Australian Competition and Consumer Commission v Pratt (No 3)
[2009] FCA 407
•29 April 2009
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Pratt (No 3) [2009] FCA 407
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
v RICHARD PRATTVID 443 of 2008
RYAN J
29 APRIL 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 443 of 2008
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ProsecutorAND: RICHARD PRATT
DefendantJUDGE:
RYAN J
DATE OF ORDER:
27 APRIL 2009
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The questions ordered on 2 December 2008 to be tried and decided separately from any other question and before any trial in the proceedings be answered as follows:
Question 1: No.
Question 2: Unnecessary to answer.
Question 3: Unnecessary to answer.
2. There be a directions hearing herein at a date to be fixed.
3. Liberty be reserved to either party to apply.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 443 of 2008
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ProsecutorAND: RICHARD PRATT
Defendant
JUDGE:
RYAN J
DATE:
29 APRIL 2009
PLACE:
MELBOURNE
REASONS FOR RULING ON ADMISSIBILITY OF ALLEGED ADMISSIONS BY THE DEFENDANT
On 2 December 2008, I made the following orders for questions to be tried and decided in these proceedings separately from any other question and before any trial in the proceedings;
A.Pursuant to s 189 of the Evidence Act 1995 (Cth) (“the Evidence Act”) and O 29 of the Rules of this Court the following questions be decided after a hearing to commence on 8 December 2008 separately from any other question and before any trial in the proceedings herein;
(1)Are any and which of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence admissible as evidence in these proceedings pursuant to any of ss 81, 82(b), 87 or 88 of the Evidence Act?
(2)If yes to (1), in respect of any of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence (which are hereinafter collectively called “the prima facie admissible documents”) are any and which of the prima facie admissible documents inadmissible in these proceedings by reason of;
(a) s 85(2) of the Evidence Act; or
(b) s 137 of the Evidence Act?
(3)If (2) be answered no in respect of any of the prima facie admissible documents;
(a)will the Court refuse to admit such document as evidence in these proceedings in the exercise of the discretion conferred by;
(i) s 90 of the Evidence Act;
(ii) s 135 of the Evidence Act?
(b)is such prima facie admissible document by reason of s 138 of the Evidence Act not to be admitted as evidence in these proceedings?
B. The costs of both parties of the hearing on 10 November 2008 be reserved.’
My reasons for those orders (Australian Competition and Consumer Commission v Pratt (No 2) [2008] FCA 1833) and my earlier reasons published in these proceedings (Australian Competition and Consumer Commission v Pratt (2008) 250 ALR 661; [2008] FCA 1373) should be read in conjunction with the present reasons.
In the earlier reasons of 9 September 2008 ([2008] FCA 1373), I set out the four charges which the defendant, Pratt, was required to answer by the Summons issued out of this Court on 19 June 2008. In the same reasons, it was noted that particulars were appended to each statement of the charges identifying extracts from the transcript of an examination of Pratt conducted pursuant to s 155 of the Trade Practices Act 1974 (Cth) (“the TPA”) in which the alleged giving by Pratt of false or misleading evidence was said to have occurred.
To permit an understanding of the circumstances attending the bringing into existence of the documents to which the questions set out at [1] above are directed, it is necessary to trace a complex history of events and negotiations involving a large number of entities, Government agencies and individuals against a background of various proceedings and statutory instruments. It is therefore convenient to identify at the beginning of these reasons those entities, agencies and individuals and the relevant statutes and proceedings and the abbreviation or acronym to be used hereafter in referring to each of them.
Relevant entities, agencies, individuals and statutes
“ABL” :
Arnold Bloch Leibler, the solicitors for the respondents in the cartel proceedings and for Pratt in the present proceedings;
“ACCC”:
The prosecutor, Australian Competition and Consumer Commission;
“AGS” :
The Australian Government Solicitor, the solicitor for the ACCC in the cartel proceedings;
“Alexander” :
Mr Robert Alexander, General Counsel within the ACCC;
“Amcor” :
Amcor Ltd;
“Beach” :
Mr Jonathon Beach QC, Senior Counsel for the respondents in the cartel proceedings;
“Caleo” :
Mr Christopher Caleo SC, Counsel for the ACCC in the cartel proceedings;
“Carroll” :
Mr Rod Carroll, the sixth respondent in the cartel proceedings;
“Cassidy” :
Mr Brian Cassidy, Chief Executive Officer of the ACCC;
“Craigie”
Mr Christopher Craigie SC, Commonwealth Director of Public Prosecutions from 13 October 2007;
“David Smith” :
Mr David Smith, a Commissioner of the ACCC who presided over the examination of Pratt pursuant to s 155 of the TPA on 26 July 2005;
“Davidson”:
Mr Graeme Scott Davidson, Deputy Director, Commercial, International and Counter Terrorism Branch within the office of the DPP;
“Debney” :
Mr Harry Debney, the Chief Executive Officer of Visy and the fifth respondent in the cartel proceedings;
“Heathcote” :
Mr Robert Heathcote, a solicitor and partner in ABL;
“Ian Smith” :
Mr Ian Smith, a public relations consultant who had acted in that capacity for the ACCC in matters unrelated to the present proceedings and who was acting as a public relations consultant for the Visy companies and Pratt in relation to the cartel proceedings;
“Jones” :
Mr Russell Jones, the former Managing Director and Chief Executive Officer of Amcor;
“Jopling” :
Mr Peter Jopling QC, Senior Counsel for ACCC in the cartel proceedings;
“Kay” :
Mr Robbie Kay, General Counsel for the Visy companies;
“McHugh” :
The Honourable Michael McHugh AC, QC, a former Justice of the High Court of Australia;
“Pratt” :
Mr Richard Pratt, the defendant in these proceedings and the Chairman of Directors of the Visy group of companies;
“Pryde” :
Ms Susan Pryde, a senior solicitor with AGS;
“Samuel” :
Mr Graeme Samuel, the Chairman of the ACCC;
“the cartel proceedings” :
The civil proceedings VID 1650 of 2005 instituted in this Court on 29 March 2005 between the ACCC as applicant and the Visy companies, Richard Pratt, Harry Debney and Rod Carroll as respondents;
“the DPP” :
The Commonwealth Director of Public Prosecutions, the solicitor for the ACCC in the present proceedings;
“the Evidence Act” :
The Evidence Act 1995 (Cth);
“the TPA” :
The Trade Practices Act 1974 (Cth);
“Visy” :
Visy Board Pty Limited, a company engaged in the manufacture of corrugated fibreboard packaging products, a member of the Visy companies and the third respondent in the cartel proceedings;
“the Visy companies” :
Collectively, Visy Industries Holdings Pty Limited, Visy Industries Australia Pty Limited and Visy Board Pty Limited which were respectively the first, second and third respondents in the cartel proceedings;
“Williams” :
Mr Geoffrey Williams, Director of the New South Wales Regional Office of the ACCC;
“Zwier” :
Mr Leon Zwier, a solicitor and partner in ABL.
