Trade Practices Commission v CC (NSW) Pty Ltd

[1995] FCA 714

CATCHWORDS

TRADE PRACTICES - restrictive trade practices - entering into an arrangement or understanding substantially lessening competition - pecuniary penalty to be imposed on corporations for principal liability and on individuals for accessorial liability - joint submission of parties as to appropriate amount of penalty - determination of appropriate amount.

Trade Practices Act 1974 (Cth) ss 4D, 45, 45A, 52, 53, 55A.

TRADE PRACTICES COMMISSION v CC (NEW SOUTH WALES) PTY LIMITED & ORS (No 6)

No NG 574 of 1994

LINDGREN J
SYDNEY
8 SEPTEMBER 1995

IN THE FEDERAL COURT OF AUSTRALIA  )
NEW SOUTH WALES DISTRICT REGISTRY  )        No NG 574 of 1994
GENERAL DIVISION                 )

BETWEEN:

TRADE PRACTICES COMMISSION
  Applicant

AND:

CC (NEW SOUTH WALES) PTY LIMITED formerly known as
CONCRETE CONSTRUCTIONS (NSW) PTY LIMITED
  First Respondent

PETER WOOLLARD
                   Second Respondent

HOLLAND STOLTE PTY LIMITED
  Third Respondent

GRAHAM RONALD DUFF
                   Fourth Respondent

MULTIPLEX CONSTRUCTIONS PTY LIMITED
  Fifth Respondent

GEOFFREY THOMAS PALMER
  Sixth Respondent

LEIGHTON CONTRACTORS PTY LIMITED
                  Seventh Respondent

LEONARD DIXON
                   Eighth Respondent

THE AUSTRALIAN FEDERATION OF CONSTRUCTION CONTRACTORS
  Ninth Respondent

RUSSELL NORMAN RICHMOND
  Tenth Respondent

CORAM:    LINDGREN J
PLACE:    SYDNEY
DATE:     8 SEPTEMBER 1995

MINUTE OF ORDERS

THE COURT:

1. DECLARES that by making or arriving at the single arrangement which is referred to in para 21 of the amended statement of claim, each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, contravened s 45 (2) (a) (ii) of the Trade Practices Act 1974.

1. ORDERS that each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, pay to the Commonwealth of Australia a pecuniary penalty of $250,000 in respect of the contravention of s 45 (2) (a) (ii) referred to in para 1 hereof within seven days of the date of this order.

1. DECLARES that by making or arriving at the single arrangement which is referred to in para 24 of the amended statement of claim, each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, contravened s 45 (2) (a) (ii) of the Trade Practices Act 1974.

1. ORDERS that each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, pay to the Commonwealth of Australia a pecuniary penalty of $250,000 in respect of the contravention of s 45 (2) (a) (ii) referred to in
   para 3 hereof within seven days of the date of this order.

1. ORDERS that each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, be restrained until 1 September 2000, whether by its directors, servants, agents or otherwise howsoever, from:

(a)making or arriving at;

(b)giving effect to;

(c)attempting to make or arrive at;

(d)inducing, or attempting to induce, any person to make or arrive at, or give effect to; or

(e)being in any way, directly or indirectly, knowingly concerned in, or party to, the making or arriving at, or the giving effect to, by any person,

any contract, arrangement or understanding with any other person who is or would otherwise be likely to be in competition with it, the fifth respondent or the seventh respondent as the case may be, which contains a provision that:

(i)has the purpose, or has or is likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of tender prices submitted in Australia by building or construction contractors; or

(ii)has the purpose of preventing, restricting or limiting the supply of building or construction services by building or construction contractors in Australia to particular persons or classes of persons either absolutely or in particular circumstances or on particular conditions.

1. ORDERS that each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, be restrained until 1 September 2000 whether by its directors, servants, agents or otherwise howsoever, from engaging in or being in any way, directly or indirectly, knowingly concerned in, or party to:

(a)conduct by a person that is misleading or deceptive, or is likely to mislead or deceive, in respect of tenders submitted by building or construction contractors;

(b)a person's falsely representing in connection with the tender for supply or possible supply of building or construction goods or services that the goods or services are of a particular standard quality value or grade;

(c)in connection with the tender for supply or possible supply of building or construction goods or services the making of a false or misleading representation with respect to the price of the goods or services;

(d)conduct that is liable to mislead the public as to the nature, characteristics, the suitability for their purpose or the quality of any services in respect of tenders for the supply of building or construction services.

