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Federal Court of Australia |
Last Updated: 19 January 2000
Australian Competition & Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17
TRADE PRACTICES - claim that respondents made and gave effect to an arrangement containing an exclusionary provision - Trade Practices Act 1974 (Cth), ss 4D, 45(2) - sufficiency of evidence
PRACTICE AND PROCEDURE - submission of no case to answer - whether moving party must elect to call no evidence - function of judge in ruling on no case submission - whether no case submission should be upheld
Trade Practices Act 1974 (Cth), ss 4D, 45(2), 76, 80
Federal Court Rules, O 32, r 4(1); O 35, r 1
Judiciary Act 1903 (Cth), s 79
Supreme Court Rules (NSW), Pt 34, r 8
Rasomen Pty Ltd v Shell Company of Australia Ltd (1997) 75 FCR 216, followed
Protean (Holdings) Ltd (recs and mgrs appointed) v American Home Assurance Co [1985] VR 187, followed
Rasomen Pty Ltd v Shell Company of Australia Ltd (1996) 71 FCR 540, cited
Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1, cited
Trade Practices Commission v George Western Foods Ltd (No 2) (1980) 43 FLR 55, followed
Residues Treatment & Trading Co Ltd v Southern Resources Ltd (1989) 52 SASR 54, cited
Popovic v Tanasijevic (No 3) [1999] SASC 339, cited
The Union Bank of Australia Ltd v Puddy [1949] VLR 242, referred to
Trade Practices Commission v Nicholas Enterprises Pty Ltd [1978] ATPR 40-097, cited
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460, cited
Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286, cited
Trade Practices Commission v Email Ltd (1980) 43 FLR 383, cited
Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206, cited
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, followed
Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) (1979) 40 FLR 83, cited
Peter Williamson Pty Ltd v Capitol Motors Ltd (1982) 61 FLR 257, cited
Bradshaw v McEwans Pty Ltd (unreported, High Court, 27 April 1951), followed
Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352, cited
Nominal Defendant v Owens (1978) 22 ALR 128, cited
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, cited
AUSTRALIAN COMPETITION & CONSUMER COMMISSION v AMCOR PRINTING PAPERS GROUP LTD & ORS
NG 1245 OF 1998
SACKVILLE J
19 JANUARY 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
1. The application be dismissed against all respondents.
2. The parties file and serve written submissions on the question of costs.
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 |
JUDGE: |
SACKVILLE J |
DATE: |
19 JANUARY 2000 |
PLACE: |
SYDNEY |
The Course of the Proceedings
1 In these proceedings the applicant ("ACCC") seeks declarations, injunctions, pecuniary penalties and other relief against four respondents.
2 The ACCC alleges that the first respondent ("Amcor") and the second respondent ("Visy"), each of which is in the business of acquiring recyclable waste paper and cardboard, made an arrangement or arrived at an understanding containing an exclusionary provision, in contravention of s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) ("TP Act"). In substance, the ACCC's case is that the arrangement or understanding was made or arrived at in late July 1996 between the third respondent ("Mr Nott") on behalf of Amcor and the fourth respondent ("Mr Guthridge") on behalf of Visy. The arrangement or understanding is said to have included a provision that Amcor would cease attempting to make contracts with The Flagstaff Group Limited ("Flagstaff"), a supplier of recyclable waste paper and cardboard in the Illawarra region, and to withdraw an offer it had made to Flagstaff on 17 July 1996 to acquire the whole of Flagstaff's recyclable paper and cardboard over a five year period (the "Amcor Offer").
3 The case pleaded by the ACCC included a claim for relief against a fifth respondent ("Mr Roach"), Amcor's New South Wales Sales Manager at the relevant time. At the commencement of the trial, Mr Catterns QC (who appeared with Mr Kerr for the ACCC) sought and was granted leave on behalf of the ACCC to discontinue the proceedings against Mr Roach. The ACCC subsequently filed a second further amended statement of claim which excised the paragraphs pleading a claim for relief against Mr Roach. The only issue remaining as between the ACCC and Mr Roach is that of costs. At the request of the parties, the resolution of that issue has been deferred until after delivery of the present judgment.
4 The ACCC's case in chief against the four remaining respondents was completed on the afternoon of the first day of the trial. At that time, counsel for the respondents invited me to entertain a submission that the ACCC had failed to make out a case against any of the respondents. Mr Scerri QC (who appeared with Mr Tonking for Amcor and Mr Nott) and Mr Young QC (who appeared with Mr O'Bryan for Visy and Mr Guthridge) submitted that their respective clients should be permitted to make the "no case" submission without being forced to make an election as to whether or not they would call any evidence.
5 Mr Catterns submitted, and counsel for the respondents did not dispute, that the appropriate course was that I should consider first whether the respondents' no case submission should be entertained without the respondents being forced to elect not to call evidence. On this approach, if I formed the view that the no case submission should be entertained only if the respondents elected to call no evidence, I would not deal with that submission unless they so elected. On the other hand, if I formed the view that the respondents should not be required to elect, I would proceed to hear argument on and to determine the no case submission.
6 I heard argument on the first issue. In the course of the respondents' arguments on that issue, their counsel foreshadowed the submissions they intended to make on the no case submission itself. That was done (so I was told) partly to explain what would be involved in addressing the no case submission and partly so that I could (if I thought it relevant to the issue of election) assess the strength of the no case submissions they wished to make.
7 After hearing argument, I delivered an ex tempore judgment in which I ruled that I was prepared to consider the respondents' no case submission without requiring them to elect whether or not to call evidence. I informed the parties that I would provide more detailed written reasons for the ruling in due course. The written reasons are included in this judgment (see pars 57-73).
8 Having made the ruling, I advised the parties that I would proceed forthwith to hear argument on the no case submission. Mr Scerri and Mr Young simply relied on the submissions foreshadowed by them in relation to the election issue. Mr Catterns then responded to these submissions.
9 At the conclusion of the argument, I stated that I had formed the clear view that the no case submissions should be upheld and that I would make orders at an appropriate time dismissing the application. I indicated that I would provide a written judgment setting out my reasons. This judgment contains my reasons for upholding the respondents' no case submissions.
The Legislation
10 Section 45 of the TP Act is in Part IV of the Act. Section 45(2), insofar as relevant, provides as follows:
"(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
...
(b) give effect to a provision of a contract, arrangement or understanding... if that provision:
(i) is an exclusionary provision; or
...".
11 The expression "exclusionary provision" is defined in s 4D(1) of the TP Act as follows:
"(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and
(b) the provision has the purpose of preventing, restricting or limiting:
(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or
(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate."