In November 2004, an approach was made to the ACCC on behalf of Amcor Ltd (“Amcor”) for an immunity from prosecution for involvement in a price-fixing cartel with the Visy Group of companies in contravention of s 46 of the TPA. By letter dated 23 December 2004 the ACCC granted conditional immunity to Amcor and its current and former officers and employees under Parts A and C of the ACCC’s leniency policy. The letter contained the following stipulations;
‘1. I refer to your facsimile to the Australian Competition and Consumer Commission (the Commission) dated 26 November 2004 in which you confirmed that you sought leniency on behalf of Amcor Limited and its related bodies corporate (Amcor) and Amcor's current and former officers and employees excluding Messrs Trevor Barnes, Ian Sangster, James Hodgson, Albert Mihelic and Christopher Bayley.
2. I confirm that Amcor was the first applicant for leniency in this matter and that the Commission was unaware of the understanding you indicate "may have been reached between at least Amcor and Visy Board concerning the supply of corrugated fibre containers".
3. Initial interviews by Commission staff with Messrs Russell Jones, Peter Brown, Peter Sutton, Darrell Roberts and Lou Lachal support the likely existence of such an understanding operating during the period 2000 to 2004 inclusive whereby existing market share volumes would be maintained and price increases would be coordinated.
4. The Commission has decided to grant immunity to Amcor under Part A of the Commission's leniency policy subject to certain conditions. Similar conditional immunity is granted to Amcor's current and former officers and employees under Part C of the policy as set out in your letter of 26 November 2004. The Commission will, as you requested, not offer conditional immunity under Part C of the policy to those former employees specified in your letter.
5. This letter details the terms and conditions upon which conditional immunity is granted. I have also written to Messrs Russell Jones, Peter Brown, Peter Sutton, Darrell Roberts and Lou Lachal advising them of the grant of conditional immunity in the terms set out in Attachment A.
6. At the conclusion of the Commission's investigation, and any proceedings that may arise from the investigation, and providing that all conditions have been fulfilled, the Commission will confirm in writing, that neither Amcor nor the current and former officers or employees covered by the application, will be proceeded against by the Commission as a consequence of involvement in the alleged cartel.
Conditions of leniency
7. Amcor must give full, frank and accurate disclosure and cooperate fully and expeditious on a continuing basis throughout the Commission's investigation and any ensuing proceedings. In particular Amcor must:
•provide full details of all facts known to it relating to the cartel including when the cartel arrangements operated, who was involved, who had knowledge of the arrangements, how the arrangements began and how they were implemented (including details of meetings etc);
•provide the Commission with all evidence and information in its possession, custody or power regarding the cartel;
•use its best endeavours to comply with any timetables set down by the Commission for the provision of information and documents;
•provide promptly, and without requirement of the Commission issuing section 155 notices or subpoenas, all documents or other items in its possession requested by the Commission, to the extent not previously provided;
•use its best efforts to secure the ongoing, full and truthful cooperation of current and former directors, officers and employees which will include:
° encouraging such persons voluntarily to provide the Commission with any information that may be relevant to the cartel;
° facilitating the ability of such persons to appear for such interviews or testimony in connection with the cartel, as the Commission may require at the times and places designated by the Commission;
° ensuring such persons respond completely, candidly and truthfully to all questions asked in interviews and court appearances and make no attempt to falsely protect or implicate any person or entity,
•make all reasonable efforts, if requested by the Commission, to pay restitution to any person or entity injured as a result of the cartel.
8. Amcor and its officers and employees and their respective legal representatives must not disclose without written consent from the ACCC to any other persons:
•that the Commission has determined that Amcor qualifies for conditional leniency;
•the evidence and information Amcor and/or its officers and employees has provided, or will be providing, to the Commission; and
•information and/or evidence Amcor, it officers or employees obtain through its cooperation with the Commission.
9. Amcor must acknowledge that the Commission's grant of immunity is conditional and that the ACCC may, in its absolute discretion, revoke this conditional grant of immunity if:
•its investigation reveals that Amcor's participation in the cartel continues;
•Amcor deliberately misleads the Commission, provides false evidence, deliberately withholds or destroys important evidence or otherwise fails to provide full, frank and accurate disclosure and to cooperate fully and expeditiously on a continuing basis;
•the Commission considers Amcor's cooperation is not a genuine corporate act having regard to the extent and significance of the failure of one or more present directors, officers or employees of Amcor to give timely, full, frank and accurate disclosure of their involvement in the cartel or of all matters within their knowledge of the involvement of others (whether or not they are directors, officers or employees of Amcor).
10. If the Commission revokes conditional immunity, the Commission may use against Amcor in proceedings for breach of the Act, any documentary or other information provided by Amcor, as well as any statements provided by any past or current director, officer, employee, servants or agents of Amcor, pursuant to this leniency arrangement.
11. As indicated above, and subject to the specified exclusions requested, any current and former directors, officers or employees of Amcor who have admitted or in the future do admit their involvement in the cartel will also qualify for conditional immunity, under Part CC of the leniency policy provided their admission is timely. The directors, officers and employees must provide the Commission with full and frank disclosure of all evidence and information in her or his possession or available to her or him relating to the cartel in the form requested by the Commission and cooperate fully and expeditiously on a continuing basis throughout the Commission's investigation and ensuing proceedings. In the case of individuals full cooperation will involve, but not be limited to, the following elements:
•providing all documents and records, including personal documents and records to the Commission which are relevant to the cartel;
•making himself/herself available for interviews upon the request of the Commission;
•respond fully and truthfully to all inquiries of the Commission in connection with the cartel, without falsely implicating any person or intentionally withholding any information.
12. The Commission may require any current or former director, officer or employee of Amcor with immunity under Part C to separately undertake to comply with conditions of immunity, including full and on-going cooperation.
13. In the event that a current or former director, officer or employee of Amcor with conditional immunity under Part C of the leniency policy fails to comply fully with his/her obligations as set out in paragraph 11, the Commission may revoke the leniency granted to such an individual. Any statements or information provided by such individual to the Commission, pursuant to this leniency arrangement, may be used against him/her in any subsequent Court proceedings.
14. Please also note that Amcor will not have conditional immunity from proceedings or a pecuniary penalty in respect of cartels not disclosed by Amcor in its application for leniency.’
As part of the co-operation which Amcor was required to give in return for the conditional immunity, Jones made statements to officers of the ACCC. In a written witness statement prepared after those interviews and dated 23 May 2005, Jones gave an account of a meeting which he had held with Pratt at the All Nations Hotel in Richmond. The part of the statement which recounted that meeting was in these terms;
‘14. During the meeting with Mr Pratt, 1 said words the substance of which was:
I have been told by Peter Brown that there is an arrangement in place between Amcor and Visy in respect of our corrugated box businesses which involves the prevention of major market share shifts. I understand that this arrangement has been made by Peter Brown and Harry Debney. I would like to get your confirmation that the arrangement is something that you support, and that you will tell Harry to ensure that the arrangement is adhered to by your people. The arrangement can continue from our end if we receive an indication that you will stick to it. Peter tells me that he has agreed with Harry that Visy will take the Smith's and Inghams contracts which are up for renewal, to compensate for Amcor having taken the Lion Nathan contract. We have 2 other major accounts up for renewal this year, Nestle and Goodman Fielder, and these are accounts which we must retain. I need to know that Visy will honour the arrangement and that Visy will not try to take the Goodman Fielder and Nestle contracts away from Amcor.
