Energex Limited v Alstom Australia Limited
[2004] FCA 575
•7 MAY 2004
FEDERAL COURT OF AUSTRALIA
Energex Limited v Alstom Australia Limited [2004] FCA 575
PRACTICE AND PROCEDURE – pleadings – application for summary judgment or strike out of statement of claim – whether allegations under s 82(1) of Trade Practices Act 1974 (Cth) statute barred under s 82(2) – whether cause of action accrues at time agreement to purchase goods entered into, or when loss and damage discovered – whether limitation defence should be dealt with at interlocutory stage – whether allegations under ss 80 and 87 included in order to circumvent limitation period – whether those allegations fail to disclose cause of action, are frivolous or vexatious, or abuse of process – whether failure to plead essential elements of tort of deceit
WORDS & PHRASES – “in trade or commerce” – s 51AC of Trade Practices Act 1974 (Cth) – whether reliance upon limitation defence constitutes conduct in trade or commerce
Trade Practices Act 1974 (Cth) Pt IV and ss 45, 51AC, 80, 82, and 87
ACCC v ABB Transmission and Distribution Limited (2001) ATPR 41-815 referred to
ACCC v ABB Transmission and Distribution Limited (2001) ATPR 41-839 referred to
Gould v Vaggelas (1985) 157 CLR 215 referred to
State of Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691 referred to
Wardley Australia Limited v Western Australia (1992) 175 CLR 514 applied
Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40-473 referred to
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 referred to
Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 referred to
Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR
40-853 referred to
Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 referred to
Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 discussed
Williams v Spautz (1992) 174 CLR 509 referred to
Walton v Gardiner (1993) 177 CLR 378 referred to
James v ANZ Banking Group Ltd (1986) 64 ALR 347 referred to
Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 applied
Potts v Miller (1940) 64 CLR 282 referred to
Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226 referred to
ACCC v CG Verbatis Holdings Pty Ltd (2001) ATPR 41-802 referred to
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 referred to
Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd (1998) ATPR 41-641 referred to
Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 applied
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 referred to
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 referred to
Cartledge v E Jopling & Sons Ltd [1963] AC 758 discussed
Blacker v National Australia Bank Ltd (2001) ATPR 41-817 referred to
Troulis v Vamvoukakis (unreported, NSW Court of Appeal, 27 February 1998) referred to
Williams v Commonwealth Bank of Australia [1999] NSWCA 345 referred to
Sutherland Shire Council v Heyman (1985) 157 CLR 424 referred to
Hawkins v Clayton (1988) 164 CLR 539 discussed
Brunninghausen v Glavanics (1999) 46 NSWLR 538 referred to
Dey v Victorian Railways Commissioners (1949) 78 CLR 62 applied
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied
Webster v Lampard (1993) 177 CLR 598 referred to
McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 applied
Bank Commerciale SA (In Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 referred to
Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26 discussed
Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257 appliedRe Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 referred to
Australian Associated Motor Insurers Ltd v NRMA Insurance Ltd (2002) 124 FCR 518 referred to
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 applied
The Commonwealth v Verwayen (1990) 170 CLR 394 referred to
Atlantic City Electric Co v General Electric Co 312 F2d 236 (1962) referred to
Bailey v Glover 88 US 342 (1874) referred to
Scarcella v Lettice (2000) 51 NSWLR 302 discussed
Imperial Gas Light and Coke Co v London Gas Light Co (1854) 10 Exch 39; 156 ER 346 referred to
Hunter v Gibbons (1856) 1 H & N 459; 156 ER 1281 referred to
Armstrong v Milburn [1886-90] All ER Rep 596 referred to
R v McNeil (1922) 31 CLR 76 referred to
Metacel Pty Ltd v Ralph Symonds Ltd (1969) 90 WN (Pt 1) (NSW) 449 referred to
Gibbs v Guild (1882) 9 QBD 59 referred to
Cubillo v Commonwealth (1999) 89 FCR 528 referred to
Noble v Victoria [1999] QCA 110 referred to
Director of Public Prosecutions v Ray [1974] AC 370 discussed
Smith v Hughes (1871) LR 6 QB 597 referred toLord Brennan & W Blair, Bullen & Leake & Jacob’s Precedents of Pleadings, 14th ed, Vol 2, London, Sweet & Maxwell, 2001
I C F Spry, The Principles of Equitable Remedies, 5th ed, Australia, LBC Information Services, 1997
R Meagher, D Heydon & M Lemming, Meagher, Gummow & Lehane’s Equitable Doctrines & Remedies, 4th ed, Australia, Butterworths Lexis Nexis, 2002ENERGEX LIMITED (ACN 078 849 055) v ALSTOM AUSTRALIA LIMITED (ACN 000 215 092), REXEL AUSTRALIA LIMITED (ACN 000437 758), RICHARD ELLIOT, PAUL BRAGHAM, COLIN JAMES, WILSON TRANSFORMER COMPANY PTY LTD (ACN 004 216 979), ROBERT WILSON, DAVID PECK, ABB TRANSMISSION AND DISTRIBUTION LIMITED (ACN 000 169 568), DOUGLAS PITT, CHRIS TAPE, DAVID TOOGOOD, GRAHAM JONES, RUSSELL ELLEN, RAYMOND BOYCE, SCHNEIDER ELECTRIC (AUSTRALIA) PTY LTD (ACN 004 969 304), RUSSELL STOCKER, ASHLEY SMOUT and WENDY MINNE
V409 of 2003
WEINBERG J
7 MAY 2004
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V409 OF 2003
BETWEEN:
ENERGEX LIMITED (ACN 000 215 092)
APPLICANTAND:
ALSTOM AUSTRALIA LIMITED (ACN 000 215 092)
FIRST RESPONDENTREXEL AUSTRALIA LIMITED (ACN 000437 758)
SECOND RESPONDENTRICHARD ELLIOT
THIRD RESPONDENTPAUL BRAGHAM
FOURTH RESPONDENTCOLIN JAMES
FIFTH RESPONDENTWILSON TRANSFORMER COMPANY PTY LTD
(ACN 004 216 979)
SIXTH RESPONDENTROBERT WILSON
SEVENTH RESPONDENTDAVID PECK
EIGHTH RESPONDENTABB TRANSMISSION AND DISTRIBUTION LIMITED
(ACN 000 169 568)
NINTH RESPONDENTDOUGLAS PITT
TENTH RESPONDENTCHRIS TAPE
ELEVENTH RESPONDENTDAVID TOOGOOD
TWELFTH RESPONDENTGRAHAM JONES
THIRTEENTH RESPONDENTRUSSELL ELLEN
FOURTEENTH RESPONDENTRAYMOND BOYCE
FIFTEENTH RESPONDENTSCHNEIDER ELECTRIC (AUSTRALIA) PTY LTD
(ACN 004 969 304)
SIXTEENTH RESPONDENTRUSSELL STOCKER
SEVENTEETH RESPONDENTASHLEY SMOUT
EIGHTEENTH RESPONDENTWENDY MINNE
NINETEENTH RESPONDENTJUDGE:
WEINBERG J
DATE OF ORDER:
7 MAY 2004
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The notice of motion filed on behalf of the first, second, third, fourth and fifth respondents on 20 August 2003, and amended on 15 October 2003, be dismissed.
2.The notice of motion filed on behalf of the sixth and seventh respondents, on 20 August 2003, be dismissed.
3.The notice of motion filed on behalf of the sixteenth, seventeenth, eighteenth and nineteenth respondents, on 28 August 2003, be dismissed.
4.The matter be stood over to 16 June 2004 at 9.30 am in order to determine any issue of costs, and to give directions for the future conduct of this proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V409 OF 2003
BETWEEN:
ENERGEX LIMITED (ACN 000 215 092)
APPLICANTAND:
ALSTOM AUSTRALIA LIMITED (ACN 000 215 092)
FIRST RESPONDENTREXEL AUSTRALIA LIMITED (ACN 000437 758)
SECOND RESPONDENTRICHARD ELLIOT
THIRD RESPONDENTPAUL BRAGHAM
FOURTH RESPONDENTCOLIN JAMES
FIFTH RESPONDENTWILSON TRANSFORMER COMPANY PTY LTD
(ACN 004 216 979)
SIXTH RESPONDENTROBERT WILSON
SEVENTH RESPONDENTDAVID PECK
EIGHTH RESPONDENTABB TRANSMISSION AND DISTRIBUTION LIMITED
(ACN 000 169 568)
NINTH RESPONDENTDOUGLAS PITT
TENTH RESPONDENTCHRIS TAPE
ELEVENTH RESPONDENTDAVID TOOGOOD
TWELFTH RESPONDENTGRAHAM JONES
THIRTEENTH RESPONDENTRUSSELL ELLEN
FOURTEENTH RESPONDENTRAYMOND BOYCE
FIFTEENTH RESPONDENTSCHNEIDER ELECTRIC (AUSTRALIA) PTY LTD
(ACN 004 969 304)
SIXTEENTH RESPONDENTRUSSELL STOCKER
SEVENTEETH RESPONDENTASHLEY SMOUT
EIGHTEENTH RESPONDENTWENDY MINNE
NINETEENTH RESPONDENT
JUDGE:
WEINBERG J
DATE:
7 MAY 2004
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
INTRODUCTION
In this proceeding, various respondents have sought either summary judgment against the applicant, or failing that, to have the applicant’s statement of claim, filed on 26 May 2003, struck out. The applications are brought by notice of motion. The first notice of motion was filed on behalf of the first to fifth respondents on 20 August 2003. An amended notice of motion was filed in Court on 15 October 2003. The second notice of motion was filed on behalf of the sixth and seventh respondents on 20 August 2003. The third notice of motion was filed on behalf of the sixteenth to nineteenth respondents on 28 August 2003.
The applicant, Energex Limited (“Energex”), is an electricity utility that has, for many years, engaged in the purchase of electricity transformers. There are two types of electricity transformers: power transformers, which are used to transform large amounts of electrical power at high voltages; and distribution transformers, which are used in applications for smaller amounts of electrical power at lower voltages.
Energex was originally known as the South East Queensland Electricity Board (“SEQEB”) being a body corporate established under the Electricity Act 1976 (Qld). On 1 July 1977, SEQEB was constituted as a body corporate capable of suing and being sued. On 9 September 1994, the South East Queensland Electricity Corporation (“SEQEC”) was established under the Government Owned Corporations (Queensland Transmission and Supply Corporation) Regulation 1994 (Qld), and assumed the rights and liabilities of SEQEB. On 1 July 1997, SEQEC became an unlisted public company, and was renamed the South East Queensland Electricity Corporation Limited. On 29 July 1998, the company changed its name to Energex Limited.
Energex has existed, in one form or another, since at least 1 July 1977. Since 1993, it has been a state owned corporation operating under the provisions of the Government Owned Corporations Act 1993 (Qld). It carries on the business of distributing and retailing electricity and other energy products. It supplies these products in Queensland, as well as other parts of Australia.
The respondents to this proceeding are either companies engaged in the manufacture and supply of power and distribution transformers, or individual members of their senior management.