12 Section 76 of the TP Act provides for pecuniary penalties. Section 76(1) is as follows:
"(1) If the Court is satisfied that a person:(a) has contravened a provision of Part IV;
...
(e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
...
the Court may order the person to pay the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters...".
The maximum pecuniary penalty that may be imposed on a body corporate by reason of s 76(1) is $10,000,000, while the maximum penalty that may be imposed on an individual is $500,000: s 76(1A)(b), (1B).
13 Section 80 of the TP Act empowers the Court, if satisfied that a person has engaged in conduct that constitutes a contravention of Part IV of the Act, or has been knowingly concerned in, or party to, the contravention, to grant an injunction in such terms as it thinks appropriate.
The Pleadings
14 The case pleaded by the ACCC in its second further amended statement of claim can be summarised as follows.
15 At all times during 1996, Amcor and Visy were competitive with each other in relation to the acquisition of recyclable waste paper in the Illawarra region of New South Wales (par 5). Flagstaff during the same period conducted a business which included supplying recyclable waste paper to interested purchasers (par 10).
16 Since about February 1995, Flagstaff had supplied Shoalhaven Whites (a good quality waste paper) to Amcor pursuant to a letter of agreement made in February 1995 (par 11). As at April 1996, Flagstaff supplied most of its remaining recyclable waste paper to Visy, while most of the recyclable waste paper acquired by Visy in the Illawarra region was acquired from Flagstaff (par 12).
17 In April 1996, Visy advertised seeking expressions of interest from parties interested in establishing and managing a cardboard/paper recycling agency for Visy in the Illawarra district (par 14). Flagstaff responded to the advertisement (par 15).
18 On 17 July 1996, Amcor made an offer in writing to acquire the whole of Flagstaff's recyclable paper and cardboard over a five year period, subject to certain rates and other terms set out in a draft Letter of Agreement (that is, the Amcor Offer) (par 16). Flagstaff then authorised Mr Peoples to seek an offer from Visy on terms superior to those offered by Amcor (par 18).
19 A meeting took place on 25 July 1996 between Mr Peoples and representatives of Visy, including Mr Guthridge, Visy's National General Manager (par 19). During the meeting, Mr Guthridge obtained a copy of the draft Amcor Letter of Agreement from Mr Peoples and faxed a copy to Mr Nott, then Amcor's General Manager, Export and Trading. Mr Guthridge also spoke during the meeting to Mr Nott on one or more occasions
"for the purpose of inducing [Amcor] to make an arrangement or arrive at an understanding that [Amcor] would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the [Amcor] Offer". (par 20)
20 The key allegation is contained in par 21 of the statement of claim:
"During or shortly after the meeting [Amcor] and Visy made an arrangement or arrived at an understanding which contained a provision that [Amcor] would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the [Amcor] Offer.
Particulars
The arrangement or understanding was made or arrived at between Mr Nott and Mr Guthridge during communications made during or shortly after the meeting including:
(i) the facsimile of the draft Letter of Agreement by Mr Guthridge to Mr Nott
(ii) the 1 or more telephone conversations between Mr Guthridge and Mr Nott during the meeting
(iii) other occasions of which the Applicant is presently unaware."
21 This provision (so it alleged) had the purpose of preventing, restricting or limiting the acquisition of goods, namely recyclable waste paper, from a particular person (Flagstaff) by Amcor (par 22). The provision was therefore an exclusionary provision within s 4D(1) of the TP Act (par 23).
22 Between 25 July and 9 August 1996, Mr Nott instructed staff of Amcor to cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and to withdraw the Amcor Offer (par 27). Mr Nott gave the instruction for the purpose of giving effect to the exclusionary provision (par 27A). After 25 July 1996, in accordance with Mr Nott's instruction, Amcor ceased attempting to make contracts with Flagstaff to acquire recyclable waste paper (par 28). By a letter dated 9 August 1996 Amcor, in accordance with Mr Nott's instructions, withdrew the Amcor Offer (par 29).
23 The ACCC alleges that
(i) by making the arrangement or arriving at the understanding between them Amcor and Visy contravened s 45(2)(a)(i) of the TP Act (par 24);
(ii) Messrs Nott and Guthridge were each directly or indirectly knowingly concerned in, or party to, the contravention by Amcor and Visy of s 45(2)(a)(i) of the TP Act, within the meaning of s 76(1)(e) and s 80(1)(e) of the Act (pars 25, 26);
(iii) by giving effect to the exclusionary provision Amcor contravened s 45(2)(b)(i) of the TP Act (par 31); and
(iv) Mr Nott was directly or indirectly knowingly concerned in, or party to, the contravention by Amcor of s 45(2)(b)(i) of the TP Act, within the meaning of s 76(1)(e) and s 80(1)(e) of the Act (par 32).
The Evidence
24 Mr Catterns read five affidavits in support of the ACCC's case. These were made by
* Mr Gandy, the Chief Executive Officer of Flagstaff (who made two affidavits);
* Mr Clarke, at the relevant time the Group Marketing Manager of Flagstaff;
* Mr Peoples, a former employee of Amcor who, at the relevant time, provided (through a private company) consultancy services to the waste paper industry and bought and sold recyclable waste paper; and
* Mr McKay, an officer of Telstra Corporation Ltd.
In addition, Mr Catterns tendered some documentary evidence.
25 Mr McKay gave uncontested evidence that telephone records showed that two telephone calls were made from Mr Guthridge's mobile telephone to Mr Nott's telephone number at Amcor in Melbourne. The first call was made from Fairfield in Sydney at 12:22 pm on 25 July 1996 and lasted for forty-two seconds. The second was made from Brisbane at 12:49 pm on 26 July 1996 and lasted for four minutes and fourteen seconds.
26 Messrs Gandy, Clarke and Peoples were cross-examined by the respondents' counsel, although not at any length. It is fair to say that there was no attempt to impugn the credit of any of the three witnesses. With one exception, their evidence was in substance consistent. It follows that, subject to that qualification, on the evidence adduced in the ACCC's case the primary facts were not in dispute. This of course is not to say that the respondents would not have disputed or explained some aspects of the evidence had they gone into evidence themselves. The important point for present purposes is that an assessment of the ACCC's case gives rise to no issue of credit and, subject to the one exception to which I have referred, no need to resolve any conflict in the evidence.
