Trade Practices Commission v Allied Mills Industries Pty Ltd
[1981] FCA 164
•14 SEPTEMBER 1981
Re: THE TRADE PRACTICES COMMISSION
And: ALLIED MILLS INDUSTRIES PTY. LIMITED AND OTHERS (1981) 60 FLR 1
No. 29 of 1979
Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES REGISTRY
GENERAL DIVISION
Sheppard J.(1)
CATCHWORDS
Trade Practices - arrangement or understanding in restraint of trade or commerce - no necessity to show restraint of trade unreasonable under general law - Quadramain Pty. Limited v. Sevastapol Investments Pty. Limited 133 C.L.R. 390 discussed - Trade Practices Act 1974, s.45(2), (3) and (4).
Trade Practices - challenge to validity of power of court to grant injunctive relief and to penalise individuals for aiding and abetting breaches of Trade Practices Act 1974 (in its form prior to 1977 amendments) - ss.45, 76 and 80 thereof.
Trade Practices - arrangement or understanding in restraint of trade or commerce - submission of no case to answer - relevant principles - sufficiency of evidence - admissibility against other respondents of evidence of implementation or furtherance of arrangement or understanding admitted against one respondent - discussion of principles enunciated by Isaacs J. in Coal Vend case 14 C.L.R. 387 - Trade Practices Act 1974, s.45 (in its form prior to 1977 amendments).
Trade Practices - Arrangement or understanding in restraint of trade - Action to recover penalties - Practice and procedure - Submission of no case to answer - Discretion as to whether respondent put to election - Federal Court Rules, O. 32, r. 4(1)
Trade Practices - Arrangement or understanding in restraint of trade - Nature of arrangement or understanding - No necessity to show that restraint is unreasonable under general law - Burden of proof that restraint is insignificant lies upon respondent - Trade Practices Act 1974 (Cth), s. 45.
Trade Practices - Arrangement or understanding in restraint of trade - Power of court to grant injunctions and impose penalties for aiding and abetting breaches of Act - Trade Practices Act 1974 (Cth), ss. 45, 76, 80.
Trade Practices - Arrangement or understanding in restraint of trade - Evidence - Sufficiency of evidence - Admissibility against other respondents of evidence of implementation or furtherance of arrangement or understanding admissible against one respondent - Trade Practices Act 1974 (Cth), s. 45.
HEADNOTE
The Trade Practices Commission alleged that the respondents had entered into an arrangement or understanding in restraint of trade or commerce, by agreeing amongst themselves to raise the market price of liquid glucose. In an action by the Commission to recover penalties for breaches of the Trade Practices Act, at the close of evidence for the Commission the respondents submitted that there was no case to answer, and raised various arguments as to the effect and validity of ss. 45 and 76 of the Act, and as to the admissibility of certain evidence tendered by the Commission as against different respondents inter se.
Held: (1) The respondents would be permitted to make a submission of no case to answer without being put to their election as to whether they would call evidence.
Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (1978), 40 FLR 74; Trade Practices Commission v. George Weston Foods Ltd. (No. 2) (1980), 43 FLR 55; Union Bank of Australia Ltd. v. Puddy, (1949) VLR 242, referred to.
(2) Section 45 of the Trade Practices Act does not import the common law doctrine of restraint of trade and applies to any restraint of trade even though, under the general law, the restraint might be considered reasonable.
Hollywood Premiere Sales Pty. Ltd. v. Faberge (Australia) Pty. Ltd. (1976), 28 FLR 167, referred to.
(3) Dubitante - The burden of proving that a restraint of trade has so slight an effect upon competition as to be insignificant is upon a respondent who seeks to take advantage of s. 45 (3) of the Trade Practices Act. There is no onus upon the Commission to prove that the restraint is not insignificant.
Trade Practices Commission v. Guests' Garage Pty. Ltd. (1976), 26 FLR 433; Trade Practices Commission v. Email Ltd. (1979), 43 FLR 383; Trade Practices Commission v. George Weston Foods Ltd. (1979), 39 FLR 182, referred to.
(4) Section 76 of the Trade Practices Act (as it was prior to the 1977 amendments) both made certain conduct unlawful, and empowered the court to impose a penalty for such conduct. It was therefore a valid enactment conferring a judicial power, and not a legislative or administrative power, upon the court.
R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945), 70 CLR 141, referred to.
(5) For an arrangement or understanding to come within s. 45 of the Trade Practices Act the parties thereto must have communicated with each other, have raised some expectations in the minds of the others, and have accepted an obligation towards each other.
Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (No. 2) (1979), 40 FLR 83, referred to.
(6) Once the existence of an understanding or arrangement, and its purposes, have been established, and there is evidence implicating each respondent in the understanding or arrangement; then evidence of the acts of any one party in implementation or furtherance of those purposes becomes admissible against the other parties thereto.
R. v. Associated Northern Collieries (1911), 14 CLR 387; Tripodi v. The Queen (1961), 104 CLR 1, discussed.
(7) There was a case to answer since there was evidence capable of establishing that each of the respondents was party to a price-fixing arrangement or understanding.
HEARING
Sydney, 1981, February 24; March 2-3, 5, 27; July 20-24, 28-31; August 3, 19; September 14. #DATE 14:9:1981
TRIAL OF ACTION.
The facts appear in the judgment.
K. R. Handley Q.C. and J. North, for the applicant.
R. v. Gyles, Q.C. and W. Caldwell, for the first, sixth and seventh respondents.
A. M. Gleeson Q.C. and R. Macfarlan, for the second and eighth respondents.
M. H. McHugh Q.C. and J. A. Strahan, for the third respondent.
B. A. Beaumont Q.C. and G. Q. Taperell, for the fourth respondent.
A. C. Archibald, for the fifth respondent.
Cur. adv. vult.
Solicitor for the applicant: B. J. O'Donovan, Commonwealth Crown Solicitor.
Solicitors for the first, sixth and seventh respondents: Sly & Russell.
Solicitors for the second and eighth respondents: Dawson Waldron & Co.
Solicitors for the third respondent: Stephen Jaques & Stephen.
Solicitors for the fourth respondent: Baker & McKenzie.
Solicitors for the fifth respondent: Middletons.
R. R. BOADEN
ORDER
1. There is a case to answer against each respondent.
2. Certain evidence admitted against individual respondents is admissible also against the other respondents on the ground that it is evidence of the implementation or furtherance of an arrangement or understanding of which there is evidence against each respondent.
JUDGE1
At the close of the evidence for the Commission counsel made a number of submissions. The principal of these were a submission by counsel for the Commission that evidence originally admitted only against one or other of the respondents was admissible against all and a submission by counsel for the respondents that there was no case to answer. The purpose of this judgment is to deal with the various submissions which were made.
The action is one against five corporate respondents and three individuals wherein the Trade Practices Commission ("the Commission") seeks to recover penalties for breaches of the Trade Practices Act 1974 ("the Act"). For ease of reference I shall refer to the first respondent as Allied Mills, to the second as Fielders, to the third as N.B. Love or Loves, to the fourth as Manildra and to the fifth as Pacific. They are the names by which the various respondents are known and they are referred to as such in the evidence.
The matters to be determined require reference to the pleadings and particulars in the case. I have not thought it necessary, however, to make detailed reference to them because of accounts of the litigation given in previous judgments. I refer particularly to Trade Practices Commission v. Allied Mills Industries Pty. Limited (1980) 32 A.L.R. 570 at pp.572-578 and to an unreported judgment given on 30 October, 1980, in relation to the admissibility in evidence of certain documents.
The breaches of the Act which are alleged to have occurred are said to have been committed in the latter months of 1976. Accordingly, it is to the form of the Act as it then was to which regard must be had. The Act was substantially amended in 1977 (Act No.81 of 1977) but it is not appropriate to refer to the Act in its amended form.
The central allegation is to be found in paragraph 12 of the amended statement of claim and particulars appended thereto. The argument in respect of the admissibility of certain evidence against the respondents and on the question of whether there was a case to answer was directed to that paragraph. As the earlier judgments show, there are critical allegations in the paragraphs of the amended statement of claim which follow paragraph 12. However, in the way that the argument proceeded, it would seem to me that I may safely have regard only to paragraph 12. If the evidence is admissible in relation to issues raised by that paragraph, it will be admissible in relation to issues raised by the other paragraphs as well. If there is a case to answer in relation to paragraph 12, there will be a case to answer in relation to the other paragraphs also. Conversely, if the evidence is not admissible in relation to the issues raised by paragraph 12, it will be rejected. If there is not a case to answer in relation to paragraph 12, there will not be a case to answer in relation to the other paragraphs.
Paragraph 12 of the amended statement of claim and the particulars appended thereto are, so far as is relevant, as follows:
"12. On or about 6th September 1976 alternatively in and between June and October 1976 the corporate respondents and each of them made an arrangement or entered into an understanding whereby the prices at which they and each of them would sell liquid glucose would be increased as from October 1976 or thereabouts"
"PARTICULARS
(A) The said arrangement was made or the said understanding was entered into at or as a result of meetings and other communications between representatives of the corporate respondents in and between June and October 1976. The meetings included a meeting on about 16 August 1976 at which representatives of the first, fourth and fifth-named respondents were present, (the representative of the first named respondent being the sixthnamed respondent), and a meeting on about 6 September 1976 at the premises of the Flour Millers Council of New South Wales at which representatives of the corporate respondents were present, (the representative of the firstnamed respondent being the sixthnamed respondent). The said arrangement or the said understanding was to the effect that the corporate respondents would increase their prices for 41 degrees Baume liquid glucose to about $275 per tonne for glucose delivered in bulk form by tankers; that there would be a surcharge for deliveries in drums; that there would be a surcharge for supplies to customers of another corporate respondent; and that the increase would take effect as from October 1976 or thereabouts.