The first respondent, Alstom Australia Limited (“Alstom”), was formerly named GEC-English Electric Pty Ltd from 1 October 1957 until 17 July 1989. It was renamed GEC Alsthom Australia Limited, and kept that name between 18 July 1989 and 21 June 1998, when it became known as Alstom. It has carried on business from its factory site at Rocklea, in Queensland, since 1989.
The second respondent, Rexel Australia Limited (“Rexel”), was formerly named GEC Australia Limited from 7 February 1978 until 4 February 1998. Between 1980 and 1989 it carried on business from the Rocklea site.
The third, fourth and fifth respondents, Messrs Richard Elliot, Paul Brabham and Colin James, are all executives or directors, past or present, of Alstom.
I shall refer to the first, second, third, fourth and fifth respondents as “the Alstom respondents”.
The sixth respondent, Wilson Transformer Company Pty Ltd (“WTC”), has carried on business from its two factories in Glen Waverley and Wodonga, in Victoria, since at least 1980.
The seventh respondent, Mr Robert Wilson, has at all relevant times been the managing director of WTC.
I shall refer to the sixth and seventh respondents as “the Wilson respondents”.
The eighth respondent, Mr David Peck, was formerly a sales and marketing manager with WTC. He ceased employment with that company in 1995. He is not a party to any notice of motion presently before the Court.
The ninth respondent, ABB Transmission and Distribution Limited (“ABBTDL”), was formerly named Tyree Industries Ltd from 2 February 1956 until 21 April 1993. On that date, its name changed to ABB Transmission Limited. On 21 December 1995, it changed its name again and became ABBTDL. ABBTDL, under whatever name, was at all times the holding company of an entity originally named Tyree Electrical Co Ltd (“TEC”), which later changed its name to ABB Power Transmission Pty Ltd (“ABBPT”). That company carried on business from its various factories in Moorebank in New South Wales, in Darra in Queensland, and in Perth. ABBPT eventually went into liquidation.
The tenth, twelfth and fourteenth respondents, Messrs Douglas Pitt, David Toogood, and Russell Ellen, all at various times held senior managerial positions at ABBPT or ABBTDL. So too did the eleventh and thirteenth respondents, Messrs Chris Tape and Graham Jones. Neither Mr Tape nor Mr Jones have yet been served with any process. They are not therefore formally parties to this proceeding and, self evidently, are not parties to any notice of motion currently before the Court.
I shall refer to the ninth, tenth, twelfth and fourteenth respondents as the “ABB respondents”. The ABB respondents are not parties to any notice of motion before the Court. They were, however, represented briefly before me at the commencement of the hearing of these applications. They indicated that they proposed to await the outcome of the various challenges brought by the other respondents before deciding upon their own course of action.
The fifteenth respondent, Mr Raymond Boyce, has not yet been served by the applicant. Nothing more need be said about his position at this stage.
The sixteenth respondent, Schneider Electric (Australia) Pty Ltd (“Schneider”), was formerly named Telemecanique (Australia) Pty Ltd from 19 December 1972 until 29 December 1992. It was named Schneider Pty Ltd from 30 December 1992 until 1 March 1999, and has been named Schneider Electric (Australia) Pty Ltd since 2 March 1999. In 1993, Schneider acquired all the issued shares in Australian Standard Electrical Transformers Pty Ltd (“ASET”), a company that from 1980 to 1993 manufactured and supplied distribution transformers from a factory in Benalla, in Victoria. Since 1993, Schneider has carried on that business that from factory.
The seventeenth, eighteenth and nineteenth respondents, Messrs Russell Stocker, and Ashley Smout and Ms Wendy Minne, have all, at various times, held senior management positions with Schneider.
I shall refer to the sixteenth, seventeenth, eighteenth and nineteenth respondents as “the Schneider respondents”.
THE FACTUAL BACKGROUND
Energex claims that since about 1980, it, together with others, has engaged in the purchase of electricity transformers from the various corporate respondents. It identifies those from whom it has purchased the transformers as being:
·GEC from 1980 to 1989, and Alstom thereafter;
·WTC since 1980; and
·ABBPT from 1980 to 1996, and ABBTDL thereafter.
In addition, Energex claims that it purchased distribution transformers from ASET from 1980 to 1993, and from Schneider thereafter.
Energex claims that there has, at all material times, been a market in Australia for the supply of power and distribution transformers. The purchasers of these transformers have included electricity utilities, and large industrial and mining companies. Energex describes this market as “the transformer market”. Alternatively, it alleges that two separate markets, one for the supply of power transformers, and the other for the supply of distribution transformers, have, at all material times, existed in Australia.
Energex claims that there was competition among the corporate respondents in relation to the supply of these transformers. It alleges that, from 1980 onwards, acting under the auspices of Australian Electrical and Electronic Manufacturers Association Limited (“AEEMA”), a company limited by guarantee, and through a Division known as the “Power and Distribution Transformers Division”, the corporate respondents entered into a series of unlawful agreements, arrangements or understandings relating to the supply of transformers. Energex describes these agreements, arrangements or understandings as “the Transformer Arrangement”.
The Transformer Arrangement was, in substance, a classic case of collusive tendering. The corporate respondents agreed that they would allocate tenders for the production and supply of transformers among themselves with a view to each of them maintaining their share of sales of power and distribution transformers. They would achieve this object by ensuring that the selected manufacturer submitted a tender at a lower assessed annual value (“AAV”) than the tenders submitted by other manufacturers, or by those manufacturers not submitting a tender. The lower AAV would be achieved by the manufacturers discussing their tenders with each other, thereby ensuring that those tenders yielded a higher AAV than that of the selected manufacturer. Energex sets out in its statement of claim a series of detailed particulars from which the existence of such an agreement, arrangement or understanding is to be inferred.
Alternatively, Energex pleads the existence of a “Pre-1993 Power Transformer Arrangement”. The parties to that arrangement are said to have been GEC, WTC and TEC. Energex claims that the arrangement involved those companies agreeing to allocate forthcoming tenders for the production and supply of power transformers amongst themselves with a view to each maintaining its share of sales. The shares of sales to be maintained were 45% to TEC, 32% to GEC, and 23% to WTC. The method by which this would be achieved was essentially the same as for the Transformer Arrangement.
The statement of claim sets out, in voluminous detail, the circumstances under which it is alleged that either the Transformer Arrangement, or the Pre-1993 Power Transformer Arrangement, came to be implemented.
Energex also pleads a third case, once again in the alternative. It alleges in par 179 of the statement of claim that in 1993, ABBPT, WTC and Tyree Transformers Pty Ltd (“Tyree”) (a company not a party to these proceedings) made an agreement or arrangement, or arrived at an understanding. It refers to this arrangement as “the 1993 Distribution Transformer Arrangement”. As with the other arrangements alleged, it pleads that those companies agreed that they would not compete with each other for contracts let to tender for the production and supply of distribution transformers, with a view to each of them maintaining their share of sales of those transformers. Again, the method adopted was similar to that previously outlined.
To complicate matters further, Energex also pleads a fourth alternative case. It alleges that in 1995, there came into existence what it describes as “the 1995 Distribution Transformer Arrangement”. It is unnecessary, for present purposes, to attempt to summarise the salient features of that arrangement. They are broadly similar to those of the first three arrangements pleaded.
THE STATEMENT OF CLAIM
The statement of claim is a complex document. It runs for 121 pages and contains 408 paragraphs. Many of these paragraphs contain a large number of sub-paragraphs. It refers to literally hundreds of meetings, conversations, or other communications, and it would take an inordinate amount of time even to attempt to summarise the broad scope of the allegations contained therein. It should be noted, however, that the allegations of unlawful conduct extend over a period of about twenty years, throughout the 1980s and 1990s.
There are, in substance, two causes of action pleaded. The first involves numerous breaches of s 45 of the Trade Practices Act 1974 (Cth) (“the Act”). As is well known, that section proscribes the making of contracts, arrangements or understandings that restrict dealings or affect competition. The second is a series of claims for the tort of deceit.
As against the various corporate respondents, Energex claims that their conduct, as specified in its statement of claim, constituted in each case the making of an agreement, arrangement or understanding which contained an exclusionary provision in contravention of s 45(2)(a)(i). It further claims that this conduct constituted in each case the making of an agreement, arrangement or understanding which contained a provision to which s 45A(1) applied, and which accordingly had the purpose, or had or was likely to have the effect of substantially lessening competition for the supply of transformers in one or other of the markets pleaded. This is said to constitute a contravention of s 45(2)(a)(ii). Energex also relies upon s 45(2)(b)(ii). It alleges that the conduct of the corporate respondents fell within ss 80(1)(a), 82(1) and 87(1).
Energex also claims that the conduct of the corporate respondents constituted in each case the giving effect to a provision of an agreement, arrangement or understanding which was an exclusionary provision in contravention of s 45(2)(b)(i), with the same consequences.
Energex then pleads that it suffered loss or damage by reason of these contraventions. It identifies that loss or damage in the following way:
“381.The conduct referred to in paragraphs 362 to 380 hereof constituted the making of or the giving effect to arrangements between:
(a)GEC, WTC, ABBPT, and Tyree from 1983 until early 1989;
(b)Alstom, WTC, ABBPT, and Tyree from early 1989 until May 1995;
(c)Alstom, WTC, ABBPT, Tyree and Schneider from May 1995 until 1 January 1996;
(d)Alstom, WTC, ABBTDL, Tyree and Schneider since 1 January 1996.
382.In light of the matters referred to in paragraphs 31 to 60, and in light of accepted economic principles, such conduct resulted in the suppliers of transformers charging higher prices than they otherwise would have charged.
383.During the period from 1983 until 2002, the prices paid by SEQEB and ENERGEX for power transformers and distribution transformers exceeded the prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof.
Particulars
The best particulars of those prices which can be provided by the Applicant before the completion of discovery are set out in Annexure B to this Statement of Claim.
384.The prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof have been estimated by:
(a)isolating the prices paid by SEQEB and ENERGEX for transformers over the period from 1983 to 2002;
(b)estimating the costs of manufacturing transformers over the period from 1983 to 2002;
(c)calculating the contribution margin, being the ratio of the price paid less the variable cost to the price paid, over that period;
(d)identifying the lowest contribution margin to the transformer manufacturers over that period;
(e)using the lowest contribution margin as an upper bound to the contribution margins which would have prevailed but for such collusive conduct;
(f)adding that contribution margin to variable costs to estimate the prices which would have prevailed but for the collusive conduct.
385.SEQEB and ENERGEX have suffered damage as a result of the price paid by them for power transformers and distribution transformers exceeding the prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof.
Particulars
The damages are particularised in Annexure B to this Statement of Claim.”
Finally, Energex turns to the ancillary liability of the individual respondents. This is particularised at pars 386-399 of the statement of claim.