27 The exception is that Messrs Gandy and Clarke gave somewhat different accounts as to the likelihood that Flagstaff would have been prepared to accept an exclusive arrangement of the kind envisaged by the Amcor Offer. Mr Clarke's account was that Flagstaff had a firm policy of not entering exclusive arrangements with a single purchaser of recyclable paper and cardboard; that the Amcor Offer had been discussed with Mr Gandy (to whom Mr Clarke reported); and that there was no prospect that the offer would be accepted. Mr Gandy, for his part, accepted that Flagstaff considered it not particularly prudent to put all its eggs in one basket and that one reason it had not accepted the Amcor Offer by 9 August 1996 (the date Amcor withdrew it) was its wariness about supplying only a single purchaser of recyclable paper and cardboard. However, he thought that Flagstaff might still have been prepared, subject to Board approval, to accept an exclusive offer from Amcor, depending on the terms of the offer. It is not in dispute that none of the reservations held by Flagstaff about the Amcor Offer was communicated to Amcor.
28 For the purposes of the election issue and the no case submission it is not necessary to resolve this apparent conflict between Mr Clarke and Mr Gandy on what is essentially a peripheral issue. I have approached these questions on the assumption that Mr Gandy's account (the version arguably more favourable to the ACCC) is more likely to be accurate. This is not necessarily the view I would have taken had it become necessary to resolve the factual question in the light of all the evidence.
The Facts
29 There are basically four categories of waste paper: high grade white paper (used as a substitute for virgin pulp when impurities such as ink are removed); mixed grade papers; cardboard and packaging; and newsprint. Within each category there are sub-categories.
30 Throughout 1996, Visy and Amcor were in competition to secure supplies of recyclable waste paper from the Illawarra region and elsewhere in Australia. The individual respondents at this time occupied the respective positions identified in the pleadings.
31 During the seven months or so preceding the relevant events, Visy was concerned to reduce the cost of securing recyclable waste paper for its operations. It was also concerned about the activities of Amcor, especially in taking over Visy's sources of supply and in quoting what Visy regarded as "very high rates" to suppliers or potential suppliers of waste paper. The concerns were expressed in a number of internal Visy memoranda written during the period 19 December 1995 to 19 July 1996. A memorandum of 12 July 1996 from Mr Gerard, Visy's Procurement Manager, to Mr Guthridge referred to Amcor's "invasions" and its "active quoting `OVER THE TOP' prices". A memorandum of 19 July 1996 from Mr Gerard to Mr Guthridge referred to Amcor "hamper[ing] our agenda with aggressive pricing on our clients". The memorandum identified accounts which Visy "were unable to reduce due to [Amcor's] pricing".
32 From about 1992, Flagstaff had carried on operations in the Illawarra area collecting waste paper and cardboard and packaging and on-selling the material collected. In about mid-1996 Flagstaff was the supplier of about fifty per cent of the recyclable paper and cardboard sourced from the Wollongong area. At that time, Flagstaff sales of waste paper and cardboard on a monthly basis were as follows:
(i) Approximately thirty tonnes of "Stainless White" was sold to Amcor at a price of $300 per tonne (that is, $9,000 per month). Amcor referred to this category of waste paper as "Shoalhaven white" or "Shoalhaven grade", apparently because it was processed at Amcor's Shoalhaven mill which had facilities for so-called de-inking. The paper came from BHP's stainless steel mill at Wollongong.
(ii) Approximately forty-five tonnes of "Mixed White" (sometimes called "P3" grade) was sold to a company called Tredex Recycling Pty Ltd ("Tredex") at $250 per tonne (that is, $11,250 per month). Tredex paid Flagstaff directly for the P3 grade paper, but Mr Peoples appears to have arranged the sales and to have received a margin or fee for doing so. Tredex exported the recycled paper acquired from Flagstaff.
(iii) Approximately sixty-four tonnes of waste cardboard was sold to Visy at $70 per tonne after Flagstaff paid $15 per tonne transportation costs (that is, $4,480 per month).
33 Flagstaff sold the Stainless White to Amcor pursuant to a written agreement, effective from 3 February 1995. The agreement was expressed to be with Amcor (then known as Australian Paper Limited) which was said to be acting as agent for its parent company, Amcor Ltd. The agreement provided for Flagstaff to supply "Shoalhaven Grade" waste paper to be collected from the Flagstaff depot. The agreement did not specify the quantity to be supplied, although the language is consistent with Amcor being obliged to take all waste paper of the specified description that Flagstaff chose to supply. Mr Gandy's understanding, which was also consistent with the language, was that Flagstaff was free to sell this grade of waste paper to other purchasers. In fact, Flagstaff sold Shoalhaven White only to Amcor.
34 Flagstaff had supplied waste cardboard to Visy on a regular basis for some time prior to 1996. There was no written agreement in force between Flagstaff and Visy, informal arrangements being made from time to time between the two companies. In late 1994 or early 1995, an informal agreement was made whereby Visy installed a "baler" at Flagstaff to bale (that is, to compact and package) cardboard waste. Any cardboard baled by the machine was to be sold only to Visy.
35 In March 1996, Visy advertised in the Illawarra Mercury seeking expressions of interest from persons interested in establishing and managing a cardboard paper collection and processing agency in the Illawarra district. Mr Clarke was surprised to see the advertisement, given Flagstaff's then existing relationship with Visy. However, he responded to the advertisement on behalf of Flagstaff and in late March or early April 1996 forwarded an expression of interest.
36 Visy subsequently proposed that Flagstaff enter into a formal arrangement to provide waste cardboard exclusively to Visy. Mr Clarke then suggested a non-exclusive arrangement. Visy responded through Mr Gorman (the Account Executive responsible for Flagstaff) that head office preferred to do business without a formal agreement being signed.
37 Despite these unsuccessful negotiations, Flagstaff in fact continued to sell the whole of its waste cardboard to Visy. Throughout 1996, it supplied waste cardboard at a price of $85 per tonne. The volume of waste cardboard supplied to Visy by Flagstaff averaged approximately seventy-five tonnes per month.
38 On 17 July 1996, at Amcor's initiative, a meeting took place at Flagstaff's premises at Unanderra. The meeting was attended by Messrs Gandy and Clarke of Flagstaff, and Mr Roach (New South Wales State Manager) and Mr Atkinson (a sales representative) from Amcor. At the meeting, Mr Roach said that Amcor had not been happy with its supplier in the Illawarra area and that Amcor proposed that Flagstaff should be its representative in that area. Mr Roach then handed Mr Gandy or Mr Clarke a draft letter of agreement in the following terms (omitting the blank formal provisions):
"LETTER OF AGREEMENTAUSTRALIAN PAPER LIMITED (Agent for AMCOR Limited) of Botany Road, Matraville NSW 2036, hereby agrees to accept
AND FLAGSTAFF INDUSTRIAL & COMMERCIAL SERVICES GROUP LIMITED of 18 Glastonbury Avenue, Unanderra NSW 2526, hereby agrees to supply the whole of the vendors recyclable paper and cardboard.
