Australian Competition and Consumer Commission v Delta Building Automation Pty Ltd
[2023] FCA 880
•1 August 2023
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Delta Building Automation Pty Ltd [2023] FCA 880
File number: ACD 32 of 2021 Judgment of: BROMWICH J Date of judgment: 1 August 2023 Catchwords: COMPETITION – proceeding for civil contraventions of s 45AJ of the Competition and Consumer Act 2010 (Cth) – cartel conduct – bid rigging – whether the respondents attempted to make an arrangement or arrive at an understanding containing a cartel provision, or attempted to induce a competitor to do the same – held: contraventions established; declarations of contravention to be made. Legislation: Competition and Consumer Act 2010 (Cth) ss 45AD, 45AD(1), 45AD(2), 45AD(3), 45AD(2)(a), 45AD(2)(c), 45AD(3), 45AD(3)(a)(iii), 45AD(3)(c)(i), 45AD(c)(ii), 45AD(3)(c)(iii), 45AD(3)(c)(iv), 45AD(4), 45AJ, 45R, 76(1), 76(1)(b), 76(1)(d)
Evidence Act 1995 (Cth) ss 140(2), 155, 155(1)(c)
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599
Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2017] FCAFC 152; 254 FCR 311
Australian Competition and Consumer Commission v Australian Egg Corporation Limited [2016] FCA 69; 337 ALR 573
Australian Competition and Consumer Commission v BlueScope Steel Limited (No 5) [2022] FCA 1475
Australian Competition and Consumer Commission v Olex Australia Pty Ltd[2017] FCA 222; [2017] ATPR 42-540
Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd [2016] FCAFC 42; 244 FCR 190
Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] FCA 824; ATPR 41-877
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Briginshaw v Briginshaw (1938) 60 CLR 336
Chamberlain v The Queen [No 2] (1984) 153 CLR 521
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153
J McPhee & Sons (Australia) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365; 172 ALR 532
J Wisbey & Associates Pty Ltd v UBS AG [2021] FCA 36
Kural v The Queen (1987) 162 CLR 502
Luxton v Vines (1952) 85 CLR 352
Shepherd v The Queen (1990) 170 CLR 573
Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256
Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 7 FCR 534
Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719
Division: General Division Registry: Australian Capital Territory National Practice Area: Commercial and Corporations Sub-area: Economic Regulator, Competition and Access Number of paragraphs: 427 Date of last submission/s: 2 August 2022 Date of hearing: 4 – 8 April 2022 Counsel for the Applicant: Mr R Yezerski and Ms Megan Caristo Solicitor for the Applicant: Webb Henderson Counsel for the Respondents: Mr C Bannan and Mr A Vial Solicitor for the Respondents: Maddocks Lawyers ORDERS
ACD 32 of 2021 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: DELTA BUILDING AUTOMATION PTY LTD
First Respondent
TIMOTHY DIXON DAVIS
Second Respondent
ORDER MADE BY:
BROMWICH J
DATE OF ORDER:
1 AUGUST 2023
THE COURT ORDERS THAT:
1.The parties confer and within 14 days, or such longer time as may be allowed, submit agreed or competing draft orders as to:
(a)declarations of contravention; and, separately
(b)procedural orders for the conduct of the remedies phase of the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
TABLE OF CONTENTS
Introduction
[1]
The key entities and people
[11]
Background
[12]
Relevant provisions of the CCA
[29]
Legal principles from the case law
[38]
The witnesses
[72]
Mr McEvilly and LES
[73]
Mr Davis and Delta
[78]
Mr Mitton and Manteena
[85]
Mr Nugraha
[89]
Mr Peter Hart
[93]
Affidavit witnesses not called to give oral evidence
[94]
Agreed facts and the resolution of some of the contested facts and issues
[95]
Delta, LES and competition between them to supply BMS in the ACT
[97]
The NGA and its BMS arrangements
[112]
Manteena Pty Ltd and the unchallenged evidence of Mr Mitton as to the tender process
[115]
Events from 31 July 2019 to 30 November 2019
[131]
Events of December 2019
[199]
Events of January 2020 onwards
[213]
List of issues
[234]
Findings on the remaining and key facts and issues in dispute
[235]
What was said during the telephone conversation between Mr Davis and Mr McEvilly on 17 December 2019
[235]
Whether, by the time of the meeting on 18 December 2019 between Mr Davis and Mr McEvilly, Mr Davis considered it necessary or desirable to engage with LES in relation to the BMS upgrade
[254]
What Mr Davis’ purposes were in organising the 18 December 2019 meeting
[254]
Whether, by the time of the meeting on 18 December 2019 between Mr Davis and Mr McEvilly, it was likely that the BMS upgrade would be put out to competitive tender, or that more than two parties would be invited to bid
[279]
Whether by the time of the meeting on 18 December 2019 between Mr Davis and Mr McEvilly, Delta and Mr Davis expected that the BMS upgrade would be put out to competitive tender, or that more than two parties would be invited to bid.
[279]
What was said during the 18 December 2019 meeting between Mr Davis and Mr McEvilly by each of those men, and what, if any, implied representations were made by Mr Davis
[328]
Mr McEvilly’s affidavit evidence in chief
[331]
Mr Davis’ affidavit evidence in chief
[335]
Key similarities in the affidavit evidence in chief of Mr McEvilly and of Mr Davis as to the 18 December 2019 meeting
[338]
Isolating the key differences in the affidavit evidence in chief of Mr McEvilly and of Mr Davis as to the 18 December meeting
[356]
Mr McEvilly’s evidence in cross-examination
[358]
Mr Davis’ evidence in cross-examination
[378]
Mr McEvilly’s account prevails
[384]
Timing of the 18 December 2019 meeting
[386]
Whether or not, at the 18 December 2019 meeting, Mr Davis impliedly offered to make a payment to Mr McEvilly or LES if:
[391]
(a) LES agreed not to submit a bid for the BMS upgrade tender; or
[391]
(b) LES agreed to submit an uncompetitive bid for the BMS upgrade tender; or
[391]
(c) LES agreed to submit a bid for the BMS upgrade tender at a price in excess of Delta’s bid or on terms that would otherwise make Delta’s bid more likely to be successful than LES’ bid.
[391]
Whether, at the 18 December 2019 meeting, Mr Davis:
[402]
(a) sought from Mr McEvilly any commitment to act in a particular way, or to maintain a particular state of affairs
[402]
(b) proposed that either LES or Delta assume an obligation, or give an assurance that it would act in a particular way
[402]
Whether Mr Davis’ conduct at the 18 December 2019 meeting was a step immediately connected to the commission of the alleged contravention of s 45AJ by Delta, or an affirmative and positive act directed towards inducing LES to make the alleged arrangement or to reach the alleged understanding
[409]
Whether the common law of attempt, insofar as it is applicable to an allegation of civil attempt under s 76(1)(b) or (d) of the Competition and Consumer Act 2010 (Cth) (CCA), contemplates not only use of the proximity test (conduct that is more than merely preparatory), but also the equivocality test (conduct having no reasonable purpose other than the commission of the alleged contravention)
[412]
Whether, at the 18 December 2019 meeting, Mr Davis intended to make an arrangement or arrive at an understanding on behalf of Delta with LES, or to induce LES to make such an arrangement or arrive at such an understanding with Delta, as alleged by the ACCC
[417]
If so, whether Mr Davis intended to make the alleged arrangement or understanding with a cartel provision within the meaning of s 45AD of the CCA because the relevant provision:
[417]
(a) had the purpose of ensuring that, in the event of a request for bids for the Original NGA BMS upgrade tender:
[417]
(i) Delta would bid for the BMS upgrade tender but LES would not, within the meaning of s 45AD(3)(c)(i); and/or
[417]
(ii) Delta and LES would both bid for the BMS upgrade tender, but on the basis that Delta's bid was more likely to be successful within the meaning of s 45AD(3)(c)(ii); and/or
[417]
(iii) Delta and LES would both bid for the BMS upgrade tender and proceed with their bids, but on the basis that Delta's bid was more likely to be successful within the meaning of s 45AD(3)(c)(iv); and/or
[417]
(b) had the purpose of preventing, restricting or limiting the supply or likely supply of services to be provided by LES to the NGA within the meaning of s 45AD(3)(a)(iii) of the CCA; and/or
[417]
(c) had the purpose, effect or likely effect of fixing or controlling, or providing for the fixing or controlling, of the price of the BMS services supplied by Delta and/or LES to the NGA within the meaning of s 45AD(2)(c) of the CCA.
[417]
Conclusion
[427]
BROMWICH J:
Introduction
This is a liability adjudication on allegations by the Australian Competition and Consumer Commission (ACCC) of attempted bid rigging, and attempted inducement of bid rigging. The attempts are alleged to have been directed to a tender for a contract to supply a replacement building management system (BMS) for the original part of the building housing the National Gallery of Australia (NGA) in Canberra. That work is referred to in these reasons as the BMS upgrade or the Honeywell BMS upgrade.
The contravening conduct is alleged to have taken place during a brief meeting over coffee on 18 December 2019 between representatives of two competing companies. One of the two companies is the first respondent, Delta Building Automation Pty Ltd, a BMS company operating in Canberra. The second respondent is Mr Timothy (Tim) Davis, the sole director and managing director of Delta. The other company is Logical Electrical Solutions Pty Ltd (LES), also operating in Canberra. The key witness for the ACCC is Mr Antony (Tony) McEvilly, the general manager of LES.
In December 2019, both Delta and LES held contracts to perform BMS work at the NGA:
(a)Delta to maintain the BMS that was due to be replaced; and
(b)LES to maintain the BMS for the adjacent NGA extension building.
There was going to be a need for some degree of integration, or some kind of interface, between the new BMS and the continuing BMS, when the former was installed. There is a dispute as to the extent of difficulty that might entail.
On the morning of Wednesday, 18 December 2019, Mr Davis and Mr McEvilly had a relatively brief meeting at a coffee shop not far from Canberra Airport. The meeting had been called by Mr Davis via a telephone call to Mr McEvilly on either Monday, 16 December 2019, or Tuesday, 17 December 2019. I conclude that the call took place the day before the meeting, on 17 December, rather than 16 December. Nothing turns on this difference.
The ACCC alleges that during the 18 December 2019 meeting:
(a)each of Mr Davis, and Delta via Mr Davis, attempted to induce LES to make an arrangement or arrive at an understanding containing a cartel provision, in contravention of s 45AJ of the Competition and Consumer Act 2010 (Cth) (CCA);
(b)additionally or alternatively, Delta via Mr Davis attempted to make an arrangement or arrive at an understanding containing a cartel provision, in contravention of s 45AJ of the CCA.
