Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd & Ors [1997] FCA 469 (19 May 1997)

CATCHWORDS

PRACTICE AND PROCEDURE - delay - Court goal of disposing of 98 per cent of cases within 18 months - whether case exceptional - further directions

TRADE PRACTICES - strikeout application - collusive tendering arrangement - whether sufficient allegation of persons constituting the directing mind and will of the company - extent to which market definition to be pleaded - sufficiency of pleading as to conduct and intention of individual respondents - whether Act prohibits aiding and abetting an attempted contravention

Trade Practices Act 1974 (Cth) ss 4D(1), 45(2) and (3), 45A(1), and 76(1)(b),(c) and (d)

Beach Petroleum NL v Johnson (1991) 105 ALR 456

Bruce v Odhams Press Ltd [1936] 1 KB 697

Cain v Doyle [1946] HCA 38; (1946) 72 CLR 409

In Re Supply of Readymixed Concrete (No. 2) [1995] 1 AC 456

Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563

Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705

Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500

News Ltd v Australian Rugby Football League Ltd [1996] FCA 1256; (1996) 139 ALR 193

Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153

The Lady Gwendolen [1965] P 294

Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 238; (1984) 55 ALR 527

Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719

Walsh v Sainsbury [1925] HCA 28; (1925) 36 CLR 464

Australian Competition & Consumer Commission -v- J McPhee & Son (Australia) Pty Ltd & Ors

(No. VG 948 of 1995)

Judge: Heerey J

Date: 19 May 1997

Place: Melbourne

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No. VG 948 of 1995

GENERAL DIVISION

B E T W E E N:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION

Applicant

-and -

J McPHEE & SON (AUSTRALIA) PTY LTD

First Respondent

and

RICHARD FORDE

Second Respondent

and

DOUGLAS MORTON

Third Respondent

and

DAVID CLARKE

Fourth Respondent

and

CRAIG HOLLAND

Fifth Respondent

and

GUY WEBB

Sixth Respondent

JUDGE: Heerey J

DATE: 19 May 1997

PLACE: Melbourne

MINUTES OF ORDER

The Court orders that:

1. Paragraphs 9, 10, 25(a), 27(a), 29(a) and 31(a) of the further amended statement of claim be struck out.

2. The applicant have liberty to replead paras 9 and 10, together with any consequential amendments, by filing and serving a further amended statement of claim within seven days.

3. Otherwise the first respondent's notice of motion dated 28 June 1996 and the second to sixth respondents' notice of motion dated 19 March 1997 are dismissed.

4. The parties have liberty to file written submissions as to costs within seven days.

5. The summons for directions is adjourned to 9.30 am on 30 May 1997. On this day all parties should be prepared to make submissions as to further directions, including the fixing of a date for trial.

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

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No. VG 948 of 1995

GENERAL DIVISION

B E T W E E N:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION

Applicant

-and -

J McPHEE & SON (AUSTRALIA) PTY LTD

First Respondent

and

RICHARD FORDE

Second Respondent

and

DOUGLAS MORTON

Third Respondent

and

DAVID CLARKE

Fourth Respondent

and

CRAIG HOLLAND

Fifth Respondent

and

GUY WEBB

Sixth Respondent

JUDGE: Heerey J

DATE: 19 May 1997

PLACE: Melbourne

REASONS FOR JUDGMENT

In this proceeding the applicant (ACCC) seeks pecuniary penalties and injunctive relief against the respondents for contraventions of Part IV and Part VI of the Trade Practices Act 1974 (Cth) (the Act). The ACCC alleges that the first respondent (McPhee):

(a) attempted to make an arrangement or reach an understanding with Multi Group Distribution Services Pty Ltd (which trades as DFE and to which I shall refer by that name) in relation to express freight transportation services provided by McPhee to two of its customers, Just Jeans and Jay Jay's (these customers are apparently related; future references to Just Jeans are intended to comprehend Jay Jay's as well);

(b) entered into an arrangement or understanding with DFE in relation to express freight transportation services provided by McPhee to another of its customers, ACI Florapak, and gave effect to that arrangement or understanding.