As noted earlier, Energex also pleads the tort of deceit. It alleges that from 1985 until 2002, it purchased transformers from GEC, Alstom, WTC, ABBPT, ABBTDL, Tyree and Schneider, pursuant to contracts awarded by the selection of a tenderer after completion of a public tender process. It alleges that each tenderer, by submitting a tender in response to an invitation to do so, represented that the price and other terms of the tender had been arrived at by the tenderer without any knowledge of the price and terms of any other tender, and was not the subject of any agreement, arrangement or understanding between the tenderer and any other manufacturer or supplier. It claims that these representations were implied, and that they were made with the intention of inducing either SEQEB or Energex to accept one of the tenders. It alleges that the representations were false, and that they were known to be false. It pleads dishonesty, in terms. It claims that it relied upon the representations, and suffered consequential loss and damage.
The claim for deceit is set out at pars 400 to 406. Those paragraphs are in the following terms:
“400.During the period from 1985 until 2002, SEQEB and ENERGEX purchased transformers from GEC, Alstom, WTC, ABBPT, ABBTDL, Tryee and Schneider pursuant to contracts awarded by the selection of a tenderer after completion of a public tender process.
Particulars
Particulars of the tender reference numbers, the closing date for tenders, the tenders submitted and the identity of the successful tenderer are contained in Annexure A to this Statement of Claim.
401.In relation to each such tender process:
(a)Invitations to tender were published in a newspaper circulating in the Brisbane area.
(b)The invitations specified the place at which copies of the tender documents would be provided.
(c)The invitations specified that tenders had to be sealed.
(d)The invitations specified the closing date and hour for tenders.
(e)The invitations specified that tenders would be publicly opened immediately after the closing time for the tender.
402.In submitting a tender in response to the invitation by SEQEB or ENERGEX, each tenderer, in respect of those tenders set out in Annexure A hereto, represented that the price and other terms of the tender submitted by it:
(a)had been arrived at by the tenderer without any knowledge of the price and terms, or likely price and terms, of any other tender; and
(b)was not the subject of any agreement, arrangement or understanding between the tenderer and any other manufacturer or supplier of the goods the subject of the tender;
Particulars
The representations are to be implied from the submission of a tender in the circumstances specified in paragraph 401 hereof.
403.Those representations were made with the intention of inducing the person who issued the invitation to tender to accept one of the tenders.
404.Those representations were false in that:
(a)each tenderer had arrived at the price and other terms of the tender submitted by it after discussing that price and other terms with another manufacturer or supplier of the goods the subject of the tender;
(b)the price and other terms of the tender submitted by it was the subject of an agreement, arrangement or understanding between the tenderer and another manufacturer or supplier of the goods the subject of the tender.
405.Those representations were made dishonestly, in that they were made with knowledge of their falsity.
406.The person issuing the invitation to tender acted in reliance on those representations and was induced thereby to accept one of the tenders.”
The loss or damage alleged to have been suffered is particularised at par 407 of the statement of claim:
“407.By virtue of the matters specified in paragraphs 400 to 406 hereof, SEQEB and ENERGEX suffered loss and damage.
Particulars
(a)If the representation had not been made, the person issuing the invitation to tender would have investigated why that tenderer was unwilling to participate in a public tender process, and further or alternatively would have referred the matter to the Australian Competition and Consumer Commission, or its predecessor the Trade Practices Commission.
(b)There was a chance that such investigation or referral would have disclosed the existence of one or more of those arrangements, in which event SEQEB or ENERGEX could have prevented the Respondents from continuing to give effect to those arrangements.
(c)SEQEB and ENERGEX lost the opportunity to prevent the Respondents from continuing to give effect to those arrangements.
(d)Had the Respondents been prevented from continuing to give effect to those arrangements, SEQEB and ENERGEX would have paid less than they did for their purchases of transformers.”
THE ALSTOM RESPONDENTS’ CONTENTIONS
The Alstom respondents contend that the allegations pleaded against them should either be dismissed under O 20 r 2(1) of the Federal Court Rules (“the Rules”), or alternatively, struck-out under O 11 r 16. They contend that:
·Energex has failed to plead the essential elements required to establish a cause of action in deceit;
·a significant number of the allegations do not “deal with” the applicant and do not disclose a cause of action maintainable by it;
·a significant number of the allegations in reliance on s 82(1) are statute barred; and
·the claims based on ss 80 and 87 of the Act constitute an abuse of process in that they serve no independent purpose other than an attempt to avoid the limitation period in relation to claims that are statute barred under s 82.
In order to understand these contentions, it is necessary to set out a few historical matters. The present application brought by Energex followed two earlier proceedings brought by the Australian Competition and Consumer Commission (“the ACCC”). Those proceedings were commenced in October 1999. The first, ACCC v ABB Transmission and Distribution Limited (2001) ATPR ¶41-815 concerned power transformers, and led to orders being made by consent against the first, third, fourth and fifth respondents. The second, ACCC v ABB Transmission and Distribution Limited (2001) ATPR ¶41-839 concerned distribution transformers, and led to orders being made by consent against the first, fourth and fifth respondents. In each of those proceedings, injunctions were granted against the first respondent, restraining it from engaging in certain conduct in relation to the supply of transformers that would otherwise be in breach of s 45 for a period of four years.
As already indicated, one of Energex’s primary claims is that the corporate respondents engaged in conduct in breach of s 45. As regards the individual respondents, the applicant alleges that each was knowingly concerned in, or party to, the contraventions by their respective employers.
It is important to note that Energex seeks injunctive relief against the respondents, under s 80. It also claims damages under ss 82(1) and/or 87(1), as well as in respect of its alternative claim for damages for deceit.
Turning first to the challenge made to the pleading of deceit, Mr Hilton SC who appeared with Mr Elliott, on behalf of the Alstom respondents, submitted that the essential elements of that cause of action included the making of a false representation, knowledge of the falsity, an intention that the person to whom the representation is made act upon it, reliance upon the representation, and loss or damage thereby sustained.
Mr Hilton submitted that Energex had failed in its pleading to “establish that a representation was made by ALSTOM or Rexel”. The meaning of that submission is not entirely clear. However, in substance, the point seems to be that although a representation can be made in circumstances where there has been no express statement, ordinarily silence, no matter how deceptive, cannot give rise to a cause of action in deceit. Absent a duty to disclose, silence cannot constitute the making of a representation.
Mr Hilton submitted that pars 400 to 402 of the statement of claim failed to plead that either Alstom or Rexel had a duty to disclose anything to Energex in relation to the tender process. The fact that Energex may genuinely have believed that the details of each tender were secret, and confidential to each tenderer, could not in the absence of a specific representation by the tenderers, or any of them, found a cause of action.
Mr Hilton also submitted that Energex’s pleading in relation to deceit should be struck out on the basis that the damage claimed in par 407 of the statement of claim was insufficiently connected, in a causal sense, with the deceit pleaded. He submitted, with reference to par (c) of the particulars of damage in par 407, that the statement of claim essentially pleaded that Energex had lost the opportunity to prevent the corporate respondents from giving effect to the anti-competitive arrangements previously alleged. However, he submitted, in an action for deceit, the general principle is that “the plaintiff is to be put, so far as possible, in the position he would have been in if he had not acted on the fraudulent inducement”: Gould v Vaggelas (1985) 157 CLR 215 at 220-221. In State of Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR ¶41-691 it was held at 42,840 and 42,841 that damages could not be recovered for lost opportunity. Accordingly, this limb of Energex’s case should be struck out.
In addition, Mr Hilton complained that an allegation of deceit, involving as it did, a claim of dishonesty, was a serious matter, and should be properly particularised. He submitted that Energex had failed to particularise at least two critical elements of its claim, namely the alleged intention with which the representations were made (par 403), and the alleged dishonesty of those representations (par 405).
Turning from the claim in deceit, Mr Hilton mounted a more general attack upon the pleading. He pointed out that the statement of claim identified forty-five separate tenders that were let by parties other than Energex or its predecessors. He submitted that these allegations had nothing whatever to do with Energex’s supposed loss or damage, and should for that reason be dismissed or struck out.
Perhaps more fundamentally, Mr Hilton submitted that many of the price fixing allegations in the present proceeding related to tenders that were awarded more than six years prior to the filing of the statement of claim. As a result, he submitted, a large number of those claims were now statute barred.
Mr Hilton developed his argument in the following way. Energex was seeking damages pursuant to s 82(1) of the Act. Its claim for damages under that section was contained in par 3 of the application by which this proceeding was initiated. Section 82(1) is, however, subject to a statutory limitation period that is now of six years. It was, at one time, three years. The effect of the limitation period was that any claims that related to tenders prior to 26 July 1998 were statute barred.
Mr Hilton noted that Energex also claimed damages pursuant to s 87(1). He acknowledged that this section, unlike s 82(1), was not subject to any limitation period. However, he submitted that the claim under s 87(1) had been made solely in order to avoid the limitation period in s 82(2), and was therefore an abuse of process.
Mr Hilton recognised that there was often a reluctance on the part of courts to deal with limitation defences at the interlocutory stage, it being thought preferable to consider them only after all the evidence had been led, or at least only at a final hearing. See for example Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 (“Wardley”). He submitted, however, that there were strong reasons for departing from that course in the present case. He contended that the allegations related to causes of action that were so old, and so clearly time barred, that they should be disposed of at the interlocutory stage. He distinguished those cases in which there was an element of uncertainty as to when the relevant loss occurred, accepting that it would not be appropriate to deal with limitation issues in those cases until a final hearing. In the present case, he submitted, any loss sustained by Energex must have been suffered, at the latest, at the moment that each transformer was purchased.
In order to understand this submission, it is necessary to have regard to s 82, in its present form. That sections provides:
“82.Actions for damages
(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2)An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.’
Section 82(2), in its present form, came into force on 26 July 2001. Prior to that, the limitation period under that section was three years. Transitional provisions were enacted in the Trade Practices Amendment Act (No 1) 2001 (Cth). Item 21 of Sch 1 to that Act provided:
“21 Application of item 20
(1) The amendment made by item 20 [ie the amendment to s 82(2)] applies in relation to conduct engaged in on or after the commencement of that item.
(2) The amendment made by item 20 also applies in relation to conduct engaged in before the commencement of that item, but only if the period that:
(a) relates to the conduct; and
(b) applied under subsection 82(2) of the Trade Practices Act 1974 before the commencement of that item;
had not ended when that item commenced.”
Mr Hilton submitted that the effect of these transitional provisions was that the new six year limitation period applied to all causes of action that had not already been barred under the previous three year limitation period, as at 26 July 2001. Accordingly, any cause of action that accrued prior to 26 July 1998, which would have been barred by the time the amendments to s 82 were made, was statute barred.
Mr Hilton then submitted that there were two elements in the cause of action established by s 82. They were a contravention, inter alia, of a provision of Pt IV of the Act and resultant loss or damage suffered by such conduct.
Mr Hilton contended that a cause of action accrues as soon as all of the necessary elements are present. Accordingly, a cause of action under s 82 accrues once an applicant first suffers loss or damage by reason of the contravention: Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR ¶40-473 at 45,454. The loss must be actual loss or damage, rather than merely potential or likely loss or damage: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348. By contrast, and by reason of s 87(1), actions under s 87 accrue on the date on which an applicant has suffered, “or is likely to suffer”, loss or damage. It was submitted that the distinction in the wording between these two provisions suggested that a cause of action under s 87 accrues from the date on which the contravention occurred.