The respondents deny any wrongdoing. Mr Davis elected to waive penalty privilege after the close of the ACCC’s case and to advance a positive evidentiary case for the respondents by way of a detailed affidavit, upon which he was cross-examined.
The respondents accept that the evidence establishes that Delta and LES were in competition with one another in the BMS industry in Canberra, and that Mr Davis acted on behalf of and with the authority of Delta. This sensible concession, reflective of the cooperative stance taken by the respondents in confining the trial to the real issues in dispute, is made in circumstances where Delta and LES were plainly competitors in relation to the BMS upgrade contract. Further, Mr Davis and Mr McEvilly via their companies (or a predecessor of LES with Mr McEvilly as its directing mind) had previously competed for BMS tenders in the ACT twice before the NGA BMS upgrade tender, namely the High Court of Australia tender in 2013 and the National Library tender in 2019.
The case largely turns on the fundamentally conflicting evidence of Mr McEvilly and Mr Davis, both as to what took place at the 18 December 2019 meeting, but also as to conversations and events prior to that. The competing cases, and especially the ACCC case, also rely upon the context for that meeting provided by the balance of the evidence, both contested and uncontested.
The ACCC seeks:
(a)declarations of contravention by both Delta and Mr Davis;
(b)the imposition of pecuniary penalties upon both of them;
(c)injunctions restraining both of them from directly or indirectly communicating to competitors or potential competitors in relation to building management system tenders in the Australian Capital Territory (ACT) for three years;
(d)the disqualification of Mr Davis from managing a corporation for three years; and
(e)Delta being required to establish, administer and comply with a trade practice compliance program for three years.
The parties sensibly sought a separate trial on liability first.
These are the conclusions I have reached on liability:
(a)The purpose of a 17 December 2019 telephone call from Mr Davis to Mr McEvilly was to arrange a meeting to discuss the upcoming BMS upgrade tender at the NGA.
(b)The purpose of Mr Davis organising the 18 December 2019 meeting was to endeavour to rig any tender bid process between the two likely tenderers, Delta and LES.
(c)The evidence of Mr McEvilly as to what transpired during the critical conversation about the BMS upgrade tender at the 18 December 2019 meeting was more credible in all the circumstances than the version advanced by Mr Davis. I accept Mr McEvilly’s version over that of Mr Davis.
(d)At the 18 December 2019 meeting, Mr Davis was proposing that LES not be a genuine competitor in the BMS upgrade tender.
(e)Mr Davis took both the necessary steps immediately connected to the commission of the alleged contraventions of s 45AJ by Delta, and an affirmative and positive act directed towards making, and inducing LES to make, the alleged arrangement or to reach the alleged understanding. As such, I have concluded that the declarations of contravention sought by the ACCC should be made.
The reasons as to the conclusions I have reached above are as follows.
The key entities and people
This is a narrative-based case that relies heavily on events leading up to and after the 18 December 2019 meeting between Mr Davis and Mr McEvilly. To aid in following the fact-finding process, the following is a list of the key entities and people involved in 2019:
Delta (Delta Building Automation Pty Ltd)
Timothy (Tim) Dixon Davis, director
Hendra Nugraha, engineering manager
Ron Atkinson, account manager
Glenn Davis (Sid), construction manager (also Mr Davis’ brother)
Craig Davis, national services manager
Adrian Middleton, service manager
Jason Wilcomes, project engineer
LES(Logical Electrical Solutions Pty Ltd)
Anthony (Tony) John McEvilly, general manager
Karen McEvilly, sole director and shareholder
NGA(National Gallery of Australia)
Mr Nicholas (Nick) Xirakis, head of capital works
Mr Mark Mandy, head of building services
Mr Matthew Hanns, facilities manager
Ms Amelia Gregory, facilities manager
Ms Aimee Dagseven, project officer
Manteena(Manteena Pty Ltd)
Mr Rodney Trent (Rod) Mitton, project director
Ms Sarah Burrows, senior project manager
Mr Jason Bills, design/services manager
Mr Paul Cresswell, project manager
Steensen Varming (Steensen Varming (Australia) Pty Ltd)
Mr Tava Sitauti, principal project delivery consultant
C&E(Control and Electric Pty Ltd)
Mr Peter Robert Hart, director
Mr Mark Wright, estimator
Background
A BMS may be described generally as a computer-based system installed in buildings to control and monitor their internal environment. This includes their mechanical, electrical and other equipment and systems, covering such things as ventilation, air conditioning, lighting, lifts, closed-circuit television (CCTV), electricity and other utility services, fire systems, and security systems.
A BMS therefore consists of computer software, computer hardware, other hardware, and specialised equipment, including cabling, alarms, sensors, monitors, and other devices. A BMS is typically used in large commercial or government buildings.
Delta was in 2019, and still was at the time of trial and closing submissions, the exclusive ACT distributer of the “Delta Controls” brand of BMS. As noted above, Mr Davis is the sole director and managing director of Delta.
LES was in 2019, and still was at the time of trial and closing submissions, the exclusive ACT supplier of the Automated Logic Corporation (ALC) brand of BMS, otherwise known in the industry as Web Control, stylised as WebCTRL, being the name of the software the ALC BMS uses. As noted above, Mr McEvilly is the general manager of LES, with his wife, Karen McEvilly, as the sole shareholder and director of LES.
Delta and LES were in 2019 and 2020, and still were at the time of trial and closing submissions, companies that conduct businesses which include the design, installation and maintenance of BMS. They, along with other BMS companies, were in competition in the BMS market in the ACT.
The NGA comprises an original building, the construction of which was completed in 1982 (Original NGA) and an extension built between 2007 and 2010 (NGA Extension). In the period up to and including 2019 and 2020:
(a)The Original NGA was served by a BMS developed by Honeywell Limited (Honeywell BMS). The Honeywell BMS was maintained by Honeywell until about October 2019, when Delta was given a 12-month maintenance contract to maintain that BMS (the formal signed contract came later in November).
(b)The NGA Extension was served by an Automated Logic Corporation (ALC) BMS, installed by a predecessor company to LES, also associated with Mr McEvilly, in about 2007. In 2019 and 2020 in particular the NGA Extension BMS was maintained by LES.
By 2019, the Honeywell BMS for the Original NGA had reached the end of its life. This was known by Mr Davis and Mr McEvilly and thus by their respective companies.
In the period prior to 2019, a decision was made by the NGA to replace the Honeywell BMS, which was always going to be a valuable and prestigious contract. This is the BMS upgrade or Honeywell BMS upgrade referred to earlier in these reasons.No change was in contemplation for the ALC BMS for the NGA Extension, serviced and maintained by LES. That is, at all times the proposed BMS upgrade was to be confined to the Original NGA.
Delta and LES were in competition in relation to any contract that would be granted to perform the BMS upgrade, and thus in relation to any tender that might issue for that purpose. Both companies submitted bids for the tender that issued in 2020, after the contraventions alleged to have taken place on 18 December 2019. Neither was successful.
As at late 2019, both Delta and LES were companies capable of performing the BMS upgrade, and both were contracted to do other work at the NGA:
(a)Delta was contracted to carry out the maintenance of the Honeywell BMS; and
(b)LES was contracted to maintain the NGA Extension BMS.
Objectively speaking, they were the two companies potentially best placed to tender successfully for the BMS upgrade to replace the Honeywell BMS in the Original NGA.
However, it was anticipated that a new BMS for the Original NGA and the existing and continuing BMS for the NGA Extension would need to be integrated, or made to interface, in some way. These two concepts are separate from each other. As explained by Mr Davis, integration involves connecting two or more BMSs to function as a single system, while interfacing involves the exchange of information and data between different BMSs. Both approaches can be combined to create a unified interface, eliminating the need for users to log into separate systems. The likely nature and extent of that need is a live issue in the proceeding. Another contested issue is whether it was ever, to the knowledge of Mr Davis and therefore Delta, the situation that the Original NGA BMS upgrade could be contracted directly to Delta or if it would always be subject to a tender process. If it is the latter, the nature and extent of the tender process, whether it be limited or closed, rather than open and competitive, is also in question.
A further live issue is the impact and effect that the continuation of the NGA Extension BMS would have on the tender for the BMS upgrade in the Original NGA, especially as to the cost of integration between the two BMSs, and any need for involvement by LES in that integration. In short, the ACCC case is that the cost of integration or an interface between the two BMSs was always going to be insignificant in the context of the overall upgrade and the need for LES involvement, if any, was very limited. The contrary case for the respondents was that both that cost and that need for LES involvement was, or at least might have been at the time of the 18 December 2019 meeting and in the mind of Mr Davis, more substantial.
The substance of the ACCC’s case can be briefly summarised as follows, drawn from its closing written submissions and supplemented by closing oral submissions. The ACCC allege that:
(a)in the period from early August 2019 to 2 December 2019, the respondents at least believed the NGA would be likely to engage Delta to undertake the BMS upgrade without a competitive tender taking place (the ACCC cast this as being viewed by the respondents as having a greater degree of certainty during that period, but this characterisation will suffice in light of the observations at [309] below which refer to Mr Davis’ evidence to the effect that he thought it was at least possible that there would be no tender process);
(b)the respondents took steps to price the work it was proposing to do for the BMS upgrade, and were able to do so without contacting Mr McEvilly or LES;
(c)the belief that a competitive tender would not be needed was “shattered” on 2 December 2019, when the respondents learned that the NGA had determined that they would put the BMS upgrade out to a formal competitive tender, and that the two tenderers would be Delta and LES;
(d)on 16 or 17 December 2019, Mr Davis telephoned Mr McEvilly and arranged to meet with him to discuss the tender, before the BMS upgrade tender was formally announced or issued;
(e)the meeting took place on 18 December 2019 at Tulips Café at Pialligo, Canberra;
(f)at the 18 December 2019 meeting, by his express words and by implication, Mr Davis and thereby Delta offered to make a payment to Mr McEvilly or to LES, if LES agreed:
(i)not to submit a bid for the tender; or
(ii)to submit an uncompetitive bid for the tender; or
(iii)to submit a bid for the tender on terms that would make Delta’s bid more likely to be successful than LES’s bid,
going well beyond merely preparatory conduct, and with there being no plausible exculpatory explanation for arranging a meeting with a competitor;
(g)by doing so:
(i)the respondents each attempted to induce LES to enter into an arrangement, or to reach an understanding, containing a cartel provision; and
(ii)Delta attempted to make such an arrangement, or reach such an understanding,
in contravention of s 45AJ of the CCA.