1. DECLARES that by engaging in the conduct referred to in paras 42 and 42A of the amended statement of claim each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, contravened ss 53 (aa), 53 (e) and 55A of the Trade Practices Act 1974.

1. ORDERS that each of the fifth and seventh respondents, Multiplex Constructions Pty Limited and Leighton Contractors Pty Limited, pay to the applicant the sum of $75,000 in respect of the applicant's costs of this
   proceeding within seven days of the date of this order.

1. DECLARES that by engaging in the conduct referred to in paras 15 to 21 of the amended statement of claim, each of the sixth and eighth respondents, Geoffrey Thomas Palmer and Leonard Dixon, was directly or indirectly knowingly concerned in, and party to, the tenderers and the AFCC making or arriving at the arrangement which is referred to in para 21 of the amended statement of claim in contravention of s 45 (2) (a) (ii) of the Trade Practices Act 1974.

10.ORDERS that the sixth respondent, Geoffrey Thomas Palmer, pay to the Commonwealth of Australia a pecuniary penalty of $25,000 in respect of his being knowingly concerned in, and party to, the contravention of s 45 (2) (a) (ii) referred to in para 9 hereof.

11.ORDERS that the eighth respondent, Leonard Dixon, pay to the Commonwealth of Australia a pecuniary penalty of $12,500 in respect of his being knowingly concerned in, and party to, the contravention of s 45 (2) (a) (ii) referred to in para 9 hereof.

12.DECLARES that by engaging in the conduct referred to in paras 22-24 of the amended statement of claim, each of the sixth and eight respondents, Geoffrey Thomas Palmer and Leonard Dixon, was directly or indirectly knowingly
concerned in, and party to, the tenderers making or arriving at the arrangement which is referred to in para 24 of the amended statement of claim in contravention of s 45 (2) (a) (ii) of the Trade Practices Act 1974.

13.ORDERS that the sixth respondent, Geoffrey Thomas Palmer, pay to the Commonwealth of Australia a pecuniary penalty of $25,000 in respect of his being knowingly concerned in, and party to, the contravention of s 45 (2) (a) (ii) referred to in para 12 hereof.

14.ORDERS that the eighth respondent, Leonard Dixon, pay to the Commonwealth of Australia a pecuniary penalty of $12,500 in respect of his being knowingly concerned in, and party to, the contravention of s 45 (2) (a) (ii) referred to in para 12 hereof.

15.ORDERS that each of the sixth and eighth respondents, Geoffrey Thomas Palmer and Leonard Dixon, be restrained until 1 September 2000, whether by his servants, agents or otherwise howsoever, from:

(a)making or arriving at;

(b)giving effect to;

(c)attempting to make or arrive at;

(d)inducing, or attempting to induce, any person to make or arrive at, or give effect to; or

(e)being in any way, directly or indirectly, knowingly concerned in, or party to, the making or arriving at, or the giving effect to, by any person,

any contract, arrangement or understanding with any other person which contains a provision to the effect that:

(i)he or that other person will agree to pay to such other person which is unsuccessful an unsuccessful tenderer's fee or a fee payable upon the obtaining by it of any contract; or

(ii)he or that other person will agree to pay to any industry association any special fee for that project which fee is payable upon or by reason of its having obtained any contract;

and which:

(iii)has the purpose, or has or is likely to have the effect of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of tender prices submitted in Australia by building or construction contractors;

(iv)has the purpose of preventing, restricting or limiting the supply of building or construction services by building or construction contractors in Australia to particular persons or classes of persons either absolutely or in particular circumstances or on particular conditions; or

(v)has the purpose, or has or is likely to have the effect, of substantially lessening competition.

16.DECLARES that by engaging in the conduct referred to in paras 15-24 of the amended statement of claim each of the sixth and eighth respondents, Geoffrey Thomas Palmer and Leonard Dixon, was directly or indirectly concerned in and party to conduct in breach of s 52, 53 (aa), s 53 (e) and/or s 55A of the Trade Practices Act 1974.

17.NOTES the agreement of the applicant and the sixth and eighth respondents respectively that there be no order as to costs as between them.