(B) Further and alternatively the said arrangement or the said understanding was initiated at the meetings referred to above and during the other communications in and between June and October 1976 particularised below and was made or entered into when the corporate respondents proceeded to act in the manner discussed during such meetings and communications and were able to observe that each of the other corporate respondents was also acting in like manner. Each of the corporate respondents notified their customers in about September 1976 that their prices for liquid glucose would be increased as from October 1976 or thereabouts, and in October 1976 or thereabouts the corporate respondents in fact increased their prices in the manner particularised above."
There then follows a list of communications which I do not set out. Each of the allegations made in paragraph 12 is denied by the respondents in their defences.
After the close of the evidence counsel for the Commission sought leave to amend the particulars by adding a further paragraph, paragraph (AA), and by amending paragraph (B). The new paragraph (AA) was as follows:
"(AA) Further and in the alternative the said arrangement or the said understanding was to the effect that the corporate respondents would increase their prices for liquid glucose sold to confectionery to a minimum of about $275 per tonne and that the increase would take effect as from October 1976 or thereabouts."
The amendment to paragraph (B) was to add the words "referred to in paragraph (A) or in paragraph (AA) above" in line 2 immediately after the word "understanding"
The amendments were opposed by counsel for all respondents.
In his submissions in reply counsel for the Commission applied to re-amend paragraph (A) of the particulars by omitting the words "41 degrees Baume". These words had earlier been added by amendment as the result of the sending by the Commission's solicitor to the solicitors for each respondent of a letter dated 16 October, 1980. In a letter dated 31 October, 1980, clarifying the position to the solicitors for Allied Mills, the solicitor for the Commission referred to the arrangement or understanding as being one whereby "the price of 41 degrees Baume liquid glucose would be raised to about $275 per tonne".
Each of the respondents opposes the re-amendment of paragraph (A) by the deletion of the reference to 41 degrees Baume.
Thus one of the questions which must be decided is whether the Commission should be permitted further to amend the particulars appended to paragraph 12 of the amended statement of claim in the respects which I have mentioned.
It is next necessary to set out the provisions of some of the sub-sections of s.45 of the Act as it was at the relevant time. Those provisions were as follows:
"45.(1) A contract in restraint of trade or commerce that was made before the commencement of this sub-section is unenforceable in so far as it confers rights or benefits or imposes duties or obligations on a corporation.
(2) A corporation shall not -
(a) make a contract or arrangement, or enter into an understanding, in restraint of trade or commerce; or
(b) give effect to a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce, whether the contract or arrangement was made or the understanding was entered into before or after the commencement of this sub-section.
(3) A contract, arrangement or understanding having the purpose or effect of fixing, controlling or maintaining the price for, or any discount, allowance or rebate in relation to, any goods or services supplied by the parties to the contract, arrangement or understanding, or by any of them, in competition with each other to persons not being parties to the contract, arrangement or understanding is not in restraint of trade or commerce for the purposes of this Act if the restraint has such a slight effect on competition between the parties to the contract, arrangement or understanding, and on competition between those parties or any of them and other persons, as to be insignificant.
(4) A contract, arrangement or understanding that is not of the kind referred to in sub-section (3) is not in restraint of trade or commerce for the purposes of this Act unless the restraint has or is likely to have a significant effect on competition between the parties to the contract, arrangement or understanding or on competition between those parties or any of them and other persons."
The submissions upon which my decision is required are numerous. Principally they are as follows:
1. The respondents' submission that for a restraint of trade to be within the section it must be a restraint which is unreasonable in the common law sense. Unless it is, the restraint, if any, is not affected by the section. The onus is upon the Commission to establish that the restraint is unreasonable in this sense. There is no evidence upon which such a finding could be based.
2. The respondents' submission that s.80 of the Act which empowers the Court to grant injunctions is invalid because it purports to confer on the Court legislative or administrative, not judicial, power. The argument was restricted to the Act in the form in which it was before the 1977 amendments.
3. The respondents' submission that s.76 of the Act, apart from s.76(a), was invalid for the same reasons.
4. The Commission's submission that it was entitled at this stage of the case to tender in evidence against the respondents numerous pieces of evidence, not directly implicating them in the arrangement or understanding which was alleged to have been made, but said to be admissible against them in accordance with principles stated by the High Court in The King v. Associated Northern Collieries (the Coal Vend case) (1911) 14 C.L.R. 387 and Tripodi v. The Queen (1961) 104 C.L.R. 1
5. The respondents' submission that, whether evidence was admitted pursuant to the principles stated in the cases just referred to or not, there was no case to answer against any of them.
I propose to deal with these matters more or less in the order in which I have stated them but when I come to submissions 4 and 5 it will not be possible to keep them distinct. Before coming to the questions that need to be resolved, I should mention that early in the trial I decided that I would allow the respondents to make a submission of no case to answer at the conclusion of the Commission's case without putting them to an election as to whether they would call evidence or not. That was the course adopted by Fisher J. in Trade Practices Commission v. Nicholas Enterprises Pty. Limited (1978) 40 F.L.R. 74. It was not the course adopted by Davies J. in Trade Practices Commission v. George Weston Foods Limited (1980) 43 F.L.R. 55. Fisher J. followed the course which he did because it was in accordance with South Australian practice and the case was tried at Adelaide. The case was not governed by the present Rules of Court. In my opinion the question is now governed by Order 32 Rule 4(1) which provides that the Court may give directions as to the order of evidence and addresses and generally as to the conduct of the trial. The matter is thus discretionary. In reaching my conclusion I took into account what had been said by the various judges to whose judgments Davies J. referred in the George Weston case. I had particularly in mind what was said by Fullagar J., when a judge of the Victorian Supreme Court, in The Union Bank of Australia Limited v. Puddy (1949) V.L.R. 242 at pp.245-246. The matter being discretionary, the fact that I decided to follow the course of not putting the respondents to their election in this case does not indicate any departure from the views of Davies J. in George Weston on any matter of principle or the application thereof.
An outstanding question which remains unresolved is what is to happen if I find a case to answer against some, but not all, respondents. The usual practice is not to dismiss a case against any respondent at that stage, but only to do that if there is still no case to answer against a respondent at the close of any evidence which may be led by the respondents against whom there is a case; Menzies v. Australian Iron and Steel Limited (1952) 52 S.R.(N.S.W.) 62. To the question of what should happen if a case is found against some respondents only I shall return in due course.
I now come to the matters to be resolved.
The respondents' argument which was put on behalf of all by senior counsel for Allied Mills is founded upon dicta that appear in the decision of the High Court in Quadramain Pty. Limited v. Sevastapol Investments Pty. Limited (1976) 133 C.L.R. 390. The dicta which are relied upon are obiter and appear principally in the judgment of Gibbs J. (as he was). His Honour said (p.403):
"In support of the second defence advanced it was submitted that s.45 of the Act applies to any covenant in restraint of trade, even to a reasonable restraint. If that is so, the section, if valid, would have the drastic result that a contract to which the section applies will be invalid even though it is demonstrably reasonable both in the interests of the parties and in the interests of the public."
His Honour said that he found it unnecessary to consider what was the proper construction of the section because he had reached the conclusion that the section had no application to the case with which he was concerned.
Later he said (p.404):
"The covenant in the present case created a contractual obligation between the original parties to the sale, but so far as Quadramain is concerned it is enforceable only as an interest in the land. Section 45(1) does not have any effect on equitable or other proprietary rights and has no application to the present proceedings. Thirdly, the effect of s.45(4) is that if, apart from that subsection, it could properly be said (contrary to my opinion) that Quadramain was seeking to enforce a contract in restraint of trade, the covenant is not a contract in restraint of trade or commerce for the purposes of the Act. The 'contract' is not of the kind referred to in sub-s.(3). Sub-section (1) does not refer to arrangements or undertakings (sic), they are dealt with by sub-s.(2) which has no relevance to the present case. The effect of sub-s.(4) is that a contract will not be in restraint of trade or commerce for the purposes of the Act unless the restraint has, or is likely to have, a significant effect on competition between the parties to the contract, or on competition between those parties or any of them and other persons."
His Honour went on to demonstrate that because neither of the parties to the covenants had any interest in the land at the relevant time the restraint had no effect whatever between them or between them or either of them and anyone else.
Mason J. said (p.406) that subject to one reservation, he was in agreement with the reasons for judgment prepared by Gibbs J. His reservation was not in relation to the present point.
Stephen J. expressly left open the question of whether the covenant was ever within s.45 (p.405).
Jacobs J., in whose judgment Murphy J. agreed (p.421), expressed the positive view that the covenant was "a contract in restraint of trade within s.45(1) unless it is eccepted under s.45(4)" (p.420).
The other judges who sat on the case, Barwick C.J. and McTiernan J.,did not express an opinion on the point.
Not only is the dictum of Gibbs J. obiter; it expresses no final view. On the other hand the dictum of Jacobs J. does express a final view and is an essential step in the reasoning of the judgment which he published. But his judgment was a dissenting one. The matter is not therefore one in respect of which there is any binding authority. Accordingly, I must come to my own conclusion on the point, paying, of course, great attention to what has been said by each of the judges who have expressed a view, tentative or final, on the point.
