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Federal Court of Australia - Full Court Decisions |
Last Updated: 21 September 2005
FEDERAL COURT OF AUSTRALIA
Energex Limited
(ACN 078 849 055) v Alstom Australia Limited (ACN 000 215 092)
[2005]
FCAFC 215
PRACTICE AND PROCEDURE – interlocutory judgment –
leave to appeal – criteria for leave – refusal of motion
for summary
dismissal of claim and strike out of statement of claim – arguable
questions in relation to application of s 82(2) of the Trade Practices Act
1974 (Cth) – availability of relief under s 87 – whether abuse
of process – viability of a plea of deceit associated with collusive
tendering – judgment at first
instance not attended with doubt –
motion for leave dismissed
TRADE PRACTICES – collusive
tendering – contraventions of s 45 of Trade Practices Act –
duration of over 20 years – whether claims for damages time barred –
accrual of causes of action – application
of s 82 to anti-competitive
conduct – alternative claim under s 87 – whether collateral purpose
of circumventing time limit – whether abuse of process – deceit
– whether implied
representation in collusive tendering – motion for
leave to appeal against refusal to summarily dismiss action and/or strike
out
statement of claim dismissed
Trade Practices Act 1974 (Cth) s 45, s 82, s
87
Trade Practices Amendment Act (No 1) (2001 (Cth) Item
21
Federal Court of Australia Act 1976 (Cth) s
24(1A)
Energex Limited v Alstom Australia Ltd [2004] FCA 575
cited
Australian Competition and Consumer Competition v ABB Transmission
and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 cited
Australian Competition
and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR
41-839 cited
Australian Competition and Consumer Commission v ABB
Transmission and Distribution Ltd (No 2 – Power Transformers) [2002]
ATPR 41-871 cited
Australian Competition and Consumer Commission v ABB
Transmission and Distribution Ltd (No 2 – Distribution Transformers)
[2002] ATPR 41-872 cited
Dey v Victorian Railways Commissioners [1949] HCA 1;
(1949) 78 CLR 62 cited
General Steel Industries Inc v Commissioner for
Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 cited
Wardley Australia Ltd v
Western Australia [1992] HCA 55; (1992) 175 CLR 514 cited
Karedis Enterprises Pty Ltd
v Antoniou (1995) 59 FCR 35 cited
Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR
539 cited
Little v Law Institute of Victoria (No 3) [1990] VR 257
cited
Australian Associated Motor Insurers Ltd v NRMA Insurance Ltd [2002] FCA 1061;
(2002) 124 FCR 518 cited
Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394
cited
Atlantic City Electric Co v General Electric Co 312 F2d 236
(2nd Circuit 1962) cited
Bailey v Glover 88 US 342 (1874)
cited
Western Australia v Wardley Australia Ltd (1991) 30 FCR 245
cited
Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302 cited
Décor
Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397
cited
Minogue v Ling [2000] FCA 125 cited
Johnson Tiles Pty Ltd
v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 cited
I and L Securities
Pty Ltd v HGW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109
cited
Warner v Elders Rural Finance Ltd [1993] FCA 117; (1992) 41 FCR 399
cited
Australian Competition and Consumer Commission v CC (NSW) Pty
Ltd [1999] FCA 954; (1999) 92 FCR 375 cited
State of Queensland v Pioneer Concrete
(Qld) Pty Ltd (1999) ATPR 41-691 cited
Fleming,
The Law of Torts, 8th Edition
ENERGEX LIMITED (ACN 078 849 055) v
ALSTOM AUSTRALIA LIMITED (ACN 000 215 092) AND OTHERS
V 756 OF
2004
V 757 OF 2004
FRENCH, HELY & MERKEL
JJ
21 SEPTEMBER 2005
PERTH (HEARD IN
MELBOURNE)
|
ENERGEX LIMITED
(ACN 078 849 055) APPLICANT |