15. Mr Pratt said to me words, the substance of which was:
Yes, Visy will honour the arrangement.
He also said words, the substance of which was:
I am aware of the arrangement in place between Visy and Amcor and the contracts you mentioned We want to maintain stability in the marketplace. I will talk to Harry and confirm that the arrangement has my support and that the Nestle and Goodman Fielder contracts will stay with Amcor.
I told Mr Pratt that I would inform Mr Brown of the substance of our discussion.’
Pursuant to s 155 of the TPA, a summons was issued to Pratt to attend for examination by David Smith.
Section 155 of the TPA has at all relevant times provided, so far as is relevant;
‘Power to obtain information, documents and evidence
(1)Subject to subsection (2A), if the Commission, the Chairperson or a Deputy Chairperson has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act or Division 4A or 4B of Part 3.3 of the Radiocommunications Act 1992, or is relevant to a designated communications matter (as defined by subsection (9)) or a designated water matter (as defined by subsection (9A)) or is relevant to the making of a decision by the Commission under subsection 91B(4), 91C(4), 93(3) or (3A) or 93AC(1) or (2) or 95AS(7) or the making of an application under subsection 95AZM(6), a member of the Commission may, by notice in writing served on that person, require that person:
(a)to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information;
(b)to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or
(c)to appear before the Commission, or before a member of the staff assisting the Commission who is an SES employee or an acting SES employee and who is specified in the notice, at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents.
(2A)A member of the Commission may not give a notice under subsection (1) merely because:
(a)a person has refused or failed to comply with a notice under subsection 95ZK(1) or (2) on the ground that complying with the notice would tend to incriminate the person, or to expose the person to a penalty; or
(b)a person has refused or failed to answer a question that the person was required to answer by the person presiding at an inquiry under Part VIIA, on the ground that the answer would tend to incriminate the person, or to expose the person to a penalty; or
(c)a person has refused or failed to produce a document referred to in a summons under subsection 95S(3), on the ground that production of the document would tend to incriminate the person, or to expose the person to a penalty.
(3)If a notice under subsection (1) requires a person to appear before the Commission to give evidence, the Commission may require the evidence to be given on oath or affirmation. For that purpose, any member of the Commission may administer an oath or affirmation.
(3A)If a notice under subsection (1) requires a person to appear before a member of the staff assisting the Commission to give evidence, the staff member may require the evidence to be given on oath or affirmation and may administer an oath or affirmation.
(5)A person shall not:
(a)refuse or fail to comply with a notice under this section;
(b)in purported compliance with such a notice, knowingly furnish information or give evidence that is false or misleading.
(5A)Paragraph (5)(a) does not apply to the extent that the person is not capable of complying with the notice.
Note:A defendant bears an evidential burden in relation to the matters in subsection (5A), see subsection 13.3(3) of the Criminal Code.
(6A)A person who contravenes subsection (5) is guilty of an offence punishable on conviction by a fine not exceeding 20 penalty units or imprisonment for 12 months.
Note 1:Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2:Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
(7)A person is not excused from furnishing information or producing a document in pursuance of this section on the ground that the information or document may tend to incriminate the person, but the answer by a person to any question asked in a notice under this section or the furnishing by a person of any information in pursuance of such a notice, or any document produced in pursuance of such a notice, is not admissible in evidence against the person:
(a)in the case of a person not being a body corporate—in any criminal proceedings other than proceedings under this section; or
(b)in the case of a body corporate—in any criminal proceedings other than:
(i)proceedings under this Act; or
(ii)proceedings under section 113 of the Radiocommunications Act 1992 that relate to a condition set out in paragraph 109A(1)(ij) or 109C(1)(a), (b) or (c) of that Act.’
The transcript of Pratt’s examination pursuant to s 155 records, amongst other things, the following exchange between Jopling as Counsel assisting the ACCC and Pratt;
MR JOPLING:
You see, if Mr Jones has told us that at this first meeting at the All Nations Hotel on the 21st May 2001, that he said to you that he had been told by Peter Brown there was an arrangement in place between Amcor and Visy in respect of your respective corrugated box businesses, which involved the prevention of major market share shifts, what would you say about that?
MR PRATT:
He’s lying.
MR JOPLING:
He’s lying. What reason would he have to lie to us in telling us that?
MR PRATT:
I’ don’t know.
MR JOPLING:
Well, why are you so adamant he is lying?
MR PRATT:
Because I would have recalled such a conversation and there never was one.
MR JOPLING:
But you can’t proffer me a reason as to why he would want to tell us a lie like that?
MR PRATT:
I don’t know.
MR JOPLING:
You see Mr … So you have absolutely no recollection of him raising a subject matter of that kind?
MR PRATT:
No.
MR JOPLING:
And your responding to that?
MR PRATT:
No.
MR JOPLING:
Do you have any independent knowledge of the existence of such an arrangement?
MR PRATT:
No.
In November 2006, Williams spoke to Davidson of the DPP about the then prospective cartel proceedings and indicated to Davidson that the ACCC held the view that Pratt had lied on oath during his examination under s 155 of the TPA.
Although the inconsistency of the respective accounts given by Jones and Pratt of their meeting at the All Nations Hotel was present to the minds of several senior officers of the ACCC with responsibility for investigating and prosecuting the alleged cartel conduct, a decision was taken within the ACCC to defer consideration of prosecuting Pratt for contravention of s 155 of the TPA. That decision was explained as due to a desire to concentrate the resources of the ACCC on instituting and prosecuting the cartel proceedings which were regarded as a priority because of the danger that they might become statute-barred.
Shortly before the cartel proceedings were instituted, Heathcote approached Williams and Alexander. That approach was made with a view to exploring a possible compromise of the contemplated cartel proceedings. In the course of his discussion with Williams and Alexander, Heathcote indicated that, provided any relief were confined to the Visy companies, the ACCC could recover massive pecuniary penalties without the risk of a trial. As well, Heathcote acknowledged that the evidence in the ACCC’s possession raised a question to be tried in relation to Pratt.
The matters raised by Heathcote were considered at a meeting of the ACCC Commissioners on 16 December 2005 when it was decided to institute the cartel proceedings against the Visy companies and three individual executives of those companies, Pratt, Debney and Carroll. After that decision had been taken, it was communicated by Samuel, Cassidy and Alexander to Heathcote and Zwier of ABL. Heathcote and Zwier reiterated that, if relief were only against the Visy companies, there could be a settlement for a record penalty but there could be no relief against the individuals, particularly Pratt. Samuel acknowledged that the ACCC understood that stance but had decided to commence proceedings against both the Visy companies and the individuals. According to Samuel, nothing that had been said at that meeting with the ABL representatives would alter that decision.