Having reflected upon the matter I have, with some doubt, reached the conclusion that the common law doctrine of reasonable restraint of trade is not imported into s.45 with the result that any restraint of trade is caught by its terms. My reason for that view is based on the presence in the section of sub-sections (3) and (4) which, to my mind, indicate that the legislature intended to provide that all restraints were to be caught by the section unless they were outside it as a result of the operation of one or other of those sub-sections. I also consider that the presence in the legislation of Part VII providing for authorisations provides an additional reason why the view I have formed is correct. It is true that in relation to contracts, arrangements or understandings, fixing or controlling the price for any goods, the power to grant an authorisation is extremely limited. But, to my mind, that is only an indication of the extent of the operation which the provisions of s.45 were intended to have.
Another reason why I think that the restraint referred to in s.45 was not intended to be a restraint under the general law is provided by the consideration that one of the matters which a court takes into account in determining whether a restraint under the general law is reasonable is whether it is reasonable as between the immediate parties to the covenant by which it is imposed. In days gone by that was the primary consideration - see the discussion in Chitty on Contracts, 24th edn., vol.1, paras. 968-970. In my opinion the dominant consideration in relation to s.45 is the protection of the public and thus the public interest. That seems to me to make it unlikely that the legislature intended to import general law concepts into the legislation.
The view which I have formed was that reached by Wootten J. in Hollywood Premiere Sales Pty. Limited v. Faberge (Australia) Pty. Limited (1976) 28 F.L.R. 167 at pp.170-172. His Honour also reached his conclusions after considering the effect of the various dicta in the Quadramain case.
In summary I have found the point a difficult one but I have reached the conclusion that the respondents' submissions should be rejected. If I had been of a contrary view, the case would have been at an end because it is common ground that there is no evidence upon which the Court could base a finding that any arrangement or understanding of the kind here alleged was in all the circumstances in unreasonable restraint of trade.
An associated submission argued on behalf of all respondents by senior counsel for N.B. Love was that the burden of proving that the case did not fall within sub-section (3) of s.45 was upon the Commission and not the respondents. That submission runs counter to the decision of the Australian Industrial Court in Trade Practices Commission v. Guests' Garage Pty. Limited (1976) 26 F.L.R. 433. That case was applied by Lockhart J. in Trade Practices Commission v. Email Limited (1979) 43 F.L.R.383 at p.402. A similar view had been expressed, although tentatively, by Davies J. in Trade Practices Commission v. George Weston Foods Limited (1979) 39 F.L.R. 182 at p.188.
In those circumstances it seems to me that I should follow the views of the judges to whom I have referred. I confess, however, to having some reservation as to whether the view which has been adopted up to now is correct. I feel saved the need to consider the matter in more detail because there is, in my opinion, evidence which is capable of establishing that the restraint of trade or commerce arising as the result of the understanding or arrangement here relied upon did not have such a slight effect on relevant competition as to be insignificant. There is evidence which, if accepted, would establish that the arrangement or understanding had the effect of increasing the price of glucose to a number of users by amounts of the order of $50 per tonne. There is also evidence capable of establishing that that is a price rise of substantial significance.
The question of the validity of s.80 of the Act as it was prior to the amendments effected in 1977 is not one which, of itself, needs to be decided at this stage of the proceedings. Counsel for Allied Mills developed the submission not only for the purpose of persuading me that the Court had no power to grant an injunction, but also for the purpose of laying the foundation for his argument that all but paragraph (a) of s.76 was invalid. The question of the invalidity of s.76 needs to be decided at this stage of the proceedings because, if the submission that it is invalid is accepted, the proceedings against the individual or personal respondents who are said to have aided and abetted the commission of the breaches of the Act which are alleged against the corporate respondents, must be dismissed. I have formed the clear view that s.76 in its entirety is valid. So much will appear when I come to deal directly with it. My conclusion in that respect is not at all based upon any view of the validity of s.80 of the Act. Accordingly, it is unnecessary now to decide the question of the validity of s.80. That question may never arise, either because the proceedings will eventually fail or because, if they succeed, it may nevertheless be thought inappropriate to give injunctive relief. Furthermore, the amendments made to s.80 in 1977 may have been procedural only with the result that one should have regard to the section in its amended form, notwithstanding that the alleged arrangement or understanding was made in 1976. There was no challenge to the validity of the section as amended.
Those being my views, I do not propose to determine the question of the validity of s.80. That question can await the day when it directly arises.
The attack made on all but paragraph (a) of s.76 is that the later paragraphs do not do more than empower the Court to penalise conduct which is not elsewhere in the Act made unlawful. The relevant paragraph for present purposes is paragraph (c). It is as follows:
"If the Court is satisfied that a person -
. . . . . . . . .
(c) has aided, abetted, counselled or procured a person to contravene such a provision;
. . . . . . . . .
the Court may order ......."
There then follow provisions providing for the payment of certain penalties.
There is no provision elsewhere in the Act making an aider or abettor liable for a breach of the Act where he aids and abets the commission of a breach such, for example, as is provided for in s.45. Section 5 of the Crimes Act 1914 does not apply because the liability is civil and not criminal (s.78).
In my view the submission is answered by considerations such as were mentioned by Dixon J. (as he was) in R. v. The Commonwealth Court of Conciliation and Arbitration; ex p. Barrett (1945) 70 C.L.R. 141, where his Honour said (pp.165-166):
"It appears to me, that, on the footing that s.58E includes judicial power, it must be taken to perform a double function, namely to deal with substantive liabilities or substantive legal relations and to give jurisdiction with reference to them. It is not unusual to find that statutes impose liabilities, create obligations or otherwise affect substantive rights, although they are expressed only to give give jurisdiction with reference to them. It is not unusual to find that statutes impose liabilities, create obligations or otherwise affect substantive rights, although they are expressed only to give jurisdiction or authority, whether of a judicial or administrative nature. Indeed, in his Legislative Methods and Forms (p.249), Sir Courtenay Ilbert appears expressly to advert to this trick of drafting, for the purpose of condemning it, when he says: 'The enactment should be so expressed as to give the right, not the remedy, to say that a person may do a particular thing, not that he may bring a particular action or obtain from the court a particular order.' The form of legislation which is expressed to hinge upon the act of a court or other authority is less scientific than realistic and is perhaps now outmoded. But it was once common."
His Honour went on to provide an example from 18th century English legislation and referred to Attorney-General of Victoria v. Moses (1907)V.L.R.130 at pp.139, 140, where sections from the Act he had selected and some others are set out. It is true, I think, that the legislation which Dixon J. had in mind took somewhat of a different form from that which is in question here. But the general principle which he expounded was, as appears from the passage I have cited from his judgment, that it is not unusual to find that statutes impose liabilities, create obligations or otherwise affect substantive rights, although they are expressed only to give jurisdiction or authority, whether of a judicial or administrative nature. In my opinion the statute here is of that kind. The jurisdiction is conferred upon the Court in the context of power to punish for breaches of the Act. I would construe the provision as, in the one breath, providing that it is unlawful to aid and abet the contravention of a provision of the Act and also providing that if there is such aiding and abetting the Court has power to impose the penalties which the latter part of the section specifies. The power is plainly conferred upon the Court to be exercised by it in the course of its ordinary functions and is conferred upon it as judicial power.
For those reasons I reject the submission that any part of s.76 is invalid. The personal respondents are not entitled, on that ground, to be dismissed from the proceedings.
4 and 5. As earlier said, these matters are connected and I propose to deal with them together. The allegation made by the Commission is that there was an arrangement or understanding of the kind which is struck at in s.45 of the Act. It was agreed by all counsel that I should follow what was said would constitute such an arrangement or understanding by Fisher J. in Trade Practices Commission v. Nicholas Enterprises Pty. Limited (No.2) (1979) 40 F.L.R. 83. His Honour had adopted what had been said in British Basic Slag Limited v. Registrar of Restrictive Trade Agreements (1963) 1 W.L.R. 727. His Honour also referred to Federal Commissioner of Taxation v. Lutovi Investments Pty. Limited (1978) 140 C.L.R. 434 where, in relation to an arrangement under s.260 of the Income Tax Assessment Act 1936, Gibbs and Mason JJ. had said (p.444):
"It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it. But in our view it is not essential that the parties are committed to it or are bound to support it. An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it."
Fisher J. went on to say (40 F.L.R. at p.89):
"The High Court was hearing an appeal from the judgment of the Full Court of the Federal Court (Federal Commissioner of Taxation v. Lutovi Investments Pty. Limited.) in which Bowen C.J. drew attention to the above-mentioned passage from the judgment of Diplock L.J. He also indicated that a number of cases, including the British Basic Slag case, had been referred to by counsel and in respect of them said: 'Except that the cases referred to emphasize that the common expectations of parties to an arrangement arouse mutual moral obligations, I do not regard these cases as taking the matter very much further'.
"These concepts, be they of mutual awareness, common expectations or mutual obligations, were seen by Diplock L.J. as essential features of an arrangement and the necessary elements of the required meeting of minds. He said in the British Basic Slag case; 'Arrangement' is not a term of art; and in section 6(3) of the Act I agree with my lords that it bears the meaning that an ordinary educated man would ascribe to it. It involves a meeting of minds because under section 6(1) it has to be an arrangement 'between two or more persons' and, since it must be an arrangement 'under which restrictions are accepted by two or more parties', it involves mutuality in that each party, assuming he is a reasonable and conscientious man, would regard himself as being in some degree under a duty whether moral or legal to conduct himself in a particular way or not to conduct himself in a particular way as the case may be, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.