The ACCC alleges that each provision of the attempted arrangement or understanding in relation to Just Jeans was an exclusionary provision (s 45(2)(a)(i) and s 4D) and was also a price-fixing arrangement (s 45(2)(a)(ii) and s 45A). Substantially the same allegations are made in respect of the arrangement or understanding with ACI Florapak, except that in this case a concluded arrangement or understanding was reached and DFE and McPhee gave effect to it (s 45(2)(b)(i) and (ii).

The gist of both the Just Jeans and ACI Florapak arrangements and understandings is alleged to be an agreement that DFE would submit a quote to the particular customer which was not less than McPhee's quote and thus ensure the customer stayed with McPhee.

The other respondents (collectively "the individual respondents") are: the second respondent, Mr Richard Forde, who was a Director of McPhee; the third respondent, Mr Douglas Morton, a Manager; the fourth respondent, Mr David Clarke, a Sales Manager; the fifth respondent, Mr Craig Holland, a General Manager and the sixth respondent, Mr Guy Webb, a Manager. It is alleged the second to fifth respondents aided and abetted the attempted contravention in the case of Just Jeans and attempted to induce DFE to contravene the Act. Mr Webb is alleged to have been knowingly concerned in the ACI Florapak contravention, having aided and abetted McPhee and/or DFE to engage in that contravention and induced DFE to engage in it.

McPhee and the individual respondents have brought applications to strike out the ACCC's further amended statement of claim dated 12 August 1996. Order 11, r 16 and O 20, r 2(1) are relied upon.

Further Amended Statement of Claim

Paragraphs 1 to 8 describe the parties. In the case of the individual respondents (paras 4 to 8) it is alleged each was employed by McPhee in the capacity already mentioned and that he "acted on behalf of McPhee in relation to the matters hereinafter alleged as its servant or agent within the scope of his actual or apparent authority". In the case of the third, fourth and fifth respondents there is the alternative allegation that he acted at the direction or with the consent of Mr Forde and that the giving of such direction or consent was within the latter's apparent authority.

Paragraphs 9 and 10 describe the market for express freight transportation services. These paragraphs will be considered in more detail at a later stage.

Paragraph 11 alleges that during the period August 1994 to August 1995 McPhee and DFE were engaged in the business of supplying express freight transportation services within Australia, were in close competition with each other in relation to the provision of such services, and were competitive with each other within the meaning of s 4D(1) of the Act. Paragraph 11A alleges that in or about May - June 1995 DFE was the South Australian country distributor of McPhee, that McPhee was the distributor of DFE in the Adelaide Hills and the areas just north of Adelaide, and McPhee was the distributor of DFE in the Gosford central coast region of New South Wales. Particulars sub-joined to that paragraph allege details of a commercial relationship between DFE and McPhee going back to 1974.

Paragraph 12 alleges that in or about May - June 1995 McPhee attempted to make an arrangement or reach an understanding with DFE in relation to express freight transportation services provided by McPhee to Just Jeans containing the provisions that DFE would not compete on rates for those two customers, that if requested to quote, DFE would submit a quotation no less than McPhee's, and that McPhee would supply DFE details of the rates it charged to Just Jeans. The lengthy particulars sub-joined to para 12 centre around a meeting which occurred on the afternoon of 16 May 1995 between the individual respondents Forde, Clarke, Holland and Morton on behalf of McPhee and Messrs John Young, Gordon Wilson and Bryan Fitt on behalf of DFE. This meeting took place at McPhee's premises on the initiative of Mr Forde. The particulars include statements in direct speech attributed to various of the participants at the meeting. The most important of these include a reference by Mr Clarke to McPhee being

hurt by the small companies who are being silly on price.

Mr Forde said that

McPhee wanted to get together just to reaffirm the position of our two companies.

Mr Clarke said:

When we walk into DFE accounts we quote, but we know what to quote.

Mr Young responded by saying

We say quite openly early in a conversation with a customer who is asking us to quote against McPhee that we have a commercial relationship with McPhee ... and we would therefore withdraw from a quoting process if placed in this situation.