Critically, Mr Hilton submitted, that it is not an essential ingredient of a cause of action under s 82(1) that an applicant be aware that he or she has a right to sue. He referred to Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 at 595 per Sackville J, with whom the other members of the Full Court agreed, in support of that contention.
It followed, so it was submitted, that in the present case, any claim that Energex might have under s 82(1) would have accrued as soon as loss or damage was first sustained. On Energex’s own case, that would have been at the moment that the transformers were accepted, and payment at an inflated price was made.
Mr Hilton submitted that the limitation period established by s 82(2) was a condition of the right to damages under that section, and not merely a limitation on that right. Notably, he pointed out that there was no discretion vested in the Court to extend the limitation period under that section on what might be described as equitable grounds. See Keen Mar Corporation Pty Lt v Labrador Park Shopping Centre Pty Ltd (1988) ATPR ¶40-853 at 49,196 and Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488. It followed that any cause of action that accrued prior to 26 July 1998 was statute barred.
Mr Hilton noted that pars 64, 65, 66 and 68 of the statement of claim alleged the existence of a number of agreements in relation to the fixing of tender prices, all of which preceded that date. Paragraphs 67 and 69 to 355 alleged that those agreements were all put into effect. All of the tenders referred to in those paragraphs had been let, and accepted, prior to 26 July 1998. They were therefore statute barred, and should either be dismissed under O 20 r 2(1)(a), or alternatively struck out under O 11 r 16.
Mr Hilton then turned specifically to Energex’s claim under s 87(1) of the Act. That subsection provides:
“(1) Without limiting the generality of section 80, where, in a proceeding instituted under this Part, or for an offence against Part VC, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IV, IVA, IVB, V or VC, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, 86C or 86D, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.”
Section 87(2) provides that the orders referred to in s 87(1) include a number of orders specifically identified in s 87(2)(a) to (g). Section 87(2)(d) provides that among the orders that can be made in a claim under s 80, which provides for injunctive relief, is an order:
“… directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage.”
At first glance, the orders that may be made under s 87(2)(d) are the same as those that can be made under s 82(1). However, as noted earlier, actions brought under s 87(1), requesting loss or damages under s 87(2)(d), appear not to be subject to any limitation period.
Mr Hilton submitted that the only reasonable inference to be drawn was that Energex, by seeking damages pursuant to s 87(2)(d), was attempting to circumvent the limitation period contained in s 82(2). He pointed out that the claim brought under s 87(1) and s 87(2)(d), was actually ancillary to the primary claim for injunctive relief under s 80. Indeed, s 87 was headed “Other Orders”, thereby signifying its ancillary nature.
Mr Hilton contended that a similar tactic had been considered by a Full Court in Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108. There, the Court dealt with the question whether a claim under s 87(1) could be made in conjunction with a claim under s 82 that was out of time. The Court (Wilcox, French and Drummond JJ) noted that s 87(1) contained no time limit, but emphasised that this was because the sub-section provided for ancillary relief. Their Honours said at 123:
“If a proceeding is brought out of time under s 82 and the limitation is pleaded and the application dismissed, then there will have been no finding of a contravention which is a necessary condition of the exercise of the power under s 87(1). If the time limitation under s 82(2) is not pleaded or is waived, or if the respondent is estopped from raising it, then a finding of contravention may be made and damages awarded under s 82. Such other orders as may be open under s 87 can also be made. That possibility is open as the time limitation imposed by s 82(2) does not in terms operate as a jurisdictional limitation but rather as a procedural bar.”
Their Honours went on to say that it followed that the time limitation under s 82 did not exclude the possibility of orders being made under s 87(1) in a proceeding commenced after the expiration of three years from the date when the cause of action occurred. In proceedings for injunctive relief under s 80, no time limitation applied, although discretionary considerations might arise in relation to undue delay in seeking that relief.
Mr Hilton noted their Honours’ comment at 124 that the absence of any time limitation under s 87, in relation to claims for damages under s 87(1), might render the time limit imposed by s 82(2) too easily avoidable.
However, the Court went on to say at 124:
“… So much may be accepted but does not provide a basis for writing into s 87(1) words that are not there. Indeed, to import into the subsection a time limitation on claims for damages under it would be to introduce an element inconsistent with its character as providing relief ancillary to a primary cause of action. The same is true of any attempt to import by analogy or otherwise the time limits imposed on claims for relief under s 87(1A) by s 87(1CA).
There are, in any event, significant differences between the relief which may be awarded under s 87(1) and that which is recoverable under s 82. The primary difference is that the relief awarded under s 87(1) is discretionary. In the exercise of that discretion, a court would be entitled to have regard to whether the subsection had been invoked merely to overcome a time problem in proceedings that could, absent that problem, have been brought under s 82. The answer to the question whether proceedings have been brought on that basis may be informed by the extent to which the primary injunctive relief would be of any utility. If the primary injunctive relief were to be refused on discretionary grounds, including lack of utility, then there would be a real issue as to whether any award for damages should be made particularly where the case is one in which a claim under s 82 would have been out of time.
It is also to be noted that the relief that may be awarded under s 87(1) includes relief which compensates only in part for loss or damage suffered. Section 82 on the other hand provides a right to complete recovery of loss or damage. Section 87(1) also allows for orders to be made to reduce or prevent likely loss or damage, a remedy not available under s 82. Having regard to the range of ancillary remedies available under s 87(1) and the range of circumstances to which it may be applied there is no warrant for importing into it any selective time limitation for any class of the relief available under it.” (emphasis added)
Accordingly, Mr Hilton submitted that although Mayne Nickless might be thought, at first glance, to support Energex’s case that it could rely upon s 87(1) to recover damages, notwithstanding that its claim under s 82(2) might be time barred, that interpretation of the case had to be heavily qualified. On balance, Mayne Nickless at least suggested that caution ought to be exercised before permitting a claim under s 87(1) to be pursued, thereby avoiding the difficulties posed by s 82(2).
Mr Hilton next submitted that, on any view, there had been undue delay in bringing the claim. He pointed to the fact that the ACCC had commenced proceedings against the Alstom respondents in 1999, and in 2000. Those proceedings had been settled by early 2001. Yet, Energex did not file its present application, or its statement of claim, until more than two years later on 26 May 2003.
Importantly, Mr Hilton submitted that the injunctive relief sought by Energex under s 80, which formed the basis of the claim under s 87(1), would be of no utility. The terms of the injunction sought were substantially the same as those of the injunction that was already in force as a result of the judgment of the Court in ACCC v ABB Transmission and Distribution Limited (2001) ATPR ¶41-815. The only difference between that injunction, and the injunction sought, was that the injunction currently in force would expire at the end of four years from the date on which it was granted, whereas the injunction sought was one in perpetuity. Mr Hilton submitted that it was an abuse of process for Energex to seek essentially the same relief as had already been granted in other proceedings, purely in order to circumvent a limitation period: Williams v Spautz (1992) 174 CLR 509 at 528 and 536.
Finally, Mr Hilton submitted that it would be “unjustifiably vexatious and oppressive” to permit Energex to litigate anew a case that had already been disposed of by earlier proceedings: Walton v Gardiner (1993) 177 CLR 378 at 393. He submitted that it would be contrary to public policy to permit that course, with all its attendant risks. He pointed, in particular, to the danger that there might be inconsistent judgments if this matter were permitted to proceed.
THE WILSON RESPONDENTS’ CONTENTIONS
Mr Archibald QC, who appeared with Mr Collinson on behalf of the Wilson respondents, joined with Mr Hilton in submitting that all causes of action for damages pursuant to s 82(1) (other than those arising from one specific tender, No QESI 30/98) were statute barred because they had not been commenced within the time specified by s 82(2). Mr Archibald further submitted that both the claim for injunctive relief under s 80, and the claim for loss or damages under s 87(2)(d) be dismissed as disclosing no reasonable cause of action, or as being frivolous or vexatious, and as constituting an abuse of process. Finally, Mr Archibald submitted that the claim for deceit should also be summarily dismissed.
In substance, Mr Archibald submitted that the relevant question to be determined was whether the conduct alleged against his clients had occurred before 26 July 1998. He submitted that, if so, any claim brought against them under s 82(1) was time barred date.
Mr Archibald joined with Mr Hilton in submitting that a claim under s 82 had two elements. It required proof of a contravention of a provision of the Act, and also proof that loss or damage had been suffered as a result of that contravention. Accordingly, he submitted, a cause of action under s 82(2) accrued, not at the moment that a breach of a section of the Act had occurred, but only when loss or damage was suffered by reason of that breach. Mr Archibald cited, in addition to Acardi, James v ANZ Banking Group Ltd (1986) 64 ALR 347 at 392.
Mr Archibald next submitted that the date on which loss or damage occurred was a question of fact, to be determined in all the circumstances of the case. He referred to Wardley, and to Karedis Enterprises Pty Ltd v Antoniou (1995) 55 FCR 35. He submitted that loss or damage could be suffered at the moment an applicant first entered into an agreement. A classic instance was where an asset was purchased and, by reason of an inherent defect, it was worth less than the price paid: Potts v Miller (1940) 64 CLR 282 at 298. Similarly, where an agreement imposed upon an applicant an obligation to pay a particular amount of money, without gaining any corresponding benefit, and the amount to be paid was quantified by “no factors extrinsic to the agreement save for the passing of time”, the loss would be suffered as soon as the agreement to pay became binding upon the applicant.
Mr Archibald contrasted these examples with the case where the actual loss that an applicant suffered depended not only upon the making of an agreement, but also upon circumstances extrinsic to that agreement. In such a case, he submitted, the loss would not be suffered until those circumstances had transpired. Thus, in Wardley, where the State of Western Australia gave an indemnity to a bank which entitled the bank to demand the payment of money upon certain contingencies, the State was not under any liability to pay until those contingencies occurred. The relevant loss or damage was not suffered merely by giving the indemnity.
Mr Archibald submitted that, in the present proceeding, Energex alleged that combinations of transformer manufacturers had in various ways reached agreements, arrangements or understandings which affected the tender prices they submitted in response to tenders issued by Energex. The allegations in relation to each tender followed a common pattern with a series of tender contracts being pleaded in pars 69 to 355 of the statement of claim. On the basis of such conduct, various contraventions of the Act were alleged in pars 362 to 390 so as to attract liability under ss 80(1)(a), 82(1) and 87(1). Loss or damage was then said to arise as set out in pars 381 to 385.
Mr Archibald contended that this was a case where any loss or damage suffered by the applicant necessarily arose immediately upon entry into each tender contract pleaded in the statement of claim. Unlike Wardley, no question arose of contingent liabilities, or of unfairness in compelling an applicant to institute a proceeding before the existence of its loss could be ascertained. There was no possibility that the Court would be put in the difficult position of having to estimate damages on the basis of probabilities, rather than assessing damages by reference to established events: Wardley at 527. Each agreement imposed upon Energex an obligation to pay an amount of money without acquiring a corresponding benefit. The amount to be paid was not quantified by factors extrinsic to the agreement, save for the passing of time. It followed that each cause of action for loss or damage arose upon the date of entry into each tender contract.