The ACCC’s alternative case, casting the alleged cartel provision in two additional different ways, is that Mr Davis was attempting to make, and induce LES to make, an arrangement or understanding:
(a)that would prevent LES supplying services to the NGA by way of upgrading the Original NGA BMS; or
(b)whereby LES would agree to tender at a “cover price”, which would have the purpose or likely effect of fixing or controlling the price of the Original NGA BMS upgrade.
The beginning of the respondents’ closing written submissions identifies the core, but not only, arguments advanced as to why they contend the ACCC’s case should fail. In short, and noting that the ACCC takes exception to each of them, they are to the effect that:
(a)the ACCC had not even attempted to discharge the onus of proving that the respondents intended, and engaged in conduct, to bring about an arrangement or understanding with the necessary features of a consensus or meeting of the minds, a commitment to act in a particular way or to maintain a particular state of affairs, and at least one party assuming an obligation or giving an assurance or undertaking to behave in a particular way – this is principally a dispute about the metes and bounds of what well-established authority requires be proven for the alleged attempt contraventions;
(b)the evidence in any event falls well short of satisfying the conduct element of the alleged attempt contraventions, and at worst still fell short of anything immediately connected to any arrangement or understanding, also relying on Mr McEvilly’s evidence in cross-examination about what was conveyed to him as amounting to no more than speculation, a submission that requires a close focus on the questions asked;
(c)the position as to the intention element was even weaker when regard was had to Mr Davis’s evidence as to his reasons for attending the meeting to the effect that, rather than those asserted by the ACCC, he instead wanted to “clear the air” with Mr McEvilly, arising out of a heated telephone conversation between the two men on 9 October 2019 about Delta personnel being present at the NGA in order to smooth the way for LES to perform any integration work between the two NGA BMS sets of equipment, and to assert that the NGA was not LES’s “turf” (or “site”) – going so far as to submit that unless the Court finds that Mr Davis was lying about the reasons he gave for attending the meeting, the necessary intention cannot be proven;
(d)Mr Davis’s evidence should be accepted, especially having regard to what is characterised as the inadequate and unrealistic cross-examination of him;
(e)Mr McEvilly’s evidence should be treated with caution, because, although he does not need to be found to have lied, he wished to inflict as much damage as he could upon the respondents because of the adverse view he took as to how they had been favourably treated by the NGA, and because he had wanted to go public with his allegations.
After closing oral submissions, a significant gulf between the parties remained. The points of disagreement are profound and have been difficult to resolve. A major part of that disagreement concerns:
(a)differences as to the characterisation and understanding of the oral evidence of Mr McEvilly and Mr Davis, especially in cross-examination;
(b)the nature and extent of evidence that was required to prove the alleged attempts; and
(c)whether the evidence adduced by the ACCC went far enough, having regard to established authority as to what was required to be proved.
The competing accounts about the key conversation at the 18 December 2019 meeting, and prior telephone conversations, especially on 9 October 2019, are irreconcilable, such that the ACCC can only succeed if the account given by Mr McEvilly is accepted and preferred over that of Mr Davis.
Relevant provisions of the CCA
The relevant provisions of the CCA in relation to attempted bid rigging or inducement into a contract, arrangement or understanding containing a cartel provision are undisputed between the parties.
Section 76 of the CCA relevantly provides (emphasis added):
(1) If the Court is satisfied that a person:
…
(b)has attempted to contravene such a provision [being a provision mentioned in sub-section (a), which includes a provision of Part IV]; or
…
(d)has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision [being a provision mentioned in sub-section (a), which includes a provision of Part IV]; …
… ,
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 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.
Section 45AJ of the CCA provides:
A corporation contravenes this section if:
(a)the corporation makes a contract or arrangement, or arrives at an understating; and
(b) the contract, arrangement or understanding contains a cartel provision.
Section 45AD identifies what constitutes the cartel provisions proscribed by s 45AJ:
(a)s 45AD(1) provides that a provision of a contract, arrangement or understanding is considered a cartel provision if it meets either the “purpose/effect condition” or the “purpose condition” in subsection (3) and the “competition condition” in subsection (4).
(b)s 45AD(2) relevantly provides:
The purpose/effect condition is satisfied if the provision has the purpose, or has or likely to have the effect, of directly or indirectly:
(a) fixing, controlling or maintaining;
… the price for …
(c)goods or services supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; …
(c)s 45AD(3) relevantly provides:
The purpose condition is satisfied if the provision has the purpose of directly or indirectly:
(a) preventing, restricting or limiting:
…
(iii)the supply, or likely supply, of goods or services to persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or
…
(c)ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services:
(i)one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; or
(ii)2 or more parties to the contract, arrangement or understanding bid, but at least 2 of them do so on the basis that one of those bids is more likely to be successful than the others;
…
(iv)2 or more parties to the contract, arrangement or understanding bid and proceed with their bids, but at least 2 of them proceed with their bids on the basis that one of those bids is more likely to be successful than the others;
…
(d)s 45AD(4) describes the “competition condition” referred to in s 45AD(1), but does not need to be reproduced because there is no dispute that this condition is met on the evidence.
The ACCC’s factual propositions outlined above at [24] (and in the alternative at [25]) can be framed by reference to the cartel provision that is alleged to be the subject of the alleged attempt and inducement. In combination with the now undisputed satisfaction of the competition condition in s 45AD(4), the cartel provision is alleged:
(a)primarily by reference to any of the purpose conditions in s 45AD(3)(c)(i), (ii) or (iv); or
(b)in the first alternative by reference to the purpose condition in s 45AD(3)(a)(iii); or
(c)in the second alternative by reference to the purpose/effect condition in s 45AD(2)(a) and (c).
The ACCC’s case is that the arrangement or understanding would have involved, if entered into as allegedly sought by Mr Davis, any of the following five modes of implementation, styled by the ACCC as being one of a limited number of ways in which the arrangement or understanding could occur, each involving a cartel arrangement or understanding:
(a)a provision of the kind in s 45AD(3)(c)(i), namely that LES would not submit a bid for the BMS upgrade tender; or
(b)a provision of the kind in s 45AD(3)(c)(ii), namely that Delta and LES would both bid on the basis that Delta’s bid would be more likely to be successful; or
(c)a provision of the kind in s 45AD(3)(c)(iv), namely that Delta and LES would both bid and proceed with their bids, on the basis that Delta’s bid would be more likely to be successful; or
(d)a provision of the kind in s 45AD(3)(a)(iii), namely that it would prevent LES from supplying services to the NGA by way of upgrading the Original NGA BMS; or
(e)a provision of the kind in s 45AD(2)(a) and (c), namely that LES would agree to tender at a “cover price”, which would have the purpose or likely effect of fixing or controlling the price of the Original NGA BMS upgrade.
An important aspect of the ACCC’s case is that the precise mode of implementation did not have to be agreed or understood at the attempt stage. On its case, whatever mechanism Mr Davis may ultimately have favoured in seeking the arrangement or understanding with LES, it would have contained a cartel provision.
The respondents’ case, although principally one of denial that the conversation deposed to by Mr McEvilly took place at all, is that even if it did take place, the evidence did not go far enough to constitute either of the attempts alleged.
These statutory elements have been the subject of judicial analysis, which will be explored in greater detail below.
Legal principles from the case law
As already noted, the ACCC alleges that Mr Davis and Delta (via Mr Davis), each attempted to induce LES to make an agreement, or arrive at an understanding containing a cartel provision, contrary to s 45AJ of the CCA. Further and in the alternative, the ACCC alleges that Delta (via Mr Davis) attempted to make an arrangement or reach an understanding that contained a cartel provision, also contrary to s 45AJ of the CCA.
The legal principles that apply are generally agreed upon, but there is a substantial dispute about their application, especially as to what is required to prove the alleged attempts, which leaches into the extent of the real agreement. The respondents, in their closing written submissions, analysed numerous cases applying the principles pertaining to attempts to make or induce an arrangement or understanding, which I have considered. However, I found that reasoning by factual analogy was of limited assistance. Prior cases and their inevitably factual circumstances principally assist in identifying and understanding the principles, and only to a lesser extent help with the application of those principles to the present circumstances.
It is convenient to commence with the legal principles which seem to be agreed. It is uncontroversial between the parties that, in both paras (b) and (d) of s 76(1), an attempt has two elements, namely, conduct and intention: Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 (also 76 FLR 455), referred to and approved by the Full Court in Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2017] FCAFC 152; 254 FCR 311 at [92] per Besanko, Foster and Yates JJ, reproduced below at [42].
The relevant intention contrary to s 45AJ that must be established is an intention to bring about the proscribed result, in this case, the making of an arrangement or the reaching of an understanding containing a cartel provision: Tubemakers at 735-736 per Toohey J, cited with approval by the Full Court in Egg Corporation at [92]. That intention will suffice even if the proscribed result would be impossible to achieve: Tubemakers at 736.
The Full Court in Egg Corporation succinctly set out many of the key principles applicable to this case:
[92] In order to establish an attempt, an applicant must prove both intention and conduct. The intention is to bring about the proscribed result which in this case is the making of an arrangement or the reaching of an understanding … (Trade Practices Commission v Tubemakers of Australia Ltd (1983) 76 FLR 455; 47 ALR 719 (Tubemakers) at 472-473; 737 and 479; 743 per Toohey J). It is not necessary in order to establish the relevant intention to prove that it was accompanied by or included an expectation of success or a belief that the purpose would be achieved (Tubemakers at 471-472; 736 per Toohey J).
[93] The conduct which is necessary to constitute an attempt is a step towards the commission of a contravention, which is immediately and not merely remotely connected with it (Tubemakers at 472; 736 per Toohey J referring to Archbold’s Pleading Evidence & Practice 36th [Ed], para 4101). The Full Court of this Court in Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 7 FCR 534 (Parkfield Operations) at 538-539 made a similar point when it said that an attempt must involve taking a step towards the commission of contravening conduct and that it is not sufficient that it be merely remotely connected or preparatory to the commission of it. In Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] ATPR 41-877 (ACCC v SIP Australia) at 45-015, Goldberg J made the point that what is required for an inducement is that “there be an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement”. In addition to that point, his Honour also referred to the decision of the Full Court of this Court in Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164 where it was said that mere persuasion, with no promise or threat, may well be an attempt to induce.