RATES:
Shoalhaven White $300.00 per tonne
Delivered to Nowra
P3 Grade (Petrie Mill QLD) $275.00 per tonne
Delivered to Petrie
Industrial Mix )
Delivered to Botany ) $90.00 per tonne
)
* Household Mix (Wingecarribee) )
Delivered to Botany
* a) May be mixed with industrial for ease of handling.
b) Australian Paper will fix the price structure in accordance
with your contract period with Wingecarribee Council.
All material must be free from contaminants such as plastic, polystyrene and rubbish. Australian Paper reserves the right to reduce payment of loads found to contain unacceptable amounts of contaminants.
AGREEMENT PERIOD:
* Australian Paper offer a 5 year agreement with a fixed price component for 2 years. Thereafter an annual review within limits to market influences + or - 10% of the above rates.
* Variances over and above this rate will be negotiated on recyclable wastepaper market conditions in existence at any time."
39 In response to an inquiry by Mr Clarke as to whether Amcor wanted all recyclable paper or just cardboard, Mr Roach said that Amcor would be happy to take everything that Flagstaff wished to provide, but that he was aware that Flagstaff had existing arrangements. Either Mr Gandy or Mr Clarke said that Flagstaff would definitely consider the proposal and get back to Amcor. No time frame for a response by Flagstaff was discussed.
40 The Amcor Offer specified a price for waste cardboard which, after transportation costs, would yield Flagstaff $5 per tonne more than the price then obtained from Visy. However, as Mr Gandy acknowledged, Flagstaff would not have been able to use Visy's baler to process waste cardboard sold to Amcor. The Amcor Offer's proposed price for Shoalhaven grade waste paper was the same as the price Flagstaff was already receiving from Amcor for that product. The Amcor Offer's proposed price for P3 grade waste paper was $275 per tonne compared with $250 per tonne received at the time from Tredex.
41 Mr Gandy subsequently discussed the Amcor Offer with Mr Peoples at a meeting on 24 July 1996. Mr Gandy said in evidence that he respected Mr Peoples' advice even though he appreciated that Mr Peoples had an interest in Flagstaff not accepting the Amcor Offer. (Mr Peoples had an interest since, if Flagstaff had entered an exclusive arrangement with Amcor, Flagstaff would have been precluded from supplying recyclable paper products to the company with which Mr Peoples had an association.)
42 Mr Peoples' advice to Mr Gandy was as follows:
"I think the prices are reasonable and I will see if Visy can match it. Just be careful getting locked to an exclusive arrangement. Don't put all your eggs in one basket. I'm scheduled to see Visy in the next few days, I'll see whether they can match or better the offer."
Mr Gandy was content to adopt this course because, as he said in evidence, he wanted to see how the Amcor Offer compared with market rates and whether Visy was prepared to match the offer or any part of it.
43 Later on 24 July 1996 or early the next day, Mr Peoples telephoned Mr Gerard. Mr Peoples said that he wanted to talk to Visy about the prices for Flagstaff, particularly the industrial mix, for which (as he told Mr Gerard) Flagstaff had been offered $90 per tonne by Amcor. Mr Gerard arranged a meeting to be held with Mr Guthridge at Visy's Smithfield premises.
44 The meeting took place at about 12.15 pm on 25 July 1996 in a small office at Visy's premises. Those present were Mr Peoples and, from Visy, Mr Guthridge, Mr Gerard and Mr Keogh (whose precise position at Visy the evidence did not make clear). Mr Peoples gave an account of the meeting in his affidavit. That account, which was not challenged, was as follows (omitting portions of his affidavit not admitted into evidence):
"27. ... Gerard (addressing Guthridge):`I'm finding it difficult to be competitive with [Amcor] because of the prices they are paying. In certain areas I'm losing business because of price. Chris Peoples spoke to me about trying to get his prices increased as well and I've told him I can't do anything there.'
During the conversation the four of us were seated at a small table. I was reading the document given to me by Mr Gandy and Mr Clarke [that is, the Amcor Offer].
Peoples:
`Well, you know, they are paying these extra prices and its very hard for me, as I'm selling material to you, to compete in the marketplace, and its very hard for other people who are selling the material or buying the material for you, to compete against [Amcor] because they're paying prices like $90.00 and you're paying (I believe I said $70.00, however, it was a figure less than $90.00).'
Guthridge:
`I want some proof that they're doing this.'
Peoples:
`Well, I have something here that they have offered in writing (by this I was referring to the document given by me by Mr Gandy and Mr Clarke).'
28. Mr Guthridge then grabbed the document out of my hand. He then walked into the tea area and I heard him talking. He was in the tea area approximately 30 to 40 seconds.
29. When he came back into the ... office the conversation continued in words to the following effect:
Guthridge:
`Prices are too high and we can't wear it. We've got to get the prices down on industrial mix. I believe our price of (I believe he said $70.00, however, I am unsure) is a fair price.'
30. There was then some general discussion [about prices of recyclable waste paper], the specifics of which I cannot recall, which lasted approximately 5 minutes.
...
32. Mr Guthridge then left the office.
33. Mr Guthridge then returned to the office and said to Mr Gerard:
Guthridge:
`Fax this off to Tony'
34. Guthridge then put the document he had snatched from me on the table. I then observed someone, whose identity I now can't recall, write on the document. I could not read what was written.
35. Geoff Gerard then went out of the office with the document and returned shortly after with the document... .
36. After Geoff Gerard's return to the office a conversation took place in words to the following effect:
Peoples (to Mr Gerard):
`What's going to happen with regard to prices for the industrial mix[?] Can you advise Flagstaff?'
Gerard:
`Yeah, ok I'll do that.'
37. The meeting then concluded. It had lasted about 20 minutes. The document was on the table. I picked it up and departed."
45 After the meeting, Mr Peoples noticed that the words "ATTN Tony Nott", the number "03 9811 9876" and the words "received June 96" had been written on the document. It is open to me to infer and, for the purpose of the no case submission, I do infer that Mr Guthridge during the meeting dialled Mr Nott's telephone number and the call lasted (as Telstra's telephone records show) for forty-two seconds.
46 Despite the absence of any records confirming that Mr Gerard acted on Mr Guthridge's instruction to fax a copy of the Amcor Offer to Mr Nott, I am prepared to infer for the same purpose that he did so, probably during the meeting.