Mr Archibald submitted that all of the contracts, except one, QESI 30/98, had been made before 26 July 1998. They were therefore statute barred. All that was left was a claim for damages arising out of QESI 30/98, an amount totalling $441,113.
Mr Archibald acknowledged that the High Court had made it clear in Wardley that it was ordinarily undesirable that limitation questions should be decided in interlocutory proceedings, in advance of the hearing of the action. The Full Court made the same point in Mayne Nickless, at [26] when it observed that:
“Generally speaking a statutory time limitation will not support an order striking out a claim for failure to disclose a reasonable cause of action or on the basis that the proceeding is frivolous or vexatious or an abuse of the process of the Court: see Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd. (2001) 112 FCR 336 and the cases reviewed there.”
The reason why courts are reluctant to deal with limitation issues at an interlocutory stage is because, generally speaking, not enough is known about the damage sustained by an applicant, and the circumstances in which it was sustained, to justify a confident answer to the question whether the proceeding should be statute barred before all of the evidence has been heard. However, Warldey recognised that there were exceptions to this rule. That case concerned contingent liabilities, and that issue did not arise here.
Mr Archibald submitted that where, as in the present case, it was clear that an applicant could not succeed on its claim, as pleaded, because s 82(2) would be a complete answer to that claim, the Court should not defer the inevitable. As the action must fail, the Court should not hesitate to say so. He referred to Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226 at 231.
In addition, Mr Archibald submitted that there would be considerable utility in striking out the claim for damages under s 82(1) at this stage. Removing that claim from the proceeding would have a major impact upon the preparation and future conduct of the case. Apart from the claim for injunctive relief, it would leave only the claim for damages for deceit, and the claim for damages pursuant to s 87. Although these claims might have to be tried, the issues raised would be considerably narrowed.
Mr Archibald then turned to the claim for injunctive relief. He submitted that Energex had simply fashioned a claim under s 80 in order to enable damages to be obtained under s 87(1). He noted that the claim for damages pursuant to s 82 had been pleaded as though it were nothing more than an alternative claim to that made under s 87(1). That was transparently nothing more than a device, designed to circumvent the limitation period in s 82(2). All of this had occurred against the background of this Court having already granted injunctive relief against the Wilson respondents, in favour of the ACCC, in terms that were almost identical to those sought by Energex in the present proceeding.
Mr Archibald further noted that it was not suggested that his clients had engaged in any contravening conduct after February 1999. Yet the present application had not been instituted until more than four years later, in May 2003, following the final disposition of the ACCC proceedings. There was no allegation by Energex of any threat by the Wilson respondents to engage in any further contravening conduct. Indeed, Finkelstein J, in his judgment in proceeding no V868 of 2000, on 3 May 2002, found that it was unlikely that the Wilson respondents would offend again. His Honour therefore concluded that specific deterrence was not a relevant consideration when fixing an appropriate penalty.
Mr Archibald acknowledged that the Court could grant injunctive relief restraining a person from engaging in conduct in contravention of the Act irrespective of whether it appeared that the person intended to engage again, or to continue to engage, in conduct of that kind: see s 80(4)(a). He submitted, however, that the risk that such conduct might recur was relevant to the exercise of the discretion: see ACCC v CG Verbatis Holdings Pty Ltd (2001) ATPR ¶41-802 at 42,638. He further submitted that the present proceeding was unique, in some respects. Energex was seeking a perpetual injunction against his clients notwithstanding the fact that there was already in place an injunction in similar terms for a period of four years.
Mr Archibald submitted that it was an abuse of process to bring such a claim. He submitted that it was also frivolous or vexatious to do so. The claim for injunctive relief was, in his submission, “clearly foredoomed to fail”: Walton v Gardiner. There was no realistic prospect that the Court would grant the injunctive relief sought, given the existence of an injunction in almost identical terms, and given also the absence of any risk that the contravening conduct would be repeated. It was obvious that the claim for injunctive relief had been included purely in order to gain a collateral advantage.
Finally, Mr Archibald submitted that the claim for deceit, as pleaded, should not be permitted to stand. He submitted that the tort required proof that a representation had been made which is not in fact genuinely believed to be true. Representations were usually made by statements, whether oral or written. Sometimes representations could be implied from acts and conduct. The law also recognised that a half-truth could amount to a falsehood. Notwithstanding qualifications of these kinds, mere silence, or non-disclosure of certain facts could not ordinarily give rise to a claim in deceit. There had to be more. For example, there might be cases where, by reason of the existence of a particular relationship, there was a duty to disclose. Such relationships might include trustee and beneficiary, solicitor and client, and principal and agent. They did not, however, include vendor and purchaser. The question whether silence alone could constitute misleading or deceptive conduct under s 52 of the Act raised an entirely different issue.
Mr Archibald submitted that Energex had done no more than allege that the mere act of submitting a tender in response to its invitation constituted a representation by each tenderer that the price and other terms of the tender had been arrived at independently, and without any knowledge of the price and terms of any other tender. The alleged representations could not be distilled from the mere submission of a tender in these circumstances.
In State of Queensland v Pioneer Concrete (Qld) Pty Ltd, one issue was whether the tort of deceit had been adequately pleaded. The statement of claim alleged that the respondents had committed that tort in impliedly representing that the various offers to provide pre-mixed concrete were competitive and non-collusive, and complied with the State’s Standard Code of Tendering. It was alleged that these were not representations capable of supporting a claim in deceit. Drummond J rejected that contention, and held that the conduct of the respondents in submitting tenders was “capable of” amounting to a representation that the prices at which they were prepared to supply concrete were competitive and non-collusive.
Mr Archibald submitted that Pioneer Concrete was readily distinguishable. In that case, the claim for deceit was struck out, at least in part, because of a difficulty with causation. The applicant in that case had pleaded that, by virtue of the deceit, it had lost the opportunity to take such steps as it was advised, including bringing proceedings under s 80, or requesting the Trade Practices Commission to bring such proceedings, to prevent the respondents from continuing to give effect to the collusive agreements alleged. The applicant’s case therefore assumed that when a person makes a fraudulent misrepresentation, the victim’s damages in deceit are assessed on the basis of the gains the victim might have made, or the detriment it might have avoided, had the fraudster disclosed the true position. That was not, and never had been, the law. In an action for deceit, the plaintiff could only seek to be put, so far as possible, in the position he would have been in had he not acted on the fraudulent inducement: see generally Pioneer Concrete at [85] to [86].
Mr Archibald submitted that Energex, having failed to plead the existence of a duty of full disclosure, could not recover the wider damages claimed in this case unless it could say that those damages flowed directly from, i.e. were caused by, the respondents’ misrepresentations. However, what caused Energex’s subsequent losses was not the initial representation, but rather the agreement made beforehand between the respondents, and the implementation of that agreement. Energex had not pleaded, and sought to avoid pleading, a duty of full disclosure. It only alleged that had the representations not been made, it would have investigated why the tenderers were unwilling to participate in a public tender process.
THE SCHNEIDER RESPONDENTS’ CONTENTIONS
Mr Gray, who appeared on behalf of the Schneider respondents, submitted that the statement of claim was seriously deficient in setting out Energex’s involvement in the various arrangements with the respondents, and with other transformer manufacturers. He submitted that the claims made against his clients suffered from the vice of uncertainty, containing many allegations that he described as “rolled up”, and therefore impossible to meet.
Mr Gray also joined with Mr Hilton and Mr Archibald in attacking the pleading in deceit, and in asserting that the claims for damages pursuant to s 82 were time barred.
Mr Gray developed his submissions by noting that Schneider had commenced manufacturing electrical transformers in December 1993, after it acquired the shares in ASET. Energex claimed that Schneider contravened s 45(2)(a)(i) and s 45A(1) by entering into arrangements with other transformer manufacturers to tender for the supply of transformers, which resulted in those suppliers charging higher prices than would otherwise have been the case. He submitted that the statement of claim was drawn in an unsatisfactory manner because the case against his clients could not clearly be discerned. He pointed specifically to pars 64, 179, 276, 379, 382, 383, 384, 397, 398 and 388 as containing “rolled-up” pleas.
It is unnecessary, for present purposes, to summarise all of the many complaints that Mr Gray made regarding the form of the pleading. It is sufficient to provide the flavour of those complaints by summarising what he said about two specific paragraphs.
Mr Gray submitted that par 64 should be struck out on the basis that it was a “rolled-up” plea which failed to identify and single out those material facts that were alleged against the Schneider respondents, as opposed to those facts alleged against the other respondents.
Paragraph 64 of the statement of claim reads as follows:
“ARRANGEMENT
64. By no later than 1982, transformer manufacturers had made an agreement or arrangement or arrived at an understanding (“the Transformer Arrangement”) whereby:
(a) they would allocate tenders for the production and supply of transformers amongst themselves with a view to each of them maintaining their share of sales of power transformers and distribution transformers;
(b) the maintenance of each manufacturer's share of sales would be achieved by the manufacturers agreeing to the allocation of tenders for the production and supply of transformers to a particular manufacturer (“the selected manufacturer”) in the expectation that the selected manufacturer would be awarded the contract resulting from the tender;
(c) the allocation of a contract to the selected manufacturer would be sought to be achieved by the selected manufacturer submitting a tender at a lower AAV than the tenders submitted by other manufacturers, or by the other manufacturers not submitting a tender;
(d) the submission of the tender by the selected manufacturer at a lower AAV would be achieved by the manufacturers discussing their tenders with each other, and the manufacturers other than the selected manufacturers ensuring that their tenders yielded a higher AAV than the tender of the selected manufacturer.
Particulars
The best particulars that the Applicant can currently provide are that the existence of such an agreement, arrangement or understanding is to be inferred from the overt acts specified in paragraphs 75, 79, 104, 110, 118, 130, 142, 146, 150, 158, 176, 182, 186, 189, 194, 196, 197, 199, 203, 205, 207, 216, 219, 227, 231, 233, 237, 241, 243, 249, 251, 253, 255, 257, 259, 261, 263, 265, 267, 269, 271, 276, 283, 285, 287, 289, 291, 293, 295, 298, 300, 303, 308, 311, 319, 329, 333, 335, 343, 345, 347, 350, 355, 383 and 384 hereof. In relation to the acts specified in paragraphs 75, 79, 104, 110, 118, 130, 142, 146, 150, 158, 176, 182, 186, 189, 194, 196, 197, 199, 203, 205, 207, 216, 219, 227, 231, 233, 237, 241, 243, 249, 251, 253, 255, 257, 259, 261, 263, 265, 267, 269, 271, 276, 283, 285, 287, 289, 291, 293, 295, 298, 300, 303, 308, 311, 319, 329, 333, 335, 343, 345, 347, 350, 355, 383 and 384 hereof, the Applicant relies on them both as overt acts from which the existence of the Transformer Arrangement can be inferred, and as separate agreements, arrangements or understandings.