18.ORDERS that each of the sixth and eighth respondents, Geoffrey Thomas Palmer and Leonard Dixon, pay the penalties referred to in paras 10 and 13, and 11 and 14, respectively, within 28 days of the date of this order.

19.NOTES the undertaking given by each of the sixth and eighth respondents, Geoffrey Thomas Palmer and Leonard Dixon, by his counsel to make himself available at the reasonable request of the applicant and to make an affidavit for the use of the applicant in these proceedings.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )
NEW SOUTH WALES DISTRICT REGISTRY  )        No NG 574 of 1994
GENERAL DIVISION                 )

BETWEEN:

TRADE PRACTICES COMMISSION
  Applicant

AND:

CC (NEW SOUTH WALES) PTY LIMITED formerly known as
CONCRETE CONSTRUCTIONS (NSW) PTY LIMITED
  First Respondent

PETER WOOLLARD
                   Second Respondent

HOLLAND STOLTE PTY LIMITED
  Third Respondent

GRAHAM RONALD DUFF
                   Fourth Respondent

MULTIPLEX CONSTRUCTIONS PTY LIMITED
  Fifth Respondent

GEOFFREY THOMAS PALMER
  Sixth Respondent

LEIGHTON CONTRACTORS PTY LIMITED
                  Seventh Respondent

LEONARD DIXON
                   Eighth Respondent

THE AUSTRALIAN FEDERATION OF CONSTRUCTION CONTRACTORS
  Ninth Respondent

RUSSELL NORMAN RICHMOND
  Tenth Respondent

CORAM:    LINDGREN J
PLACE:    SYDNEY
DATE:     8 SEPTEMBER 1995

REASONS FOR JUDGMENT (No 6)

(relating to the fifth, sixth, seventh and eighth respondents)

NATURE OF PROCEEDINGS AND THE FACTS AS PLEADED

These proceedings arise out of what the applicant ("the Commission") alleges to have been collusive tendering by major construction companies for a project known as the Commonwealth Offices - Haymarket ("the Haymarket Project").  It alleges that this involved contraventions of the Trade Practices Act 1974 (Cth) ("the Act").

The Commission's application was filed on 30 August 1994 seeking one set of remedies against the corporate respondents, that is to say, the first, third, fifth, seventh and ninth respondents, and another set of remedies against the individual respondents, that is to say, the second, fourth, sixth, eighth and tenth respondents.  Each set of remedies comprises the imposition of pecuniary penalties, declaratory and injunctive relief.  With the application was filed a statement of claim. An amended statement of claim was filed on 17 November 1994. 

According to the pleading each individual respondent was at all material times employed by the corporate respondent named in the title to the proceedings immediately preceding his name.  Accordingly, and so the pleading described them, Mr Woollard was employed by Concretes, Mr Duff was employed by Hollands, Mr Palmer was employed by Multiplex, Mr Dixon was employed by Leightons and Mr Richmond was employed by the AFCC.  (I use the same abbreviations in these reasons.)  It is pleaded that all acts alleged in the amended statement of claim were performed by the individual respondents in their capacities as employees of their respective corporate employers.

The AFCC has never appeared in the proceedings. On 28 September 1994 Hill J made an order staying the proceedings in so far as they related to Mr Woollard (his Honour's reasons are reported at (1994) 125 ALR 94). Mr Richmond, Hollands and Mr Duff have withdrawn their defences, each joined with the Commission in making a submission as to a level of penalty appropriate to be imposed, and penalties have been imposed on them (see (1994) ATPR 41-363, (1995) ATPR 41-406 and (1995) ATPR 41-415 respectively). Leightons, Multiplex, Mr Dixon and Mr Palmer now wish to withdraw their defences and join with the Commission in making submissions as to the appropriate penalty to be imposed on them respectively.

FACTS AS PLEADED AND ISSUES ON THE PLEADINGS

The following is an account of the facts as alleged by the Commission in the amended statement of claim.

At all material times Concretes, Hollands, Multiplex and Leightons ("the Tenderers") carried on business as building and construction contractors in New South Wales and were members of the AFCC. On or about 11 August 1988, Australian Construction Services ("ACS"), part of the Commonwealth Department of Administrative Services, for and on behalf of the Commonwealth, invited the Tenderers to submit tenders for the Haymarket Project.