'No necessary or useful purpose would be served by attempting an expanded and comprehensive definition of the word 'arrangement' in section 6(3) of the Act. "As I see it, all that is required," said Cross J., to constitute an arrangement not enforceable in law is that the parties to it shall have communication with one another in some way, and that as a result of the communication each has intentionally aroused in the other an expectation that he will act in a certain way"((1962)L.R. 3 R.P. 178 at p.196) (1963) 1 W.L.R. at pp.746-747."
A significant feature of each of the above passages is the emphasis placed upon the necessity for each of the parties to have communicated with the other, for each to have raised an expectation in the mind of the other, and for each to have accepted an obligation qua the other. These are in my opinion the essential elements of the requisite meeting of minds."
The emphasis is mine.
I next refer to principles of the law of evidence which deal with the questions of what will constitute proof that a defendant is a party to a combination or conspiracy (in this case the alleged arrangement or understanding) and, if that be established, what evidence of the furtherance by one party of the arrangement or understanding will be admissible against other parties thereto.
I mentioned earlier that counsel for the Commission had sought to tender a great deal of evidence, primarily admissible only against one or other of the respondents, against each other respondent and that he had relied for this purpose upon the Coal Vend case and upon Tripodi. In the former case Isaacs J. dealt with both the questions to which I have adverted. He said (p.400):
"Two things must be carefully kept distinct, viz., the fact of combination, and acts done in pursuance of the combination. There is a tendency to confuse the two, because in many instances acts of individual defendants may be regarded as evidence of the first as well as of the second.
But it is an error to say that acts of one defendant, however numerous, and however pointedly in furtherance of the prohibited purpose, are necessarily admissible as overt acts of offence against a co-defendant charged with conspiring with the first. They are not so admissible unless the two defendants are shown to be associated for that purpose, so as to make the purpose common to both.
Community of purpose may be proved by independent facts, but it need not be. If the other defendant is shown to be committing other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge.
For instance, the Crown relies upon the contract alleged, as both an independent ground of offence, and as evidence of the combination.
In the latter aspect, if it be established, then separate acts of the several defendants in furtherance of those purposes of the contract which are part of the common plan may affect the liability of the other parties to the contract; but if it be not established then those separate acts may have first to be examined in order to determine whether they indicate or form a combination, before the acts of one person can be allowed to affect another."
The emphasis is mine.
After referring to some authorities his Honour went on to quote with approval a passage from the then current edition of Russell on Crimes (the 7th edition) vol.1, p.191, where it was said:
"The evidence in support of an indictment for a conspiracy is generally circumstantial; and it is not necessary to prove any direct concert, or even any meeting of the conspirators, as the actual fact of conspiracy may be collected from the collateral circumstances of the case. Although the common design is the root of the charge it is not necessary to prove that the defendants came together, and actually agreed in terms to have the common design, and to pursue it by common means, and so to carry it into execution, for in many cases of the most clearly established conspiracies there are no means of proving any such thing. If, therefore, two persons pursue by their acts the same object, often by the same means, one performing one part of an act, and the other another part of the same act, so as to complete it, with a view to the attainment of a common object they are pursuing, the jury are free to infer that they have been engaged in a conspiracy to effect that object. It is not necessary to prove the existence of a conspiracy before giving in evidence of the acts of the alleged conspirators, and isolated acts may be proved as steps by which the conspiracy itself may be established. In R. v. Duffield (5 Cox 404), Erle J. directed the jury that it does not happen once in a thousand times when the offence of conspiracy is tried that anybody comes before the jury to say that he was present at the time when the parties did conspire together, and when they agreed to carry out their unlawful purposes; that species of evidence is hardly ever to be adduced before a jury; but the unlawful conspiracy is to be inferred from the conduct of the parties; and if several men are seen taking several steps, all tending towards one obvious purpose, and they are seen through a continued portion of time taking steps that lead to one end, it is for the jury to say whether those persons had not combined together to bring about that end, which their conduct appears so obviously adapted to effectuate."
Isaacs J. continued (p.402):
"Once the combination and its purposes are proved, the acts of any party to it in furtherance of those purposes are attributable to all, as being within the scope and in execution of their common agreement. And no act which is not done in furtherance of the common purpose comes within that principle of admissibility."
His Honour said what he did in relation to a case brought under the Australian Industries Preservation Act 1906. His dicta were approved in the joint judgment of Dixon C.J. and Fullagar and Windeyer JJ. in Tripodi (supra) at p.7. Their Honours also said (pp.7-8):
"It must be remembered that the basal reason for admitting the evidence of the acts or words of one against the other is that the combination or preconcert to commit the crime is considered as implying an authority to each to act or speak in furtherance of the common purpose on behalf of the others. From the nature of the case it can seldom happen that anything said by one which is no more than a narrative statement or account of some event that has already taken place, that is to say, some statement which would be receivable in evidence against the man who made it as an admission and not otherwise, can become admissible under this principle against his companions in the common enterprise. Usually the question of admissibility will relate to directions, instructions or arrangements or to utterances accompanying acts. It is customary at criminal trials simply to treat the presence or absence of the prisoner as decisive of the admissibility of things said and it is a pity to rob that empirical but practical and convenient test of any of its usefulness. But often enough in an ordinary case where there is no confederation or preconcert, directions, instructions and the like although spoken in the absence of the prisoner may, according to the circumstances of the case, be admissible as res gestae or relevant facts. It is easy to understand therefore that preconcert confederacy or combination may make such directions and the like admissible when they are given by one of several acting in preconcert with the prisoner and are given in furtherance of the common design. In the present case the things said and done when the prisoner was not present or within earshot are for the most part of this character and are admissible as part of what was done in furtherance of the common criminal purpose."
Tripodi was a case of conspiracy under the general law. Nevertheless I consider that what Isaacs J. said in the Coal Vend case and what was said by the judges in Tripodi apply equally to the present case. No submission to the contrary was made by counsel for any respondent.
To the principles enunciated in these cases it will be necessary to return after I have referred to some of the evidence.
Another aspect of the law upon which I should make some reference to authority is the question of what needs to be established by an applicant before the Court will hold that there is a case to answer. There are many statements of principle. It is sufficient if I refer, without citing it, to what was said by the High Court in May v. O'Sullivan (1955) 92 C.L.R. 654 at pp.658-659, and to what was said by Kitto J. in Zanetti v. Hill (1962) 108 C.L.R. 433. His Honour said (p.442):
"The question whether there is a case to answer, arising as it does at the end of the prosecution's evidence in chief, is simply the question of law whether the defendant could lawfully be convicted on the evidence as it stands, - whether, that is to say, there is with respect to every element of the offence some evidence which, if accepted, would either prove the element directly or enable its existence to be inferred. That is a question to be carefully distinguished from the question of fact for ultimate decision, namely whether every element of the offence is established to the satisfaction of the tribunal of fact beyond a reasonable doubt. See May v. O'Sullivan (supra)."
I also refer to Jayasena v. The Queen (1970) A.C. 618 where the Privy Council said (p.624):
". . . . . . . . . . . in trial by jury a party may be required to adduce some evidence in support of his case, whether on the general issue or on a particular issue, before that issue is left to the jury. How much evidence has to be adduced depends upon the nature of the requirement. It may be such evidence as, if believed and if left uncontradicted and unexplained, could be accepted by the jury as proof. Or it may be, as in English law when on a charge of murder the issue of provocation arises, enough evidence to suggest a reasonable possibility. It is doubtless permissible to describe the requirement as a burden, and it may be to describe the requirement as a burden, and it may be convenient to call it an evidential burden. But it is confusing to call it a burden of proof. Further, it is misleading to call it a burden of proof, whether described as legal or evidential or by any other adjective, when it can be discharged by the production of evidence that falls short of proof."
It is correct to say that that statement was made in the context of a case which, to a degree, depended upon special provisions relating to evidence in the law of Ceylon. But the statement is of general application as was acknowledged by Professor Cross in the 2nd Australian edition of his work on Evidence (p.113).
Then I should say something about inferences. In this respect it is sufficient to refer to what was said by Dixon J. in Bressington v. Commissioner for Railways (N.S.W.) (1947) 75 C.L.R. 339 at p.353, namely,
"For the purpose of the question stated (whether there was any evidence to support the plaintiff's case) when more than one inference or interpretation is open upon the evidence, we must adopt that most favourable to the plaintiff's case."
During the argument there was discussion as to the drawing of inferences, the respondents understandably being concerned to emphasise that I should not engage in conjecture or speculation. There was disagreement between counsel for the applicant and counsel for the respondents as to whether it was permissible to draw an inference if it were based upon an inference already drawn. It was the submission of the respondents that inferences must be based on proved facts and could not be based on other inferences. No authority cited to me suggests that there is any hard and fast rule about the matter. What one must not do is rely upon conjecture and speculation as distinct from proved facts and inferences which may reasonably be drawn from the evidence. Certainly it would be impermissible - to use a hackneyed phrase - to pile inference upon inference in order to reach the conclusion that there is a case to answer.
Mention was made of the standard of proof which is imposed upon the Commission. There was no disagreement that the standard was that referred to by Dixon J. in Briginshaw v. Briginshaw (1938) 60 C.L.R. 336 at pp. 361-362. The standard is upon a balance of probabilities but taking into account very much the seriousness and gravity of the allegations which are made. On the other hand it should be emphasised, as his Honour did, that no third standard of persuasion has developed. This being a civil case the standard is upon a balance of probabilities and not beyond reasonable doubt. Importantly, the tribunal must, as Dixon J. said, feel an actual persuasion of the occurrence or existence of any fact before it can be found to be proved.