Mr Forde said that Just Jeans

will be contacting you [ie DFE] as they have decided to go to the market place. They will also be contacting IPEC.

At about this stage Mr Holland said:

We had better turn the tape recorder off.

Mr Morton said:

We don't really see IPEC as a serious contender and I believe that Just Jeans thinks that way as well. You will definitely be approached by Just Jeans to quote and we would like you to quote.

Mr Holland said:

It is important for you to quote.

Mr Morton said:

We would like you to quote.

On 16 May Just Jeans issued a tender to DFE and IPEC for the provision of express freight transportation services. On the following day Mr Holland rang Mr Bates, the Deputy Managing Director of DFE, and told him that McPhee was trying to get an increase in rates from Just Jeans and that McPhee wanted DFE to quote. On either that day or the next Mr Morton telephoned Mr Young and gave him details of the rates charged by McPhee to Just Jeans and Jay Jay's and said words to the effect

At 250 to the metre you would need to be around 25 cents.

It is alleged that this would be understood as a reference to 25 cents per kilogram from Melbourne to Sydney on the basis of 250 kilograms to the cubic metre. Prior to the 16 May meeting McPhee had submitted to Just Jeans a rate of 22 cents per kilogram.

Paragraph 12A(a) alleges that Mr Forde

intended on behalf of McPhee to make the said arrangement or reach the said understanding with DFE.

Particulars are given in which it is said that the intent is to be inferred from the fact that Mr Forde convened the meeting of 16 May. The particulars go on to summarise Mr Forde's participation in the meeting. Sub-paragraphs (b), (c) and (d) of para 12A make similar allegations in respect of Messrs Morton, Clarke and Holland respectively.

Paragraph 12B alleges that by reason of the matters alleged in paras 4, 5, 6, 7 and 12A each of the intentions of the second to fifth respondents "is to be aggregated and imputed to McPhee" and that accordingly, at the time of the making of the attempt referred to in para 12, McPhee intended to so make the arrangement or reach the understanding with DFE referred to in that paragraph.

Paragraph 13 alleges that each of the provisions of the attempted arrangement or undertaking referred to in para 12 had the purpose of: (a) preventing, restricting or limiting the supply of express freight transportation services by DFE to Just Jeans, and (b) limiting Just Jeans to acquiring such services from McPhee, and was thereby an exclusionary provision within the meaning of s 4D(1)(b)(i) and/or (ii) of the Act. Paragraph 14 alleges that each of the provisions of the attempted arrangement or understanding had the purpose or was likely to have the effect of fixing, controlling or maintaining prices for services to be supplied by McPhee or DFE to Just Jeans and was therefore deemed pursuant to s 45A to have or to be likely to have the effect of substantially lessening competition. Particulars given state that the purpose of McPhee or the likely effect is to be inferred from the matters referred to in paras 12, 12A, 12B and 13.

Paragraphs 15 to 18 deal with the ACI Florapak allegation. Paragraph 15 alleges that in or about November 1994 McPhee and DFE made and/or entered into an arrangement or understanding with each other in relation to express freight transportation services provided by McPhee to ACI Florapak. The alleged provisions of such arrangement or understanding are substantially the same as those of the attempted arrangement or understanding in relation to Just Jeans referred to in para 12. The particulars include the following allegations. On the initiative of the sixth respondent Mr Webb, a meeting took place about 5.15 pm on 14 or 15 November 1994 between Mr Webb and Mr Peter Jolly of DFE at the Traralgon Football Club Social Rooms. Mr Webb asked Mr Jolly not to take away the ACI Florapak account from McPhee, as it was McPhee's major account in Gippsland, and to cover McPhee's rates. He said he would on the following day give Mr Jolly the rates charged by McPhee to Florapak. The next morning Mr Jolly met Mr Webb at the McPhee transport depot. Mr Jolly asked for McPhee's rates charged to ACI Florapak and Mr Webb gave him those rates. Mr Jolly subsequently provided a quote to ACI Florapak which in relation to the main volume rates, being Sydney and Adelaide, was a cent or two higher than the McPhee rates provided by Mr Webb.