Central to the Commission's case is a meeting held in September or October 1988 ("the Meeting") at which two agreements were made. It is convenient to set out paragraphs 15-24 of the amended statement of claim which relate to these matters.  Those paragraphs are as follows:

"15.In or about September or October 1988 John Cunningham ('Cunningham') Director of Special Projects with the AFCC, for and on behalf of the AFCC, contacted the tenderers and notified them of his intention to conduct a meeting of tenderers in relation to the Haymarket project prior to the closing date for tenders.  Cunningham invited an officer from each of the tenderers to attend such a meeting ('the meeting') prior to the closing of tenders and each of the tenderers accepted the invitation.

PARTICULARS

Cunningham contacted each of the tenderers by telephone.

16.It was the intention of Cunningham and of each of the tenderers respectively in setting up and agreeing to attend the meeting that each tenderer would be able to take into account, and would take into account in preparation of its tender, any matters agreed at the meeting (which Cunningham and each of the tenderers expected would include arrangements or understandings on the subjects of special fees ('Special Fee') and unsuccessful tenderers fees).

17.Prior to the meeting Richmond instructed Cunningham to propose to the tenderers that the successful tenderer should pay to the AFCC a Special Fee of $1,000,000.

18.In or about September or October 1988 the meeting took place at the premises of the AFCC at 655 Pacific Highway (cnr Christie Street) St Leonards in the State of New South Wales.

19.The meeting was attended by:

(a)Cunningham of the AFCC;

(b)Woollard of Concretes;

(c)Duff of Hollands;

(d)Palmer of Multiplex; and

(e)Dixon of Leightons.

20.At the meeting Cunningham proposed that the successful tenderer for the Haymarket project should pay an agreed amount called a Special Fee ('Special Fee') to the AFCC.

21.At or arising out of the meeting each of the tenderers, and the AFCC made or arrived at an arrangement and understanding between themselves to the effect that;

(a)each tenderer would, if its tender for the Haymarket project was accepted, pay from the proceeds of the job a Special Fee to the AFCC in the sum of $1,000,000;

(b)each tenderer would take into account in the preparation of its tender, the commitment to pay the Special Fee if successful.

(c)none of the tenderers or the AFCC would disclose to ACS the terms of the arrangement or understanding, or that a meeting of all tenderers had taken place.

PARTICULARS

(i)the arrangement or understanding was partly express and partly implied;

(ii)insofar as it was express it was oral:

(iii)as to the oral part it was constituted by the conversation at the meeting;

(iv)insofar it was implied it arose from the attendance at the meeting of Cunningham,
and the representatives of the tenderers and the acceptance of the proposals put at the meeting;

(v)as to subparagraph 21(b) and (c) it was implied in order to give business efficacy to the arrangement or understanding; and

(vi)the Applicant will also rely on the inferences to be drawn from the facts set out in paragraphs 27-30 [it is not necessary to refer to the allegations made in paras 27-30].

22.After the agreement or understanding referred to in paragraph 21 had been reached Cunningham was asked to leave the room, and did so.  The meeting resumed with Woollard of Concretes,  Duff of Hollands, Palmer of Multiplex and Dixon of Leightons in attendance.

23.At the meeting it was then proposed that the successful tenderer should pay to each of the unsuccessful tenderers an unsuccessful tenderers fee ('UTF') in the sum of $750,000.

24.There arose from the meeting an arrangement or understanding between the tenderers to the effect that:

(a)each tenderer would, if its tender for the Haymarket project was accepted, pay from the proceeds of the job a UTF to each of the unsuccessful tenderers in the sum of $750,000;

(b)each tenderer would take into account in the preparation of its tender, the commitment to pay the UTF if successful; and

(c)none of the tenderers or the AFCC would disclose to ACS the terms of the arrangement or understanding or that a meeting of all tenderers had taken place.

PARTICULARS

(i)The arrangement or understanding was partly express and partly implied;

(ii)insofar as it was express it was oral:

(iii)as to the oral part it was constituted by the conversation at the meeting;

(iv)insofar it was implied it arose from the attendance at the meeting of the representatives of the tenderers and the acceptance of the proposals put at the meeting;

(v)as to subparagraph 24(b) and (c) it was implied in order to give business efficacy to the arrangement or understanding; and

(vi)the Applicant will also rely on the inferences to be drawn from the facts set out in paragraphs 32-35 [it is not necessary to refer to the allegations made in paras 32-35]."