[94] For the purposes of both elements of an attempt, that is to say intention and conduct, it is not necessary for the precise terms of the proposed arrangement or understanding to have been formulated. This point was made by the Full Court in Parkfield Operations (at 539) and another way of putting the point is that it is not necessary for an attempt to be made out to establish that the relevant conduct had reached an advanced stage. Having said this, it is perhaps trite to note that the more advanced the conduct, the more likely it is that the inference of the necessary intention will be drawn.
[95] In order for there to be an arrangement or understanding …, there must be a meeting of minds and this involves a commitment to act in a particular way. A mere expectation as distinct from an assumption of obligation, assurance or undertaking to act in a particular way is not sufficient. Unlike an arrangement, an understanding can be tacit (Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 (CC Pty Ltd) at [135]-[141] per Lindgren J; Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at [45]-[47]; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR 321 at [28]-[39] per Gray J).
[96] For some time, there has been a debate in the authorities as to whether a meeting of minds involving only one party assuming an obligation as distinct from mutual or reciprocal obligations can constitute an arrangement or understanding of a proscribed kind. The issue has not been authoritatively determined. The courts which have addressed the issue have consistently said that even if the undertaking of a unilateral obligation can constitute a contravening arrangement or understanding, such cases are likely to be rare (see, for example, Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (Service Station Association) at 230-231 per Lockhart J, at 238 per Spender and Lee JJ; CC (NSW) Pty Ltd at [139] per Lindgren J). For reasons which we will give, it will not be necessary for us to resolve the issue in this case.
After this judgment was reserved, O’Bryan J handed down Australian Competition and Consumer Commission v BlueScope Steel Limited (No 5) [2022] FCA 1475. The parties directed my attention to this keenly awaited decision soon after it was delivered and after I had considered it, but as is conventional did not indicate any particular passage that either side relied upon. I have read BlueScope Steel carefully, and in particular Part C ([72]-[183]), in which his Honour addresses the legal principles applicable to that case, which largely, but not entirely, mirror those applicable to this proceeding, and key parts of the application of those principles to the substantially different factual circumstances of that case. In particular, I adopt these as useful statements of principle on the topics of the conduct element in the context of the attempt provision in s 76(1)(b) of the CCA ([86]-[97]), the corresponding intention element ([98]-[99]), the purpose of a cartel provision ([110]-[112]) and the effect of a cartel provision ([113]-[114]).
O’Bryan J in BlueScope Steel at [101]-[108] provided a more detailed explanation of the meaning of the terms “arrangement” or “understanding” than I have found generally necessary. However, at [108] his Honour concluded with the pithy observation about a concluded arrangement or understanding as relevant to the intention element for an attempt or attempt to induce that state of affairs, which I gratefully adopt:
A meeting of minds as to a course of conduct to be followed by one or more persons cannot arise unless those persons have communicated their assent to adopting that course of conduct. It is important to emphasise, though, that in the context of an understanding containing an unlawful cartel provision, the assumption of an obligation means no more than the communication of assent to a particular course of conduct proposed by a competitor, where the communication may be by words or conduct. Language of obligation, commonly used in the law of contract, should not obscure the nature of an understanding and the means and circumstances in which it may be arrived at.
The above observation is of particular importance in assessing the question of what the evidence establishes about the conversation between Mr Davis and Mr McEvilly at their coffee shop meeting on 18 December 2019, and in particular whether that evidence went far enough on the intention element for the alleged attempts. The importance emerges in large measure because the respondents in BlueScope Steel, in common with the respondents in this proceeding, asserted that the evidence did not go far enough, even if Mr McEvilly’s account of that conversation was accepted, on the concept of commitment and the related concepts as addressed by O’Bryan J at [142]-[148] in the abstract, and at [1420]-[1422] in their application. The following statements of principle in relation to concluded arrangements or understandings as relevant to the intention element for an attempt are particularly apposite to this proceeding, noting that the ACCC’s primary case here concerned bid rigging rather than price fixing:
[144] As to the conduct element of an attempt to induce, in my view a person may be found to have attempted to induce a counterparty to reach a price fixing understanding notwithstanding that the person never expressly asked the counterparty for a commitment with respect to the counterparty’s prices. The respondents’ submission to the contrary has a number of difficulties: it seeks to frame the applicable legal principles in a narrow and rigid manner and also has the effect of substituting the word “commitment” in place of the word “understanding” in the Act.
[145] As discussed above, there has been considerable judicial explication of the words “arrangement” and “understanding” as used in the Act. Reducing those words to the single notion of a “commitment”, however that might be conceived, is an erroneous reduction in legal principle. The statutory words have a broader meaning. They require that the parties have, by words or conduct, aroused an expectation in each that they will conduct themselves in accordance with the subject matter of the arrangement or understanding. The expectation must be more than a mere hope, belief or prediction that, as a matter of fact, a person will conduct themselves in the future in a particular way. The expectation must arise out of the dealings between the parties which has resulted in what can alternatively be called the assumption of an obligation, the giving of an assurance or undertaking, or a meeting of minds, that they will act in the future in a particular way. While an arrangement is well described in terms of undertaking obligations or duties, albeit not legally enforceable, an understanding is more aptly described as arriving at a common mind (or consensus) as to a particular course to be followed. Conduct which founds an understanding can be arrived at by words or conduct and may be tacit. Further, as an arrangement or understanding is not binding on the parties in law, the parties are inevitably free to withdraw from it and act inconsistently with it, notwithstanding their consent to it.
[146] It follows from the judicial explication of the concept of an “understanding” that there is no requirement in law for one of the parties to have expressly sought a commitment from the other party to assume some obligation. An understanding may be reached through a course of dealings between the parties that makes clear the desired outcome and through which a meeting of minds on pursuing the outcome is achieved. A course of dealings between parties is capable of arousing an expectation in each party that they will conduct themselves in accordance with the communicated outcome.
[147] It necessarily follows that an attempt to reach a price fixing understanding within s 76(1)(b) does not require, as a matter of law, that the relevant person has expressly sought a commitment from a competitor to price in a particular way. There are other ways in which a price fixing understanding may be brought about. That conclusion is even stronger in the case of inducing or attempting to induce a person to reach a price fixing understanding within s 76(1)(d). An inducement ordinarily refers to some proffered advantage or disadvantage, promised or threatened, which will follow if the object of the inducement adopts or fails to adopt a stipulated course of action. Mere persuasion, with no promise or threat, may also constitute an attempt to induce. It is not possible to define in any rigid or narrow manner the categories or types of conduct that may constitute inducing or attempting to induce a person to reach a price fixing understanding within s 76(1)(d). The conduct may involve a course of meetings, communications and other dealings in which inducements are proposed or offered and which are directed at reaching a consensus, or a meeting of minds, about the level of prices to be charged by one or more of the parties. It can be accepted that, for a consensus or meeting of minds to be finally arrived at, there must be some communication or indication of assent from one party to the other whether by words or by conduct. However, an attempt to induce a person to reach a price fixing understanding does not require assent to be achieved; it requires a step towards the inducement of the understanding which is more than merely preparatory and which is immediately and not merely remotely connected with the inducement to reach the understanding. It should also be reiterated that, in the context of an attempt and an attempt to induce, it is not necessary for the conduct to have reached an advanced stage or for the precise terms of the proposed understanding to have been formulated.
[148] As to the intention element of an attempt to induce, a person may only be found to have attempted to induce a counterparty to reach a price fixing understanding if the person intended, by their conduct, to take steps which were directed at inducing the counterparty to reach the understanding. In other words, it is necessary that the understanding be in contemplation and be the intended outcome of the attempt to induce. It is not sufficient for the person to merely intend that the counterparty reflect on the prices they are charging. The intention must be directed to the ultimate end of reaching an understanding. Again, though, the use of the word “commitment” in that context is unduly limiting. The intention must be to induce the counterparty to reach an understanding, which requires a consensus or meeting of minds about acting in accordance with the subject of the understanding. It is sufficient that, by the acts that constitute the attempt to induce, the person offers promises or threats or otherwise engages in persuasive conduct that is intended to induce a consensus, however the ultimate assent may be communicated.
When considering the Egg Corporation case both at first instance and on appeal, it is important to appreciate that the ACCC’s case at trial failed on intention as to all five respondents, not on conduct (although there was a dispute at the appeal about what was found about the conduct of three of the respondents): see the Full Court at [74]-[75] and [84]-[85] (in the context of [82]-[83]); see also the reasons of the primary judge, White J, in Australian Competition and Consumer Commission v Australian Egg Corporation Limited [2016] FCA 69; 337 ALR 573 (Egg Corporation trial judgment or Egg Corporation White J judgment) at [403]. By notices of contention, the respondents sought to overturn the findings made as to conduct. The Full Court at [137]-[138] addressed and rejected a submission by the respondents to the ACCC appeal on those notices of contention that the absence of a concrete proposal by way of an arrangement or understanding was fatal to establishing the element of intention, specifically endorsing the Egg Corporation White J judgment at [78] and [81] as to the statements of principle, and [394] as to their application.
Those paragraphs in the Egg Corporation White J judgment as to that part of the ACCC’s case that succeeded are particularly relevant to the present case and warrant reproduction of the most relevant passages of those paragraphs, adding also [79]:
[78] In those cases in which the ACCC alleges that an arrangement or understanding had been reached, there must be evidence of a meeting of minds between the parties under which at least one of them assumes an obligation or undertakes to act in a certain way. However, in the case of an alleged attempt, what must be established, relevantly, is that the respondents engaged in conduct (took a step towards) inducing others to reach an agreement or understanding that at least one or more would limit their production or supply. Liability under s 76(1)(b) is established if the respondent engaged in conduct directed towards inducing another to reach an agreement or understanding which has the proscribed qualities. Section 76(1)(d) will be engaged if a respondent has engaged in the requisite conduct with the particular intention, even if the form of the proposed agreement or understanding is unparticularised, undeveloped and inchoate. It is not necessary for the ACCC to establish in addition that the agreement or understanding was to take a particular form or to have a particular content or would involve, as in this case, only particular egg producers.