The cartel proceedings were instituted in this Court on 21 December 2005. Several interlocutory issues arose for resolution while those proceedings were pending. One of the interlocutory steps taken in the cartel proceedings was the filing on 21 April 2006 of a Defence on behalf of Pratt which contained general denials of allegations of Visy’s participation in a cartel.
After the cartel proceedings had been fixed for trial to commence on 1 October 2007, Heathcote of ABL telephoned Pryde of AGS as solicitor for the ACCC proposing a mediation of the cartel proceedings and suggesting that McHugh would be an appropriate mediator. After an exchange of correspondence ending on 1 August 2007, it was arranged that a meeting on 6 August 2007 should occur at the offices of ABL between representatives of the ACCC and representatives of the Visy companies and Pratt. On the same day, Williams sent an email to Alexander which included these sentences;
‘Also for your interests Messrs Pratt and Debney have an issue confronting them over giving false evidence during the examination if they now agreed to plead how do you propose to deal with that. I am sure Heathcote is aware of it and. will raise it.’
On 2 August 2007, Williams spoke with Alexander about the forthcoming meeting with representatives of the Visy companies and Pratt and the possible proceedings against Pratt under s 155 of the TPA. The latter possibility was raised because Alexander believed that Heathcote would be aware that Pratt was exposed to a possible criminal prosecution under s 155 and would seek an assurance that no such prosecution would occur. It was therefore seen to be necessary to prepare a response to that matter which Williams and Alexander expected Heathcote to raise. On 2 August 2007, Alexander discussed the likely need for such a response with Cassidy who suggested that Alexander should respond to the representatives of the Visy companies and Pratt by saying that any proposal they might make would be put to a formal meeting of the ACCC. Alexander conveyed that suggested response to Williams with the addition that it was ultimately a decision for the DPP. Alexander also told Williams that it was up to Beach or Heathcote to raise the issue and the ACCC representatives, themselves, should not raise it.
The meeting of 6 August 2007 occurred as arranged and occupied about two hours. It was attended by Counsel for the ACCC together with Pryde, Alexander and Williams. Pratt, Debney and the Visy companies were represented by Beach and Heathcote, who told the ACCC that there was a “political issue” involved in Pratt’s position because he, Pratt, had told the Prime Minister that he had not contravened the TPA. Accordingly, Beach said that the respondents would only consent to a “weak” declaration in respect of Pratt’s involvement and a requirement that he undergo a compliance program. It was indicated on behalf of the ACCC that it would be prepared to agree to any pecuniary penalty for Pratt to be “wrapped up” with that to be imposed on the Visy companies, but that it would insist on a declaration of Pratt’s knowing involvement in the cartel conduct. At the same meeting, the suggestion was revived that McHugh might mediate or broker a settlement of the cartel proceeding. The representatives of the Visy companies, Pratt and Debney, were asked to provide the ACCC with a written version of their proposals to settle the cartel proceedings. There was no mention at that meeting of the possibility that charges might be laid against Pratt or Debney under s 155 of the TPA.
On 15 August 2007, ABL sent a letter to the AGS containing the terms of an offer on behalf of the Visy companies, Pratt and Debney to settle the cartel proceedings. That letter contained the following paragraphs;
‘The settlement contemplated by the Visy respondents will involve:
1.Visy Board Pty Limited (“Visy Board”) admitting 17 contraventions of the Trade Practices Act 1974 (Cth) (“TPA”) including:
(a)making and giving effect to an Overarching Understanding;
(b)making the 2000 price increase understanding;
(c)making and giving effect to the 2001 price increase understanding;
(d)making and giving effect to the 2002 price increase understanding;
(e)making and giving effect to the 2003 price increase understanding; and
(f)the making of some of the 13 specific customer arrangements (set out in Schedule 1 to this letter).
2.Mr Debney admitting 5 contraventions of the TPA including:
(a)making and giving effect to an Overarching Understanding;
(b)making the 2000 price increase understanding;
(c)making the Inghams understanding; and
(d)making the 2003 price increase understanding.
3.Mr Carroll: see below.
4.Mr Pratt acknowledging that he failed to take steps to implement adequate controls and supervision to prevent the relevant (offending) conduct by Mr Debney and Mr Carroll and agreeing to the orders set out later.
5.Visy Board paying a pecuniary penalty at the upper end of a range to $35 million.
6.Mr Debney paying a pecuniary penalty at the upper end of a range of $750,000 - $1.25 million.
7.Mr Carroll paying a pecuniary penalty to be agreed.
8.Visy Board paying the Commission's reasonable costs of this proceeding on a party party basis.
General Observations
The purpose of this letter is to outline, in general terms, the admissions that my clients will be prepared to make to bring about the settlement of this proceeding. Obviously, any settlement that the parties may conclude is necessarily subject to the sanction of the Federal Court. However, If discussions progress to the point where agreement can be reached on all matters of substance and detail, we envisage the matter proceeding as a pecuniary penalty hearing only at which His Honour Justice Heerey will have the benefit of an Agreed Statement of Facts and written and oral submissions on behalf of all parries (the submissions may comprise both a joint submission and, where necessary, a separate submission on discrete issues). Furthermore, it may be that the Visy respondents will want to file additional evidence to support the proposed agreed position that will be put to the Court. I envisage that the Visy respondents will also be permitted at the pecuniary penalty hearing to adduce such evidence as they may be advised in relation to aspects of paragraph 22 of their Defence viz:
(a) Visy Board not being the initiator or the ring-leader;
(b)The objective market share positions from January 2000 to December 2004; and
(c) The heterogeneous aspects of the product and the pricing.
In this letter I have attempted to set out a broad outline of the admissions that will be made although you will appreciate that detailed discussions will need to take place (between the parties' legal and other representatives) as to the precise form and conduct to be admitted by the Visy respondents.
Any settlement of this proceeding will necessarily require resolution of the 3 broad areas in contention, namely:
(a) the alleged Over-arching Understanding;
(b) the alleged price increase understandings; and
(c) the pleaded customer transactions.
As for the latter, Schedule 1 to this letter is a table entitled "Table of Proposed Admissions" ("Table"). It identifies the alleged understandings and the position that the Visy parties propose to offer, based on instructions and on the submitted evidence. At the time of writing this letter we are still preparing the response of the Visy respondents to the 13 pleaded customer transactions.
Parameters of Possible Settlement
We envisage that any settlement will involve pleas by Visy Board, Mr Debney, Mr Carroll and to a limited degree, Mr Pratt. As for Mr Carroll, we anticipate that if a compromise can be reached with the Visy respondents, Mr Carroll is likely to give instructions to compromise his position in a manner which would be acceptable to the Commission and consistent with the position of the Visy respondents in terms of agreed contraventions the subject of any settlement. The position of Visy Industries Holdings Pty Limited and Visy Industries Australia Pty Limited is separately addressed in Schedule 2 to this letter.