47 Telstra's records show that a further telephone call took place between Mr Guthridge's mobile telephone (in Brisbane) and Mr Nott's Melbourne number on 26 July 1996. I infer that Mr Guthridge spoke to Mr Nott during this call, which lasted four minutes and fourteen seconds.
48 On 1 August 1996, Mr Gandy and Mr Peoples had a meeting with Mr Gerard of Visy at Flagstaff's premises. At that meeting, Mr Gerard said that Visy would take all Flagstaff's paper as well as all its cardboard. He also said that Visy wanted to take over the whole Illawarra area for both paper and cardboard, but to do that Flagstaff would have to "lift its game". Mr Gerard inquired whether Flagstaff was sending any cardboard to Amcor, to which Mr Gandy answered in the negative. Mr Gandy asked for Visy's offer in writing. Mr Gerard said that such an offer would be sent. However, no such offer was ever received by Flagstaff.
49 Although the Amcor Offer was discussed within Flagstaff, Mr Gandy did not make any response to the offer. Nor did Amcor pursue the offer with Flagstaff.
50 On or shortly after 9 August 1996, Mr Clarke received a letter from Mr Roach of Amcor in the following terms:
"Further to our recent telephone conversation, we wish to formally withdraw our letter of Agreement and the rates offered for the procurement of various grades of wastepaper of recycling.However, we would still wish to build a working, trading relationship with Flagstaff and would be pleased to hear from you if you can see any areas where this could be developed.
Assuring you of our best attention at all times."
There was no evidence as to the contents of the "recent telephone conversation" referred to in the letter.
51 Flagstaff continued to supply Amcor with Shoalhaven grade recyclable paper until about 1997, when the supplier of that paper ceased business in Wollongong.
The Procedural Question
52 In Rasomen Pty Ltd v Shell Company of Australia Ltd (1997) 75 FCR 216, a Full Court rejected a contention by the appellant that the trial judge had erred in ruling on a no case submission without requiring the respondent to elect to call no evidence. The Full Court (at 218) quoted with approval a passage from the judgment of Tadgell J as a member of the Full Court of the Supreme Court of Victoria in Protean (Holdings) Ltd (recs and mgrs appointed) v American Home Assurance Co [1985] VR 187.
53 In Protean, an insurer defended a claim for an indemnity under a fire policy on grounds that the insured had lit or connived at the lighting of the fire and had misrepresented or failed to disclose certain facts to the insurer. At the close of the insurer's case, the trial Judge, Marks J, allowed the insured to submit that there was no case to answer in respect of the defences without requiring the insured to elect whether or not to call evidence in relation to the defences. Marks J (whose judgment is also reported at [1987] VR 187) approached the matter by indicating that he would both entertain the submission and rule on it without requiring the insured to make an election. He did so after some sixteen days of hearing evidence. The Full Court upheld this approach.
54 Tadgell J pointed out (at 237) that, where a party flags an intention to submit to a judge sitting alone that there is no case to answer on a contested issue, that party is really inviting the judge to rule that he or she should not have to adduce evidence or further evidence on that issue in order to have it finally decided in his or her favour. As his Honour said (at 237):
"Usually, but not inevitably, the invitation will be issued at the end of the evidence called against the party desiring to make the submission (whom I shall call `the moving party') and before that party calls any evidence on the relevant issue in answer to that of the other party (whom I shall call `the respondent party'). It might be issued after the moving party has called some but not all of his evidence."
Tadgell J continued, in the passage quoted in Rasomen, as follows:
"The judge is entitled, for reasons that seem appropriate to him, to decline out and out to entertain such a submission at the stage at which he is asked to do so. Normally, however, the Judge would not feel justified in refusing outright to hear a submission of no case if to hear it would carry the prospect of justly facilitating the disposition of the litigation. Usually there would be three courses open to him, short of refusing altogether to entertain the submission, namely:1. He might decline to entertain the submission at that stage unless the moving party were to elect before making it not to call any evidence, either generally or on the issue on which the ruling was sought; or
2. He might allow the submission to be made without putting the moving party to any election at that stage but leaving, until he had heard it, the question whether or not he would rule on it without requiring an election to be made; and having heard the submission, and any answer to it by the respondent party, he could either rule on it or not, perhaps requiring an election to be made as a prerequisite to his doing so; or
3. He might indicate that he would both entertain the submission and rule on it without requiring an election to be made by the moving party."
55 The second of the three courses identified by Tadgell J was followed by Branson J at first instance in Rasomen (Rasomen Pty Ltd v The Shell Company of Australia Ltd (1996) 71 FCR 540, at 543) and by Finkelstein J in Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1, at 6.
56 It was the second course which was in substance adopted in the present case, with one qualification. The qualification flowed from the fact that Mr Catterns preferred not to address the substance of the no case submission until after I had ruled on whether the respondents should be permitted to make their no case submission without having to elect not to call further evidence. The respondents were content for this course of action to be followed and, accordingly, I did so.
The Election Question
57 The next question to be addressed was whether the respondents were to be permitted to make their no case submission without having to elect whether or not to call evidence.
58 As Finkelstein J observed in Compaq Computer, there has been some uncertainty as to the source of the power of the Federal Court to make a no case submission: Compaq Computer, at 6. In Rasomen, which was heard both at first instance and on appeal in South Australia, the Full Court stated (at 223) that, apart from Federal Court Rules ("FCR"), O 32 r 4(1), which gives a power to the Court to give directions "as to the order of evidence and addresses and generally as to the conduct of the trial", there is no statutory provision or Rule of Court which provides for the procedure to be adopted in the Federal Court where a no case submission is made. Their Honours considered (at 223) that s 79 of the Judiciary Act 1903 (Cth) ("Judiciary Act") fills the gap. It provides that the laws of each State, including the laws relating to procedure shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all courts exercising federal jurisdiction in that State in all cases to which they are applicable. Accordingly, their Honours considered that it had been appropriate for the trial Judge to pay particular attention to decisions of the Supreme Court of South Australia.
59 The Full Court did not advert to the suggestion made by Davies J in Trade Practices Commission v George Western Foods Ltd (No 2) (1980) 43 FLR 55, at 56-57, that the power to entertain a no case submission finds its source in FCR, O 35 r 1 (although the Full Court in Rasomen referred to George Weston on other issues). Order 35 r 1 gives the Court power at any stage of the proceedings, on the application of any party, to pronounce such judgment or make such orders as the nature of the case requires, notwithstanding that the applicant does not claim such an order in the originating process.