Paragraph 15A(a) alleges that Mr Webb intended on behalf of McPhee to make the arrangement or understanding. That intent, it is said, is to be inferred from Mr Webb's conduct. By para 15A(b) it is alleged that by reason of the matters in paras 8 and 15A(a) the intention of Mr Webb is to be imputed to McPhee. Paragraph 16 and 17 are pleas respectively of exclusionary provisions under s 4D(b)(i) and (ii) and price-fixing under s 45A which mirror paras 13 and 14.

Paragraphs 19 to 34 allege the various ways in which the previously pleaded conduct is said to have contravened the Act. Paragraph 19 alleges that the attempted Just Jeans arrangement or understanding, if made, would have constituted a contravention of: (a) s 45(2)(a)(i) because it contained exclusionary provisions, and (b) of s 45(2)(a)(ii) by reason of s 45A. Paragraph 20 alleges that McPhee attempted to induce DFE to contravene s 45(2)(a)(i) and (ii). Further, so para 22 alleges, the giving effect by McPhee to the ACI Florapak arrangement or understanding contravened s 45(2)(b). Paragraph 23 alleges that McPhee induced or attempted to induce DFE to contravene s 45(2)(a)(i) and (ii) and s 45(2)(b).

Paragraph 24 alleges in respect of Mr Forde that he convened the meeting of 16 May 1995 for the purpose of discussing the Just Jeans and Jay Jay's account, first raised that account at the meeting, agreed with and acquiesced in what was said by Messrs Clarke, Morton and Holland at the meeting, intended that McPhee and DFE enter into an arrangement or understanding to the effect as set out in para 12A(a), and on 28 June 1995 rang Mr Young and expressed concern about the manner in which DFE was tendering for Just Jeans' business. By engaging in such conduct, Mr Forde attempted to induce DFE to enter into the arrangement or understanding. Paragraph 25 alleges that by engaging in the conduct referred to in para 24 Mr Forde (a) aided, abetted counselled or procured McPhee and/or DFE to engage in the attempted contraventions referred to in paras 19 and 20, and which was conduct of the kind referred to in s 76(1)(c) and s 80(1)(c), and (b) attempted to induce DFE to contravene s 45(2)(a)(i) and (ii), which was conduct of the kind referred to in s 76(1)(d) and s 80(1)(d).

Paragraphs 26 to 32 make similar allegations in relation to each of the third to fifth respondents. Paragraph 33 alleges that Mr Webb (a) was knowingly concerned in the ACI Florapak contravention, (b) aided and abetted McPhee and/or DFE to engage in that contravention and (c) induced DFE to contravene s 45(2)(a)(i) and (ii).

Paragraph 34 alleges a threat and intention by the respondents, unless restrained, to make further arrangements or understandings containing similar provisions to the Just Jeans and ACI Florapak arrangements.

McPhee's Arguments

Counsel for McPhee argued that the further amended statement of claim was defective in that:

(a) it did not plead the necessary elements of intention in relation to the attempted Just Jeans arrangement and understanding;

(b) there was need to plead more than a conclusion as to the relevant market, and

(c) the conduct pleaded as against the individual respondents was inadequate to constitute an attempt by McPhee.

Intention

Counsel argued, correctly in my view, that s 76(1)(b) requires the ACCC to establish an intention on the part of McPhee to contravene the relevant provisions of Part IV. Further, the intention must be that of a person or persons who constituted the "directing mind and will" of the company within the company law principles laid down by the House of Lords in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 and Tesco Supermarkets Ltd v Nattrass [1972] AC 153. Section 84(2) is of no assistance in this regard. Thus far McPhee's argument is supported by Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 at 737-740.

In developing this argument, counsel said that the further amended statement of claim did not disclose an allegation that any of the individual respondents was authorised by the board of McPhee or was a delegate of the board. At most, Mr Forde was a director and that in itself did not make him the "directing mind and will" of the company.