|
|
AND:
|
ALSTOM AUSTRALIA LIMITED
(ACN 000 215 092) FIRST RESPONDENT REXEL AUSTRALIA LIMITED (ACN 000 437 758) SECOND RESPONDENT RICHARD ELLIOT THIRD RESPONDENT PAUL GRABHAM FOURTH RESPONDENT COLIN JAMES FIFTH RESPONDENT WILSON TRANSFORMER COMPANY PTY LTD (ACN 004 216 979) SIXTH RESPONDENT ROBERT WILSON SEVENTH RESPONDENT DAVID PECK EIGHTH RESPONDENT ABB TRANSMISSION AND DISTRIBUTION LIMITED (ACN 000 169 568) NINTH RESPONDENT DOUGLAS PITT TENTH RESPONDENT CHRIS TAPE ELEVENTH RESPONDENT DAVID TOOGOOD TWELFTH RESPONDENT GRAHAM JONES THIRTEENTH RESPONDENT RUSSELL ELLEN FOURTEENTH RESPONDENT SCHNEIDER ELECTRIC (AUSTRALIA) PTY LTD (ACN 004 969 304) SIXTEENTH RESPONDENT RUSSELL STOCKER SEVENTEENTH RESPONDENT ASHLEY SMOUT EIGHTEENTH RESPONDENT WENDY MINNE NINETEENTH RESPONDENT V 757 OF 2004 |
|
BETWEEN:
|
ENERGEX LIMITED
(ACN 078 849 055) APPLICANT |
|
AND:
|
ALSTOM AUSTRALIA LIMITED
(ACN 000 215 092) FIRST RESPONDENT REXEL AUSTRALIA LIMITED (ACN 000 437 758) SECOND RESPONDENT RICHARD ELLIOT THIRD RESPONDENT PAUL GRABHAM FOURTH RESPONDENT COLIN JAMES FIFTH RESPONDENT WILSON TRANSFORMER COMPANY PTY LTD (ACN 004 216 979) SIXTH RESPONDENT ROBERT WILSON SEVENTH RESPONDENT DAVID PECK EIGHTH RESPONDENT ABB TRANSMISSION AND DISTRIBUTION LIMITED (ACN 000 169 568) NINTH RESPONDENT DOUGLAS PITT TENTH RESPONDENT CHRIS TAPE ELEVENTH RESPONDENT DAVID TOOGOOD TWELFTH RESPONDENT GRAHAM JONES THIRTEENTH RESPONDENT RUSSELL ELLEN FOURTEENTH RESPONDENT RAYMOND BOYCE FIFTEENTH RESPONDENT SCHNEIDER ELECTRIC (AUSTRALIA) PTY LTD (ACN 004 969 304) SIXTEENTH RESPONDENT RUSSELL STOCKER SEVENTEENTH RESPONDENT ASHLEY SMOUT EIGHTEENTH RESPONDENT WENDY MINNE NINETEENTH RESPONDENT |
|
DATE OF ORDER:
|
|
|
WHERE MADE:
|
THE COURT ORDERS THAT:
A. On the Motion of the First, Second, Third, Fourth and Fifth Respondents filed 14 May 2004 seeking leave to appeal from the judgment of Weinberg J made 7 May 2004:
1. The motion be dismissed.
2. The First, Second, Third, Fourth and Fifth Respondents pay the Applicant’s costs of the motion.
B. On the Motion of the Sixth and Seventh Respondents filed 14 May 2004 seeking leave to appeal against the judgment of Weinberg J made 7 May 2004:
1. The motion be dismissed.
2. The Sixth and Seventh Respondents pay the Applicant’s costs of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
REASONS FOR JUDGMENT
THE COURT:
Introduction
1 Energex Limited (Energex), which is an electricity utility based in Queensland, commenced these proceedings in May 2003 against a number of corporations and their officers for alleged collusive tendering in contravention of s 45 of the Trade Practices Act 1974 (Cth) (the Act) and for deceit in connection with the supply of power and distribution transformers between 1982 and 2002.
2 The conduct was also the subject of proceedings brought by the Australian Competition and Consumer Commission (ACCC) in 1999 and 2000. Declarations and injunctions were awarded against various of the respondents and pecuniary penalties were imposed in those proceedings.
3 Energex claims that it has suffered loss and damage over the years by paying more than it should have for the transformers which it purchased as a result of the collusive tenders submitted by the corporate respondents.
4 The respondents filed motions before Weinberg J seeking to dismiss the proceedings and, alternatively, seeking to strike out parts of the statement of claim. They did so in reliance upon the following contentions:
1. The claims for damages under s 82 of the Act were, for the most part, statute barred because of the expiry of the former time limit of three years, imposed by s 82(2) of the Act, for bringing such claims.