In a sense I am not concerned with standard of proof at this stage of the case. That will come later if I find a case to answer. But there are views, particularly in criminal cases, that a court inquiring into the question of whether there is a case to answer must conclude that the evidence for the Crown, if accepted, would be capable of providing proof of the offence charged beyond reasonable doubt. It is unnecessary for me to enter into a discussion of the problems which such a proposition involves. Here, if the applicant is to succeed, I must be satisfied that if the evidence were accepted it would be capable of providing sufficient proof of the breaches of the Act which are said to have occurred.
In the course of his submissions mention was made by senior counsel for the applicant of Jones v. Dunkel (1959) 101 C.L.R. 298. In my opinion the principles for which that case is well known have no application in the present exercise. Those principles enable one the more readily to find facts proved or actually to draw inferences in the event that a defendant calls no evidence. That sort of consideration is not in question here because my approach must be, in accordance with May v. O'Sullivan and Zanetti v. Hill, to assume that the Commission's evidence has been accepted in its entirety and that all inferences reasonably open have been drawn in its favour. Jones v. Dunkel is only of assistance when one comes to the determination of factual questions and finds that a party has not called evidence which he may reasonably have been expected to call.
Finally I should refer to another principle which is where facts or evidence are peculiarly within the knowledge of a party, the Court will be prepared to act on slight evidence of their existence. There are a number of cases in which this principle is stated. It is sufficient if I refer to De Gioia v. Darling Island Stevedoring & Lighterage Co. Limited (1942) 42 S.R.(N.S.W.) 1. In the course of his judgment Jordan, C.J. said (p.4):
"The case may, however, be one in which, although the principle of res ipsa loquitur is not available to the plaintiff, some of the facts essential to the plaintiff's case are peculiarly within the knowledge of the defendant, and it is, in the nature of things, difficult for the plaintiff to produce evidence of them. Such a state of things does not absolve the plaintiff from adducing some evidence of those facts; but where it exists it is legitimate for the trial Judge to hold that very slight evidence pointing to their existence may be treated as sufficient to justify a jury in holding that they do exist, if, but only if, there is no explanation of that evidence by the defendant: Parker v. Paton (41 S.R.(N.S.W.) 237 at p.243). If, in such a case, the defendant does give evidence explaining the plaintiff's evidence on the point, this evidence of the defendant may then have to be considered for two purposes, first by the Judge, to determine whether, in the light of the explanation, the plaintiff's evidence can now be regarded as capable of constituting a prima facie case; and, if so, then secondly, by the jury, to determine whether they accept the defendant's explanation. If the trial Judge has properly formed the opinion that the plaintiff can be regarded as having made out a prima facie case only if his evidence, or some of it, remains unexplained, then if an explanation is supplied by the defendant it is necessary for him to reconsider the plaintiff's evidence for himself in the light of that explanation, not for the purpose of usurping the jury's functions, but in order to determine whether what bore the appearance of a prima facie case in fact amounted to one, and to decide a point which is for him alone, namely whether there is a case fit to go to the jury; . . . . . . . ."
With these principles in mind I can come more directly to the question of law which I have to resolve - is there, upon the evidence so far led, a case for each of the respondents to answer? In performing that exercise I accept the evidence as proved and I treat as drawn every inference which favours the applicant's case and as not drawn every inference which favours the respondents' cases. I take into account that the question of whether there was or was not an arrangement or understanding of the kind alleged is a matter peculiarly within the knowledge of the respondents; on the other hand I bear in mind that the allegations made against them are serious in their nature and that the exercise requires the gravity of them to be taken into account before it could be concluded that if the evidence were left as it is it could provide a basis upon which findings of breach could be made.
The principles enunciated by Isaacs J. in the Coal Vend case do not permit of evidence not directly implicating an individual respondent to be admitted against that respondent unless there is first some evidence which implicates it in an arrangement or understanding of the kind which is alleged. But the words from his judgment which I have earlier emphasised show that if there be revealed by the evidence of the conduct of the various parties in the alleged combination such a concurrence of time, character, direction and result as naturally to lead to the inference that the separate acts of the parties were the outcome of preconcert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, such evidence may provide primary evidence which is capable of establishing that the parties were acting together pursuant to some previously made agreement, arrangement or understanding. To approach the examination of the evidence in that way is a permissible course in the carrying out of the exercise of determining whether there is evidence to implicate the various parties.
Notwithstanding that consideration, it was the respondents' submission that there was no evidence to implicate any of them in the alleged arrangement or understanding. It is to that submission that I go first of all. It is the fifth of the submissions earlier listed.
It is necessary to refer to some background or surrounding circumstance evidence. Counsel for the applicant originally described this as circumstantial evidence and led counsel for the respondents to believe that he was making a case against each based upon circumstantial evidence. That is not the case. The Commission's case is based upon direct evidence at least as to three respondents, upon evidence of surrounding circumstances and upon inferences to be drawn from certain actions of the respondents and their employees and from documents. Argument developed as to whether the surrounding circumstance evidence, if admissible against one respondent, was also admissible against the others. I do not think that is the correct way of approaching the problem. Obviously it is relevant to know and appreciate what the background was at the time the alleged arrangement or understanding was entered into. Such an exercise does not require the resolution of nice questions concerning the admissibility of particular pieces of evidence against respondents. In this respect there is a good deal of common ground amongst the respondents themselves and between them and the Commission. From a schedule prepared by counsel for the Commission I can state shortly what the relevant background was without, I think, getting into any area where there is substantial conflict.
Before I come directly to that task I should say something about glucose. It is a product derived from starch which itself comes from flour. The glucose here in question is liquid glucose, that is it is glucose suspended in water. It is sold in that form because it suits the manufacturing purposes of those who acquire it to purchase it in the form of a solution. Those who buy glucose are in the main confectionery and ice cream manufacturers as well as some others including some breweries and biscuit manufacturers. Still others require it for purposes not associated with the food industry. The glucose here in question is a pure product and has been described in the evidence as "water white". It is to be distinguished from less pure forms of glucose, for example, brewers liquid clucose and brand name products supplied by Allied Mills and Fielders, known respectively as wheatose and frutose which are used interchangeably by some ice cream manufacturers with products obtained from cane sugar.
The liquid glucose is sold in varying concentrations. The evidence is not clear as to the purpose of this, although some evidence would suggest that the concentration is varied at the request of those who use the product. The degree of concentration is determined by a scale known in the industry as Baume (Be.). The concentrations which are most usually referred to in the evidence are 40 Be., 41 Be., 43 Be. and 44 Be.. It is to be observed that the liquid glucose referred to in the particulars appended to the amended statement of claim was 41 Be. . The higher the Baume the more concentrated the glucose solution is and thus the more valuable the product. Often, but by no means always, higher concentrations of Baume were sold at dearer prices than lower concentrations.
The arrangement is alleged to have been made in September 1976. There is no question but that in the months prior to September there had been a most intensive price war engaged in by each of the respondents in relation to liquid glucose. That is common ground. The principal reason for the price war was the entry into the market of Manildra late in 1975. It began to cut prices in order to obtain a share of the existing market. Its tactics in this regard were matched by the remaining four respondents who also cut prices in an attempt to retain their market shares. Notwithstanding those steps, Manildra by the middle of 1976 had a substantial share of the market. Pacific attempted to exercise some price leadership about the middle of 1976 but its attempt in this regard failed for want of support from the other suppliers.
Commencing in September 1976 and continuing through October and November there was a sudden turn round in the behaviour of the suppliers. The price war suddenly stopped and very substantial price increases were effected by all suppliers commencing on 7 September, 1976, when Manildra's representatives made their new pricing policy known to a New South Wales company, Darrell Lea Chocolate Shops Pty. Limited (Darrell Lea). Two schedules which were handed up during the course of the addresses show the turn round in pricing which occurred. The first, which is headed "Prices immediately before Sept/Oct. Increase " was handed up by counsel for Fielders and the second (which bears no heading) shows prices as they became after the price war ceased. The alterations in the document are in my handwriting and give effect to corrections I was asked to make during the course of the addresses. Copies of these schedules will be appended to this judgment when it is finally published. It is agreed by all counsel that they are substantially accurate.
From the respondents' point of view they omit, however, one critical factor. It is the period - really the lag time - between the charging by each respondent of the lower price and the charging by it of the higher price. That is a matter heavily relied upon by the respondents in an attempt to demonstrate that the conduct of the respondents was open to the inference of price leadership by one or more of them, rather than agreement. It is said that that inference is at least as open as the inference that there was an arrangement or understanding; indeed it is contended that the totality of the evidence reveals price leadership as the more probable cause of the increases rather than any arrangement or understanding.
A matter to be observed from a consideration of the schedules is that both during the price war and thereafter the respondents did not uniformly charge higher prices for higher concentrations of glucose. Sometimes they did and sometimes they did not. For instance the schedule prepared in relation to prices charged before the price rise shows that Allied Mills was charging a company known as Nunquam $220 per tonne for both 43 and 44 Be. glucose; likewise it was charging a company,Kensam, the same price for the same concentrations. To Scanlans Sweets it was charging $235 per tonne for both 41 and 45 Be. glucose. Fielders was charging Lifesavers $225 per tonne for different qualities of glucose as well as different concentrations. Other examples could be given. The same picture is revealed after the price war concluded.