Counsel for the ACCC, while accepting the correctness of Tubemakers, advanced two arguments in support of the way the element of intention was pleaded against McPhee. The first was based on the decision of the High Court in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563. That case involved a common law action of deceit. A majority of the High Court (Brennan, Deane, Gaudron and McHugh JJ) held that the requisite state of mind of the defendant company could be established by the aggregation of the knowledge of several individuals. Speaking of an agent of the company, a Mr Cini, and one of its officers, a Mr Ryan, the majority said (at 582):

Their knowledge was the knowledge of Eurolynx, for they were the persons who were responsible for the initial negotiations and who had set the scene in which the representation had been made by the s 32 statement and the proffered contract of sale. As Bright J said in Brambles Holdings Ltd v Carey (1976) 15 SASR 270 at 279

"Always, when beliefs or opinions or states of mind are attributed to a company it is necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company. This process is often necessary in cases in which companies charged with offences such as conspiracy to defraud."

A division of function among officers of a corporation responsible for different aspects of the one transaction does not relieve the corporation from responsibility determined by reference to the knowledge possessed by each of them. (See Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 at 485; Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153 at 170.) Neither Cini nor Ryan was called to give evidence. It is erroneous to make a finding as to the company's intention or willingness to misrepresent the contractual arrangements with Swaeder without reference to the knowledge of Cini and Ryan.

Counsel for the McPhee sought to distinguish Eurolynx by arguing that it was concerned with the knowledge of the individuals concerned, as distinct from their intention. It would be open to McPhee to advance such an argument at trial, but it seems to me quite insufficient for a strikeout application. To say that a principle applies when one state of mind (knowledge) is to be established, but not another state of mind (intention), requires a subtle distinction, the validity of which is not immediately apparent to me. In any case, I note that the majority in Eurolynx specifically mention intention as well as knowledge and their citation of Brambles and Tesco shows that they were speaking in the context of the "directing mind and will" doctrine.

A second argument of counsel for the ACCC was based on the recent decision of the Privy Council in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500. The appellant had been prosecuted for breach of a New Zealand statute which required a shareholder in a listed company to give notice to the company once a certain level of shareholding had been reached. Of the two officers of the appellant who had the relevant knowledge, one was the Chief Investment Officer and the other its Senior Portfolio Manager. The appellant was convicted by the trial judge, Heron J. Appeals to the New Zealand Court of Appeal and the Privy Council were dismissed.

In my respectful opinion Meridian is a very important case because it stresses the importance of the construction of the statute, the breach of which is alleged to have been committed by a company. As Lord Hoffmann said (at 511) in delivering the advice of the Judicial Committee, "the question is one of construction rather than metaphysics". Speaking of the legislation in question and its policy which was

to compel, in fast-moving markets, the immediate disclosure of the identity of persons who become substantial security holders in public (companies)

his Lordship went on to say:

In the case of a corporate security holder, what rule should be implied as to the person whose knowledge for this purpose is to count as the knowledge of the company? Surely the person who, with the authority of the company, acquired the relevant interest. Otherwise the policy of the Act would be defeated. Companies would be able to allow employees to acquire interests on their behalf which made them substantial security holders but would not have to report them until the board or someone else in senior management got to know about it. This would put a premium on the board paying as little attention as possible to what its investment managers were doing.

The relevance of that reasoning to the present case will be obvious enough. Reference should also be made to In Re Supply of Readymixed Concrete (No. 2) [1995] 1 AC 456 and also The Lady Gwendolen [1965] P 294, discussed in Meridian, [1995] AC at 510-511.

I conclude that, for the purposes of this strikeout application, McPhee's arguments should not be accepted.

The Market

Paragraphs 9 and 10 of the further amended statement of claim extend over three and a half pages, mostly single-spaced. They describe the market which is said to have existed in the period August 1994 to August 1995 for the supply of express freight transportation services to members of the public in Australia. Amongst other things, the "major suppliers" of such services are said to have been TNT Limited (including McPhee), Mayne Nickless Ltd (including IPEC), DFE, AirRoad, Cope and Australian Air Express. There is a description of how this market operated, and an allegation that no other service of any kind was readily substitutable on the demand side or the supply side. There is detail of barriers to entry to the market and geographic limits.