The Tenderers did take into account the arrangements or understandings reached at the Meeting in the preparation and submission of their tenders.  ACS awarded the contract to Hollands.  Mr Richmond caused or procured the AFCC, by its National Executive Committee, to ratify and levy the Special Fee on Hollands.  In or about January or February 1989 Hollands paid $200,000 or $300,000 to the AFCC as part of the Special Fee, and subsequently over a period from 24 July 1989 to 1 February 1990, the AFCC sent a series of seven invoices of $100,000 each to Hollands which it also paid on account of the Special Fee.  For their part, Concretes, Multiplex and Leightons each sent to Hollands a series of invoices which represented parts of their respective UTFs and totalled, in respect of each of those three unsuccessful Tenderers, $750,000.  Hollands also paid the amounts of those invoices. 

Each of the invoices sent by the AFCC and by Concretes, Multiplex and Leightons to Hollands purported to be claims for "consultancy services".  But such services had not been provided and were never intended to be provided.  In the result, Hollands paid the Special Fee of $1,000,000 to the AFCC and UTFs totalling $2,250,000 to Concretes, Multiplex and Leightons.

RELEVANT PROVISIONS OF THE ACT

The amended statement of claim alleges that the pleaded conduct constituted various contraventions of the Act.

It is important to note the relevant provisions of the Act at the relevant time as referred to in the amended statement of claim, namely ss 4D, 45 (2) (a), (b); 45A; 52; 53 (aa), (e); and 55A.

It is unnecessary for me to give an account of the various ways in which it is pleaded that the respondents contravened the Act. They are numerous. It is pleaded not only that the corporate respondents "contravened" and "attempted to contravene" a provision of Part IV (cf paras 76 (1) (a) and (b) of the Act), but also that each of the Tenderers was "knowingly involved" in contraventions by the other Tenderers. It is pleaded that each of the individual respondents was "knowingly involved" in each of the contraventions by each of the AFCC and by each of the Tenderers. The pleading recognises that all four Tenderers were parties to both the Special Fee agreement and the UTFs Agreement but that the AFCC was a party only to the Special Fee agreement.

The principal allegation is that the making and implementation of the two agreements constituted contraventions of paras 45 (2) (a) and (b) of the Act. Those provisions are as follows:

"45(2)A corporation shall not --

(a)make a contract or arrangement, or arrive at an understanding, if --

(i)the proposed contract, arrangement or understanding contains an exclusionary provision; or

(ii)a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b)give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision --

(i)is an exclusionary provision; or

(ii)has the purpose, or has or is likely to have the effect, of substantially lessening competition."

The notion of an "exclusionary provision" is "defined" in s 4D of the Act. It is also pleaded that the two agreements constituted "price fixing" in contravention of s 45A. Finally, contraventions of ss 52, 53 (aa), 53 (e) and/or 55A within Part V of the Act are alleged against the Tenderers.

It is alleged that the five individual respondents were directly or indirectly concerned in and party to their employers' conduct in contravention of those provisions.

Under s 76, if the Court is satisfied that a person contravened a provision of Part IV (in which ss 45 and 45A occur) or was an accessory of certain kinds to such a contravention, it may order the person to pay to the Commonwealth such pecuniary penalty in respect of each act or omission by the person to which the section applied, as the Court determines

"to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person ha[d] previously been found by the Court in proceedings under this Part to have engaged in any similar conduct".

Further, under s 76, the pecuniary penalty payable by a person being a body corporate is not to exceed $250,000 for each act or omission by the body corporate to which the section applies, and the pecuniary penalty payable by any other person is not to exceed $50,000 for each act or omission by such other person to which the section applies (these are the maximum penalties provided for as at the times of the pleaded contraventions).  Section 78 provides that criminal proceedings do not lie against a contravener or accessory by reason only of the contravention of a provision of Part IV or accessorial conduct of the kinds referred to in s 76.