The Position of Visy Board:
In relation to the Over-arching Understanding, we ask you to assume the following (for the purpose of further settlement discussions):
Visy Board offers to plead to a contravention of the TPA concerning the making n the Over-arching Understanding (paragraph 19 of the SFASC. The content of the terms of the Over-arching Understanding will need to be discussed, but in essence it will involve an arrangement as between Visy Board and Amcor for:
(a) sensible pricing;
(b) as a corollary of (a), relative stability in the market;
(c)as a corollary of (a) and/or (b), a maintenance of relative market share of each of Visy Board and Amcor incorporating a form of elements 19(a)-(d) of the SFASC;.
(d) as a corollary of (a), some form of 19(g) of the SFASC; and
(e) some form of elements 19(h) and (i) of the SFASC.
This will need to be discussed further. But we accept that this will be the principal contravention justifying the highest penalty if a compromise is reached.
Mr Debney's version of events and state of mind may also need to be addressed in terms of any material put to the Court to justify any agreed penalty.
In relation to the giving effect to the Over-arching Understanding, we ask you to assume the following:
Visy Board offers to plead to contraventions of the TPA involving the giving effect to the Over-arching Understanding by reason of:
(a) the making of the price increase arrangement for 2000;
(b) the making of the price increase arrangement for 2001;
(c) the making of the price increase arrangement for 2002;
(d) the making of the price increase arrangement for 20D3;
(e)the making of some of the 13 specific customer arrangements set out in the Table later in Schedule 1; and
(f)the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the SFASC (the Pratt allegations are dealt with later in this letter); however, as to this conduct, we will need to discuss with you the precise terms thereof and how this is presented.
You will, of course, appreciate that some of this conduct is the subject of allegations of 2 or more contraventions and that recognition of this aspect will need to be made in terms of any joint presentation to the Court to substantiate the agreed penalty.
In relation to the price increase arrangements, we ask you to assume the following:
Visy Board offers to plead to the making of each of the 4 price increase arrangements and some limited giving effect thereto on the following generic factual foundation in each case, namely that:
(a)prior to the making of each arrangement, both Visy Board and Amcor had each unilaterally decided to increase their prices for the particular year in any event;
(b)the prior unilateral decisions referred to in (a) had an independent commercial rationale (e.g. an increase in costs) for each of Visy Board and Amcor;
(c)each price increase notified by Visy Board and/or Amcor to their respective customer bases:
(i)was a "headline" notification;
(ii)was implemented differently in each State by each company; and
(iii)within each State was implemented on a discretionary basis for each individual customer within the purview of the particular State Manager depending upon the particular idiosyncratic customer position; and
(d)Visy Board would have increased its prices in any event irrespective of the alleged arrangements.
The Position of Mr Pratt
In relation to Mr Pratt's position we ask you to assume the following:
Mr Pratt offers the following:
(a)He will subject himself personally to orders that he implement across the Visy Group an appropriate TPA compliance program (audited);
(b)He will acknowledge in a Statement of Agreed Facts that in his position as Executive Chairman of the Visy Group of companies, which includes Visy Board, he failed to implement adequate controls and supervision in respect of Messrs Debney and Carroll to prevent the offending conduct occurring; and
(c)He will acknowledge in a Statement of Agreed Facts that any penalty imposed upon Visy Board will be borne by the Pratt family.
Subject to (a)-(c), a pecuniary penalty will not be separately imposed upon him.
The Position of Mr Debney
In relation to Mr Debney's position, we ask you to assume the following:
Mr Debney offers to plead to 5 separate contraventions of the TPA being knowingly involved in the contraventions by Visy Board which are set out in the Table in Schedule 1.
The Position in relation to the 13 pleaded customers,
We have also analysed the available evidence In relation to the pleaded customers which we have attempted to summarize in Schedule 1. Obviously detailed discussions will need to take place as to the precise behaviour to be admitted by the respondents identified in the Table on a case by case basis.
Pecuniary Penalties
Our clients and their legal representatives have given very careful consideration to the matters raised at the conference held at your offices on Monday 6 August last. We understand that the highest pecuniary penalty ever imposed against a corporate respondent for contraventions of Part IV of the TPA is $15 million (see ACCC v Roche Vitamins Australia Pty Ltd [2001] FCA 150). As we have said to you, in our opinion the likely range for a pecuniary penalty against Visy Board is $25-$35 million. If we can agree on all other matters, Visy Board would be prepared to agree to pay a pecuniary penalty at the upper end of a range to $35 million.
We also understand that the highest pecuniary penalty ever imposed against an individual respondent for contraventions of Part IV of the TPA is $200,000.00. In our opinion the likely range for a pecuniary penalty against Mr Debney is $750,000 to $1.25 million. If we can agree on all other matters, Mr Debney would be prepared to agree to pay a pecuniary penalty at the upper end of that range.
Mr Carroll's position has been separately addressed.
You will observe that we have made no provision for a separate pecuniary penalty against Mr Pratt, the reasons for which are earlier stated. Similarly, we have made no provision for separate penalties against the Visy intermediate or ultimate holding companies for reasons previously stated.
Costs
If we can agree on all other matters, Visy Board would be prepared to submit to an order that it pay the Commission's costs of the proceeding as between party and party, to be taxed in the absence of agreement or, at the discretion of the ACCC, to be fixed by an independent costs expert,
Conclusion
We look forward to meeting with you at a time to be arranged this coming Friday, 17 August, to take our discussions to the next level. If in the meantime there is any aspect of this letter that you would like us to clarify please let me know.’
At a further meeting at the offices of the AGS on 17 August 2007, Alexander provided, by way of a counter-offer to that made in ABL’s letter of 15 August 2007, a draft of the orders to which the ACCC would require the Visy companies and the individual defendants to consent as a condition of the settlement of the cartel proceedings. That draft proposed the making of, amongst others, the following orders;
‘Declarations
THE COURT DECLARES THAT:
1. Each of:
(a) the First Respondent ("Visy IH");
(b)the Second Respondent ("Visy IA");
(c)the Third Respondent ("Visy Board"),
(individually and collectively referred to hereafter as "Visy", unless otherwise indicated) by making a contract or arrangement or arriving at an understanding with Amcor Limited ("Amcor") in approximately January to April 2000 containing provisions that:
(i)Visy and Amcor would permit each other to maintain approximately their then current share of the market in Australia for the supply of corrugated fibreboard packaging ("CFP");
(ii)Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other's principal CFP customers;
(iii)if, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the market in Australia for the supply of .CFP ("CFP Market") that Amcor had lost as a result of losing the supply contract to Visy;
(iv)if, for one reason or another, Amcor did enter into a contract for the supply of CFP with a principal CFP customer of Visy, then Amcor would not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor;
(v)Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;
(vi)Visy would appoint the Sixth Respondent ("Carroll") as its nominated contact person with Amcor for the purpose of effecting the implementation of the contract, arrangement of understanding; and
(vii)Amcor would appoint Edward Laidlaw as its nominated contact person with Visy for the purpose of effecting the implementation of the contract, arrangement or understanding; and
made a contract or arrangement or arrived at an understanding (the "Over-arching Understanding") which:
(A)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(1) of the TPA; and
(B)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.