Mr Gray submitted that a pleading drawn in this manner made it impossible to understand what role, if any, his clients were alleged to have played in relation to the “Transformer Arrangement”, to which the paragraph referred. He complained that the reference, in the particulars, to the numerous paragraphs of the statement of claim, from which such an agreement, arrangement or understanding could be inferred, reinforced the “rolled-up” nature of the plea. The problem was exacerbated by the fact that Energex asserted that it relied upon each and every one of the overt acts specified in order to infer the existence of the Transformer Arrangement. At the same time, Energex relied upon those same overt acts as the basis for the inference that there were “separate agreements, arrangements or understandings”. This inconsistency in approach was said to be the source of some confusion.
Mr Gray claimed that par 179 of the statement of claim was defective in that it contained no allegations against the Schneider respondents in relation to the 1993 Distribution Transformer Arrangement, whereas subsequently, in par 272, Energex referred expressly to the Schneider respondents as having participated in the Transformer Arrangement, or alternatively, the 1993 Distribution Transformer Arrangement.
Paragraph 179 reads as follows:
“179.Further and alternatively to paragraph 64 hereof, in about early 1993, ABBPT, WTC and Tyree made an agreement or arrangement or arrived at an understanding (“the 1993 Distribution Transformer Arrangement”) whereby:
(a)ABBPT, WTC and Tyree agreed that they would not compete with each other for contracts let to tender for the production and supply of distribution transformers, with a view to each of them maintaining their share of sales of distribution transformers;
(b)ABBPT, WTC and Tyree agreed that they would allocate such tenders so that usually the company which had an existing contract to supply that particular purchaser would be awarded the new contract to result from the letting of the tender.
(c) the awarding of the new contract to the existing supplier would be sought to be achieved by the selected supplier submitting a tender at a lower AAV than the tenders submitted by other manufacturers, or by the other manufacturers not submitting a tender, in the expectation that the selected supplier would be awarded the contract resulting from the tender;
(d) the submission of the tender by the selected supplier at a lower AAV would be achieved by the manufacturers discussing their tenders with each other, and the manufacturers other than the selected supplier ensuring that their tenders yielded a higher AAV than the tender of the selected manufacturer.
Particulars
(i)The agreement or arrangement was made, or the understanding was arrived at, at a number of meetings and telephone conversations between Pitt and Jones on behalf of ABBPT, Wilson on behalf of WTC, and Boyce on behalf of Tyree.
(ii)The meetings and telephone conversations which took place included:
(A)a meeting on 25 February 1993 at the ABB premises at Darra, Brisbane, between Pitt and Boyce.
(B)a meeting on 26 March 1993 at the ABB premises at Moorebank, Sydney, at which Pitt, Jones and Boyce were present.
(C)Telephone conversation and/or meetings in the period of late 1992 to mid 1993 between Ptitt and/or Jones and Wilson that the Applicant is not yet able to particularise.
(iii)The submission of tenders at an appropriate AAV was to be achieved by:
(A) When a request for tenders was announced, and the quantity and specifications for the product were known, the parties would individually commence preparation of a tender in the ordinary course.
(B)Shortly prior to the closing date for the tender, the representatives of the party with an existing contract was to contact the representative for each other party by telephone and arrange a “covering bid” for the tender process. A covering bid would involve the other parties agreeing with the party with an existing contract to provide a bid with a higher AAV so as to enable the party with an existing contract to win the tender. The covering margin was to be 2% to 5%. Alternatively, agreement was reached for another supplier to win the tender.
(C) The representatives of each party were then to have a detailed discussion of their respective AAVs for each of the relevant tender items. Prices and/or AAVs could also be exchanged by facsimile.
(iv) Each party would then submit a tender in accordance with and in the knowledge of the price information exchanged, the effect of which being that the bid of the selected supplier would be covered by the bids of the other parties.”
Paragraph 272 is in the following terms:
“272. In or about May 1995:
(a) ABBPT, WTC and Tyree re-committed to the Transformer Arrangement, or alternatively the 1993 Distribution Transformer Arrangement, and Schneider agreed to participate in the Transformer Arrangement, or alternatively the 1993 Distribution Transformer Arrangement; or
(b) ABBPT, WTC, Tyree and Schneider made an agreement or arrangement or arrived at an understanding that they would not compete with each other for contracts let to tender for the production and supply of distribution transformers, with a view to each of them maintaining their share of sales of distribution transformers. The parties agreed as part of the agreement, arrangement or understanding that it was to be implemented in the manner pleaded in paragraph 179 above;
except that
(c) due to the break up of the State-wide electricity utility in Victoria into five regionally based utilities, WTC and Schneider would need to agree on how any forthcoming tenders in Victoria for distribution transformers above 100kVA would be shared between them so as to ensure that they maintained their share of sales of distribution transformers;
the conduct in this paragraph being referred to as the “1995 Distribution Transformer Arrangement”.
Particulars
(i) The agreement or arrangement was made at a number of meetings and telephone conversations between Pitt and Jones on behalf of ABBPT, Wilson on behalf of WTC, Boyce on behalf of Tyree, and Stocker on behalf of Schneider .
(ii) The meetings and telephone conversations which took place included:
(A) A meeting on 17 March 1994 immediately before or after an AEEMA meeting at Woolloomooloo Waters, Woolloomooloo Bay, Sydney at which Pitt and/or Jones and Stocker were present.
(B) A meeting on 29 July 1994 immediately after an AEEMA meeting at the Australian Chamber of Manufacturers offices, St Kilda, Melbourne at which Jones, Wilson and Stocker were present.
(C) A meeting on 11 November 1994 immediately after an AEEMA meeting at Sanctuary Cove, Surfers Paradise at which Pitt, Jones, Wilson and Stocker were present.
(D) A meeting in late 1994 at the home of Wilson in Glen Iris, Melbourne at which Jones, Wilson and Stocker were present.
(E) A meeting in or about May 1995 at the home of Wilson in Glen Iris, Melbourne at which Jones, Wilson, Stocker and Boyce were present.
(F) Telephone conversations during the period from about March 1994 to May 1995 between Pitt, Jones, Wilson, Boyce and Stocker that the Applicant is not yet able to particularise.”
Mr Gray submitted that it was impossible to glean from reading these paragraphs in conjunction with each other precisely what conduct Energex alleged that the Schneider respondents had engaged in that was said to have given rise to the 1993 Distribution Transformer Arrangement.
Mr Gray levelled similar criticisms at numerous other paragraphs of the statement of claim. For example, he submitted that par 276 was defective because the allegation contained therein was devoid of proper particulars regarding any alleged agreement or arrangement made by Schneider with respect to a particular tender. I interpolate, at this stage, to observe that many of his criticisms can fairly be described as “pleading points”, raising matters that could be addressed by the provision of further particulars. Even if there were substance in his complaints, it would not necessarily follow that the application should be dismissed, or that the statement of claim should be struck out, in whole or in part.
Mr Gray largely adopted the submissions of Mr Hilton and Mr Archibald with regard to the pleading of the tort of deceit. He submitted that the tort had been pleaded in a manner that could be analysed in the following way:
“(a)Paragraph 400 simply pleads that the applicant purchased transformers from transformer manufacturers, including Schneider, by the selection of a tender after a public tender process.
(b)Paragraph 401 pleads what that tender process involved.
(c)Paragraph 402 pleads that in submitting a tender each tenderer represented that the price and other terms of the tender had been arrived at by the tenderer without knowledge of the price and terms of any other tenderer and was not subject to any agreement, arrangement or understanding between them. It is pleaded that these representations are to be implied from the facts pleaded in paragraph 401. It is submitted there is no basis upon which such representations could be said to arise from the facts pleaded in paragraph 401 as to the tender process.
(d)Paragraphs 404 and 405 allege that the representations were false and that they were made dishonestly in that they were made with knowledge of the falsity. There is, it is contended, no proper basis pleaded for the allegation of dishonesty. There is, furthermore, no proper basis pleaded that the alleged representations were made with knowledge of their falsity. The pleading simply relies upon the tender process alleged in paragraph 401 as impliedly giving rise to a representation that the tender submitted had been arrived at by the tenderer without any knowledge of the price or terms of any other tender and was not the subject of any agreement or arrangement or understanding between the tenderers. That is not sustainable on the matters pleaded.”
Mr Gray submitted that the pleading in deceit should be struck out because the Schneider respondents had not been successful in any of the tenders set out in Annexure “A” to the statement of claim. A plaintiff could only be liable in deceit for damage actually caused on the basis that damage is the gist of the tort.
Finally, Mr Gray noted that par 381 of the statement of claim alleged that Schneider had been involved in contravening conduct “between May 1995 and 1 June 1996”, and then “from 1 January 1996”. According to par 354, the last tender by Energex in which it was alleged that Schneider had engaged in contravening conduct was the Aurora tender, on 8 January 1999. The only other tenders that might have occurred after 26 July 1998 were those described in pars 344, 346, 348, and 354. The tenders that occurred prior to that date were those described in pars 234, 270, 274, 282, 284, 294, 297, 299, 301, 307, 314, 316, 318, 328, 330, 334 and 342. For the reasons advanced by Mr Hilton and Mr Archibald, the claims relating to the tenders that occurred prior to 26 July 1998 should be struck out.
ENERGEX’S CONTENTIONS IN REPLY
Mr Keane QC, who appeared with Mr O’Shea SC and Mr O’Bryan on behalf of Energex, commenced his reply by noting that O 11 r 2(a) provides that a pleading of a party shall contain, and contain only, a statement in summary form of the material facts on which the party relies, but not the evidence by which those facts are to be proved.
Mr Keane submitted that it was well established that the material facts are those necessary for the purpose of formulating a complete cause of action. It is not sufficient that the statement of claim simply express a conclusion drawn from facts that are not stated. Not only must all material facts be pleaded, but they must be pleaded with a sufficient degree of specificity, having regard to the general subject matter, to convey to the opposing party the case that party has to meet. It must be apparent on the face of the document that the facts pleaded, if proved, would establish the cause of action relied upon: see Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR ¶41-522 at 42,679.
Mr Keane then summarised his understanding of the elements of a cause of action alleging a contravention of s 45(2)(a). He identified the following elements:
·the making of a contract, arrangement or understanding (collectively described for convenience as an “arrangement”);
·a party to the arrangement being a corporation; and
·the arrangement containing either an exclusionary provision, or a provision that has the purpose or likely effect of substantially lessening competition in a market.
Mr Keane submitted that in relation to an arrangement containing an exclusionary provision within the meaning of s 4D, two additional elements had to be satisfied. The arrangement must be made between persons, any two of whom were in competition with each other. In addition, the provision within the arrangement must have the purpose of preventing, restricting or limiting the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons.