McPhee, whose earlier complaints had resulted in paras 9 and 10 being in their present form, argued that the pleading was still defective because it was "conclusionary".

However, the problem with paras 9 and 10 in my opinion is not that they are insufficient, but that in their present form they are prolix, unnecessary and irrelevant and raise false issues which are likely to embarrass and delay the fair trial of this proceeding.

Section 45(2)(a)(ii) and (b)(ii) speak of a provision of a contract, arrangement or understanding which has the purpose or effect "of substantially lessening competition". Section 45A(1) provides:

45A. (1) Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or the proposed parties to the proposed contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other.

The concept of competition is defined in s 45(3) as follows:

(3) For the purposes of this section and section 45A, "competition", in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.

Thus competition relevantly means competition in any market in which the parties to the actual or proposed contract, arrangement or understanding are engaged. As long as the ACCC can establish that, in connection with the alleged arrangements or understandings, McPhee and DFE were competing in a market, it is not to the point that others may have been supplying the same services in that market, or that services other than express freight transportation services might have been provided, or that the geographical extent of the market might have been different from that pleaded. To illustrate the point, one might ask rhetorically what would it matter for the purposes of the present case if, after elaborate discovery and issue of many subpoenas, expensive expert evidence, and a trial lasting several weeks, if not months, it were proved that AirRoad and COPE were not participants in the alleged market, that some other firms not named in para 10 were participants, or that the alleged market did not cover the whole of Australia but only Victoria, South Australia and New South Wales?

In News Ltd v Australian Rugby Football League Ltd [1996] FCA 1256; (1996) 139 ALR 193 the Full Court was concerned with a claim that certain agreements made between the ARL and a number of clubs contained exclusionary provisions and thus contravened s 45(2)(a)(i). In that context the Full Court said (at 330):

The prohibition imposed by s 45 of the TP Act applies irrespective of the extent to which putative exclusionary provisions affect competition in a market. It is plain that the parliament regarded horizontal arrangements of an exclusionary character as having a necessary tendency to inhibit competition and that this was regarded as sufficient to proscribe the making of such arrangements.

Section 4D(2) of the TP Act is important. The subsection deems persons to be competitive with each other if they satisfy the specified tests. The Act prohibits the making or giving effect to exclusionary provision whether they do or do not have the purpose or the effect of substantially lessening competition. This is plain from the terms of s 45(1) and (2). The prohibition against making or giving effect to a provision of a contract that has the purpose, or would have or be likely to have the effect of substantially lessening competition is imposed by s 45(1)(b), (2)(a)(ii) and (2)(b)(ii). The definition of "competition" for the purposes of those provisions appears in s 45(3), in terms which require competition in a market. This contrasts with the prohibition against the making of or giving effect to exclusionary provisions. Hence it is not necessary to consider questions of market definition for s 4D purposes.

Since the Full Court was dealing with an exclusionary provisions claim, their Honours' remarks are directly in point for that aspect of the present case.

The present case is also concerned, as Rugby League was not, with an allegation of price-fixing. Reliance is placed on s 45A. In my respectful opinion, their Honours' contrasting of competition in a market, which is required by s 45(3) when s 45A applies, does not mean that in a case under s 45(2)(a)(ii) and (2)(b)(ii) exhaustive market definition, in the sense of pleading and proof of the full nature and extent of the market, is required. In his written submissions counsel for the ACCC argued:

In the ordinary course of establishing, say, a breach of the competition provisions in s 45 [sic, I think s 46 was intended] or s 47, it would be necessary to establish the identity of other players in the market, their position of power, any other arrangements which may impact on competition, alternate sources of supply, substitutable goods or services, the geographic parameter of the market, the barriers to entry etc. The per se provisions of ss 45A and 4D clearly avoid these issues by confining themselves to the nature of the arrangement between only the parties to the alleged conduct. [Emphasis in original]

I agree. In the present case, if it were established that McPhee and DFE were offering, or contemplating the offer of, the same services (express freight transportation services), to the same existing or potential customer (Just Jeans or ACI Florapak), it would be open to a Court to conclude that McPhee and DFE were in competition with (at least) each other in a market for the supply (at least) of such services.