[79] The approach just outlined is supported by the reasons of the Full Court in Parkfield Operations at 539‑40:
Finally, his Honour thought that there could be no attempt to induce XL to make an arrangement of the kind alleged if there was no arrangement which was in place or could readily be effected. He thought that the evidence established no more than that there was an invitation “to start to see if an arrangement can be made”. We do not think that it was necessary for any arrangement to be in place, or readily able to be effected, with the other retailers. It was sufficient that the respondents sought to persuade XL to enter into an arrangement to increase prices. As was said in Yorke v Lucas (1983) 49 ALR 672 at 681 (affirmed by the High Court, (1985) 59 ALJR 776):
“Inducing a contravention in the context of s 75B(b) connotes, in our view, some act of compulsion by force or threat of force or some act of persuasion or stimulation aimed at ensuring that an act is committed which constitutes a contravention. The word ‘incite’ is akin to ‘induce’, though induce probably covers a wider field.”
We therefore cannot agree with the reasons which led his Honour to the conclusion that the Commission had not established a case against the respondents.
[80] …
[81] I accept however, the submission of Mr Doyle SC, counsel for AECL and Mr Kellaway, that the uncertain and general nature of the putative arrangement makes the pinpointing of conduct or words referrable to such an arrangement difficult, and that account should be taken of this in the assessment of the evidence.
…
[394] It is true that an attempt to induce a contravention … does not require that a single form of action be proposed. …
Applying by analogy the passage from Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 7 FCR 534 quoted by White J above, to the ACCC’s primary case of an attempted inducement, it needed to establish that Mr Davis (and through him, Delta), sought to persuade Mr McEvilly to enter into an arrangement, or to reach an understanding, to rig the BMS tender. As his Honour observed at [78], endorsed by the Full Court, it was not necessary for the ACCC to establish that the agreement or understanding in contemplation was to take a particular form or to have a particular content. That said, the absence of any allegation as to the precise form of the alleged intended arrangement or understanding may make it more difficult to be satisfied that this was what was sought: Egg Corporation at [83], in the final point aspect of White J’s reasoning on intention as summarised by the Full Court at the end of that paragraph. In the case of bid rigging, the available options for a proposed arrangement or understanding may, as a practical matter, be more limited, going some way to alleviating this barrier to a finding of the necessary corresponding intention.
The Full Court in Egg Corporation at [95] was referring to what is required to prove that an arrangement has been made, or an understanding arrived at, including tacitly – that is, in the event of the attempt succeeding – whereas at [94] the Full Court is referring to the antecedent stage of an attempt to achieve either outcome. It necessarily follows that proving an attempt does not require establishing a meeting of minds, nor as part of that any kind of commitment being given. An attempt by one person directed to another is, by its very nature, unilateral, but must involve more than preparatory steps to achieve the proscribed objective. It is common ground in this case that there must be sufficient proximity between the conduct and the commission of the contravention. There remains a dispute as to how far the ACCC’s case needed to go, which is addressed later in this segment, in the context of the following paragraph and what it means in practical terms.
It is important to maintain a distinction between the attempts alleged, and the alleged object of those attempts. The ACCC accepts, and indeed submits, that in the case of an attempt or inducement to contravene s 45AJ of the CCA, there are two additional requirements that must be met:
(a)First, it must be demonstrated that the relevant attempt was to induce a person to enter into, in this case, an “arrangement or understanding” (a contract not being alleged) within the meaning of s 45AJ, noting again as per the above that neither the conduct nor the intention requires precise terms to have been formulated: Egg Corporation at [94]. By reference to what constitutes an arrangement or understanding, per Egg Corporation at [95], this requires that there was an attempt to induce a “meeting of the minds” and “a commitment to act in a particular way”. At least one party must, if the attempt were to succeed, “assume an obligation” (whether legal or moral in nature) to act in a certain way: J Wisbey & Associates Pty Ltd v UBS AG [2021] FCA 36 per Beach J at [125].
(b)Second, it must be demonstrated that the relevant arrangement or understanding would contain a cartel provision within the meaning of s 45AD of the CCA. This, in turn, requires consideration of two further requirements:
(i)whether a provision of the relevant arrangement or understanding would contain a provision satisfying either the “purpose/effect condition” in s 45AD(2) or the “purpose condition” in s 45AD(3); and
(ii)whether two or more parties to the arrangement or understanding satisfied the “competition condition” in s 45AD(4).
The purpose/effect condition and the purpose condition are set out above at [32] and are addressed in more detail later in these reasons.
The “competition condition” in s 45AD(4) relevantly requires that the two or more parties involved in the arrangement or understanding are, or are likely to be, in competition with each other in the supply of the services in question. The ACCC submits that general competition meets this requirement, even in circumstances where LES and Delta were not competing for the BMS Upgrade Tender in particular, citing the Full Court case of J McPhee & Sons (Australia) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365; 172 ALR 532 at [111]-[112] (Black CJ, Lee and Goldberg JJ). However, as already noted, the respondents accept that the competition condition is satisfied, and I am satisfied that is so on the evidence.
I now turn to a key area of dispute at the level of principle, to be applied to the facts as found. It is convenient to address this at a relatively early stage in these reasons because of its importance to the fact-finding exercise that follows. The issue is jointly posed as follows:
Does the common law of attempt, insofar as it is applicable to an allegation of civil attempt under s 76(1)(b) or (d) of the Competition and Consumer Act 2010 (Cth) (CCA), contemplate not only use of the proximity test (conduct that is more than merely preparatory), but also the equivocality test (conduct having no reasonable purpose other than the commission of the alleged contravention)?
The ACCC contends that the answer is “no”; while the respondents contend that the answer is “yes”. For the reasons that follow, there is no equivocality test to be applied, and accordingly the answer is “no”.
The principle sought to be applied is drawn by analogy from the criminal law. Considerable caution must be exercised before importing criminal law concepts too readily or uncritically into civil proceedings, even civil penalty proceedings, for reasons identified in relation to civil penalty proceedings generally: see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (Agreed Penalties Case) at [51]-[57] and Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599 at [14]. A key reason for that caution is that the standard of proof in criminal proceedings means that when circumstantial evidence is relied upon, especially to prove state of mind, the prosecutor must exclude all reasonable explanations consistent with innocence: Shepherd v The Queen (1990) 170 CLR 573. That is an aspect of proof beyond reasonable doubt in criminal proceedings, which has no analogue in relation to the civil standard of the balance of probabilities, even when serious allegations require evidence to be of a sufficient quality to support any adverse conclusion reached: s 140(2) of the Evidence Act 1995 (Cth), the statutory version of Briginshaw v Briginshaw (1938) 60 CLR 336 per Dixon J at 361-362.
In a civil case, the combination of circumstances relied upon must do no more than raise “a more probable inference in favour of what is alleged”: see Shepherd per Mason CJ at 576 and per Dawson J at 581 (with whom Toohey and Gaudron JJ agreed), explaining a passage from Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 536 containing that phrase without adverse comment. The unquoted, but footnoted, source of that phrase in Chamberlain is Luxton v Vines (1952) 85 CLR 352 at 358, where Dixon, Fullagar and Kitto JJ quoted from the following passage in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 (emphasis added to identify the phrase):
Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley (1911) AC 674 at 687). But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise: cf per Lord Loreburn, above, at p 678.
It follows that the starting point is that the exclusion of alternative explanations forms no part of any civil law requirement for reaching the necessary state of satisfaction on the balance of probabilities, even if it might be analytically deployed as a process of reasoning. Although common, this is not a rule of law even in relation to jury directions in criminal cases and is sometimes not appropriate in such a case: Shepherd per Mason CJ at 575 and per Dawson J at 578. As Dawson J pointed out, while a direction of that kind is customarily given to a jury in circumstantial evidence cases, it is no more than an amplification of the rule that the prosecution must prove its case beyond reasonable doubt, such that in some cases such a direction may be confusing rather than helpful. Even in criminal proceedings, it is only the elements of an offence that must be proven beyond reasonable doubt, each fact relied upon to support the proof of that element need not be proven to that standard unless indispensable to the finding of guilt. Of course, sometimes a non-element component of a criminal case may need to be proven beyond reasonable doubt, such as identification.
Given the strong background of fundamental principles against the existence of a principle of equivocality in a civil case, it was for the respondents to demonstrate a reason why that should be departed from in any civil case, and particularly in a case such as this. It will not suffice to refer to such a rule applying in criminal cases where that is not, in any event, so clearly entrenched as a rule of law. That is, it was not for the ACCC to show that a principle of equivocality did not apply, but rather for the respondents to show that it did.
The respondents rely upon Toohey J, when his Honour was a member of this Court, in an express aside from the question of intention by addressing conduct (actus reas), dispelling the notion that an expectation of success was necessary for an attempt to be established. As part of that reasoning, his Honour quoted in Tubemakers at p 736 the following passage from Archbold’s Pleading Evidence & Practice (36th ed):
… the actus reus necessary to constitute an attempt is complete if the prisoner does an act which is a step towards the commission of the specific crime, which is immediately and not merely remotely connected with the commission of it, and the doing of which cannot reasonably be regarded as having any other purpose than the commission of the specific crime.
The respondents contend that this passage plainly contemplates the use of both a proximity test and an equivocality test. Quite apart from the fact that this is a reference to the requirements in criminal proceedings being used by analogy to address a different issue, I am unable to accept that, read in context, this has anything to say about equivocality at all. Nor does Toohey J’s later reference at p 743 to purpose or effect in relation to the issue of substantially lessening competition assist. Similarly, the Full Court in Parkfield Operations at pp 538-9 quoting this part of Tubemakers was concerned with proximity, and not any novel notion of equivocality foreign to the ordinary concepts and principles of civil law, and in particular the civil standard of proof.
The respondents suggest that in Egg Corporation, both White J at [387]-[388], and the Full Court in upholding those passages at [109]-[111], was also endorsing an unstated principle of equivocality. In keeping with what the Full Court actually said, I am unable to accept that White J was doing any such thing. Rather, his Honour was referring to innocent explanations for facts upon which the ACCC relied to draw adverse inferences as to what was taking place for the purpose of making a decision on whether the necessary intention corresponding to the proven conduct had also been proven, which is a very different exercise even if it bears a superficial similarity. It is the difference between an analytical tool and a legal requirement.
White J found that the understanding that the ACCC placed on certain phrases that had been used in the context of a meeting between competitors was not supported because of other innocent inferences that could reasonably be drawn on the question of intention. That was clearly enough a reference to the ordinary processes of inferential fact finding for state of mind as to whether the necessary state of satisfaction had been reached, not requiring the ACCC to exclude innocent explanations as a precondition to reaching the requisite state of satisfaction.