Recently, the High Court has looked again at the question of when contingent losses are sustained. In Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26, the applicants took a 99-year lease over a unit in a retirement village owned and managed by Overton Investments Pty Ltd. Prior to, and at the time they entered into the lease, Overton gave them an estimate of the amount that they would be required to contribute towards outgoings. It explained that this was an estimate only, and would be subject to variation from time to time.
The estimate was based on figures that did not reflect the actual cost of outgoings. Nor did it take into account all of the various outgoings that Overton was entitled to recover. In 1997, Overton began charging the applicants for all outgoings that could properly be charged under the lease. The applicants brought proceedings alleging breaches of s 52 and sought orders under s 87, limiting the contributions that they were required to pay. In the alternative, they sought damages under s 82. Those damages reflected the difference between the value of the lease if contributions were calculated in accordance with Overton’s legal entitlement, and the value of the lease if contributions were charged in accordance with a restriction on its recovery entitlements.
The applicants succeeded at first instance in proving that Overton had engaged in conduct that was misleading or likely to mislead. His Honour also concluded that Overton’s conduct had caused the applicants to enter into the lease. However, he held that they had not proved that they had suffered any loss or damage. That was because there was no difference between the price paid under the lease, and its value at the date of the lease. Nor was there any evidence that the applicants were not receiving value for the maintenance fees that they were required to pay. An appeal to the Full Court was dismissed. However, the High Court reversed the trial judge’s decision, and remitted the matter to him for assessment of damages and interest.
The reasoning of the High Court can be summarised as follows. The Full Court erred in concluding that the applicants had not proved loss or damage. It is not correct to assume that in every misrepresentation case, the only type of damage that could be redressed under Pt VI of the Act was a difference between price and value, or any consequential loss. Although there was no evidence that the applicants had not received value for the maintenance fees that they paid, it did not necessarily follow that they did not incur loss.
The High Court also reiterated what had been decided in Marks v GIO, namely that the operation of Pt VI should not be approached by drawing analogies from the tort of deceit, or any other claims under general law. The expression “loss or damage” should not be given a narrow meaning, and was not confined to economic loss. Importantly, the Court held that if a party enters a contract that exposes that party to a contingent loss or liability (that is, the possibility of future detrimental consequences), no damage is sustained until the contingency is fulfilled and the loss becomes actual. In the instant case, the applicants suffered loss when Overton starting charging the full amount of the outgoings that it was entitled to charge. Their Honours said at [55]:
“What the appellants did not know was that the estimate of outgoings they were given did not provide for all the outgoings that were then being incurred. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a contingency in the sense that the adverse risk might never have eventuated. When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, the appellants suffered loss and damage. And this court’s decision in Wardley requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available.” (footnote omitted)
The Court also said at [66]:
“The appellants had been induced by the respondent’s conduct to undertake an obligation which may, but need not, have been more onerous than the respondent’s representation led them to believe. When the respondent started to charge all the outgoings it was entitled to charge, the appellants suffered a loss. The amount of that loss was not to be determined, as the majority of the Full Court held, only by comparing the financial position of the appellants according to whether they entered this lease or took some other accommodation. The appellants did not contend that they had suffered loss in that way. The appellants suffered loss because the continuing financial obligations they undertook when they took the lease proved to be larger than they had been led to believe.”
The present case differs in several important respects from both Wardley and Murphy v Overton. There is no question of Energex having entered into a contract that exposed it to a “contingent loss or liability”. Nonetheless, the reasoning in those cases, and the reasoning in Karedis, at least lends some support to Mr Keane’s argument that Energex did not suffer loss or damage at the moment it entered into each of the agreements pleaded. Rather, it suffered loss only at the point that it could be ascertained that the price it had paid exceeded the market value of the goods. That is, of course, treating “market value” as a value untainted by market rigging.
It is not necessary, therefore, to determine whether Mr Keane’s alternative contention as to the meaning of the word “suffers” is arguable in order to conclude that Energex should not be shut out of court, at this stage, on the basis of s 82(2).
It is also unnecessary to accept as arguable Me Keane’s somewhat elaborate submissions regarding what Energex might do in the event that the respondents seek to rely upon s 82(2) as an answer to the claim for damages under s 82(1). Mr Keane pointed out that it was theoretically possible that the respondents would not plead the limitation defence. He submitted that no application for summary dismissal should be entertained until that defence had at least been pleaded.
I am not persuaded by that submission. The various notices of motion presently before the Court make it abundantly clear that the respondents will, if required to file defences, plead the limitation defence. Mr Keane’s suggestion that they may not do so is entirely unrealistic.
The next point raised by Mr Keane was that any attempt on the part of the respondents to plead a limitation defence would be met by an amendment to the statement of claim, by way of reply, in which Energex would seek damages based not upon the original breaches of s 45, but rather upon the unconscionable conduct involved in pleading the defence. Mr Keane contended that such relief would arise pursuant to s 51AC. Alternatively, he submitted that Energex would be entitled to recover damages, pursuant to the causes of action already pleaded, or to obtain injunctive relief to prevent the respondents from pleading that defence.
I am greatly impressed by the ingenuity of the argument. I am rather less impressed by its merits.
Mr Keane submitted that any attempt to plead the limitation defence would amount to conduct “in trade or commerce”. Section 51AC relevantly provides:
“(1) A corporation must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a person (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
(2) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a corporation (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a corporation (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
…”
Section 51AC(4) contains a series of matters to which the Court may have regard when determining whether either ss 51AC(1) or 51AC(2) has been contravened.
Section 51AC(5) provides:
“5.A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with:
(a)the supply or possible supply of goods or services to another person; or
(b) the acquisition or possible acquisition of goods or services from another person;
by reason only that the first-mentioned person institutes legal proceedings in relation to that supply, possible supply, acquisition or possible acquisition or refers to arbitration a dispute or claim in relation to that supply, possible supply, acquisition or possible acquisition.”
Mr Keane submitted that any party who enters into a contract, and then seeks to plead a defence, or seeks to take advantage of a legal right, in circumstances where it would be “unconscionable” to do so, thereby contravenes s 51AC. He submitted that s 51AC(5) supported that contention, and he relied in particular upon the use of the expression “by reason only that”.
I am not persuaded by that submission. It requires the expression “in trade or commerce” to be given an unduly wide meaning. It is also difficult to reconcile with those authorities that have dealt with the meaning of that expression in this context. For example, in Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257, the Full Court of the Supreme Court of Victoria held that a statement made by the respondent during the course of proceedings brought against the appellant seeking to restrain the appellant from practising as a solicitor could not give rise to a claim under the Fair Trading Act 1985 (Vic).
In a joint judgment, Kaye and Beach JJ said at 273:
“In our opinion, statements made during the course of litigation cannot be categorised as statements made in trade or commerce nor can they categorised as representations.”
Their Honours referred to Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 where Bowen CJ explained that the words “trade” and “commerce” were ordinary terms which described all the “mutual communings” that comprised commercial arrangements or commercial dealings. They then concluded:
“A statement made to a court during the course of litigation is not a statement made in connection with or as part of a commercial arrangement.”
See also the observations of Ormiston J at 292, which are to the same effect.
I also note that in Australian Associated Motor Insurers Ltd v NRMA Insurance Ltd (2002) 124 FCR 518, Conti J held that a claim that the NRMA and the second respondent, who was a solicitor who acted under retainer agreements from NRMA–insured parties, had contravened s 52, should be struck-out because the conduct about which the applicant complained did not occur “in trade or commerce”. His Honour applied the test laid down in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603-604 in arriving at that conclusion. In substance, he accepted that the conduct of litigation in court on behalf of a client does not amount to engaging in an activity having a trading or commercial character.
On the present state of the authorities, any attempt on the part of Energex to invoke s 51AC in response to a pleading of a limitation defence is unlikely to succeed. The same may be said regarding Mr Keane’s submission that the equitable jurisdiction of the Court could be invoked to enjoin the respondents from relying upon any limitation defence. There is no basis, in the present case, for invoking an estoppel of the kind raised in The Commonwealth v Verwayen (1990) 170 CLR 394. The respondents have not undertaken, expressly or impliedly, not to plead a limitations defence. I accept that in Hawkins v Clayton, Deane J flagged the possibility that an injunction might go to prevent reliance upon such a defence in circumstances where it would be unconscionable to permit it to be raised. However, his Honour’s analysis does not seem to have commended itself to the other members of the Court.
Mr Keane also relied upon what is known in the United States as the “doctrine of fraudulent concealment”. He referred to Atlantic City Electric Co v General Electric Co 312 F2d 236 (1962), a decision of the United States Court of Appeals, Second Circuit. In that case, the majority referred to that doctrine, and its application in every Federal statute of limitation. In effect, the Court held that the doctrine applied unless Congress expressly provided to the contrary, in clear and unambiguous language.
A similar approach had earlier been taken by the United States Supreme Court in Bailey v Glover 88 US 342 (1874). There, it was held that, at least in equity suits, time did not run in cases of fraudulent concealment until the fraud had been discovered. The Court observed that the position at common law was less clear, but on balance, the same principle ought to apply.
The difficulty with my placing any reliance upon these authorities is that the Full Federal Court in Wardley expressly considered, and rejected, any such principle. It noted, for example, that in England, historically, limitation statutes had been construed in a manner that favoured defendants. That led to the enactment of the Latent Damages Act 1986 (UK) which inserted s 14A into the Limitation Act 1980 (UK). This had the effect that the starting date for the reckoning of the period of limitation would be the earliest date on which the plaintiff first had both the knowledge required to bring an action, and the right to do so.
The Full Court in Wardley observed that the older English authorities had not escaped criticism. Nonetheless, those cases had been repeatedly followed in Australia and left little room for the invocation of any equitable doctrine of concealed fraud. The Full Court observed at 269:
“The equitable doctrine of concealed fraud does not operate to prevent a defendant to a purely legal claim, not being a claim also cognisable in the concurrent jurisdiction of an equity court, from pleading the Statute of Limitations.”
The Full Court noted that strong criticisms had been levelled at this approach by various commentators and law reform bodies. It said at 270:
“In 1936, the contrary views of McCardie J in Lynn v Bamber drew some anxious comment in par 22 of the Fifth Interim Report of the Law Revision Committee which dealt with statutes of limitation: see also the cautious treatment of the subject by D B Ross, “Concealed Fraud and the Statute of Limitations” (1930) 4 ALJ 174. The result was a recommendation by the Committee (since embodied in the British legislation) that in all cases in which the statutes of limitation apply, or are applied by analogy, (a) where a cause of action is founded on fraud, committed by the defendant or his agent or some person through whom he claims, or (b) where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent or some person through whom he claims, the right of the plaintiff to sue should be deemed to have first accrued at the time when the plaintiff discovered such fraud, or could with reasonable diligence have discovered it. The New South Wales and Victorian legislation, to which Davies J referred in Fenech v Sterling, expresses the same policy. We were told that there was no such legislation in Western Australia. (No question arose on this appeal as to whether, consistently with the scope of s 82 of the Act, there remained room for the operation of s 79 of the Judiciary Act to pick up any State limitation statute: see Vink v Schering Pty Ltd (No 2) [1991] ATPR 52,113.)”