Counsel for the ACCC did not oppose the striking out of paras 9 and 10 with liberty to replead. I will so order. The liberty will extend to such consequential amendments as may be necessary.

Pleading of Conduct of Individual Respondents

Counsel for McPhee argued that the particulars under para 12 were a "play script" and did not plead the required material facts, which he said should be "distilled". He said that if material allegations of fact were pleaded, they appeared only as particulars. It was a "rolled-up pleading".

As to this, I respectfully adopt what was said by von Doussa J in Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466. After referring to the well-known passage from the judgment of Scott LJ in Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713, his Honour said

A strict distinction between material facts and particulars has tended to become more obscured as the years have gone by. The tendency now is towards narrative pleading as there is a growing concern that pleadings according to traditional rules do not adequately make known to the court and to the parties the nature of the opposing cases in complex matters.

His Honour referred to the South Australian Supreme Court Rules and continued:

Technical objections raised to pleadings on the ground of alleged want of form will be received with less enthusiasm today than in times past. Nevertheless the pleadings, including particulars stated therein, must be adequate to disclose the case which the opposing party must meet at trial, and to disclose a reasonable cause of action.

In this case the particulars sub-joined to para 12 disclose considerable detail, particularly in respect of what was said at the meeting of 16 May 1995. Where the actual words used are not explicit, the particulars give the construction which the ACCC will argue they bore in the circumstances and which would have been understood by those present. The respondents cannot legitimately complain of any lack of knowledge of the case they have to meet. I am not satisfied that the fair trial of this proceeding necessitates the pleading of some intermediate level of allegation (which, apart from anything else, would be conclusionary) between the primary facts presently contained in the particulars sub-joined to para 12 and the substantive allegations.

Included in the written submissions of McPhee is a sentence by sentence analysis of what appears in the particulars, with each sentence taken in isolation and an argument put that it discloses no illegality. For example at the meeting Mr Forde is said to have asked Mr Young:

Are you making any dough?

The comment is made:

Why should he not ask this?

It is alleged Mr Forde said:

I wanted to get together just to reaffirm the position of our two companies.

And the comment is made:

Is it a reference to their commercial co-operation in which case there is nothing illegal?

In my respectful opinion this approach is quite unrealistic. The particulars sub-joined to para 12, have to be taken as a whole. That is the factual case the respondents have to meet. I am satisfied that it would be open to a Court to hold that, if proved, what was said amounted to an attempt as alleged.

Arguments of the Individual Respondents

As well as adopting the argument of counsel for McPhee, counsel for the individual respondents argued:

(a) Paragraphs 24 and 25 (a) do not disclose a contravention by Mr Forde because s 76(1)(c) does not prohibit aiding and abetting etc the attempted contravention of a provision of Part IV.

(b) There is no pleading that the individual respondents knew the relevant intention of each other respondent.

(c) Various pleading deficiencies.

Aiding and Abetting etc Attempted Contravention

I agree that s 76(1)(c) does not on its plain language extend to "aiding, abetting, counselling or procuring a person to contravene or attempt to contravene such a provision".

"Such a provision" means a provision of Part IV of the Act (see s 76(1)(a)). Attempting to contravene a provision of Part IV is not itself a contravention of Part IV. Attempts are proscribed by s 76(1)(b), which is in Part VI.

The ACCC cannot fall back on an amendment which would simply delete the reference to "or attempt to contravene". The ordinary rule of the criminal law is that a person cannot be convicted of aiding and abetting an offence unless that offence has been committed: Walsh v Sainsbury [1925] HCA 28; (1925) 36 CLR 464 at 477, Cain v Doyle [1946] HCA 38; (1946) 72 CLR 409 at 417. I do not think the contrary is reasonably arguable. Therefore para 25(a) will be struck out together with the corresponding allegations against the third, fourth and fifth respondents, namely paras 27(a), 29(a) and 31(a).