JOINT SUBMISSIONS OF THE COMMISSION, LEIGHTONS, MULTIPLEX, MR DIXON AND MR PALMER

General
As mentioned earlier, Leightons, Multiplex and Messrs Dixon and Palmer have joined with the Commission in making a joint statement and submission. All four of those respondents have withdrawn their defences and now admit the allegations made in the amended statement of claim. The joint statement and submission accepts that each of Leightons and Multiplex has contravened ss 45 (2) (a) (ii), 45 (2) (b) (i), 45 (2) (b) (ii), 53 (aa), 53 (e) and 55A of the Act as pleaded in paras 47 and 47A-K of the amended statement of claim. It is admitted that the contraventions were serious and that they occurred in an industry of importance to the Australian economy. It is submitted that the Court should impose a total penalty of $500,000 on each of Leightons and Multiplex.  In support of this amount the joint submission (incorporating minor textual amendments made on the hearing) includes the following

"There are not present in relation to Leighton and Multiplex some of the features in relation to Hollands which led the court to impose significantly lower penalties than otherwise would have been appropriate [The total penalty in relation to Hollands was $400,000]. Hollands made full restitution to ACS, as have Leighton and Multiplex. The change of ownership of Hollands and the complete co-operation exhibited by the new ownership with the Commission are features not relevant in relation to Leighton and Multiplex. Furthermore, Leighton and Multiplex did not withdraw their defences until after orders for discovery against them had been made...

...Leighton and Multiplex accept that the two main conversations, namely the making of an arrangement or understanding in relation to Special Fees and the making of an arrangement or understanding in relation to Unsuccessful Tender Fees had a very serious effect on competition and warrant the imposition of the maximum penalty in each case.

Leighton and Multiplex are aware that the Commission contends that in the case of Multiplex there were 25 contraventions and in the case of Leighton there were 27 contraventions (both of which figures are multiplied by a factor of about 3 if contraventions consisting of knowing involvement are included) and they accept that in all circumstances, orders which imposed the maximum penalties upon them in relation to two contraventions are appropriate and positively submit that penalties of this quantum are appropriate."

I turn now to the individual respondents with whom these Reasons for Judgment are concerned, namely Mr Palmer and Mr Dixon.  Mr Palmer accepts that he was a director of Multiplex and was its agent for the purpose of the making of the arrangements or understandings to which it was a party.  He and the Commission suggest that his conduct warrants a penalty of $25,000 in relation to each of the two main contraventions, that is the making of the Special Fee agreement and the making of the UTFs agreement.  The joint submission refers to the fact that the Commission, in its pleading, contends for six contraventions plus a large number of "knowing involvement" contraventions, but accepts that it is appropriate that the matter be approached by reference to the two main contraventions.

Mr Dixon accepts that he was the agent of Leightons for the purpose of the making of the arrangements or understandings to which it was a party.  The Commission accepts however, that it is appropriate for the Court to take into account in Mr Dixon's case the fact that he was not a director of Leightons and that both the level of his responsibility in Leightons and the level of his culpability might be described as "lower" than that of other individual respondents.  In particular, it is accepted that his position was that of "Chief Estimator" and that he had been requested to attend the Meeting by another officer of Leightons.

In the result the Commission and Mr Dixon join in submitting that a considerably lower penalty is appropriate to be imposed on Mr Dixon than the penalties imposed on Messrs Palmer and Duff, both of whom were directors (in Mr Duff's case, the Managing Director) of their respective companies.  The Commission and Mr Dixon jointly submit that Mr Dixon's conduct warrants a penalty of $12,500 in relation to each of the two main contraventions, that is, the making of the arrangement or understanding constituted by the Special Fee agreement and the making of the arrangement or understanding constituted by the UTFs agreement.  In its pleading, the Commission contends for six contraventions plus a large number of "knowing involvement" contraventions by Mr Dixon but accepts that it is appropriate that the Court not impose higher penalties on him.

Orders suggested by the parties
The parties have submitted to the Court a suggested form of short minutes of orders which, in summary, provide for penalties as follows:

Multiplex and Leightons

1. By making or arriving at the single arrangement referred to in para 21 of the amended statement of claim, each of Multiplex and Leightons contravened s 45 (2) (a) (ii) of the Act - a penalty of $250,000 against each of those respondents.