Having given the matter careful consideration, the Full Court concluded:
“But the question for us is whether there is room for the application of this particular equitable doctrine to defeat reliance upon a limitation provision contained within the statute conferring the cause of action. The equitable doctrine is expressed in terms of claims arising under the general law, whether they might be characterised as legal or equitable. It is not couched in terms which extend to claims created purely by statute. In such cases, the statute has to be given its full effect including any engrafted time limitation of whatever character. That, in our view, is what follows from the decision of the High Court in Crown v McNeil.”
Nothing said by the High Court in Wardley, when the case went on appeal, casts any doubt upon the correctness of the approach taken to this issue by the Full Court. Other cases that are in point, including Scarcella v Lettice (2000) 51 NSWLR 302, point in the same direction. See generally the observations of Handley JA in Scarcella at 306 and 308.
In Scarcella it was held that time commenced to run, in an action for negligence, when damages accrued, even though the purchasers were not aware of the defect in title. The defect in question was not latent, and could have been discovered had the solicitors who acted for the plaintiff adopted normal conveyancing procedures.
On the present state of the authorities, the doctrine of concealed fraud cannot be invoked in answer to the respondents’ foreshadowed reliance upon s 82(2). The authorities suggest that there may be some scope for the application of the doctrine of equitable estoppel, but it is clearly premature to consider that possibility. There would need to be a great deal more known about the facts before any definitive conclusion could be reached.
Some commentators have noted that in cases of fraud, statutes of limitations have been given a special application in equity. For example, I C F Spry, in The Principles of Equitable Remedies 5th ed, 1997, observes at pp 424 and following, that courts of equity would not ordinarily allow a statute of limitations to be set up, in equitable proceedings, in respect of time during which, by reason of the fraud of the defendant, the plaintiff was not aware of his or her right of action. He says that the precise basis upon which equitable relief was granted had been the subject of controversy but “should probably be found in the general disposition of courts of equity to prevent fraudulent reliance on rights”. He also says that there has been some uncertainty as to whether courts of equity would intervene to prevent the setting up of statutory limitation periods in common law actions.
The learned authors of Meagher, Gummow & Lehane’s Equitable Doctrines & Remedies, 4th ed, 2002, essentially agree with this analysis. They point out that when the Court of Chancery developed the doctrine of applying statutes of limitation, by analogy, it refused to do so in cases of “concealed fraud”. There were two main classes of case to which the doctrine applied: (a) when the action was one alleging fraud, in which case time did not run until the discovery of the fraud; and (b) where the cause of action did not involve fraud but its existence was fraudulently concealed by the defendant, in which case time did not run until both the concealment had been discovered, and the cause of action ascertained. They suggest that the former category included actions involving the common law notion of deceit.
Whatever rules developed in equity regarding the taking of limitation defences in cases of fraud seem to have been confined to purely equitable proceedings. In Meagher, Gummow & Lehane, it is said at [34-095] that the equitable doctrine of concealed fraud furnished an answer only to equitable claims. It could not be used to furnish grounds for an injunction restraining a defendant at law from pleading the statute of limitations. See generally Imperial Gas Light and Coke Co v London Gas Light Co (1854) 10 Exch 39; 156 ER 346, Hunter v Gibbons (1856) 1 H & N 459; 156 ER 1281, Armstrong v Milburn [1886-90] All ER Rep 596, and R v McNeil (1922) 31 CLR 76 at 99-100. The New South Wales Court of Appeal took the same approach in Metacel Pty Ltd v Ralph Symonds Ltd (1969) 90 WN (Pt 1) (NSW) 449 at 452, a case cited with approval by the Full Court in Wardley.
In such cases, time did not begin to run against a plaintiff so long as, by reason of the fraud of the defendant, the plaintiff was not aware of the matters giving rise to the cause of action. See for example Gibbs v Guild (1882) 9 QBD 59 at 69. According to Dr Spry, the better view was that fraud included, for these purposes, fraudulent concealment after a cause of action accrued. He noted, however, that much of this old learning had been superseded by the passage of legislation dealing with limitation periods.
In summary, I am not persuaded that Energex’s claims for damages under s 82(1) are untenable. It is at least arguable that any loss or damage suffered by Energex did not occur until after 26 July 1998, the date on which time began to run. Whether or not the limitation defence ultimately succeeds will be a matter for the trial. It is not a matter for summary dismissal.
I am fortified in my conclusion regarding this matter by what the High Court said in Wardley. The majority observed in its joint judgment at 533:
“We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.”
In Cubillo v Commonwealth (1999) 89 FCR 528, O’Loughlin J adopted a similarly cautious approach at 580-590. His Honour supported that approach by reference at 588 to a passage from the judgment of the Queensland Court of Appeal in Noble v Victoria [1999] QCA 110.
Abuse of process
Because I have rejected the respondents’ contention that it is clear beyond argument that Energex’s claims for damages under s 82(1) are time barred, so as to warrant summary dismissal, it is not necessary, strictly speaking to deal with their alternative argument that the attempt to invoke s 87(1), as a by-product of a spurious application for injunctive relief, constitutes an abuse of process. Clearly, if s 82(2) does not constitute a bar to the claims under s 82(1), it cannot be an abuse of process for Energex to plead an alternative claim.
However, even if the claims brought under s 82(1) were statute barred, it would not necessarily follow that bringing an alternative claim under s 87(1), in conjunction with a claim for injunctive relief, would amount to an abuse of process.
In the first place, I see no reason why Energex should not seek the additional protection that would be afforded if an injunction under s 80 were granted in the terms sought. The fact that the ACCC has already obtained injunctive relief is relevant to the exercise of the discretion as to whether additional injunctive relief should be granted. It is not, however, a bar to such relief.
Once it is accepted that Energex is entitled to seek injunctive relief, there is no reason why it should be prevented from seeking damages under s 87(1). If Energex can make good its claim that the respondents have systematically engaged in collusive tendering over many years, there would be every justification, in my view, for permitting it to plead its case under s 87(1) so that it could recover damages.
The current weight of authority in this country is against the existence of a doctrine of fraudulent concealment in answer to a limitation defence, save in purely equitable proceedings. However, the principles that underlie that doctrine are relevant when considering whether the applicant’s attempt to find an alternative basis upon which to press its claim should be regarded as an abuse of process.
There is nothing wrong, in my opinion, with what Energex has done. If the respondents have engaged in systematic fraud, as alleged, it hardly behoves them to complain about Energex’s reliance upon a remedy for which the Act expressly provides. The respondents describe Energex’s conduct as an attempt to “circumvent” a protection that the Act affords them. I do not accept that as a valid characterisation. This is a case in which not only is fraudulent conduct alleged against the respondents, but so too is fraudulent concealment of that conduct. It is, in my view, quite inappropriate to describe Energex’s application for injunctive relief, and for damages under s 87(1), as an abuse of process.
Deceit
This takes me to the next issue, which is the challenge to the manner in which the tort of deceit is pleaded. I propose to deal with that point briefly.
I accept Mr Keane’s submission that it is at least arguable that the conduct of the respondents in engaging in the tender process, as they did, gave rise to an implied representation that that process was being conducted in a proper and lawful manner. I also accept his submission that Energex need not, and does not, rely upon the existence of some duty, on the part of the respondents, to inform it of the true position. The question is simply whether the respondents’ conduct was apt to indicate that what were in truth collusive tenders, were genuine and separate bids.
There appears to be no real issue between the parties regarding the necessary elements of an action in deceit. It seems clear enough that there must be a representation of fact made by words or by conduct, and mere silence is not sufficient.
There is a helpful summary of the requirements for pleading the tort of deceit in Bullen & Leake & Jacob’s Precedents of Pleadings, 14th ed, Vol 2, London, Sweet & Maxwell, 2001, at pp 813-816. A representation can be a statement which is implied from the context in which words are spoken, or by conduct.
An example of how conduct that appears not to involve any representation may in fact be held to do so is to be found in Director of Public Prosecutions v Ray [1974] AC 370. In that case, the defendant and four friends went to a restaurant intending to have a meal there and pay for it. After eating the main course, they decided not to pay for the meal. However, they remained seated until the waiter went out of the room. They then ran from the restaurant. The defendant was convicted of dishonestly obtaining a pecuniary advantage by deception. The House of Lords held that the conviction should stand on the basis that the defendant’s conduct, in remaining seated in the restaurant, amounted to a continuing representation of his present intention to pay. His change of mind produced a deception, the effect of which was that he was treated as an honest customer whose conduct did not call for precautions.
This decision has not escaped criticism. Nonetheless, it remains good law in England, and although he did not cite it, it certainly supports Mr Keane’s argument. Bullen & Leake makes the point that active concealment of a material fact may operate as a misrepresentation but mere non-disclosure of facts will not give rise to a cause of action unless there is a duty of disclosure, for example, where there is a fiduciary relationship: see Smith v Hughes (1871) LR 6 QB 597.
It is at least arguable that the respondents, by their conduct in submitting tenders in accordance with a regulated tender process, made the representations pleaded. That is sufficient to avoid summary dismissal, or a strike out application.
Other pleading points
The final matter that needs to be considered is whether Mr Gray has succeeded in demonstrating that the statement of claim is so defective as to warrant being struck out in whole or in part. In my view, he has not made good that contention.
The statement of claim is certainly a complex document. At times it is difficult to follow. That is because it encompasses a large number of transactions, involving many different entities. Nonetheless, I am not persuaded that it is so complex, or unclear, that it would “embarrass” the Schneider respondents to require them to file a defence. If any uncertainty exists regarding the nature of the allegations made against those respondents, it can be overcome by the provision of further and better particulars.
Orders
Each notice of motion will be dismissed. I will stand the matter over to 16 June 2004 at 9.30 am to hear submissions from the parties regarding the matter of costs, and to give directions as to the future conduct of this proceeding.
I certify that the preceding two hundred and fifty-four (254) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate:
Dated: 7 May 2004
Counsel for the Applicant: Mr P Keane QC and Mr P O'Shea SC with Mr M O'Bryan Solicitors for the Applicant: Minter Ellison Counsel for the First, Second, Third, Fourth and Fifth Respondents: Mr J W Hilton QC with Mr J D Elliott Solicitors for the First, Second, Third, Fourth and Fifth Respondents: Gilbert and Tobin Counsel for the Sixth and Seventh Respondents: Mr A Archibald QC with Mr P Collinson Solicitors for the Sixth and Seventh Respondents: Allens Arthur Robinson Counsel for the Ninth, Tenth, Twelfth and Fourteenth Respondents: Mr D R Sibtain Solicitors for the Ninth, Tenth, Twelfth and Fourteenth Respondents: Blake Dawson Waldron Counsel for the Sixteenth, Seventeenth, Eighteenth and Nineteenth Respondents: Mr P Gray Solicitors for the Sixteenth, Seventeenth, Eighteenth and Nineteenth Respondents: Truman Hoyle Date of Hearing: 15 and 16 October 2003 Date of Judgment: 7 May 2004
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