2. Alternative claims for injunctive relief under s 80, coupled with claims for damages under s 87 of the Act, were an abuse of process designed to circumvent the time limit imposed by s 82(2).
3. Claims for deceit based on implied representations associated with the presentation of tenders pursuant to the collusive tendering arrangements could not be sustained as a matter of law.
5 His Honour dismissed the motions. Certain of the respondents then filed in this Court motions seeking leave to appeal against his Honour’s orders. For the reasons that follow we are of the opinion that his Honour was correct to dismiss the motions. Leave to appeal should be refused with costs.
The Nature of the Proceedings and the Parties
6 Energex is an electricity utility incorporated in Queensland. Its corporate ancestry began with the South East Queensland Electricity Board (SEQEB) which was established as a body corporate under the Electricity Act 1976 (Qld). On 9 September 1994 the South East Queensland Electricity Corporation (SEQEC) was created under the Government Owned Corporations (Queensland Transmission and Supply Corporation) Regulation 1994 (Qld). It assumed the rights and liabilities of SEQEB. SEQEC became an unlisted public company in July 1997 when it was renamed the South East Queensland Electricity Corporation Limited. It changed its name to Energex Limited on 29 July 1998.
7 In May 2003 Energex commenced proceedings against a number of companies and their officers for alleged collusive tendering and deceit relating to the supply of power and distribution transformers over a period of some 20 years. Some of the respondents have had different names at different times of their existence. The respondents are as follows:
1. Alstom Australia Ltd (Alstom) formerly named GEC-English Electric Pty Ltd between October 1957 and 17 July 1989. It was named GEC Alsthom Australia Ltd between 18 July 1989 and 21 June 1998. It then became known as Alstom. Alstom is the first respondent. The third, fourth and fifth respondents, Messrs. Richard Elliott, Paul Grabham and Colin James are or have been executives or directors of Alstom.
2. Rexel Australia Ltd which was formerly named GEC Australia Limited between 7 February 1978 and 4 February 1998 is the second respondent.
3. Wilson Transformer Company Pty Ltd (WTC) which has carried on business in Victoria since at least 1980 is the sixth respondent. Mr Robert Wilson, its managing director, is the seventh respondent. Mr David Peck, formerly a sales and marketing manager with WTC, who ceased employment with it in 1995, is the eighth respondent.
4. ABB Transmission and Distribution Ltd (ABBTDL) was known as Tyree Industries Limited between February 1956 and 21 April 1993 when it changed its name to AAB Transmission Limited. It changed its name again on 21 December 1995 and became ABBTDL. It is the holding company of an entity originally named Tyree Electrical Co Limited (TEC). That company later changed its name to ABB Power Transmission Pty Ltd (ABBPT). The latter company has been wound up. ABBTDL is the ninth respondent. Messrs. Douglas Pitt, David Toogood, Russell Ellen, Chris Tape and Graham Jones have held senior managerial positions at ABBPT or ABBTDL. They are the tenth to fourteenth respondents inclusive. Messrs. Tape and Jones, the eleventh and thirteenth respondents, had not been served at the time of the judgment the subject of the application for leave to appeal and were not formally parties to the motion which is the subject of the present application. Mr Raymond Boyce, who is the fifteenth respondent and is said to have been the managing director of Tyree Transformers Pty Ltd from February 1993, had not been served at the time of the hearing of the motion which is the subject of the present application.
5. Schneider Electric (Australia) Pty Limited was named Telemecanique (Australia) Pty Limited between December 1972 and 29 December 1992. It changed its name to Schneider Pty Ltd from 30 December 1992 until 1 March 1999 and became Schneider Electric (Australia) Pty Limited (Schneider) on 2 March 1999. In 1993 it acquired all the issued shares in Australian Standard Electrical Transformers Pty Ltd (ASET) which manufactured and supplied distribution transformers from 1980 to 1983. Schneider is the sixteenth respondent. Messrs. Russell Stocker, Ashley Smout and Wendy Minne, the seventeenth, eighteenth and nineteenth respondents, have all held senior management positions with Schneider.
The Statement of Claim
8 In a lengthy statement of claim comprising 121 pages and 408 paragraphs with eight pages of annexures, Energex alleges against the corporate respondents that in various combinations they have, since 1982, entered into and given effect to a number of arrangements which amounted to collusive tendering agreements.