2. By engaging in each instance of: [the conduct alleged in various paragraphs of the Second Further Amended Statement of Claim]
… … …
Visy gave effect to a provision of the Over-arching Understanding that:
(i)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and
(ii)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.
… … … … …
35.The Fourth Respondent ("Pratt") was, directly or indirectly, knowingly concerned in, or party to, the contraventions of the TPA by Visy referred to in sub-paragraph (a) of paragraph 2 above, within the meaning of sections 76(i)(e) and 80(i)(e) of the TPA, by meeting and discussing with the CEO of Amcor the implementation by Visy and by Amcor of the Over-arching Understanding referred to in paragraph 1 above.
… … … …
Pecuniary Penalties
38. An order that Visy IH pay a pecuniary penalty in the sum of $6million.
39. An order that Visy IA pay a pecuniary penalty in the sum of $18million.
40. An order that Visy Board pay a pecuniary penalty in the sum of $12million.
41. An order that Debney pay a pecuniary penalty in the sum of $1,500,000.
42. An order that Carroll pay a pecuniary penalty in the sum of $500,000.
Injunctive orders
43.Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants, agents, or otherwise howsoever, from:
(a)making, or arriving at;
(b) giving effect to;
(c)inducing, or attempting to induce, any person to make or arrive at, or give effect to; or
(d)being in any way knowing concerned in, or party to, the making or arriving at, or giving effect to,
any contract, arrangement or understanding with Amcor, or any other supplier of CFP in Australia, which contains a provision that:
(i)has the purpose of preventing, restricting or limiting the supply of CFP by a party to the said contract, arrangement or understanding to customers or potential customers of any of them;
(ii)has the purpose, or has or is likely to have the effect of fixing, controlling or maintaining, of prices for CFP supplied by a party to its customers in Australia; or
(iii)has the purpose, or has or is likely to have the effect, whether by itself or together with another provision or provisions of any contract, arrangement or understanding to which Visy IH, Visy IA or Visy Board is a party, of substantially lessening, preventing or hindering competition in the CFP Market.
44.Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants or agents or otherwise howsoever, from:
(a)communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia;
(b)requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or
(c)requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP.
45.Each of Pratt, Debney and Carroll be permanently restrained, by themselves, their servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of Visy IH, Visy IA or Visy Board in:
(a)communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia;
(b)requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or
(c)requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP.
Other orders
46.Pratt and each of Visy IH, Visy IA and Visy Board shall implement and undertake, at Mr Pratt's expense, a trade practices compliance program that is in accordance with the Australian Standard for Compliance Programs AS-3806-1998 and provides for implementation of the program to be audited by an independent auditor, and is in a form agreed with the ACCC or approved by the Court, with regard to section 45 of the TPA.
47.Visy IH, Visy IA and Visy Board shall pay the costs of the ACCC of and incidental to these proceedings.
At the same meeting on 17 August 2007, Heathcote again adverted to the possibility of engaging McHugh as a mediator and suggested that a person of his eminence could be instrumental in “getting Pratt across the line”, which would assist in justifying to the public the proposed settlement.
On 21 August 2007, Heathcote of ABL sent a further letter to AGS which included these statements;
‘…… The declaration of a contravention by Mr Pratt (paragraph 35) is not something that we have instructions to agree to. We regard this issue as a substantial impediment to any overall settlement.
As you are aware, we had thought that a mediation (Court ordered or otherwise) before Michael McHugh QC might provide a forum in which settlement discussions could be progressed or at the very least the issues between the parties narrowed. It seems to us that this substantial impediment would be an appropriate matter to refer to Mr McHugh QC. He is available to meet with the parties and their legal representatives on Tuesday 28 August 2007.
If a mediation is to take place before Mr McHugh QC we believe it is important that the persons directly involved, including the decision makers, are present for some part of the mediation_ For our part we would undertake to have Mr Pratt and Mr Debney both present and we would expect that Mr Samuel would also attend.
We do not envisage that the process needs to be formalised beyond providing Mr McHugh QC with copies of the relevant material and a brief letter of instructions. The relevant material, in our view can be confined to the following.
1 The pleadings.
2 Our letter to you of 15 August 2007.
3 The draft orders tabled at our meeting on 17 August 2007.
4 Mr Pratt's Section 155 transcript.
5 The transcript of the 14 December 2004 interview of Mr Jones.
6 Mr Jones' Outline as filed by the ACCC.’
The letter from ABL of 21 August 2007 was discussed by Samuel, Cassidy, Alexander and Williams. Those officers of the ACCC decided to reject the suggested mediation and resolved that, for any settlement of the cartel proceedings to occur, Pratt would have to admit to having been knowingly involved in at least one contravention of the TPA. They considered that nothing had changed since the cartel proceedings had been instituted to warrant releasing Pratt from liability for any contravention at all of the TPA.
On about 23 August 2007 and again a few days later, Ian Smith telephoned Samuel and told him that there was a division of opinion among the Visy advisers concerning Pratt and urged the ACCC to attend the proposed mediation under the chairmanship of McHugh. Despite those overtures, AGS sent to ABL on 24 August 2007 a letter which recited;
‘ACCC v Visy Industries Holdings Pty Ltd & Ors
Federal Court Proceedings: VID 1650 of 2005
1.We refer to your letter dated 21 August 2007 proposing a mediation before Mr Michael McHugh QC on Tuesday 28 August 2007..
2.We are instructed that the ACCC is of the view that the proposed mediation is not an appropriate means to progress discussions between the parties as to possible resolution of the above proceedings.
3.Nevertheless, the ACCC invites your clients' response to the draft orders tabled at our meeting on Friday 17 August 2007 and stands ready to discuss that response at a further meeting with you and other representatives of your clients should they so wish.
4. We look forward to your response.’
On 30 August 2007, a videoconference meeting of the ACCC Commissioners was addressed by Counsel retained by the ACCC in the cartel proceedings and it was resolved that the ACCC would participate in a meeting to be chaired by McHugh but that it would be a non-negotiable condition of any settlement of the cartel proceedings that Pratt should consent to a declaration that he had been knowingly concerned in a contravention of the TPA. Accordingly, the minutes of that meeting recorded the following resolution;
‘The Commission decided:
-to attend a meeting facilitated by Mr McHugh with Visy’s legal representatives and Mr Pratt next week. The meeting is to deal specifically with Mr Pratt’s declaration of being knowingly concerned in a contravention of the Act by Visy. The ACCC will be represented by Mr Brian Cassidy, Chief Executive Officer, Mr Bob Alexander, General Counsel, Mr Geoff Williams, Principal Investigator, and Counsel acting for the ACCC – Mr Peter Jopling and Mr Chris Caleo and lawyer Ms Susan Pryde, AGS. Members of the Commission will not attend but will be available as the Commission to decide any settlement issue.
-The Commission decided that its position in relation to Mr Pratt is unchanged and non negotiable in that Mr Pratt must accede to a declaration that he was knowingly concerned in contravening the Act by Visy.
-Staff provide the terms of the engagement of Mr McHugh for the meeting for settling by the Commission.