The Commission commenced its investigation of this matter as the result of information and documents supplied to it by a Mr. Matthews who, at the relevant time, was Allied Mills' Victorian manager of its Starch Division. The circumstances in which he came to give that information are set out in the judgment delivered by me on 24 February last ((1981) 34 A.L.R. 105). Mr. Matthews eventually gave evidence and produced a number of documents. At this stage his evidence does no more than implicate Allied Mills. I refer to the essential parts of it. In doing so I have relied on his contemporary memoranda rather than upon his oral evidence, although I have referred to his oral evidence to a degree.
I propose to refer to the evidence as shortly as I can and in a very summary way. I have taken the account largely from written submissions handed up by counsel for the Commission. The account is not exhaustive.
The evidence is as follows:
1. On 19 August, 1976, Mr. Matthews received a telephone call from Mr. Street who was his immediate superior. Mr. Street informed Mr. Matthews that he and Mr. Schrader, one of the executive directors of Allied Mills, had attended a meeting at which Mr. Honan of Manildra and one of the directors, a Mr. Russell, of Pacific were present. The meeting had been held on 16 August, 1976. Mr. Street is said to have told Mr. Matthews that the meeting had agreed to increase prices for glucose. He added, "They agreed to buck the Trade Practices Act". Mr. Street asked Mr. Matthews to provide him with the current prices for glucose to various customers and also for some other information. Mr. Matthews telephoned Mr. Street with the required information the same day.
2. On 7 September, 1976, Mr. Street telephoned Mr. Matthews and informed him that glucose prices were going up on 1 October, 1976. The minimum price was to be $275 per tonne "with premium for drums and quality". The price of $275 was to be the base price in Melbourne. For South Australia and Western Australia additional charges were to be made for freight.
3. On 16 September, 1976, Mr. Matthews received a further telephone call from Mr. Street in which he said that the base price from 41 degrees Be. was to be $276. He gave him some other instructions concerning prices for glucose to be delivered in drums and for the calculation of prices to be charged for concentrations of glucose greater than 41 degrees Be. There were some additional instructions to which it is unnecessary to refer. At the end of the conversation Mr. Matthews said to Mr. Street that the instructions were very involved and that he had better write and confirm it. Mr. Street said that he was putting nothing in writing. On the following day, 17 September, 1976, Mr. Matthews sent Mr. Street a confidential memorandum confirming his understanding of what he had been told. Mr. Matthews noted on the memorandum that its contents had been approved by Mr. Street on 22 September, 1976.
4. On 30 September, 1976, there was a telephone call between Mr. Schrader and Mr. Matthews. Mr. Schrader said to Mr. Matthews that he had a complaint from Mr. Russell of Bunges, a reference to Pacific. Mr. Russell had asked Mr. Schrader when he was going to put his glucose prices up. Mr. Matthews had to be told who Mr. Russell was and said, "You would not tell him that would you Tony?" Mr. Schrader replied, "I have got to; I have given them my word". Mr. Matthews asked, "to whom have you given your word?" Mr. Schrader said, "To all the other glucose manufacturers". Mr. Matthews said, "I wish you had not told me that, Tony. That would not be proper. It would be illegal". Mr. Schrader said that he had done nothing illegal. There was some further conversation about when Mr. Matthews would see Cadburys in Melbourne. He was asked why he had left them so late. He replied that one of the Cadbury executives, Mr. Izzard, had been on leave and that it was desirable that he be there when the notification was made.
5. On 7 October, 1976, Mr. Street came to Mr. Matthews' office in Melbourne. The evidence is best referred to by setting out Mr. Matthews' note of what transpired both at 9 a.m. and when Mr. Street returned at 3.15 p.m. The reference to RMS is a reference to Mr. Street. The references to Clive and to Allan Worthington are references to other executives of Allied Mills. Mr. Campbell is an executive of Cadbury-Schweppes Pty. Limited. The note is as follows:
"7th October. RMS arrived in my office 9.a.m. I went all over the details again. I said: 'I am not yet 60 - I cannot afford to resign' 'I am not yet qualified for superannuation' 'This is tantamount to retrenchment - SCHRADER 'by his action in this matter is forcing me out of my employment with the company'. RMS. Said: 'I admire your attitude in this - I told SCHRADER he should not involve you and CLIVE in it - I have tried to protect you.' 'You do not need to leave the company - Allan WORTHINGTON has told me he would like you to go over to Manage John DARLING & Co . . . . . ' He went on to describe what he had discussed with A. WORTHINGTON. I said I needed a job - I would go like a shot. 3.15.p.m. RMS returns to my office. Tells me Don CAMPBELL has been very rude to him. Quote: 'When I told him I had no authority to negotiate he told me to stop Allied Mills sending "messenger boys in with no power to negotiate". I pointed out that, in my view, it would be annoying to such a senior, professional, man as Don to have the General Manager of the Allied Mills Division come all the way from Sydney to meet with our largest glucose customer without authority to negotiate - over many years, in Don's experience, Branch managers had had power to negotiate. I said: 'Don will be asking himself why things are different this time - it smells'"
6. On 10 October, 1976, Mr. Matthews telephoned Mr. J.R. Cadwallader, another executive director of Allied Mills. He told Mr. Cadwallader that knowledge had come to his hand which convinced him that Allied Mills was involved in a pricing arrangement which amounted to a breach of the Trade Practices Act. He said that in his view this was dangerous for the directors. Although they all might not know of it, they might be seen to be implicated. Mr. Cadwallader said, "are you speaking about that pricing arrangement for glucose?" Mr. Matthews said, "Yes, do you know about that?" Mr. Cadwallader said, "I know they were planning it; I did not know they had put it into effect; they have not been very clever about it have they? How did you find out about it?" There followed some further discussion to which it is unnecessary to refer for the purpose of determining the question now at issue.
Counsel for Allied Mills made a great many submissions about the effect of this evidence but to my mind it would establish, if accepted, that Allied Mills had entered into a price fixing arrangement with other glucose suppliers. I refer particularly to the conversation between Mr. Matthews and Mr. Schrader which occurred on 30 September, 1976. I have also taken into account the telephone call of 19 August, 1976, in which Mr. Street told Mr. Matthews that the meeting with Mr. Honan and one of the Russells from Bunge had agreed to increase prices for glucose and to buck the Trade Practices Act. It is true, as counsel for Allied Mills submitted, that that could not itself have been the arrangement which is sued upon. But the arrangement could have had its origins in that meeting. It would be unreal to divorce the evidence of it from other evidence in the case particularly instructions given by Mr. Street to Mr. Matthews on 7 September, 1976, and 16 September, 1976, in which Mr. Matthews was told that glucose prices were going up on 1 October, 1976, to $275 minimum and that the base price was to be $276. At this stage of the case it is doing no injustice to Allied Mills to infer that the instructions given on 7 September, 1976, and 16 September, 1976, were the implementation of a price fixing arrangement. Nor do I understand, notwithstanding submissions by counsel for Allied Mills to the contrary, why one should not infer that the price fixing arrangement was one which provided for a base or minimum price of $275 or $276. That is a matter of which I say more later.
Additional evidence which in my view tends to establish a case against Allied Mills that there was a price fixing arrangement are Mr. Matthews' conversations with Mr. Street on 7 October and his conversation with Mr. Cadwallader on 10 October.
Counsel for the Commission relied upon a great many documents and other conversations in support of his case. I do not find it necessary or appropriate to go to the detail of these at this stage. It is enough to say that in most cases I do not find in them unequivocal support for the case that is made. If there were no more I think the case could well be one where such inferences as could be drawn would not necessarily favour there being a price fixing arrangement. However, viewed in the light of the evidence which was given by Mr. Matthews these various matters have in my opinion the significance that they certainly do not suggest that there was no price fixing agreement. In most if not all cases they are consistent with its existence. One matter of this kind of which I should make special mention is the evidence which there is of the way in which Cadbury-Schweppes Pty. Limited was informed of the price rise. The significant matter is that the Cadbury representatives were told very clearly that there was to be no negotiation from the price which was put forward. The evidence up to this stage of the proceedings tends to establish that that was unusual. There are other instances where other customers were told there was to be no negotiation. Those matters viewed against the background which there is of direct evidence of a price fixing agreement tend to strengthen the case which the Commission has.
Just as there is direct evidence against Allied Mills so there is direct evidence against Fielders. This is to be found in the evidence of a Mr. Denholme. He gave evidence of what was said by Mr. Ksoll, the national sales manager of Fielders, in November, 1976, when addressing a group of newly acquired staff (as the result of a take over) of whom Mr. Denholme was one. Mr. Denholme gave a number of accounts of what was said at the meeting. For present purposes it is enough to refer to that given when he was first asked about the matter in chief. Mr. Ksoll was not speaking about glucose but about another starch product. His object was to enthuse sales staff and to give them confidence that there was a market for the product at profitable prices. Mr. Ksoll said, according to Mr. Denholme, "that what had been achieved by agreement on glucose prices in recent months was now about to be achieved by merger between Corn Products (the newly acquired company) and Fielders - namely, rationalisation of prices and increasing prices to the market generally".
In March 1977 Mr. Denholme was speaking to Mr. Ksoll. According to Mr. Denholms he said that he was to refer all prices to him through Mr. Caddy (the Southern States Sales Manager) and that he did not at any stage wish to be caught out by the opposition because Mr. Denholme had quoted particular prices to customers. Mr. Denholme's evidence continued, "Mr. Ksoll said that the agreement had to stick. There could not be any problems at all relating to glucose prices in particular. He said that we could not afford another price war".