9 The first arrangements pleaded are set out at pars 64 and 65 of the statement of claim and date back to 1982. In par 64 of the statement of claim Energex alleges that by no later than 1982 transformer manufacturers had made an agreement or arrangement or arrived at an understanding (the transformer arrangement) whereby:
(a) they would allocate tenders for the production and supply of transformers amongst themselves with a view to each of them maintaining their share of sales of power transformers and distribution transformers;
(b) the maintenance of each manufacturer’s share of sales would be achieved by the manufacturers agreeing to the allocation of tenders for the production and supply of transformers to a particular manufacturer (the selected manufacturer) in the expectation that the selected manufacturer would be awarded the contract resulting from the tender;
(c) the allocation of a contract to the selected manufacturer would be sought to be achieved by the selected manufacturer submitting a tender at a lower Assessed Annual Value (‘AAV’) than the tenders submitted by other manufacturers, or by the other manufacturers not submitting a tender;
(d) the submission of the tender by the selected manufacturer at a lower AAV would be achieved by the manufacturers discussing their tenders with each other, and the manufacturers other than the selected manufacturers ensuring that their tenders yielded a higher AAV than the tender of the selected manufacturer.
The AAV is described in particulars to par 60
of the statement of claim as ‘an amount representing the capital cost of
the transformer
(ie price) plus the capitalised cost of the losses of
electricity that will result from the use of the transformer over its
life’.
The AAV is said to often be referred to as the ‘total
cost’. A formula for the calculation of the AAV is set out in
the
particulars to par 60. It is not necessary to reproduce it for present
purposes.
10 By way of further and alternative plea in par 65 of the statement of claim, Energex alleges that no later than 1982 GEC, WTC and TEC made an agreement or arrived at an understanding involving the allocation of tenders and supply of power transformers between the three manufacturers with a view to each of them maintaining their share of sales of power transformers. This is referred to in the pleading as the pre-1993 Power Transformer Arrangement.
11 Alstom is said to have become a party to the Transformer Arrangement and, alternatively the pre-1993 Power Transformer Arrangement in place of GEC, in April 1989. From 1982 until late 1983 ABBPT, GEC and then Alstom, and WTC are said to have given effect to either the Transformer Arrangement or the pre-1993 Power Transformer Arrangement. Tyree is said to have become a party to the Transformer Arrangement in or about 1983.
12 A further agreement or arrangement is pleaded in par 179. This is said to have been made in or about early 1993 between ABBPT, WTC and Tyree. It is referred to in the pleadings as the 1993 Distribution Transformer Arrangement.
13 It is alleged that in a meeting in October 1993 or meetings held at about that time, ABBPT, Alstom and WTC made an agreement or arrangement or arrived at an understanding which is referred to in the pleadings as the 1993 Power Transformer Arrangement. This is said to have confirmed the pre-1993 Power Transformer Arrangement subject to certain changes . A further agreement, arrangement or understanding is said to have been made in May 1995 between ABBPT, WTC, Tyree and Schneider and is referred to in the pleadings as the 1995 Distribution Transformer Arrangement.
14 The learned primary judge summarised the statement of claim and the following outline is substantially drawn from his summary.
15 The statement of claim pleads two classes of cause of action. The first class involves allegations of a large number of breaches by the corporate respondents of s 45 of the Act. The second class involves claims that the respondents committed the tort of deceit on various occasions.
16 Energex alleges against the corporate respondents that their pleaded agreements, arrangements or understandings contained exclusionary provisions in contravention of s 45(2)(a)(i). It also asserts that their conduct constituted, in each case, the making of an agreement, arrangement or understanding containing a provision to which s 45A(1) applied and which therefore had the purpose or was likely to have the effect of substantially lessening competition for the supply of transformers in one or other of the pleaded markets. This was said to be in contravention of s 45(2)(a)(ii). Energex also relies upon s 45(2)(b)(ii). It claims that the conduct of the corporate respondents constituted giving effect to a provision of an agreement, arrangement or understanding which was an exclusionary provision in contravention of s 45(2)(b)(i). It alleges accessorial liability on the part of the officers and former officers of the corporate respondents.