The Commission directed staff to prepare a paper for next week’s Commission Meeting. The paper is to examine the scope of penalties for the Visy Corporate and individual respondents. The staff paper needs to address any precedent for allowing a penalty awarded against an individual to be rolled into the corporate penalty.’
Consistently with that resolution, Pryde of the AGS sent to ABL a letter dated 31 August 2007 which recited, amongst other things;
‘1.We refer to our letter of 24 August 2007 and in the telephone conversation between the writer, and Mr Heathcote and Mr Zwier yesterday evening We confirm we have taken further instructions as to the matters raised in your letter of 21 August 2007.
2.We now have instructions to agree to a meeting next Thursday, 6 September 2007, to be chaired by Mr McHugh QC, between the parties and their legal representatives.
3.The persons who will attend the meeting on behalf of the Applicant will be Mr Alexander, Mr Williams, Mr Cassidy (CEO of the ACCC Mr Jopling QC and Mr Caleo of Counsel, and the writer.
4.The attendees on behalf of the Applicant are not the decision makers of the Commission and they do not have authority to reach Final agreement on matters discussed at the meeting. The ultimate decision-maker, the Commission, comprises six Commissioners, and each of the six Commissioners will be available by telephone on 6 September 2007 if required.
5.So that we can progress this meeting, could you please provide us with a draft letter of instruction to Mr McHugh QC so that we can circulate this to all Commissioners as soon as possible. We consider that the letter of instruction to Mr McHugh QC should be a joint letter of instruction from ABL and AGS.
6.As we understand it, the only issue for discussion at the meeting is the terms of a declaration of contravention by Mr Pratt. Accordingly, we agree that Mr McHugh QC should be provided with a letter of instruction and the relevant material which is specific in your letter of 21 August 2007, namely:
1.the pleadings;
2.the ABL letter to AGS of 15 August 2007;
3the draft orders tabled at the meeting on 17 August 2007;
4the transcript of Mr Pratt's section 155 examination of 26 July 2005;
5.the transcript of Mr Jones' interview of 14 December 2004; and
6the Proof of Evidence of Mr Jones filed by the Applicant on 2 July 2007.
7.We concur with your comments that time is short and we would appreciate your response - including the draft letter of instruction to Mr McHugh QC - at your earliest convenience.’
A joint letter of instructions to McHugh was prepared and sent on 31 August 2007. It said, in part;
‘We are pleased to confirm your availability to Chair a meeting to be conducted between the parties to the Proceeding (with the exception of Mr Carroll) and their legal representatives in Melbourne on Thursday 6 September 2007. The meeting will be conducted at the offices of Arnold Bloch Leibler, Level 21, 333 Collins Street, Melbourne commencing at 8:00 am. A maximum of 4 hours has been set aside for the meeting.
It is agreed that the meeting will be conducted on a without prejudice basis. The Australian Government Solicitor (Ms Susan Pryde) is the solicitor on the record for the Commission and Arnold Bloch Leibler (Robert Heathcote and Leon Zwier) are the solicitors on the record for all Respondents save for Mr Carroll.
The only issue for discussion at the meeting is the relief sought by the Commission against Mr Pratt as a Respondent to the Proceeding.
The following persons will attend the meeting on behalf of the Commission:
Mr Jopling QC, Mr Cateo SC, Ms Pryde, Mr Cassidy (CEO of the Commission), Mr Alexander (General Counsel of the Commission) and Mr Williams (the Commission's Director in New South Wales).
The attendees on behalf of the Applicant are not the decision makers of the Commission and they do not have authority to reach final agreement on matters discussed at the meeting. The ultimate decision-maker, the Commission, comprises six Commissioners, and each of the six Commissioners will be available by telephone on 6 September 2007 if required.
The following persons will attend the meeting on behalf of the Respondents:
Mr Pratt, Mr Beach QC, Mr Heathcote, Mr Zwier, Mr Kaye (Visy General Counsel) and Mr Webster (Visy consultant).
It is proposed that the meeting be conducted informally: It is not a mediation.
We are enclosing copies of the following material for your information:
1 Pleadings
(a)Second Further Amended Statement of Claim dated 30 November 2006;
(b)Amended Defence of the First, Second and Third Respondents dated 22 December 2006;
(c)Amended Defence of the Fourth Respondent (Richard Pratt) dated 22 December 2006; and
(d)Amended Defence of the Fifth Respondent (Harry Debney) dated 22 December 2006.
2Letter dated 15 August 2007 from Arnold Bloch Leibler to the Australian Government Solicitor (not including the enclosures to Schedule 2)..
3Draft Orders prepared on behalf of the Commission (23 pages).
4Transcript of Mr Pratt's s 155 examination of 26 July 2005.
5Transcript of the Commission's interview of Russell Jones dated 14 December 2004.
6Proof of Evidence of Russell Haydn Jones filed 2 July 2007 on behalf of the Commission.
We will contact your office this afternoon to arrange to courier to you over the weekend (as requested) hard copies of these documents if that would be of assistance.
We will also make travel and accommodation arrangements for you through your personal assistant
The Australian Government Solicitor and Arnold Bloch Leibler both undertake to pay your professional fees and disbursements (including travel and accommodation costs) each as to 50% upon receipt of an invoice.
As discussed, would you please forward your “pro forma” Confidentiality Agreement and Mediation Agreement, which we will modify for the purposes of the meeting
Any queries you may have in relation to the matter should be directed jointly to Ms Susan Pryde and Mr Robert Heathcote whose contact details appear below.’
On 5 September 2007, McHugh provided the ACCC and ABL with a copy of his standard form mediation agreement. Cassidy resolved not to sign it because he considered that the proposed meeting was not to be a mediation. He intimated his view to Samuel who endorsed it. Cassidy then told Alexander that he would only sign a letter of appointment for McHugh and an agreement to be responsible for the ACCC’s share of his fees.
Early on the morning of 6 September 2007, Cassidy and Alexander discussed the forthcoming meeting to be chaired by McHugh and agreed that, if the Visy representatives should raise the possibility of criminal proceedings against Pratt under s 155 of the TPA, the ACCC’s response should be that this issue was not “on the table” so far as the ACCC was concerned as the Commissioners had not considered it and were in no position to reach any settlement on it.
The meeting chaired by McHugh took place at the offices of ABL on 6 September 2007. After the ACCC representatives conveyed their refusal to sign the standard form mediation agreement, a short form agreement was executed on the same day. It stipulated, in part, that;
‘THIS AGREEMENT is made the 6th day of September, 2007
BETWEEN:
AND:Australian Competition and Consumer Commission ("ACCC") of 23 Marcus Clarke Street, Canberra, ACT 2601
AND:Richard Pratt, Level 2, 533 Little Lonsdale Street, Melbourne, Victoria, 3000
(collectively "the Parties")
AND:THE HON. MICHAEL HUDSON McHUGH AC, QC of 235 Macquarie Street, Sydney ("the Chairman")
RECITALS
A. Disputes have arisen between the parties concerning the relief sought by ACCC against Mr. Pratt in proceeding no. VID 1650 of 2005 ("the Disputes"):
B. The Chairman has agreed, on the terms and conditions of this agreement to assist the Parties to resolve, if possible, the Disputes.
