, Amcor had become dissatisfied with its Illawarra supplier of waste paper (par 15B). On 17 July 1996, Amcor offered, at a meeting at which Mr Roach was present, to acquire the whole of Flagstaff’s recyclable paper and cardboard over a five year period (par 16). Flagstaff subsequently approached Visy to seek a better offer from it (par 18). Visy, through Mr Guthridge, then spoke to Mr Nott for the purpose of inducing Amcor to cease dealing with Flagstaff and to withdraw its offer to Flagstaff (par 20).
Shortly thereafter, Amcor and Visy, through Mr Guthridge and Mr Nott, made an arrangement whereby Amcor agreed to cease dealing with Flagstaff and to withdraw its offer (par 21). This arrangement contained an exclusionary provision within the meaning of s 4D(1) of the TP Act, and by making the arrangement, Amcor and Visy contravened s 45(2)(a)(i) of the TP Act (pars 23, 24).
The draft statement of claim continues:
“26A.At all material times Mr Roach, directly or indirectly, reported to, and received instructions from, Mr Nott.
26B.At all material times, Mr Roach’s role as State Sales Manager of [Amcor] was to obtain supplies of recyclable waste paper on commercially acceptable terms, including from suppliers in the Illawarra region.
27.Between 25 July and 9 August 1996 Mr Nott, directly or indirectly, instructed staff of [Amcor], including Mr Roach, to cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and to withdraw the [offer to Flagstaff].
27A.Mr Nott gave the instruction for the purpose of giving effect to the provision set out in paragraph 21.
28.After 25 July 1996, in accordance with Mr Nott’s instructions, [Amcor] ceased attempting to make contracts with Flagstaff to acquire recyclable waste paper.
Particulars
At no time after 25 July did Mr Roach or anyone else from [Amcor] approach Flagstaff to pursue the open offer referred to in paragraphs 16 and 17....
29.By a letter dated 9 August 1996 [Amcor], in accordance with Mr Nott’s instructions, withdrew the [offer to Flagstaff].
Particulars
The letter was from David Roach for [Amcor] to Michael Clarke for Flagstaff.
...
32A.At all times between 17 July and 9 August 1996 Mr Roach was aware that:
a)[Amcor] generally desired to obtain supplies of recyclable waste paper on commercially acceptable terms, including from suppliers in the Illawarra region
b)Visy also generally desired to obtain supplies of recyclable waste paper on commercially acceptable terms, including from suppliers in the Illawarra region
c)GTC and Flagstaff were the main suppliers of recyclable waste paper in the Illawarra region
d)[Amcor] had become dissatisfied with GTC as its agent and as source of recyclable waste paper in the Illawarra region
e)[Amcor] desired to obtain recyclable waste paper from alternate suppliers in the Illawarra region, of which Flagstaff was one
f)Flagstaff was Visy’s main agent for and supplier of recyclable waste paper in the Illawarra region
h)the [Amcor] offer was at rates and on terms which were commercially acceptable to [Amcor]
32B.Mr Roach was aware of Mr Nott’s instruction referred to in paragraph 27A at all material times after it was given.
32C.At the time of withdrawing the [offer to Flagstaff] Mr Roach knew:
a)that he had been present at the making of the [offer]
b)that it had not previously been withdrawn
c)that there was no good commercial reason to withdraw the offer.
32D.Mr Roach failed to make any proper inquiry to determine the reason or purpose for the withdrawal of the offer.
32E.Mr Roach knew,
a)that the arrangement or understanding referred to in paragraph 21 had been made,
b)that by engaging in the conduct referred to in paragraphs 28 and 29, he would be concerned in or party to giving effect to the provision set out in paragraph 21.
Particulars
Mr Roach’s knowledge is to be inferred from the matters set out in paragraphs 26A, 26B, 27 and 32A-32D.
33.In the circumstances set out in paragraphs 1-21, 26A, 26B, 27, 32A-32E by the conduct set out in paragraphs 28 and 29, Mr Roach was directly or indirectly, knowingly concerned in or party to, the contravention by [Amcor] of s 45(2)(b)(i) of the [TP Act], within the meaning of s 76(1)(e) and s 80(1)(e) of the [TP Act].
The relief sought against Mr Roach includes declaratory and injunctive relief and an order that he pay a pecuniary penalty to the Commonwealth.
Mr Roach’s Submissions
Mr Tonking did not dispute that the draft statement of claim pleaded that Mr Roach had knowledge of the essential elements of Amcor’s alleged contravention of s 45(2)(b)(i) of the TP Act. He also accepted that the rules of pleading do not require particulars of facts on which a party relies to support an allegation of knowledge: FCR, O 12, r 3.
Mr Tonking did submit, however, that the draft statement of claim pleaded a case that could not succeed as against Mr Roach. As I followed the argument, his starting point was the proposition stated by the High Court in Pereira v Director of Public Prosecutions (1988) 82 ALR 217, at 220, that:
“where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available.”
Mr Tonking argued that the particulars to par 32E, although not strictly necessary, confined the ACCC’s case to one of knowledge to be inferred from the matters identified. The final step in the argument was that there were rational inferences available from the matters pleaded, other than that Mr Roach had knowledge of the elements of Amcor’s alleged contravention of s 45(2)(b)(i) of the TP Act. It followed that the ACCC could not hope to establish the pleaded case against Mr Roach and leave should not be granted for it to file the draft statement of claim.
The ACCC’s Response – The Second Draft Statement of Claim
In response to these submissions, Mr Catterns made it clear that the ACCC did not intend to limit itself to inferences that might be drawn from the pleaded matters. He said that the ACCC had provided particulars to par 32E simply to provide fair notice to Mr Roach that it intended to rely on such inferences as were available to it. However, the ACCC wished to take advantage of any other evidence tending to prove the requisite knowledge of Mr Roach. This might include evidence given by other witnesses or, if Mr Roach chose to file an affidavit and be cross-examined, his own evidence.