In the submission of counsel for Fielders that evidence could not be relied upon because it must have related to an arrangement other than the one here alleged. That was because the evidence tended to suggest that the September arrangement ceased to have effect after the end of December 1976. There is force in that submission but in the absence of other evidence, it is my opinion that the inference is open that Mr. Ksoll was referring to the 1976 price war and a price fixing agreement which had brought it to an end. In reaching that conclusion I have kept in mind that the Commission does not allege that the September arrangement remained in force after the end of 1976.
There is then evidence of Mr. Caddy. He gave evidence of a conversation with Mr. Ksoll in September 1976 during which he was told that the price war had finished and that prices for glucose were to be increased. Mr. Caddy asked him whether Fielders were going up alone. Mr. Ksoll said that he understood that other suppliers would also be increasing their prices.
Mr. Caddy was extensively cross-examined about that conversation. He was referred to an interview which had been conducted by Mr. Alexander of the Crown Solicitor's office. In the submission of counsel for Fielders the effect of the cross-examination was such that Mr. Caddy withdrew his evidence in chief which should therefore be put on one side. The cross-examination extends over a number of pages. It is not practical to set out the whole of it. It needs to be read as a whole for it to be properly understood. Having performed that exercise, I have decided that I should reject counsel's submission. In doing so I have borne in mind very much that I am dealing with a submission of no case to answer. If I were dealing with the matter upon the basis that the evidence had concluded and the problem was whether I were to accept Mr. Caddy's evidence in chief at its face value, the question would be of a different kind. I express no view on what the outcome would then be. For present purposes the Commission is entitled to have the evidence looked at as if it had been accepted without question.
Undoubtedly Mr. Caddy was under the impression that the arrangement was one whereby the price of $275 was to be charged only to new customers. Counsel for Fielders relied upon that impression, which came only from Mr. Caddy's recollection, for the purpose of demonstrating that no arrangement of the kind here pleaded was established. A reference, however, to some of the documentary evidence - telexes in Exhibit CJ - would establish that Mr. Caddy's instructions were not in accordance with his recollection. On 10 September, 1976, a number of telexes were sent from the Sydney office to the Melbourne office. These included an instruction as to the form of a price increase notification which was to take effect on and from 15 September, 1976. It did not state the price increase. The actual price increases were specified in an accompanying telex. These show a variety of different situations with various of the Fielders' customers. So far as new customers were concerned, Mr. Caddy was told that "any client we are currently not supplying no price is to be quoted or supply commitment made and you are to refer same to me (Mr. Ksoll) direct immediately with all relevant details".
In passing I should note that it was most unusual for Fielders not to quote new customers, particularly if they asked for a quotation. That circumstance is certainly consistent with there being a price fixing arrangement of the kind here alleged.
There are other instances where Mr. Caddy's instructions were not to enter into negotiations with customers who were not Fielders' customers.
I should also mention a letter dated 14 December, 1976, written by Mr. Caddy in his capacity as Southern States Sales Manager of Fielders to Rowntree Hoadley Limited in which he said, amongst other things,
"As you are probably aware, market prices increased again during September, and we increased our prices to a minimum of $275.00 in Melbourne and Sydney as it was impossible to continue selling at reduced price levels."
That paragraph tends to cast doubt on Mr. Caddy's recollection that the policy was to charge a minimum price of $275 per tonne only to new customers. If I were concerned with finding facts, the circumstance that Mr. Caddy's recollection was in conflict with one or more of the contemporary documents would be of importance, particularly as he was persuaded to say in cross-examination that the letter did not, according to his then recollection, correctly state the position. On the other hand, one could take the view that one would prefer the statement made by him in a contemporaneous document to his recollection more than four years afterwards. Clearly it would be open to a tribunal of fact to reject Mr. Caddy's evidence in this respect and to rely on the document. The Commission is entitled to have the matter put at its highest from its (the Commission's) point of view in the exercise which is presently being undertaken.
In my opinion the evidence tends to establish that Fielders were party to a price fixing arrangement. As to whether it is an arrangement within the terms of the pleadings is a matter to which I shall return.
There is also direct evidence implicating N.B. Love in a price fixing arrangement. It is to be found in an internal memorandum written by Mr. Campbell, who at the time was purchasing manager of Cadbury Schweppes Pty. Limited, to Mr. Izzard who was then its senior purchasing officer. Both men were in the Melbourne office of Cadburys. It was a large user of glucose both at its Ringwood plant and at its Claremont plant in Tasmania. The memorandum is dated 22 September, 1976, and reports a visit the previous day by two Love executives, Messrs. Burkhardt and Nicholls. The essential part of it is as follows:
"They said that their glucose price was completely unprofitable; in N.S.W. they had been able to increase prices because their opposition had also increased theirs; they understood the Industry was proposing to increase Melbourne prices; they hoped other suppliers would have approached us already; and they would like to increase the price of Glucose for Ringwood from $215 per tonne to $275."
Both Mr. Campbell and Mr. Izzard have given evidence. Mr. Campbell's account of his conversation with Messrs. Burkhardt and Nicholls is consistent with the memorandum.
It was submitted by senior counsel for Loves that although the evidence was admissible against his client, the statement made by the two Love executives could not be used or treated as admissions against his client. With respect to counsel I confess to having had difficulty in understanding the distinction which this submission involves. It is a submission which I reject.
The inference is plainly open from what Mr. Campbell was told that a price fixing agreement had been entered into by the glucose suppliers. It may not be as clear as the evidence of Mr. Matthews, Mr. Denholme and Mr. Caddy but the inference is there and the Commission is entitled to have it drawn.
At this stage I should say that a reading of the entirety of Mr. Campbell's and Mr. Izzard's evidence is instructive not only in relation to Loves but in relation to other suppliers as well. The tenor of their evidence, as I have earlier mentioned, is that after severe competition amongst the suppliers, negotiations proceeded with a confidence and in a manner which was quite foreign to anything that had previously been experienced. Support for that evidence is to be found in Mr. Matthews's evidence.
As in the case of Allied Mills and Fielders, N.B. Love announced to other customers that prices were not negotiable. This was an unusual course in relation to these customers just as it was in relation to Cadburys.
There is no direct evidence implicating Manildra Sugars in any arrangement. But it is permissible to come to the question of the evidence against Manildra with it in mind that there is prima facie evidence of an arrangement implicating Allied Mills, Fielders and N.B. Love; I refer to the Coal Vend case (supra 14 C.L.R. at p.400) and to Morton Salt Company v. United States (1956) Trade Cases (U.S.) 71765 at p.71772. It is also relevant to have in mind the fact that there were five suppliers. Each had engaged in intensive competition with the others. Unless all behaved similarly there was a good chance that unilateral price leadership would fail. That had indeed occurred earlier in the year 1976.
So far as the evidence discloses Manildra made the first move when on 7 September, 1976, one of its executives, Mr. Crawford, called on Darrell Lea. Mr. Crawford told Mr. Conroy of Darrell Lea that Manildra could not continue to supply at cut prices and that prices would have to be increased to about $275 before Manildra would break even. Darrell Lea was a substantial user of glucose and a good customer of Manildra.
It is to be recalled that Manildra was the principal cause of the price war. It drastically undercut prices to obtain a share of the market. In the period leading up to the price war Darrell Lea had been supplied by Manildra, Fielders and Allied Mills. Both the latter companies were large and established suppliers of glucose. In the submission of counsel for the Commission it would have been a brave move indeed for Manildra to act as it did on 7 September unless it was confident that the other suppliers would take a similar course. Its confidence was indeed justified so far as Fielders were concerned. The following day, 8 September, Mr. Baker of Fielders called on Mr. Conroy. Mr. Baker said that prices would probably be increased and that Darrell Lea would be advised in writing later on. It subsequently received one of the pro forma price notifications increasing the price to $277 per tonne as from 15 September. However, on 9 September Mr. McCallister of Allied Mills called and said his company was prepared to supply at $210. That is inconsistent with there being a price fixing arrangement or at least such an arrangement to which Allied Mills was a party. But it must be remembered that on 7 September, 1976, Mr. Street had spoken to Mr. Matthews and said to him that prices were going up on 1 October, 1976. The minimum price was to be $275 per tonne "with premium for drums and quantity". The evidence therefore discloses that on 7/8 September three of the respondents including Manildra had decided to put their prices up to a figure of the order of $275. That circumstance coupled with Manildra's apparent leadership, notwithstanding that it was the original price cutter and the cause of the price war, leave the inference open that it was a party to the price fixing arrangement of which there is direct evidence implicating Allied Mills, Fielders and N.B. Love.
There are other matters in the evidence which reinforce me in that conclusion. I list them shortly.
1. Manildra refused to quote some customers after their prices had been increased by other suppliers. The customers were Cadburys and Riviera Confectionery Pty. Limited. It may be that Manildra had a good reason for not quoting Cadburys because of the extent of its needs and the absence of bulk supply tanks belonging to Manildra at the Cadbury plant. But those are not matters which need concern me at this stage. The two instances when taken into account along with the other evidence leave open the inference that the failure to quote was the result of some agreement with the other suppliers. Manildra at no time had supplied Ringwood; but it had supplied Claremont. Its notification of price increases earlier mentioned was for Claremont. The fact that it was already a supplier, albeit to Tasmania, makes it the more surprising that it would not quote for Ringwood.
2. There are instances in the evidence other than in relation to Cadburys where Manildra notified price increases at or about the same time as other suppliers. This occurred in relation to Craig & Hales. The other suppliers were Allied Mills and Pacific. In relation to Meadowsweet Confectionery Pty. Limited there were visits from Pacific and Manildra within a few days. Pacific came first and notified an increase to $275. Manildra quoted a figure well above. The story in relation to Snow Confectionery Pty. Limited is similar.