As the Full Court observed at [110], this was no more than an exercise by White J in correctly applying the civil standard of proof in the first place, expressly rejecting the submission recorded at [109] that his Honour’s approach was one of asking whether there were explanations consistent with innocence, so as to be applying the criminal standard of proof. It is plain enough that had the Full Court found that White J had been applying any test akin to the equivocality test advanced by the respondents, that would have been found to be an error because it would have entailed applying the wrong standard of proof. That way of reading the Full Court’s reasons is supported by the earlier passage in Egg Corporation at [93], reproduced above at [42], where the references to Tubemakers and Parkfield Operations are clearly directed only to proximity.
There is a material difference in principle between on the one hand evaluating evidence and forming a view as to whether or not the evidence establishes an alleged contravention on the balance of probabilities, and on the other hand ascertaining whether that standard has not been met because some competing possibility consistent with there being no contravention has not been excluded. The latter involves a reasoning process in criminal proceedings which can be a necessary part of the discharge of the onus of proving a case beyond reasonable doubt (ie, beyond the balance of probabilities), but which never arises in civil proceedings because that is not the ultimate burden of proof threshold required to be met. It follows that there is no basis, either on first principles or by authority, for the application of an equivocality test in relation to an alleged attempt in a civil penalty proceeding. For the same reason, there is no requirement, as suggested by the respondents, to apply some kind of test that the offer made by Mr Davis be found to be unambiguously directed to either of the two attempts, because that too implies the necessity of going beyond the threshold of the balance of probabilities.
The next major disagreement in principle between the parties turns on the distinction between what must be proven to establish that an arrangement has been made, or an understanding reached, and what must be proven to establish an attempt to induce that or an attempt to achieve that objective. As the ACCC points out in closing oral submissions, there is no dispute that an arrangement or understanding within the meaning of s 45AJ of the CCA requires a meeting of the minds and a commitment to act in a particular way, nor any dispute that such an arrangement or understanding requires that at least one party assumes an obligation, whether legal or moral in nature, to act in a particular way. The dispute turns on how granular the identification of the proposed arrangement or understanding must be by the evidence when an attempt is alleged.
Omitting the errant references to equivocality, the respondents contend that a person cannot be liable for an attempt to make, or an attempt to induce, an arrangement or understanding unless they engage in conduct immediately or proximately connected and directed to securing:
(a)a consensus or meeting of the minds;
(b)a commitment to act in a particular way or the maintain a particular state of affairs;
(c)the assumption of obligations, assurances or undertakings,
coupled with an intention to bring about that specific result. The respondents maintain that the ACCC's submissions failed to consider these factors because the evidence does not support an affirmative answer to any of the factors, let alone all of them.
In applying those principles in closing oral submissions, the respondents gave content to this requirement by suggesting that it was not sufficient for a person to appreciate that the natural and probable consequence of their conduct is a completed contravention; they must have intended to bring about a specific result; and they must have had a subjective intention to bring about each of the essential elements of the contravention alleged to have been attempted. An attempt, they submit, requires the critical features of an arrangement or understanding to be sought, being an intention, with proximate acts, to bring about an arrangement with the features of a commitment and obligation. The key issue in dispute is how far the ACCC’s case needed to go on the question of commitment on the conduct element.
This is put somewhat evocatively in closing oral submissions for the respondents as whether it was proven, as said to be required, that Mr Davis wanted an arrangement whereby he would be able to say to Mr McEvilly in due course something like “What on earth are you doing?” We had a deal that you weren’t going to put in a bid”. This submission was evidently directed to the manner in which the bid rigging would be proposed to be implemented, and therefore equally applying to the alternative options for implementation identified by the ACCC of a bid being put in by LES which was either higher than the Delta bid, such as by a cover price, or that was in some other way inferior to Delta’s bid. To the extent that this is a submission that the precise mechanism by which any proposed arrangement or understanding to induce bid rigging had to be identified, as opposed to such identification making the case stronger, it cannot be accepted in light of the reasoning of both White J and the Full Court in Egg Corporation considered above. However, this still leaves for determination just how detailed the identification must be shown to be, at this stage dealing with the applicable principles.
The ACCCs’ contrary submission is that the propositions of law summarised above do not mean that an attempt to contravene s 45AJ of the CCA, or to induce such a contravention, will only be made out where the conduct has progressed to the point where a commitment has been expressly sought. That is because a distinction must be drawn between the intention element and the conduct element. To establish the intention element, it is necessary to prove an intention that an arrangement or understanding involving a meeting of the minds, a commitment, and an assumption of obligations would ultimately be reached, but in order to prove the conduct element it is not necessary to prove that the conduct actually reached the stage at which a commitment was sought. The ACCC submits this is supported by Egg Corporation at [93], with the Full Court quoting with approval the observations of Goldberg J in Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] FCA 824; ATPR 41-877 at [112] that what is required for an inducement is that “there be an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement”, and (quoting from Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164) that “mere persuasion, with no promise or threat, may well be an attempt to induce”. The ACCC also notes that the respondents’ suggestion that Heating Centre be treated with caution because it is a resale price maintenance case belies its endorsement in Egg Corporation at [93].
The ACCC submits that this then leads into the statement of principle in Egg Corporation at [94], and especially the first sentence, that for both intention and conduct, “it is not necessary for the precise terms of the proposed arrangement or understanding to have been formulated”. Further, at [137], the Full Court expressly endorsed the observation by White J at [78] that s 76(1)(d) of the CCA “will be engaged if a respondent has engaged in the requisite conduct with the particular intention, even if the form of the proposed agreement or understanding is unparticularised, undeveloped and inchoate”. In reliance upon these statements of principle, the ACCC submits that it is not necessary for the conduct to have reached the stage that a specific commitment has been sought in order for the conduct element, or an attempt to induce a contravention of s 45AJ, to be established.
The ACCC’s submission must be accepted, relying as it does upon the binding authority of the Full Court in Egg Corporation. The relevant test for the conduct element is whether a sufficient step was taken in all the circumstances to take it beyond being merely preparatory. An attempt does not require that the substantive contravention has almost taken place. Of course, if all that Mr McEvilly needed to do was assent to what was proposed in order for the inducement to have been effective, the arrangement to have been made, or the understanding to have been reached, then the threshold for an attempt will comfortably have been surpassed.
The witnesses
I made notes of my perception of the four witnesses who gave oral testimony at the time it was given or soon afterwards, mostly in cross-examination on their affidavits, and recorded much of the following observations as the evidence progressed, supplemented by reading the transcript.
Mr McEvilly and LES
Mr McEvilly has been a licensed electrician since about 1982. He has worked as an electrical contractor for almost 40 years, specialising in mechanical electrical services. He formed his own company in about 1984, until it was purchased in about 1987. He then worked for the purchaser for about 18 months, until he left to start up another business, which was later incorporated in 2004 as Electrical Solutions (ACT) Pty Ltd. That business provided services relating to the design and installation of electrical and control systems, which later progressed to BMS work in around 1991 in the ACT and surrounding areas, prior to incorporation in 2004. Mr McEvilly was the sole director of Electrical Solutions (ACT).
Electrical Solutions (ACT) went into liquidation on the petition of the Deputy Commissioner of Taxation in this Court in March 2019. This took place following a request made on its behalf to reduce the rate at which tax debts were required to be repaid. A liquidator was appointed on 31 May 2019. On Mr McEvilly’s evidence in cross-examination, which was not challenged and which I accept, that tax debt situation in turn was reached by reason of a major project running seriously over the allotted time and causing substantial losses. Mr McEvilly was keen not to cause losses to customers or to have employees losing any entitlements, so, with the benefit of insolvency advice, in April 2019 he set up a new company to buy the assets of Electrical Solutions (ACT) and to assume responsibility for accrued employee entitlements. That new company was LES. Mr McEvilly has been the General Manager of LES since May 2019. His wife is the sole shareholder and sole director, and provides accounting and office management services. LES employs about 15 staff and provides a range of electrical services.
As with all of the witnesses who gave oral evidence, I watched and listened carefully to the cross-examination of Mr McEvilly, taking notes of my impressions at the time and preparing these observations soon afterwards while it was still fresh in my mind. Mr McEvilly is quietly spoken and generally understated. That said, he was firm in his views and a careful and attentive witness. It was apparent that this was driven by attention to detail and a desire to be accurate, rather than being either pedantic or unduly aware of the impact of his answers on the ACCC’s case. Without hesitation, he gave a number of answers that were not entirely helpful to aspects of that case. He was reluctant, but not ultimately unwilling, to accept that the conduct of Mr Davis and Delta had annoyed him, as had what he perceived to be the preferential treatment of Delta by the NGA and its contractors. As the later cross-examination of Mr Nugraha demonstrated, that perception proved to be well-founded. I ultimately conclude that Delta was intended to be the beneficiary of a degree of overt preferential treatment, especially by Mr Sitauti of Steensen Varming, but also in less clear ways by at least some at the NGA, a process that Mr Davis not only was aware of, but contributed to.
Overall, I have little hesitation in accepting Mr McEvilly as a witness of truth, reliability and accuracy, and in accepting his evidence even when not corroborated. That acceptance is qualified to a limited degree by other evidence that cast doubt on limited aspects of what he said had taken place. For the reasons set out below, I do not accept the respondents’ submission that any particular caution is required before accepting his evidence.
My response to a clash between the evidence of Mr McEvilly and the evidence of Mr Davis has been to look to the timing, logic and consistency of each in the context of, in particular, documentary evidence and the sequence of events to see whether one or the other can safely be preferred. In the greater part, that has resulted in me preferring the evidence of Mr McEvilly, but there are a number of lesser areas where a concluded view was not possible.
Mr Davis and Delta
Mr Davis has been a licensed electrician since 1993, and has specialised in mechanical electrical services and BMS since 2000. Prior to founding Delta he was employed at a company called AKM Electrical Services Pty Ltd in the role of apprentice electrician between 1989 and 1993. It was during some of that period where he worked with Mr McEvilly.
After 1993, Mr Davis continued with AKM Electrical until 1994, in the role of a tradesman. In subsequent years until 2000, he worked for three more companies, Staefa Controls as a BMS commissioning engineer, Brooks Merchant Industries Pty Ltd as a switchboard designer and Tyco Pty Ltd as a services manager, between 1998 and 2000. Subsequently, he founded Delta in around September 2000, where he has been the sole managing director since then.