Mr Catterns acknowledged that the particulars to par 32E of the draft statement of claim might have created an ambiguity that should be clarified. He also acknowledged (although Mr Tonking had not relied on the point) that it was probably necessary to plead that Mr Roach knew that the arrangement or understanding between Amcor and Visy had been made for the purpose of preventing, restricting or limiting the acquisition by Amcor of waste paper from Flagstaff.
In these circumstances, Mr Catterns sought, in effect, to amend the ACCC’s foreshadowed motion so that it sought leave to file yet another version of the statement of claim, namely the second draft statement of claim. This version reframed pars 32D, 32E, 32F and 33 of the draft statement of claim by substituting the following for those paragraphs:
“32D.Mr Roach knew,
a)that the arrangement or understanding referred to in paragraph 21 had been made, and that it had been made for the purpose set out in paragraph 22.
b)that by engaging in the conduct referred to in paragraphs 28 and 29, he would be concerned in or party to giving effect to the provision set out in paragraph 21.
Particulars
Mr Roach’s knowledge is to be inferred from the matters set out in paragraphs 26A, 26B, 27 and 32A-32C, but without prejudice to the Applicant’s entitlement to rely on matters of evidence or matters of inference or any other matters arising from the Respondents’ conduct of the case.
32E.Further or in the alternative, Mr Roach failed to make any proper inquiry to determine the reason or purpose for the withdrawal of the offer.
32F.Mr Roach knew;
a)that the arrangement or understanding referred to in paragraph 21 had been made, and that it had been made for the purpose set out in paragraph 22.
b)that by engaging in the conduct referred to in paragraphs 28 and 29, he would be concerned in or party to giving effect to the provision set out in paragraph 21.
Particulars
Mr Roach’s knowledge is to be inferred from the matters set out in paragraphs 26A, 26B, 27 and 32A-32C, and 32E, but without prejudice to the Applicant’s entitlement to rely on matters of evidence or matters of inference or any other matters arising from the Respondents’ conduct of the case.
33.In the circumstances set out in paragraphs 1-21, 26A, 26B, 27 and 32A-32D, and in the alternative 32A-32F, by the conduct set out in paragraphs 28 and 29, Mr Roach was directly or indirectly, knowingly concerned in or party to, the contravention by [Amcor] of s 45(2)(b)(i) of the [TP Act], within the meaning of s 76(1)(e) and s 80(1)(e) of the [TP Act].”
(I have bolded the most important changes.)
As Mr Catterns explained, this form of pleading is designed to clarify the evidence on which the ACCC intends to rely and to make it clear that Mr Roach’s alleged failure to make any proper inquiry to determine the reason for the withdrawal of the Flagstaff offer is an alternative basis for inferring knowledge on the part of Mr Roach of the matters pleaded in par 32F.
The position was regularised by the ACCC filing a motion which sought leave to file a further pleading in the form of the second draft statement of claim.
Leave Should be Granted to the ACCC
I think it fair to say that, subject to the question of costs, Mr Tonking did not dispute that, whatever difficulties might have been presented by ambiguities in the particulars to the draft statement of claim, they had been overcome by the second draft statement of claim. In any event, he accepted that the second draft statement of claim properly pleads the necessary elements of a case that Mr Roach had been knowingly concerned in Amcor’s alleged contravention of s 45(2)(b)(i) of the TP Act. The amended particulars make it clear that the ACCC intends to rely on all matters of evidence or inference that may be available to it. This the ACCC is entitled to do. In these circumstances, in the absence of any claim of prejudice by Mr Roach, the ACCC should be given leave to file the second draft statement of claim.
Costs
In my opinion, Mr Roach’s objections to the ACCC’s series of pleadings or draft pleadings (save the last), generally speaking, had considerable force. This has been recognised by the ACCC’s successive amendments to its pleadings or proposed pleadings. In my opinion, the ACCC should have addressed and corrected defects in its pleadings at an earlier stage. In these circumstances, while the ACCC ultimately obtained leave to file an amended pleading, it should bear the bulk of Mr Roach’s costs.
As between Amcor and Mr Nott (on the one hand) and the ACCC (on the other hand), no order for costs should be made in respect of the strike out motion. However, the ACCC should bear the costs (if any) thrown away by the filing of the amended statement of claim and of the second draft statement of claim.
Orders
The following orders should be made:
1. The motion filed on 26 March 1999 by Amcor, Mr Nott and Mr Roach be dismissed.
2.The ACCC be given leave to file a further amended statement of claim in or substantially in the form of the pleading annexed to the ACCC’s motion filed on 28 April 1999.
3.The ACCC pay sevety-five per cent of Mr Roach’s costs of the motion filed on 26 March 1999 and of the motion filed on 28 April 1999.
4.Subject to Order 3, Amcor, Mr Nott and the ACCC each bear its or his own costs of the motion filed on 26 March 1999.
5.The ACCC pay the costs (if any) of Amcor, Mr Nott and Mr Roach thrown away by the filing of the amended statement of claim on 22 April 1999 and of the further amended statement of claim referred to in Order 2.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. Associate:
Dated: 30 April 1999
Counsel for the Applicant: Mr D K Catterns QC with Mr V F Kerr Solicitor for the Applicant: Australian Government Solicitor Counsel for the Fifth Respondent: Mr A I Tonking Solicitor for the Fifth Respondent: Arthur Robinson & Hedderwicks Date of Hearing: 28 April 1999 Date of Judgment: 30 April 1999
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