3. It is also relevant to take into account evidence contained in a memorandum dated 8 July, 1976, written by Mr. Abell, the purchasing manager of A.W. Allen Limited to Mr. Doddrell, his managing director. In the memorandum Mr. Abell said that both Pacific and Manildra had independently admitted to exchange of information "at senior level between themselves concerning price to A.W. Allen as survival is threatened, and advice from one party (Manildra) states requests have been made by the other to raise our price simultaneously". The liaison between the two companies which is referred to was prior to the making of the arrangement which the Commission alleges but it tends to establish collaboration between the two in relation to prices.
There is some direct evidence against Pacific. Mr. Cowell was a senior executive with Meadowsweet Confectionery Pty. Limited. After he had visits from representatives of other suppliers he received a call from a Mr. Horoch of Pacific. Mr. Cowell had asked Mr. Horoch to call. Mr. Horoch said that prices were to be increased to $275 per tonne and that there would be no negotiation from this price. Mr. Cowell was asked for more detail and said, "It was only that he was most emphatic that that was the price and I said to him, 'Well, you know, I will just have to go elsewhere', and he said not to bother, 'because there is a general industry price rise', and that there was no need virtually to go elsewhere and get a better price".
This evidence is consistent, to a degree, with Pacific having decided to raise its prices because by the time of Mr. Horoch's visit there had been price increases by the other suppliers. The evidence would suggest that Pacific was the last to move. That is a matter heavily relied upon by its counsel.
The evidence, however, must be viewed in the light of other evidence which there is. Pacific had unsuccessfully attempted to increase its prices to four customers in the period May/June 1976. There is evidence that Pacific knew Manildra's prices when an attempt was made to increase prices to another company earlier in the year. As earlier mentioned there is evidence of collaboration between Pacific and Manildra prior to the making of any arrangement by all suppliers in or about September 1976.
As in the case of other respondents there are instances in the evidence of increases in price at about the same time as increases made by other suppliers and one instance of refusal to quote. Prices were also offered on a no negotiation basis.
Then I should mention a matter referred to in the minutes of directors' meetings of Pacific. On 29 September, 1976, one of its senior executives, Mr. Flack, is reported as saying that "the price of confectioners glucose was being increased and that this was in the course of completion, although buyer resistence was strong".
As in the case of Manildra I bear in mind that the evidence against three of the respondents is capable of establishing an arrangement in relation to prices. The principles stated in the Coal Vend case and the Morton Salt case would lead one to the conclusion that the evidence is capable of establishing that Pacific was a party to the same arrangement. After all, it would have been much more difficult for the other suppliers if even one supplier stayed outside the arrangement. I think the inference which the Commission is entitled to have drawn from Mr. Horoch's conversation with Mr. Cowell is that there was in existence a price fixing arrangement to which Pacific was a party.
I am therefore of opinion that there is evidence capable of establishing that each of the respondents was a party to a price fixing arrangement or understanding.
It was, however, strongly submitted by counsel for all respondents that whilst there might be some evidence of a price fixing arrangement or understanding (it was disputed that there was) there was no evidence of any such arrangement or understanding as was pleaded and particularised either originally or in the amended particulars earlier referred to. Before I come to that question it is convenient to deal with the question of whether I should allow the amendments to the particulars which are opposed. Counsel for the Commission referred to a great many authorities on the question of whether amendments ought to be allowed. These establish, clearly in my opinion, that the amendments ought to be allowed. There was no detailed development by counsel for any respondent of reasons why the amendments should be disallowed and, in the end, counsel for the respondents concentrated their attention in endeavouring to persuade me that, if the amendments were allowed, the case was nevertheless not within the particulars. A special submission was made in relation to the re-amendment of paragraph (A) of the particulars to remove the words, "41 degrees Baume". It was said that it would be most unlikely that there would have been an arrangement which would have involved the pricing of glucose without regard to degrees of Baume. To charge the same price for different concentrations would involve in reality the charging of different prices for the product and this was something which the suppliers, that is the respondents, would not have been silly enough to do. There may be force in that submission but the fact remains that one of the schedules to which reference was earlier made establishes that some of the respondents did charge the one customer the same price for different concentrations of glucose. I do not regard the considerations which are involved in the submission as providing reasons why I should not allow the re-amendment of paragraph (A) in the way which the Commission seeks.
Accordingly I propose to treat the particulars appended to paragraph 12 of the statement of claim as having been amended in each of the respects earlier referred to.
In my opinion there is evidence of an understanding or arrangement along the lines of that particularised in paragraph (AA) of the particulars as amended. It is true that there are instances where prices not as high as $275 per tonne were charged by an individual respondent to particular customers. But this does not overcome the effect of the evidence of agreement to which I have earlier referred in relation to each of the respondents. The evidence is open to the inference that for one reason or another particular respondents did not abide by the arrangement or understanding of which there is evidence.
In my opinion counsel for the respondents were inclined to treat the allegation as if it was one of there being an actual agreement as distinct from an arrangement or understanding. In this regard it is important to keep steadfastly in mind the nature of an arrangement and an understanding as explained by Fisher J. in Trade Practices Commission v. Nicholas Enterprises Pty. Limited (No.2) (supra). Particular attention must be paid to the final paragraph cited from his Honour's judgment which I have earlier emphasised.
Additionally one must bear in mind what was said by Isaacs J. in the Coal Vend case about the way in which conclusions may properly be drawn from the conduct of parties as to there being a combination, in this case an arrangement or understanding.
Senior counsel for Fielders said that the evidence was equally consistent with there having been a meeting at which one of the respondents' representatives had said some such words as, "Prices up?" or, "Let's be sensible]" It may be true to say that the evidence is consistent with that sort of remark having been made and assented to. But in my opinion the totality of the evidence is capable of establishing that more was involved than those words would of themselves imply. In particular there is too much evidence about a price of $275 per tonne to enable it to be concluded that such a view of the evidence was as consistent as evidence of an arrangement or understanding in which no figure at all was mentioned.
I have given substantial consideration to the question of whether there is evidence of an arrangement or understanding such as is particularised in paragraph (A) of the particulars as re-amended. I do not consider that there is sufficient evidence of an arrangement which involved the imposition of surcharges for deliveries in drums or for supplies to customers of another respondent. But I think, after due reflection, that there is evidence of an arrangement or understanding that the corporate respondents would increase their prices for liquid glucose to about $275 per tonne.
I am satisfied also that there is evidence of an arrangement of the kind which is alleged in paragraph (B) of the particulars.
I am conscious of the fact that two arrangements are involved and that they may be mutually inconsistent. But I bear in mind that the evidence of what occurred is peculiarly within the knowledge of the respondents. Until the evidence is concluded - and I realise that there may be no more evidence - it would be impossible to conclude whether in fact there is evidence which establishes an arrangement or understanding of either kind. But the case has not reached that stage. It is a question of whether there is evidence capable of establishing the arrangements and understandings which are pleaded. In my opinion there is.
My conclusion so far makes it unnecessary to express a view on what would have been the position if I had found a case to answer against some, but not all respondents. Accordingly, I express no opinion on that question.
The final matter (the fourth of those earlier listed) is the question of what evidence of the furtherance or implementation of the arrangement or understanding originally admissible only against one or other of the respondents is admissible against all. Such evidence is admissible pursuant to principles which are stated in the Coal Vend case and the Tripodi case earlier cited. It does not become admissible unless there is first of all evidence implicating each respondent in the arrangement or understanding which is relied upon. It does not therefore establish a case against any respondent, but it may have the effect of strengthening the case which there is.
In the course of his submissions senior counsel for the Commission handed up a schedule of evidence said to be primarily admissible against each respondent and only against that respondent. In cases where he proposed to tender the evidence eventually against each other respondent as well, the evidence was marked with an (X). It became known in the course of the submissions as the (X) evidence. Certain amendments were in due course made to the schedules. Only two submissions were made against the admissibility of that evidence apart from the general one that it could not be admitted or used to establish a case to answer against any respondent. That proposition was not in contest. The first of the submissions was that no evidence was admissible against any respondent unless it concerned and directly implicated that respondent in the arrangement or understanding which is alleged. To my mind that submission misunderstands the basis upon which such evidence is admitted. I reject the submission.
The second submission was that the principles upon which the evidence was admitted did not override the rule against hearsay. Thus, if the representative of one party, in the course of giving or carrying out an instruction which could fairly be said to be an instruction given or carried out as part of the implementation of the arrangement or understanding, said, for instance to a customer, that he had been told something by the representative of another respondent, what he said in that regard could not be admissible against that or any other respondent except the respondent whose representative made the statement. No authority was cited on the point. Having considered the matter, I have decided that the submission is sound and should be upheld.
Subject to that matter, however, I admit the entirety of the (X) evidence as shown in the schedules as amended against each of the respondents. There were two further schedules handed up by counsel for the Commission. These were headed respectively "Matthews' evidence admissible against Allied Mills" and "Matthews' evidence admissible against Pacific". I propose to admit the evidence which is referred to in paragraphs 3, 4, 5, 7 and 9 of the first of these schedules against all respondents.
I do not admit any part of the second schedule against other respondents because I do not regard the evidence referred to as probative. It is not evidence upon which I have relied in concluding that there is a case to answer against Pacific.
That concludes my treatment of the matters which were to be decided. As foreshadowed when the matter was adjourned the further hearing will resume on Tuesday, 22 September.
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