If it is accepted that Mr Davis genuinely saw nothing wrong with his role and Delta’s behaviour via Mr Nugraha in relation to the drafting of the tender specifications, then his moral outlook makes it less likely that he would find a proposal to engage in bid rigging repugnant, which is an important consideration when considering the quality of evidence required to reach the necessary state of satisfaction, as mandated by s 140(2) of the Evidence Act. If instead it is found that Mr Davis was aware of the impropriety of that conduct, then it is even worse. I am prepared to make the lesser finding, and find that this at least was reflective of how driven Mr Davis was to secure the BMS upgrade contract, again tending to favour Mr McEvilly’s account of the 18 December 2019 conversation.
Whether or not, at the 18 December 2019 meeting, Mr Davis impliedly offered to make a payment to Mr McEvilly or LES if:
(a) LES agreed not to submit a bid for the BMS upgrade tender; or
(b) LES agreed to submit an uncompetitive bid for the BMS upgrade tender; or
(c) LES agreed to submit a bid for the BMS upgrade tender at a price in excess of Delta’s bid or on terms that would otherwise make Delta’s bid more likely to be successful than LES’ bid.
In light of the factual findings I have made, I do not accept that Mr Davis’ offer to pay money was for any purpose deposed to by him. His account was inherently implausible and inconsistent with the logic and sequence of events.
I am comfortably satisfied, on the balance of probabilities, and having regard to the quality of evidence required to reach such a serious and adverse conclusion as mandated by s 140(2) of the Evidence Act, of the following facts.
During the course of the 18 December 2019 meeting, Mr Davis offered to make a payment to Mr McEvilly or to LES, that bare fact not being in dispute, and specifically, Mr Davis said words to the effect:
Look mate, I know you’ve had a long association with the gallery. To appease you, I would like to offer you a payment so that you are not wasting your time. The tender is going to be released early in the New Year. There will only be two tenderers and I am confident to win even from second place.
While Mr Davis asserted that he would not use a word like “appease”, I note that this was the word that Mr McEvilly attributed to him not just in his affidavit, but also in the email he sent to the ACCC on 25 March 2020, enabling me to have a greater degree of confidence as to the reliability of this evidence. That email was the subject of the cross-examination of Mr McEvilly, and was marked for identification and subsequently tendered, without objection, by the ACCC.
It is telling as Mr McEvilly deposes, and I accept that:
(a)he responded to this offer by saying words to the effect:
Look Tim, thanks for the offer but, if we get the opportunity to tender for this project, we will do our best to put forward a competitive bid in an attempt to win it. I won’t be doing anything else.
(b)and Mr Davis did not demur from that response, which strongly supports the conclusion that what was being conveyed, and was intended to be conveyed, pertained not just to the BMS upgrade tender, but to departing from a competitive process by rigging that tender.
Mr Davis’ offer was therefore clearly directed to the BMS upgrade tender, and it is common ground that Mr Davis expected the process to commence by the release of the tender early the next year, 2020. It had nothing to do with the Honeywell BMS service and maintenance contract, an explanation by Mr Davis which simply makes no sense in the context of the evidence about the absence of profitability for that contract.
The evidence made it clear that both men were familiar with tendering processes in the BMS industry in Canberra. Absent corruption, of which there was no suggestion, beyond perhaps the conduct of and towards Mr Sitauti, I readily infer it would have been obvious to both Mr Davis and Mr McEvilly that inherent in one tenderer succeeding over a competitor would be that the competitor either did not submit a bid, or submitted a bid that was inferior in some way. This is supported by Mr McEvilly’s response, and Mr Davis’ lack of a rejoinder, correction or denial, being a circumstance that not only assists at this point of these reasons in understanding the substance of what was said, but also supports an inference as to a corresponding intention, a topic I address separately below, based on the reasoning of Beach J in Olex, reproduced above at [256].
In the context and way the offer was made by Mr Davis, and rejected by Mr McEvilly without rejoinder, correction or denial, casting what was proposed in terms that are readily comprehensible to both Mr Davis and Mr McEvilly, it was both:
(a)an attempt to make an arrangement or arrive at an understanding between Delta and LES to rig the bid for the BMS upgrade tender; and
(b)an attempt by Mr Davis, and through him Delta, to induce such an arrangement or understanding to rig the bid for the BMS upgrade tender,
so as at least to increase materially the chances that Delta would win the tender.
The precise ways in which the bid could have been rigged, while not expressly stated, were limited. I readily infer that this would be known to both men given their commercial and tender experience, such that it did not need to be, nor would it be likely to have been, spelt out at that stage. It was a quintessentially tacit offer of the kind to be expected if advanced by one seasoned commercial operator to a like competitor.
In keeping with Mr McEvilly’s comprehension of what was being proposed, the ways in which the proposed arrangement or understanding would be given effect would be LES agreeing not to submit a bid, LES agreeing to submit a bid that was uncompetitive, LES agreeing to submit a bid at a price in excess of Delta’s bid, or otherwise on terms that would otherwise make Delta’s bid more likely to be successful than LES’ bid.
Put another way, in all the circumstances and on all the evidence considered as a whole, and taking into account the experience and background of both men, the clear implication in Mr Davis making the offer in the context of the meeting that I am satisfied was called by him to discuss the BMS upgrade, was that in one way or another, Mr Davis was proposing that LES not be a genuine competitor in the BMS upgrade tender.
Whether, at the 18 December 2019 meeting, Mr Davis:
(a) sought from Mr McEvilly any commitment to act in a particular way, or to maintain a particular state of affairs
(b) proposed that either LES or Delta assume an obligation, or give an assurance that it would act in a particular way
Only the respondents contend that I am required to resolve these two issues, while the ACCC contends that because the alleged contraventions are both attempts, there was no need for a commitment to be sought or an obligation to be proposed by Mr Davis at the time of the 18 December 2019 meeting. For the reasons discussed in the legal principles part of this judgment, I am satisfied that the authorities, and especially Egg Corporation when properly understood, not just support, but mandate, that conclusion.
The ACCC nonetheless contends that these issues should be resolved in its favour, making its case stronger, and thus, if this were required, it was proven in any event. I consider it prudent to consider whether that is so in the alternative, in case I am wrong in some way about the need for a commitment to be sought, or a proposal made that either Delta or LES assume an obligation or give an assurance to act in a particular way.
In keeping with the tenor of the respondents’ submissions, beyond asserting that Mr Davis’ account should be preferred and addressing the contingency that it was not, the argument on this topic is simply that even on Mr McEvilly’s account in his affidavit, said to be supported by his evidence in cross-examination, nothing that Mr Davis said went far enough even to constitute any attempt to enter into an arrangement, reach an understanding, or to induce such an outcome, let alone reach the point of seeking a commitment or the assumption of an obligation. It was an inadequacy of evidence argument.
The ACCC puts forward a compelling argument to the contrary. The major thrust of that argument turns on a more detailed consideration of Mr McEvilly’s rejection of Mr Davis’ offer of payment and the lack of what I have termed as a demurrer to that response, such as by way of a rejoinder, correction or denial. The ACCC points out that not only did Mr McEvilly reject Mr Davis’ offer of payment in favour of expressly saying he would be putting forward a competitive bid, but he went a step further by saying that he would not be doing anything else. The ACCC submits that Mr McEvilly’s immediate reaction is to understand that this was an offer made upon the contingency of LES doing something other than submitting a competitive bid, in the context of never before having been offered money by a competitor to avoid wasting time on a tender; and that there is a form of corroboration by an acceptance of that understanding by Mr McEvilly in Mr Davis not correcting his response in any way.
The next step in the ACCC’s argument is that, had Mr McEvilly instead accepted the offer, that would have involved a sufficient degree of commitment and a sufficient assumption of an obligation to constitute the making of an arrangement or the reaching of an understanding. The further substance of the submission as I understand it, is that had Mr McEvilly instead accepted Mr Davis’ offer of a payment, and thus of not wasting time on preparing a competitive tender bid, that would have carried with it both the giving of a commitment and the acceptance of a corresponding obligation of at least a moral nature not to compete by one of the available means known to them both. To use the argument advanced by the respondents as to inadequacy, if Mr McEvilly had responded in that way, and had later put in a competitive bid, Mr Davis would have been entitled to have questioned why that was taking place.
The ACCC supports this argument by reliance upon the reasoning in the Full Court decision of McPhee. In that case, in the critical conversation, the contravener only overtly asked the competitor to put in a quote, but it was found by the trial judge, and upheld by the Full Court, that what was being asked was to put in a quote that was not competitive. There were further conversations and conduct, but the case turned on what had been asked. The Full Court at [120] rejected the submission that what had occurred at the time of the meeting was too subtle, too tentative or too remote, having regard to what later took place, and upheld the trial judge’s observation that all that was needed to complete the arrangement or understanding was acquiescence, with the conduct having advanced well beyond preparation to the stage of persuasion and a positive attempt to induce. The Full Court took into account the reaction of the person to whom the request was made. The ACCC characterises this case as being in the same vein. I agree. I do not accept the respondents’ submission that McPhee was an inherently much stronger case, or that this case fell a long way short of what had happened in that case.
While the details and precise mechanism would have had to be decided, most likely after the tender had been released, so as to devise the best method by which to make running with a weaker bid or not at all credible, the offer and what came with it was capable of being accepted by Mr McEvilly on the spot. Mr McEvilly’s immediate rejection of the offer, expression of an intention to submit a competitive bid, and refusal to countenance doing anything else, together with the absence of any demurrer by Mr Davis, in the context provided by the rest of the evidence, the key aspects of which have been detailed in these reasons, leads to comfortable satisfaction, on the balance of probabilities, that part and parcel of the offer of payment was Mr Davis seeking both a commitment and a corresponding assumption of an obligation to behave in a non-competitive way, sufficient to meet that requirement if it exists. In reaching this conclusion, I find that this serves only to make the ACCC’s case stronger, rather than meaning that seeking such a commitment or assumption of an obligation is indispensable to proving an alleged attempt, or attempt to induce.
Whether Mr Davis’ conduct at the 18 December 2019 meeting was a step immediately connected to the commission of the alleged contravention of s 45AJ by Delta, or an affirmative and positive act directed towards inducing LES to make the alleged arrangement or to reach the alleged understanding
It follows from the conclusions I have reached above that seeking a commitment and an assumption of an obligation, and the capacity for that to be accepted so as to amount to a concluded, although not fully detailed, arrangement or understanding, means that:
(a)the content of the offer made;
(b)the absence of any demurrer to the content of its rejection; and
(c)the history and context of events and the circumstances of the two men,
enables me to conclude with comfort that Mr Davis took both the necessary steps immediately connected to the commission of the alleged contravention of s 45AJ by Delta, and an affirmative and positive act directed towards inducing LES to make the alleged arrangement or to reach the alleged understanding.