60 In my view, the language of FCR, O 35 r 1, is ample to authorise the Court to entertain and rule on a no case submission without any need to invoke s 79 of the Judiciary Act. Locating the source of power in O 35 r 1 overcomes the potential difficulty that the practice of the Court on such an important question might vary from State to State: cf Supreme Court Rules (NSW), Pt 34 r 8 (preventing a defendant who makes a no case submission from adducing evidence or further evidence). None of the parties in the present case, in particular the ACCC, disputed that O 35 r 1 was the source of the Court's power to entertain and rule on a no case submission.
61 The general rule of practice is that a decision will not be given on a no case submission unless the moving party elects to give no evidence: Rasomen, at 223; Compaq Computer, at 6-7 (and cases cited there). There are good reasons for the rule, in particular the difficulty that if a judge rules in favour of a no case submission and the judgment in favour of the moving party is overturned on appeal, it would usually be necessary to order a new trial: Compaq Computer, at 7. A further problem is that a no case submission may require the judge to consider the evidence twice during the trial, namely, in connection with the submission and, if the submission fails, at the conclusion of all the evidence. This problem may be particularly acute if the no case submission requires an evaluation of the credit of witnesses.
62 Nonetheless, the Court has a discretion to depart from the general rule. In Protean, Tadgell J observed (at 238) that a departure from the general rule can seldom be justified unless adherence to the rule would not serve the ends of justice or convenience. Tadgell J continued (at 238):
"In deciding which course to follow the Judge will be guided by the nature of the case, the stage it has reached, the particular issues involved and the evidence that has been given. The imposition of a requirement that the moving party make an election before the Judge entertains the submission, or before he rules on it, will depend on the just and convenient disposition of the litigation."
This passage was approved by the Full Court in Rasomen. As the Full Court said, Tadgell J's formulation allows the Court to consider "wider public interest considerations". Nonetheless, the ultimate aim must be the attainment of justice: Rasomen, at 224.
63 In a passage which is frequently cited, Perry J in Residues Treatment & Trading Co Ltd v Southern Resources Ltd (1989) 52 SASR 54, at 68, said that there are primarily four situations in which a submission of no case to answer may be made. He identified them as follows:
"1. Where no reference at all to the evidence is required.2. Where a reference to the evidence is required only to establish that there is an evidentiary hiatus or failure to adduce any evidence as to an essential element in the cause of action.
3. Where it is argued that on a consideration of the evidence adduced by the plaintiff taken at its highest from the plaintiff's point of view, the evidence could not support the causes of action pleaded.
4. The situation where it is contended that although there is some evidence to support the plaintiff's claim, it is so weak and unreliable that it should be dismissed without calling upon the defendant."
Perry J made these further observations (at 69):
"As to category 1, this should normally be argued on the pleadings, preferably before the trial commences. No question of election arises in that situation. Likewise, consideration of a submission of no case to answer in category 2 should not involve an election.As to categories 3 and 4, these situations should normally be met by the application of what I have referred to as the general rule that counsel should be called upon to elect."
64 In my respectful opinion, these observations are helpful, provided they are not treated as a rigid categorisation to be applied regardless of the circumstances of an individual case. As Olsson J said in Popovic v Tanasijevic (No 3) [1999] SASC 339, at [14], the four categories are not necessarily absolute and exclusive and there can be hybrid situations. There must be, as his Honour pointed out, a residual discretion to apply a reasonable degree of flexibility to meet the exigencies of particular cases and to achieve a fair and just result.
65 The basis of the no case submission foreshadowed by the respondents was that the evidence adduced by the ACCC in its case in chief was incapable of establishing, to the requisite standard, the elements of the contraventions of the TP Act alleged against the respondents (or any of them). Alternatively, the respondents contended that I should decline to draw from the primary facts those inferences that are required to make out a case against any or all the respondents. Submissions of this kind appear to fall within the third of Perry J's categories, although it may be that they can be classified as at least overlapping with the second category.
66 I was content at the hearing to proceed on the basis that the case fell within the third of Perry J's categories. I accepted that in such a case there must be unusual circumstances to warrant the respondents being permitted to make their no case submission without being required not to adduce any evidence. Nonetheless, I considered that the circumstances of the present case were sufficiently unusual that it was in the interests of justice for the respondents to be permitted to follow that course.
67 First and most important, I took the view that this is a case in which serious allegations of contraventions of the TP Act had been made against each of the respondents. If the allegations were to be established, the corporate respondents would be exposed to pecuniary penalties of up to $10,000,000 and the individual respondents to pecuniary penalties of up to $500,000. Adverse findings might well have serious consequences in terms of loss of business reputation.
68 The authorities recognise that a departure from the general rule is often justified where fraud is alleged against the moving party. In The Union Bank of Australia Ltd v Puddy [1949] VLR 242, Fullagar J said (at 246) that where fraud is alleged
"it may often be wrong to suggest that a party should submit himself to cross-examination before it is seen that there is really some evidence against him."
See also Protean, at 215, per Young CJ; at 236, per Fullagar J; Compaq, at 7. The present case is not one in which fraud has been alleged, but in my opinion it is analogous to a fraud case by reason of the very serious allegations that have been made against each of the respondents: see George Weston, at 61; Trade Practices Commission v Nicholas Enterprises Pty Ltd [1978] ATPR 40-097 (Fisher J), at 17,958. The analogy is in my view strengthened by the fact that the definition of "exclusionary provision" in s 4D of the TP Act incorporates the concept of "purpose" in a subjective sense: ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 (FC), at 474-477.
69 Secondly, it became clear from the contentions advanced by the respondents that the no case submission could be addressed by me without having to assess the credit of any of the witnesses. The ACCC's case, as Mr Catterns explained in opening, is essentially a circumstantial one based on inferences that can be drawn (so it was said) from facts that are largely not in dispute. This analysis was borne out by the ACCC's case in chief which, as I have explained, in substance involved only one relatively minor conflict in the evidence which, in any event, related to a peripheral issue. I formed the view that there would be little difficulty in addressing the no case submission without resolving that conflict. Had I concluded that the no case submission required me to assess the credit of any of the witnesses, I would have declined to entertain it unless the respondents elected to call evidence.
70 Thirdly, all four respondents sought to put a no case submission. This was not a case where some only of the respondents wished to make the submission. Had that been the position, there might have been difficulties in entertaining the submission without requiring those respondents wishing to advance it not to call evidence.
71 Fourthly, it seemed to me that addressing the no case submission might well save court time and costs. This factor did not loom as large as it did in a case like Protean. The parties in the present case estimated that a further two days would be required to complete the hearing if the respondents were to go into evidence. This consideration was far from decisive, but it was relevant.