1. By making or arriving at the single arrangement referred to in para 24 of the amended statement of claim, each of Multiplex and Leightons contravened s 45 (2) (a) (ii) of the Act - a penalty of $250,000 against each of those respondents.

Mr Palmer and Mr Dixon

1. By engaging in the conduct referred to in paras 15 to 19 and 21 of the amended statement of claim, each of Mr Palmer and Mr Dixon was, directly or indirectly, knowingly concerned in, and party to, the Tenderers and the AFCC making or arriving at the arrangement referred to in para 21 of the amended statement of claim, and each of Mr Palmer and Mr Dixon thereby contravened s 45 (2) (a) (ii) of the Act - a penalty of $25,000 against Mr Palmer and a penalty of $12,500 against Mr Dixon.

2. By engaging in the conduct referred to in paras 15 to 19 and 21 to 24 of the amended statement of claim, each of Mr Palmer and Mr Dixon was directly or indirectly knowingly concerned in, and party to, the Tenderers and the AFCC making or arriving at the arrangement referred to in para 24 of the amended statement of claim, and each of Mr Palmer and Mr Dixon thereby contravened s 45 (2) (a) (ii) of the Act - a penalty of $25,000 against Mr Palmer and a penalty of $12,500 against Mr Dixon.

As can be seen from the orders which accompany these Reasons for Judgment, I have made orders in forms slightly different from the above.

REASONING:

Agreement between the Commission and Multiplex, Leightons, Mr Palmer and Mr Dixon on desirable amount of pecuniary penalties.

Of course, the amount of penalty is a matter for the Court.  But decisions in this area have consistently treated it as proper for the Court to be informed of, and treat as relevant, the parties' agreement as to an appropriate amount, and further, if the agreed amount is within the range of amounts which the Court would have had in mind ordering in any event, for the Court to make an order for payment of the agreed amount: see Trade Practices Commission v Allied Mills
Industries Pty Ltd (No 5) (1981) 60 FLR 38 (FCA/Sheppard J) at 41; Commerce Commission v New Zealand Milk Corporation Ltd [1994] 2 NZLR 730 (HC/FC); Trade Practices Commission v Hymix Industries Pty Ltd (1995) ATPR 41-369 (FCA/Lockhart J); and see (1995) 69 ALJ 243.

Matters relevant to the quantum of pecuniary penalty
The passage from s 76 quoted earlier requires the Court to have regard "to all relevant matters" including those specified.  In Trade Practices Commission v CSR Limited (1991) ATPR 41-076 at 52,152-52,153, French J listed nine matters to which the Court will have regard in its assessment of "a penalty of appropriate deterrent value" of which the first three are mentioned in s 76:

1. The nature and extent of the contravening conduct.

1. The amount of loss or damage caused.

1. The circumstances in which the conduct took place.

1. The size of the contravening company.

1. The degree of power it has, as evidenced by its market share and ease of entry into the market.

1. The deliberateness of the contravention and the period over which it extended.

1. Whether the contravention arose out of the conduct of senior management or at a lower level.

1. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

2. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention."

Although useful as reminders, statements of factors likely to be found relevant cannot be exhaustive. 

General
The facts of the alleged contraventions by Multiplex, Leightons, Palmer and Dixon were not proved before me by evidence.  However, the hearing proceeded on the basis of this joint statement by the Commission and those respondents:

"By the withdrawal of their defences, each of the respondents admits the allegations made in the Commission's pleading."

The arrangements or understandings pleaded are of a serious nature.  They involved the payment by the successful Tenderer (in the event, Hollands) of a Special Fee of no less than $1,000,000 to the AFCC, and payment of UTFs totalling no less than $2,250,000 to the unsuccessful Tenderers (in the event, Concretes, Multiplex and Leightons).  The inference is that all four tenders submitted were $3,250,000 more than what they would have been but for the arrangements or understandings.  This was, of course, a gross imposition on the Commonwealth.  The corruption of market forces to the detriment of the Commonwealth and the public deserves strong condemnation. 
Section 45 (2) (a) (ii) prohibits the making of certain contracts, arrangements and understandings: other pleaded acts of Multiplex and Leightons said to contravene s 45 are the implementation of the Special Fee agreement and the UTFs agreement. The amended statement of claim also pleads that by its conduct in all the circumstances, Multiplex and Leightons made false representations of various kinds in contravention of ss 53 and 55A of the Act. As well, it is pleaded that each of Multiplex and Leightons was knowingly involved in the contraventions by the AFCC and the other Tenderers.