However, attempting to induce the contravention of a provision of Part IV stands on a different footing. Such an attempt is expressly proscribed by s 76(1)(d). As to the allegations of attempting to induce DFE to contravene s 45(2)(a)(i) and (ii), contrary to s 76(1)(d), I accept that in the case of an attempt there must be an intention to bring about the prohibited result, in this case DFE entering into the price-fixing arrangement or understanding: Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 238; (1984) 55 ALR 527 at 542. It seems to be open on the material pleaded for a Court to conclude that, in the case of Just Jeans, all the relevant individual respondents, acting as they did together in the one meeting, did intend to bring out that entire result. The position is even clearer in the case of ACI Florapak.

Knowledge of the Intention of Others

Counsel for the individual respondents argued that before any such respondent could be found guilty of a contravention it would have to be shown that he was aware of the intent of each other respondent. That knowledge should have been pleaded. To take the example of Mr Forde, it would have to be shown that he had knowledge, in respect of Mr Morton, of all Morton's conduct, of Morton's intention and Morton's knowledge of the essential elements in respect of each of the others. I take the latter to mean that Forde would have had to know that Morton knew of the knowledge of Forde himself and of Clarke and Holland. Likewise it is said Forde would have to have similar knowledge in respect of Clarke and Holland. And each of Clarke and Holland would have to have similar knowledge in respect of the others.

I am not persuaded, at least for the purposes of a strikeout application, that this argument is valid. Prima facie, it seems it would be only necessary to show that in respect of each individual respondent he engaged in the conduct alleged against him with the intention of inducing DFE to enter into the price-fixing arrangement or understanding. Bearing on that intention of course it would be his knowledge of what his fellow McPhee officers were saying and doing at the same time.

Various Pleading Deficiencies

I have read the detailed written submissions of counsel on behalf of the individual respondents. I am not satisfied that any of the complaints made are justified, or that the individual respondents are in any way prejudiced in their ability to meet the allegations made against them.

Further Progress of this Case

The ACCC's application was filed on 19 December 1995, that is to say 18 months ago. The final form of the statement of claim has still not been resolved.

The stated goal of this Court is that at least 98 per cent of cases be disposed of within 18 months from commencement: Federal Court of Australia Annual Report 1995-96, p 34. The present case, while undoubtedly serious and important, is not necessarily a complex one. The primary factual issues essentially involve one meeting in the case of Just Jeans and two in the case of ACI Florapak. I do not regard this case as exceptional, in the sense of falling within the 2 per cent of cases that require more than 18 months to resolve. It is typical of the general run of cases that the Court must deal with under Part IV of the Act, indeed less complex than many.

The delay thus far is unacceptable. Future directions will need to be framed with the objective of obtaining an early trial.

Orders

1. Paragraphs 9, 10, 25(a), 27(a), 29(a) and 31(a) of the further amended statement of claim be struck out.

2. The applicant have liberty to replead paras 9 and 10, together with any consequential amendments, by filing and serving a further amended statement of claim within seven days.

3. Otherwise McPhee's notice of motion dated 28 June 1996 and the individual respondents' notice of motion dated 19 March 1997 are dismissed.

4. The parties have liberty to file written submissions as to costs within seven days.

5. The summons for directions will be adjourned to 9.30 am on 30 May 1997. At this time the parties should be prepared to make submissions as to further directions, including the fixing of a date for trial.

I certify that this and the preceding twenty-four (24) pages are a true copy of the reasons for judgment of the Honourable Justice Heerey.

Dated: 19 May 1997

Associate

Appearances

Counsel for the applicant: J B R Beach

Solicitor for the applicant: Australian Government

Solicitor

Counsel for the first respondent: P R Hayes QC and I D

Martindale

Solicitor for the first Clayton Utz

respondent:

Counsel for the second to sixth N Lucarelli

respondents:

Solicitor for the second to Lander & Rogers

sixth respondents:

Date of hearing: 16 April 1997