17 The allegations of deceit appear at pars 400 to 406 of the statement of claim. They are as follows:
‘400. During the period from 1985 until 2002, SEQEB and ENERGEX purchased transformers from GEC, Alstom, WTC, ABBPT, ABBTDL, Tyree and Schneider pursuant to contracts awarded by the selection of a tenderer after completion of a public tender process.
Particulars
Particulars of the tender reference numbers, the closing date for tenders, the tenders submitted and the identity of the successful tenderer are contained in Annexure A to this Statement of Claim.
401. In relation to each such tender process:
(a) Invitations to tender were published in a newspaper circulating in the Brisbane area.
(b) The invitations specified the place at which copies of the tender documents would be provided.
(c) The invitations specified that tenders had to be sealed.
(d) The invitations specified the closing date and hour for tenders.
(e) The invitations specified that tenders would be publicly opened immediately after the closing time for the tender.
402. In submitting a tender in response to the invitation by SEQEB or ENERGEX, each tenderer, in respect of those tenders set out in Annexure A hereto, represented that the price and other terms of the tender submitted by it:
(a) had been arrived at by the tenderer without any knowledge of the price and terms, or likely price and terms, of any other tender; and
(b) was not the subject of any agreement, arrangement or understanding between the tenderer and any other manufacturer or supplier of the goods the subject of the tender;
Particulars
The representations are to be implied from the submission of a tender in the circumstances specified in paragraph 401 hereof.
403. Those representations were made with the intention of inducing the person who issued the invitation to tender to accept one of the tenders.
404. Those representations were false, in that:
(a) each tenderer had arrived at the price and other terms of the tender submitted by it after discussing that price and other terms with another manufacturer or supplier of the goods the subject of the tender;
(b) the price and other terms of the tender submitted by it was the subject of an agreement, arrangement or understanding between the tenderer and another manufacturer or supplier of the goods the subject of the tender.
405. Those representations were made dishonestly, in that they were made with knowledge of their falsity.
406. The person issuing the invitation to tender acted in reliance on those representations and was induced thereby to accept one of the tenders.’
18 The damages said to flow from the contraventions of s 45 of the Act are set out at pars 381 to 385 and are in the following terms:
‘381. The conduct referred to in paragraphs 362 to 380 hereof constituted the making of or the giving effect to arrangements between:
(a) GEC, WTC, ABBPT, and Tyree from 1983 until early 1989;
(b) Alstom, WTC, ABBPT and Tyree from early 1989 until May 1995;
(c) Alstom, WTC, ABBPT, Tyree and Schneider from May 1995 until 1 January 1996;
(d) Alstom, WTC, ABBTDL, Tyree and Schneider since 1 January 1996.
382. In light of the matters referred to in paragraphs 31 to 60, and in light of accepted economic principles, such conduct resulted in the suppliers of transformers charging higher prices than they otherwise would have charged.
383. During the period from 1983 until 2002, the prices paid by SEQEB and ENERGEX for power transformers and distribution transformers exceeded the prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof.
Particulars
The best particulars of those prices which can be provided by the Applicant before the completion of discovery are set out in Annexure B to this Statement of Claim.
384. The prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof have been estimated by:
(a) isolating the prices paid by SEQEB and ENERGEX for transformers over the period from 1983 to 2002;
(b) estimating the costs of manufacturing transformers over the period from 1983 to 2002;
(c) calculating the contribution margin, being the ratio of the price paid less the variable cost to the price paid, over that period;
(d) identifying the lowest contribution margin to the transformer manufacturers over that period;
(e) using that lowest contribution margin as an upper bound to the contribution margins which would have prevailed but for such collusive conduct;
(f) adding that contribution margin to variable costs to estimate the prices which would have prevailed but for the collusive conduct.
385. SEQEB and ENERGEX have suffered damage as a result of the price paid by them for power transformers and distribution transformers exceeding the prices which would have prevailed but for the conduct referred to in paragraphs 362 to 380 hereof.
Particulars
The damages are particularised in Annexure B to this Statement of Claim.’
19 The loss and damage said to have flowed from the deceit complained of is set out in par 407 in the following terms:
‘By virtue of the matters specified in paragraphs 400 to 406 hereof, SEQEB and ENERGEX suffered loss and damage.
Particulars
(a) If the representation had not been made, the person issuing the invitation to tender would have investigated why that tenderer was unwilling to participate in a public tender process, and further or alternatively would have referred the matter to the Australian Competition and Consumer Commission, or its predecessor the Trade Practices Commission.