Clearly, it is possible, on the pleaded facts, to find many more than the two contraventions constituted by the making of the Special Fee agreement and the UTFs agreement.  Indeed, the amended statement of claim pleads numerous contraventions by Multiplex and Leightons, counting, for example, each dispatch of an invoice by each of Multiplex and Leightons as giving rise to a separate contravention.

Of course, if the same conduct constitutes two or more contraventions, not more than one penalty may be imposed: sub-s 76 (3) of the Act.

I think that the approach taken in the joint submission quoted earlier is an appropriate one.  I also accept the relevance of the factors there mentioned.  The suggested penalties totalling $500,000 for each of Multiplex and Leightons are within the range that I would have contemplated imposing.  The penalties suggested are the maxima for two contraventions by a corporation.  As well, I am invited to order that each of Multiplex and Leightons pay $75,000 towards the Commission's costs.

I do not lose sight of the fact that at least some of the other pleaded conduct of Multiplex and Leightons contravened other provisions of the Act and that if these additional contraventions were to be separately taken into account, the sum of $500,000 would be a smaller proportion of the aggregate of the maximum penalties which I could impose on each of those companies. But there are different legitimate ways of viewing the pleaded conduct. All of it must be taken into account and it must be looked at as a whole. If the overall conduct of each company were to be regarded as constituting, say, four contraventions rather than two, it would, in my opinion, be right to regard something less than the maximum penalties for four contraventions ($1,000,000) as appropriate.

There were two focal points of the collusive arrangement here: the Special Fee agreement and the UTFs agreement.  In my opinion it is an appropriate approach to identify two contraventions, one related to each agreement, and to impose the maximum penalty for the two.  In the result, a penalty of $500,000 will be imposed on Multiplex and a penalty of $500,000 on Leightons (an aggregate of $1,000,000 for both companies).

In relation to the individual respondents with whom these Reasons for Judgment are concerned, Mr Palmer and Mr Dixon, much of what I have already said is relevant.  I accept that an appropriate starting point in their cases is to consider imposing a penalty equal to 50% of the maximum penalty in respect of two contraventions.  The resultant two amounts of $25,000 (totalling $50,000) are the amounts of the penalties imposed on Mr Duff on 5 May 1995.   However, I also accept that the special circumstances of Mr Dixon's case warrant the imposition of a lower level of penalty.  If I had been approaching the matter without knowing of the parties' concurrence in a penalty of $12,500, I may well, on the basis of nothing more than the joint statement, have imposed a penalty marginally higher than that amount in his case. But certainly $12,500 is within the region of the amount of penalty which I would have considered imposing and I may well have imposed that very amount.  In the circumstances I think it appropriate to impose penalties as sought against the individual respondents.

CONCLUSION:

Subject to minor formal amendments, I propose to make the declarations and orders, and note the agreements, as jointly suggested by the Commission, Multiplex, Leightons, Mr Palmer and Mr Dixon.  This will involve a payment by each of Multiplex and Leightons of $500,000 as pecuniary penalties and of $75,000 towards the Commissioner's costs.  It will involve a payment by Mr Palmer of $50,000 and a payment by Mr Dixon of $25,000.  As well, there will be declaratory and injunctive relief against all four respondents.  In arriving at the penalties I have taken into account all contraventions pleaded in the amended statement of claim.

I certify that this and the preceding 20 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:            8 September 1995

Heard:         1 September 1995

Place:         Sydney

Decision:      8 September 1995

Appearances:     Mr C A Sweeney QC with Mr P Clay of counsel instructed by the Australian Government Solicitor appeared for the applicant.

Mr C Porter QC and Mr P Whitford of counsel instructed by Freehill Hollingdale & Page solicitors appeared for the 5th respondent, Multiplex Constructions Pty Ltd and the 6th respondent Geoffrey Thomas Palmer.

Mr C P Comans of counsel instructed by Robin Maxam solicitor appeared for the 7th respondent, Leighton Contractors Pty Ltd.

Mr I E Davidson of counsel instructed by Dunhill Madden Butler solicitors appeared for the 8th respondent, Leonard Dixon.