72 Fifthly, the ACCC had been on notice prior to the commencement of the hearing that the respondents proposed to make a no case submission. It had therefore been clear from the outset that the ACCC's circumstantial case was to be challenged. Mr Catterns was not placed at the disadvantage that sometimes occurs if a no case submission is made in the course of a hearing. Mr Catterns fairly did not suggest otherwise. Moreover, the fact that the respondents gave advance notice of their intention to pursue a no case submission meant that the arguments could be put and dealt with expeditiously. This was not a case where the arguments on the no case submission disrupted or prolonged the trial.
73 I took the view, in the absence of submissions by Mr Catterns on the substance of the no case submission, that I should make a decision on this procedural question without making a firm judgment as to the merits of the no case submission itself. I did, however, form the impression that the submission was strongly arguable. The subsequent argument more than confirmed that impression.
The No Case Submission
74 The ACCC accepted that there was no direct evidence of the arrangement pleaded in par 21 of the statement of claim, namely that Visy and Amcor had made an arrangement or arrived at an understanding which contained a provision that Amcor would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the Amcor Offer. It submitted that evidence of an arrangement or understanding is usually circumstantial and includes evidence of opportunity in parallel or complementary conduct from which appropriate inferences can be drawn. According to the ACCC, the present was such a case.
75 An arrangement or understanding for the purposes of s 45(2) of the TP Act is apt to describe something less than a binding contract or agreement: Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 (Aust Ind Ct, FC), at 290-291, per Smithers J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd (1980) 43 FLR 383 (Lockhart J), at 385; Ira Berk, at 291, per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email, at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (FC), at 230-231, per Lockhart J.
76 It follows from the Full Court decision in Rasomen that, in addressing a no case submission, the function of a judge sitting without a jury is no different from that which has to be performed by a judge who has heard all the evidence of the parties in the ordinary way and who has to give final judgment. In particular, where the moving party contends that the evidence does not give rise to the inferences of fact alleged by the opponent, it is appropriate for the trial judge to decide what inferences he or she would draw from the evidence and to act on those conclusions to determine finally the issues in the case: Rasomen, at 228.
77 The Full Court in Rasomen approved the observations of Young CJ (with whom Fullagar J agreed) in Protean (at 215):
"Where a trial judge entertains a submission that there is no case to answer without requiring an election, any one of three results may ensue. The judge may conclude that the evidence could sustain a finding against the party making the submission, in which case he would overrule the submission and allow the case to proceed. The second possible result is that the case is so finely balanced that the judge is not satisfied that even if the evidence could sustain a finding against the party making the submission he would be prepared to make the necessary finding himself. Where the case is being tried without a jury, a trial judge in such a position would no doubt allow the case to proceed....The third possible result of a submission that there is no case to answer is that the judge is persuaded by it and decides to uphold it. In reaching such a conclusion a trial judge is entitled to draw all proper inferences from the evidence, but he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. Theoretically he then concludes that the evidence could not sustain a finding against the party making the submission. In such a case he upholds the submission. The consequence must then be that judgment must be entered for the party making the submission. His opponent has simply not discharged the burden which rested on him of establishing his case. Where this result ensues there is no room for a distinction between whether the evidence could sustain a finding against the party making the submission and whether the judge would make such a finding. Such a case is covered by the second possible result referred to above. The third possibility is where the proposition `no case to answer' means `would you, the Judge, on the evidence given, decide for the party against whom the submission is made': cf. Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, at 330-1." (Emphasis added.)
78 Two other principles, neither of which was disputed, are relevant to the present case. The first is that in a case where in which the applicant seeks to recover pecuniary penalties under s 76 of the TP Act, the standard of proof to be applied is the civil, not criminal, standard. However, in determining what inferences should be drawn from the primary facts, it is necessary to have regard to the seriousness of the allegations made against the respondents and the gravity of the consequences of adverse findings against them: Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, at 362, per Dixon J; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) (1979) 40 FLR 83 (Fisher J), at 105; Peter Williamson Pty Ltd v Capitol Motors Ltd (1982) 61 FLR 257 (Franki J), at 264.
79 The second is that, in civil proceedings where the applicant's case rests on inferences from primary facts, it is not enough for the circumstances to give rise to conflicting inferences of equal degrees of probability. The principle was stated by the High Court in Bradshaw v McEwans Pty Ltd (unreported, 27 April 1951) and adopted repeatedly since:
"Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as mere conjecture or surmise."
See Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352, at 358, per Dixon, Fullagar and Kitto JJ; Nominal Defendant v Owens (1978) 22 ALR 128 (FC), at 132-133, per Muirhead J (with whom St John J agreed); Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 (CA), at 141, per Tadgell JA and cases cited there.
80 Mr Catterns relied on a number of factors to support the inference that Mr Guthridge, on behalf of Visy, and Mr Nott, on behalf of Amcor, made or arrived at the pleaded arrangement or understanding on or shortly after 25 July 1996. The factors were these:
* In mid-1996, Amcor and Visy were competitors for securing the supply of recyclable waste paper in the Illawarra area.
* Throughout the months preceding the relevant events, Visy had been increasingly concerned about Amcor's activities in winning suppliers and increasing prices, at a time when Visy itself considered it essential to reduce costs. According to Mr Catterns, the internal Visy memoranda demonstrated that Amcor was caught in a "pincer" (his expression), whereby it faced a loss of suppliers or the need to increase the prices paid for its supplies of recyclable waste paper.
* On 17 July 1996, Amcor made a commercially acceptable offer to Flagstaff to acquire the whole of its supplies of recyclable waste paper.
* At the meeting of 25 July 1996, between Visy representatives and Mr Peoples, Mr Guthridge had become agitated on seeing the terms of the Amcor Offer. His agitation derived from the fact that Amcor had been offering prices he considered too high, especially since he considered that Visy had to get prices down.
* Mr Guthridge spoke to Mr Nott during the course of the meeting on 25 July 1996 and during the conversation of about four minutes on the following day. Mr Guthridge also caused a copy of the Amcor Offer to be faxed to Mr Nott. This provided an opportunity for the pleaded arrangement or understanding to be made or entered into.
* Amcor made no further attempt to pursue the Amcor Offer, notwithstanding its need for reliable supplies of recyclable waste paper.
* On 1 August 1996, Mr Gerard of Visy made an informal offer to Mr Gandy of Flagstaff to take all of Flagstaff's waste paper and cardboard.
* Amcor withdrew the Amcor Offer by its letter of 9 August 1996. It gave no explanation for doing so.