AGREEMENT
Appointment of the Chairman
1.The Parties appoint the Chairman, and the Chairman accepts the appointment, to chair a "without prejudice" meeting of the Parties to discuss the Disputes ("the Meeting")
2.The Parties jointly and severally agree to pay the Chairman's fees and expenses. Such payments and other expenses of the Meeting such as room hire shall, as between themselves, be shared equally between the Parties. … … … …’
During the meeting, the ACCC representatives, Cassidy, Alexander, Williams, Pryde, Jopling and Caleo occupied one room (“the ACCC room”) and the representatives of the Visy companies and Pratt including Heathcote and Beach were in another room (“the Pratt room”). McHugh moved between the two rooms and there was no direct communication of a relevant kind between any representative of the ACCC and any representative of the Visy companies and Pratt. A statement by McHugh which was received into evidence by consent in the present proceedings contained, amongst others, the following paragraphs;
‘10.At the initial meeting in the Pratt room, Mr Pratt’s lawyers were saying that Mr Pratt would accede to orders directing him to ensure greater supervision of Visy’s activities vis-à-vis trade practices matters and to implement a trade practices compliance program, but that Mr Pratt was not prepared to admit to the conversation as alleged in the statement of claim as Mr Pratt denied those allegations.
11.I then proceeded to the ACCC room. During my first period in the ACCC room, I outlined for the ACCC that Mr Pratt denied what the ACCC alleged to have been said at his meeting with Mr Jones on 21 May 2001. I said that in a contested trial it would be one man’s word against another and the ACCC would bear the onus of proving the Jones version of the conversation to the Briginshaw standard of proof.
12.Mr Alexander told me that the ACCC’s position was that in order for the Civil Penalty Proceeding to settle, Mr Pratt had to admit to knowing the essential elements of the overarching understanding between Visy and Amcor. He said that I would know that better than anyone that this was necessary before he could be knowingly concerned in a contravention of the Act. That stuck in my mind, because Mr Alexander was assuming I was a party to the judgment in Yorke v Lucas, which was decided before I was appointed to the High Court. Neither the ACCC executives nor any of their legal advisers said to me at that time (or any time) that they had in mind an intention, or considered it a possibility that the ACCC might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice.
13.I then returned to the Visy room where Mr Pratt was present. During that period:
(a)I told Mr Pratt that the ACCC was not willing to compromise the Civil Penalty Proceeding without him making an admission directed to the conduct alleged against him;
(b)Mr Pratt said that he had not had a discussion with Mr Jones on 21 May 2001 as alleged by the ACCC in its statement of claim, or as eventually set out in the signed Proposed Order. (He did not resile from that position at any time in the “without prejudice” Meeting in my presence);
(c)I told Mr Pratt that he had to factor into his thinking about whether or not to settle the civil Penalty Proceeding, or to go to trial, that there was a likelihood of an adverse finding being made against him personally;
(d)I said, on the one hand, there was a high onus of proof in relation to Jones’ evidence and that there was an inconsistency in Jones’ first account (as set out in the Jones Examination) and as later set out in the Jones Proof, about what had occurred at the meeting on 21 May 2001. I said that as a result, Jones may not be believed.
(e)I told Mr Pratt that, on the other hand, he had to face up to Mr Jones’ evidence, and to the fact that a judge would ask why Mr Jones would make that evidence up and implicate himself in the cartel. I told Mr Pratt that he had to take into account that a Court may accept Mr Jones’ account of the conversation. Mr Beach QC said that he may be able to move Mr Jones in cross-examination to come back to the version provided in the Jones Examination. I also told Mr Pratt that a judge might think, given his hands on role in the business and as a person who was on the factory floor at 6 a.m. in the morning, it was likely that he would have been aware of all the important matters for the business, and therefore that he must have known about the cartel even though Mr Pratt denied it to be so. I said that was among the things he had to weigh up if he wanted to resolve the Civil Penalty Proceeding. I told Mr Pratt that if he wanted to avoid six months of costly litigation and continued adverse publicity, he had to be prepared to make the concession sought by the ACCC because otherwise the Civil Penalty Proceeding could not be resolved.
(f)Mr Pratt was told by others at the meeting that the damage to his reputation by acknowledging his participation in the cartel could be managed by those advising him in relation to media matters;
(g)Mr Pratt was also told, and this was a matter of some concern to him, that any evidence led in the Civil Penalty Proceeding may be available to applicants in a class action against Visy for damages arising from the cartel.
14.Mr Pratt did not remain for the entire meeting, because he had to leave to attend a lunch in Sydney with the Prime Minister. I recall Mr Kaye speaking to him by telephone later in the meeting. I cannot recall what Mr Kaye told Mr Pratt.
15.Mr Pratt said very little during the time I was present in the Visy room. He mainly listed to what was said, and he said little or nothing in response to the above observations. He was also concerned by the effect of a finding that he had contravened the Trade Practices Act on his reputation.
16.During my time in the Pratt room, Mr Pratt was not engaged with the process. He did not act as I had expected that he would, given his status as a leading businessman, and he appeared distracted.
17.There was a lot of discussion at the meeting about some particular words in the draft declaration, and various drafts were produced. I went back and forth two or three times between the rooms while the specific words were debated. The Visy advisers, particular Robbie Kaye and one of the public relations people, were the driving forces, discussing how to manage the proposed concession and focusing on what they could make of the word “indirectly” in the proposed declaration. There was lots of discussion about “indirectly” and “communicating”, and what exactly those words meant. At one point a dictionary was referred to. This was because it was sought to find a formulation by the Pratt side which did not involve admitting to the correctness of the Jones account.
18.At the conclusion of the meeting, a form of words was agreed. The proposed Order was signed in the ACCC room. I was asked to witness that document, and I signed and dated it. That was the end of my involvement in the matter.
19.The ACCC did not in my presence inform Mr Pratt or his legal advisers, or say to me, that it had in mind an intention, or considered it a possibility, that it might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice. Had the ACCC informed me of such risks or possibilities, I would have regarded that as a relevant matter to put to Mr Pratt in considering whether to compromise the civil Penalty Proceeding.’
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Honourable Justice Ryan. Associate:
Dated: 29 April 2009
Counsel for the Prosecutor CDPP: Mr M Dean SC with Dr S Donaghue
and Mr R AttiwillSolicitor for the Prosecutor CDPP: Office of the Commonwealth Director
of Public ProsecutionsCounsel for the Defendant: Mr R Richter QC with Mr N Clelland SC,
Dr S McNicol, Mr A Palmer and Ms K L WalkerSolicitor for the Defendant: Arnold Bloch Leibler
Dates of Hearing: 8 - 18 December 2008 and 4-5 February 2009 inclusive Date of Orders: 27 April 2009 Date of Reasons for Ruling on Admissibility of Alleged Admissions by the Defendant: 29 April 2009.
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