(b) There was a chance that such investigation or referral would have disclosed the existence of one or more of those arrangements, in which event SEQEB or ENERGEX could have prevented the Respondents from continuing to give effect to those arrangements.
(c) SEQEB and ENERGEX lost the opportunity to prevent the Respondents from continuing to give effect to those arrangements.
(d) Had the Respondents been prevented from continuing to give effect to those arrangements, SEQEB and ENERGEX would have paid less than they did for their purchases of transformers.’
The Strike Out Motions
20 Various of the respondents filed three notices of motion in the proceedings seeking summary dismissal of the Energex claim or the striking out of parts of its pleading. The first to fifth respondents (the Alstom respondents) filed their motion on 20 August 2003 and an amended motion on 15 October 2003. The sixth and seventh respondents (the Wilson Transformer respondents) filed their motion on 20 August 2003 and the sixteenth to nineteenth respondents (the Schneider respondents) on 28 April 2003.
21 On 7 May 2004 each of the motions was dismissed by Weinberg J – Energex Limited v Alstom Australia Ltd [2004] FCA 575. The Alstom respondents and the Wilson Transformer respondents have filed notices of motion seeking leave to appeal against his Honour’s judgment.
The Earlier ACCC Proceedings
22 The ACCC commenced two sets of proceedings against the Alstom respondents and the Wilson Transformer respondents, one in 1999 relating to dealings affecting transformers and the other in 2000 relating to distribution transformers. Declarations and findings of fact against the Alstom respondents were made in favour of the ACCC by the Court and injunctions were granted by consent – Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 and Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-839.
23 The injunctive relief sought by Energex against the Alstom respondents in these proceedings is said to be substantially the same as the injunctive relief awarded in the two ACCC proceedings. A similar point is made by the Wilson Transformer respondents who were also the subject of the proceedings commenced by the ACCC and who submitted to consent injunctions in relation to power and distribution transformers – Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2 – Power Transformers) [2002] ATPR 41-871 and Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2 – Distribution Transformers) [2002] ATPR 41-872.
24 As will be seen later the grant of the injunction against the Alstom and Wilson Transformer respondents is said to be relevant to the propriety of the claims for damages under s 87 of the Act brought ancillary to claims for injunctive relief under s 80.
The Reasons for Judgment of the Learned Primary Judge
25 The Alstom respondents submitted to his Honour that the allegations pleaded against them should be dismissed under O 20 r 2(1) of the Federal Court Rules or struck out under O 11 r 16. Their essential contentions were:
1. Energex had failed to plead the essential elements required to establish a cause of action in deceit.
2. A significant number of the allegations did not ‘deal with’ Energex and did not disclose a cause of action maintainable by it.
3. A significant number of the claims based on s 82(1) of the Act were statute barred.
4. The claims based on ss 80 and 87 of the Act constituted an abuse of process in that they served no independent purpose other than to avoid the limitation period in relation to claims statute barred under s 82.
26 The Wilson Transformer respondents joined with the Alstom respondents in submitting that all the causes of action for damages pursuant to s 82(1), apart from those arising from one specific tender number QES30/98, were statute barred because they had not been commenced within the time specified by s 82(2). They further contended that the claim for injunctive relief under s 80 and for loss or damages under s 87(2)(d) should be dismissed as disclosing no reasonable cause of action or as being frivolous or vexatious or constituting an abuse of process. They submitted that the claim for deceit should be summarily dismissed. The learned primary judge set out in some detail the arguments advanced by these respondents. It is not necessary to set them out again in these reasons. It is sufficient to go straight to his Honour’s reasoning on the various points made.
27 His Honour began by accepting that the proceedings have the potential to run for months if they go to trial. The conduct of the proceedings so far indicated that they would be hard fought with every conceivable point likely to be taken.
28 His Honour set out the general principles governing applications for summary disposition of proceedings enunciated in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 (Dixon J) and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-130 (Barwick CJ). The essential proposition emerging from those authorities, as stated by his Honour, is that the power to order summary judgment in favour of a respondent must be exercised with caution and should not be exercised unless it is obvious that there is no real question to be tried. A similar approach was required in considering the striking out in whole or in part of a pleading under O 11 r 16. None of these propositions was contentious.