81 In my opinion, the factors identified by Mr Catterns fall well short of giving rise to a reasonable and definite inference that Amcor and Visy, by means of communications between Mr Guthridge and Mr Nott, made an arrangement or arrived at an understanding which contained a provision that Amcor would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the Amcor Offer. Whether an arrangement or understanding to this effect was made or arrived at is, on the evidence, a mere matter of conjecture.
82 The evidence is consistent with alternative hypotheses which are at least as likely, if not more likely, than the pleaded arrangement or understanding. The most obvious (but not the only one) is that Mr Guthridge telephoned Mr Nott in order to confirm that the draft letter of agreement provided by Mr Peoples at the meeting of 25 July 1996 was a genuine and current offer from Amcor to Flagstaff. At the meeting, Mr Guthridge had demanded proof from Mr Peoples that Amcor was prepared to pay the prices reported by Mr Peoples (who was trying to persuade Visy to increase the prices it was prepared to pay Flagstaff). It was in that context that Mr Peoples produced a copy of the Amcor Offer and that an apparently agitated Mr Guthridge left the room in order to make what I infer was a brief telephone call to Mr Nott. These events, if anything, rather suggest that Mr Guthridge wished to contact Mr Nott to verify the accuracy of what Mr Peoples had told him. This is not the only possible interpretation of the events. For example, it is possible that Mr Guthridge simply wished to let Mr Nott know that Visy was aware of Amcor's activities in the marketplace. The point is that the facts do not give rise to a reasonable and definite inference of the arrangement or understanding pleaded by the ACCC.
83 The ACCC's contentions do not gain any strength from the evidence that Mr Guthridge sent a facsimile to Mr Nott and had a four minute conversation with him on 26 July 1996. The Amcor Offer had been made to Flagstaff by Mr Roach, Amcor's New South Wales Manager. There is nothing to suggest that Mr Nott was personally aware of the terms of the Amcor Offer prior to 25 July 1996 or that his approval was needed before Mr Roach could make the offer to Flagstaff. The faxing of the Amcor Offer to Mr Nott by Mr Guthridge is consistent, for example, with the latter wishing to draw Mr Nott's attention to the terms of the offer so that he could verify its currency. Similarly, the four minute conversation on 26 July 1996 (the first having lasted only forty-two seconds) is consistent with Mr Nott having responded to Mr Guthridge's inquiry, perhaps by confirming that the offer was genuine and current or in some other, less helpful, manner.
84 The ACCC relied on what is characterised as Amcor's "unexplained" withdrawal of the Amcor Offer on 9 August 1996. But the withdrawal did not take place soon after the only two conversations (so far as the evidence reveals) that took place between Mr Guthridge and Mr Nott. The Amcor Offer remained open for some two weeks after the second of those conversations, during which time Flagstaff could have accepted it. It is true that during this period Amcor did not pursue Flagstaff. It is equally true that Flagstaff felt no need to communicate with Amcor. It is difficult to see why the withdrawal of the Amcor Offer two weeks after the conversations should give rise to a reasonable and definite inference that the withdrawal was prompted by an arrangement or understanding in the terms pleaded by the ACCC. Other inferences are at least equally plausible. Amcor might well have withdrawn the offer, for example, because it concluded (whether correctly or not) that Flagstaff was merely using the offer to obtain better terms from Visy and had no intention of accepting. There was no commercial or legal obligation on Amcor to give a reason to Flagstaff for withdrawing its offer.
85 The obstacles confronting the ACCC's circumstantial case become even more apparent when regard is had to the terms of the withdrawal of the Amcor Offer and Amcor's subsequent dealings with Flagstaff. It is important to remember that the pleaded arrangement or understanding between Visy and Amcor was to the effect that Amcor would not merely withdraw the Amcor offer but that it would also "cease attempting to make contracts with Flagstaff to acquire recyclable waste paper". Amcor's letter of 9 August 1996 asserted that it wished to continue its trading relationship with Flagstaff. The fact is that it did continue the trading relationship, since Flagstaff continued to supply Amcor with Shoalhaven grade recyclable paper until Flagstaff's supplier of that category of waste paper ceased business in Wollongong. It is true that Flagstaff supplied the waste paper, and Amcor received it, pursuant to the 1995 written agreement between them. But there is no evidence that Amcor attempted to dissuade Flagstaff from supplying Shoalhaven grade recyclable paper or to take any other steps to terminate the relationship. While this state of affairs is not necessarily inconsistent with the pleaded arrangement or understanding, it tends to reinforce the view that the inferences the ACCC seeks to draw from the evidence are no more than matters of mere conjecture.
86 Mr Catterns sought to gain comfort from the internal Visy memoranda. They clearly demonstrate that Visy was concerned about Amcor's incursions into Visy's sources of supply and about Amcor's willingness to pay higher prices to suppliers. But there is nothing in the documents which suggested that Mr Guthridge decided that an appropriate response to the competitive threat was to make an arrangement or arrive at an understanding with Amcor in contravention of the TP Act. The internal Visy documents demonstrate that Visy faced an aggressive competitor in the marketplace and that it had to develop a commercial response. Doubtless they also support the suggestion that Mr Guthridge was irritated by Amcor's activities. But the evidence does not support an inference that Mr Guthridge chose to meet the threat by persuading Mr Nott to make or enter into the pleaded arrangement or understanding. Nor does the evidence address, let alone explain, why Mr Nott of Amcor would have chosen to respond favourably to any such approach by Mr Guthridge.
87 In my opinion, the evidence adduced by the ACCC, assessed as a whole, falls well short of establishing to the required standard that Visy and Amcor made or entered into the pleaded arrangement or understanding. The respondents' no case submission must be upheld.
Conclusion
88 Since the respondents' no case submission has been upheld, the application against all four remaining respondents must be dismissed. I shall give the parties an opportunity to make submissions on costs.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. |
Associate:
Dated: 19 January 2000
Counsel for the Applicant: |
Mr D K Catterns QC with Mr V F Kerr |
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Solicitor for the Applicant: |
Australian Government Solicitor |
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Counsel for the First and Third Respondents: |
Mr C Scerri QC with Mr A I Tonking |
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Solicitor for the First and Third Respondents: |
Arthur Robinson & Hedderwicks |
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Counsel for the Second and Fourth Respondents: |
Mr N Young QC with Mr N O'Bryan |
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Solicitor for the Second and Fourth Respondents: |
Minter Ellison |
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Date of Hearing: |
8-9 December 1999 |
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Date of Judgment: |
19 January 2000 |
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