As the ACCC submits, and I accept, it was sufficient that Mr Davis was seeking to initiate discussions with a competitor to enter into an unlawful arrangement or understanding. I am satisfied that the threshold identified by the Full Court in Parkfield Operations from the bottom of p 538 and over to p 539 has been amply met when regard is had to the evidence as whole. As the ACCC point out, had Mr McEvilly been at all receptive to the offer that Mr Davis made, undoubtedly further discussions would have been necessary to finalise the details of the proposed arrangement or understanding. In particular, the precise method of implementing the rigging of the bid would need to be sorted out, but this was necessarily likely to be dependent upon the tender requirements and specifications. However, because of the relatively early stage at which the offer was made by Mr Davis to Mr McEvilly, namely before any tender had been issued, specifics as to any integration needs would have been at best premature and at worst little more than guesswork. That is because the tender specifications necessary to know what was required by the NGA, so as to be able to ascertain what work was needed and its cost, including the need for and nature of the supply of goods and services required from third parties, had not yet been supplied.
It is not tenable to suggest that a bid rigging arrangement or understanding cannot be sought at the stage of an attempt, and even entered into, prior to the details being available that are practically necessary for its implementation. To be fair, that is not what the respondents in terms contended, but the case that they advanced as to the insufficiency of the evidence tended to carry this kind of implication, or at least this practical and legal consequence. It would take the requirement beyond the state of being “unparticularised, undeveloped and inchoate” identified by White J, and specifically approved by the Full Court in Egg Corporation.
Whether the common law of attempt, insofar as it is applicable to an allegation of civil attempt under s 76(1)(b) or (d) of the Competition and Consumer Act 2010 (Cth) (CCA), contemplates not only use of the proximity test (conduct that is more than merely preparatory), but also the equivocality test (conduct having no reasonable purpose other than the commission of the alleged contravention)
While I have found, in the legal principles part of this judgment, that the equivocality test has no application to attempt in civil proceedings, including civil penalty proceedings, I am satisfied that even if such a test did apply, it would be satisfied. That is so for two inter-related reasons.
First, I have rejected Mr Davis’ benign explanation for and account of the 18 December 2019 meeting, even allowing for the portions for which there is agreement (preferring and accepting Mr McEvilly’s context for those agreed components over those advanced by Mr Davis), which is the only purpose advanced by the respondents, with no other purpose being apparent.
Secondly and additionally, once Mr Davis’ account is rejected, there is no credible explanation for the meeting taking place at all. The only remaining purpose was, in all the circumstances, and given the history of relations between the two men, nefarious. And I am satisfied that Mr McEvilly had no nefarious purpose in agreeing to meet with Mr Davis.
I am satisfied, on the balance of probabilities, that the unequivocal purpose of Mr Davis convening the meeting, and what was said by him, was to attempt, or attempt to induce, the making of an arrangement or reaching of an understanding as alleged by the ACCC, using this reasoning as an evaluative tool as supported by some of the criminal law authorities relied upon by the respondents. If this was a test or standard being applied and was found not to be met, it would, in my view, probably amount to an error by, in substance if not in form, applying the criminal standard of proof, of the kind that the Full Court rejected had been engaged in by White J in Egg Corporation.
There is no corresponding error in being satisfied comfortably beyond the minimum threshold for reaching the necessary positive state of satisfaction on the balance of probabilities that each of the two attempts alleged by the ACCC took place. However, because it is beyond question that this is the correct standard, I make it clear and express that I should not and do not make any finding to that effect beyond reasonable doubt.
Whether, at the 18 December 2019 meeting, Mr Davis intended to make an arrangement or arrive at an understanding on behalf of Delta with LES, or to induce LES to make such an arrangement or arrive at such an understanding with Delta, as alleged by the ACCC
If so, whether Mr Davis intended to make the alleged arrangement or understanding with a cartel provision within the meaning of s 45AD of the CCA because the relevant provision:
(a) had the purpose of ensuring that, in the event of a request for bids for the Original NGA BMS upgrade tender:
(i) Delta would bid for the BMS upgrade tender but LES would not, within the meaning of s 45AD(3)(c)(i); and/or
(ii) Delta and LES would both bid for the BMS upgrade tender, but on the basis that Delta's bid was more likely to be successful within the meaning of s 45AD(3)(c)(ii); and/or
(iii) Delta and LES would both bid for the BMS upgrade tender and proceed with their bids, but on the basis that Delta's bid was more likely to be successful within the meaning of s 45AD(3)(c)(iv); and/or
(b) had the purpose of preventing, restricting or limiting the supply or likely supply of services to be provided by LES to the NGA within the meaning of s 45AD(3)(a)(iii) of the CCA; and/or
(c) had the purpose, effect or likely effect of fixing or controlling, or providing for the fixing or controlling, of the price of the BMS services supplied by Delta and/or LES to the NGA within the meaning of s 45AD(2)(c) of the CCA.
Taking all the findings about conduct, the remaining question is intention. Most of the work has already been done. Once findings have been made about what was said and what was conveyed, the live question remaining is as to what Mr Davis intended. In that case, any positive conclusion is inferential. Mr Davis’ account has been rejected, such that his denials about what he said are no longer in play.
The issues as to intention are cast in a way that distinguishes between:
(a)the intention to make the alleged arrangement or reach the alleged understanding, or inducing that to occur, being the alleged objectives of the conduct; and
(b)the intention as to the content of any such agreement or understanding including a cartel provision, either in the primary and direct sense of bid rigging, or in the alternative indirect sense of controlling supply or price control or fixing.
In the circumstances of this case, it was conceptually possible for the ACCC’s case to have fallen short on the bid rigging due to an absence of an express statement by Mr Davis as to how that would be carried out. However, once the bid rigging aspect of the conduct is established, the control of supply and the control or fixing of the price flow from the action in taking LES out of the tender process, either at all, or in any practical and competitive sense.
Notwithstanding the observations earlier in these reasons about the need for caution in any application of criminal law principles and authority to civil penalty proceedings, the criminal law can sometimes be a valuable source of reasoning. That is especially so in relation to the tribunal of fact. The majority of the High Court observed in Kural v The Queen (1987) 162 CLR 502:
(a)at 504:
Where the offence charged is the commission of a proscribed act, a guilty mind exists when an intention on the part of the accused to do the proscribed act is shown. The problem then is one of proof. How does one prove the existence of the requisite intention? Sometimes there is direct evidence in the form of an admission by the accused that he intended his conduct to involve the forbidden act. More often, the existence of the requisite intention is a matter of inference from what the accused has actually done. The intention may be inferred from the doing of the proscribed act and the circumstances in which it was done.
(b)at 505:
… the existence of the requisite intention is a question of fact and that in most cases the outcome will depend on an inference to be drawn from primary facts found by the tribunal of fact. In this, as in other areas of the law, it is important not to succumb to the temptation of transforming matters of fact into propositions of law.
When the proven conduct, as found by the tribunal of fact is capable of supporting competing inferences as to the accompanying state of mind, there may be a dilemma in determining, in a civil case, which is more likely. That was the situation faced by White J in the Egg Corporation trial. His Honour was not satisfied that the proscribed intention was more likely than an intention that did not bear that character. That was so despite his Honour rejecting exculpatory accounts given by counsel for the respondents.
This case is quite different. Not only has the relevant aspect of Mr Davis’ account of the 18 December 2019 conversation been rejected, and Mr McEvilly’s contrary account been accepted, but no other benign account has been advanced, much less accepted.
I therefore proceed on the process of inference drawing as to intention from the facts with respect to conduct as found earlier in these reasons. Those facts support no reasonable inference other than that Mr Davis intended to make an arrangement or arrive at understanding as alleged by the ACCC, or to induce LES to make such an arrangement or arrive at such an understanding.
I further readily infer that Mr Davis’ intention amounted to such an arrangement or understanding with a cartel provision within the meaning of s 45AD of the CCA because that cartel provision had the purpose of ensuring that, in the event of a request for bids for the BMS upgrade tender:
(a)Delta would bid but LES would not (s 45AD(3)(c)(i)); or
(b)Delta and LES would both bid for the BMS upgrade tender, but on the basis that Delta was more likely to be successful (s 45AD(3)(c)(ii)); or
(c)Delta and LES would both bid for the BMS upgrade tender and proceed with their bids, but on the basis that Delta’s bid was more likely to be successful (s 45AD(3)(c)(iv)).
It follows from the inference I draw as to intention concerning the type of cartel provisions proscribed by s 45AD(3)(c)(i), (ii) or (iv), that I also draw an inference as to Mr Davis having the intention for the cartel provisions of the kind proscribed by:
(a)s 45AD(3)(a)(iii), namely having the purpose of preventing, restricting or limiting the supply or likely supply of services to be provided by LES to the NGA; or
(b)s 45AD(2)(c), namely having the purpose or likely effect of fixing or controlling, or providing for the fixing or controlling, of the price of the BMS services provided by Delta and/or LES to the NGA.
It may be observed that each of these alternative intentions do not depend on bid rigging per se. Rather they encompass a different form of cartel conduct associated with or arising out of the tender process. This does not rely upon the greater specificity or granularity required by s 45AD(3)(c)(i), (ii) or (iv). As the ACCC submits, and I accept, on the evidence it is clear that Mr Davis was seeking to make or arrive at, and induce LES to make or arrive at, an arrangement or understanding containing a cartel provision because it:
(a)would prevent LES from supplying BMS upgrade services to the NGA; and/or
(b)would entail LES agreeing to tender at a “cover price”, because tenderers who agree that they will tender at particular prices will also, of necessity, thereby fix, control or maintain prices, as those terms are explained by reference to a range of well-established authorities by Dowsett and Edelman JJ in Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd [2016] FCAFC 42; 244 FCR 190 at [550]-[554], which, as the ACCC points out, is especially so when only two tenderers are involved.
Conclusion
I am satisfied that declarations of contravention of the kind sought by the ACCC should be made, and that the matter should proceed to a remedies hearing. The appropriate course now is for the parties to confer and submit two sets of agreed or competing draft orders as to:
(a)declarations of contravention; and
(b)procedural orders for the conduct of the remedies phase of the proceeding.
I certify that the preceding four hundred and twenty-seven (427) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bromwich. Associate:
Dated: 1 August 2023
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