29 His Honour then considered whether the claims under s 82 of the Act were time barred. He accepted the contention by counsel for Energex that it would be contrary to basic principle to deprive an injured party of its right to compensation arising out of an allegedly fraudulent conspiracy merely because the conspiracy was not detected until after the limitation period had expired. He also accepted the submission that s 82 should be interpreted without any preconception flowing from the ordinary application of common law doctrines of tort and contract. The task for the Court was to construe the expression ‘suffers loss or damage’ in s 82(1) and the cognate expression concerning when the cause that relates to the ‘conduct accrued’ in s 82(2). While those expressions were to be given their ordinary and natural meaning it was a meaning to be informed by the extensive body of authority about the time of accrual of causes of action arising out of misconduct or breach of statute. His Honour observed that some of the cases suggest that this occurs only when the misconduct or breach comes to light. He took the example of the case of a building with a latent defect. When such a building is purchased the plaintiff does not suffer economic loss until the defect becomes manifest. His Honour noted that the way in which such a case is typically pleaded is to assert that the loss results from the payment of a greater amount than would have been paid had the defect been known. In some cases under s 52 of the Act involving the purchase of an asset it may be the case that a finding cannot be made until the benefits and burdens of the transaction have been fully ascertained. That may be long after the date of purchase of the asset.
30 Energex rejected the respondents’ characterisation of its pleading as a claim that it had paid more for the transformers it purchased than it ought to have done and that, but for the cartel, it would have paid less for them. Energex argued that it had suffered damage as a result of the price being paid exceeding the price that would have prevailed but for the contravening conduct. Counsel for Energex submitted that:
‘... just like the person who buys the building with the latent defects that one day will emerge into cracks that devalue it, we acquired transformers in the market in circumstances in which the day after we acquired them, just like the building with the canker working away at its foundations, our transformer was worth exactly what we paid for it the day before and remained so, until the fact of the cartel and the fact that the market was rigged emerged.’
Counsel for Energex submitted that Energex could not have sued the respondents for the difference between the price paid for the transformers and their ‘value’ the day after they had been purchased. This is because the only measure of true market value was a hypothetical fair and honest market. That would have required the fact that the market had been rigged to become manifest.
31 His Honour found support for the Energex submission in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 and particularly the discussion by Brennan J of the proposition that a loss is suffered only when the true extent of the benefit and burden of the various transactions can be ascertained. He also found support for the Energex contention in Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35. His Honour said: (at [178])
‘On that analysis, Energex could not be said to have paid more than the market value for the transformers purchased until it became clear what that market value actually was. That could not have occurred until it was discovered that the market had been rigged.’
His Honour observed that in summary Energex’s primary case was not that it suffered loss at the moment it paid for the transformers but that it suffered loss because it paid more than it ought to have done in a free market. He found it to be arguable that Energex did not suffer loss within the meaning of that expression in s 82(2) until the market rigging became manifest. At that point it could be ascertained that it had suffered loss and that the loss could be quantified. He made no final determination on that point. The only question was whether the Energex contention that its claims were not time barred was arguable.
32 He considered an alternative submission by Energex that the word ‘suffers’ in s 82(1) connotes knowledge on the part of the victim of the facts that give rise to the loss or damage alleged. Although it accepted that there was no authority directly on point, Energex argued that there were highly persuasive dicta in cases such as Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 and Wardley that gave it some support. After referring to passages from the judgments in those two cases, his Honour said he had difficulty in accepting that variant of the Energex case. It relied upon a strained meaning being given to the word ‘suffers’ in s 82(1). His Honour observed that in ordinary parlance a person can ‘suffer’ loss or damage without being aware of the facts that give rise to it. The analogy between the present case and that of a latent building defect was not as exact as contended by Energex, nor was the analogy between the present case and the contingent case such as Wardley.
33 His Honour accepted the force of the contention that it does not lie in the mouth of those who have engaged in serious and persistent misconduct, to say that having managed to keep their misconduct secret for long enough, they are entitled to take the benefit of a limitation defence. He said (at [193]):
‘The miscreants, having by their conspiracy not merely injured Energex, but also prevented it from discovering what was happening, should not be permitted to take advantage of their own misconduct.’
His Honour observed, correctly however, that s 82(2) contains no express fraud exception. He found it unnecessary to come to any firm conclusion about the matter. He said (at [196]):
‘It is sufficient to say, as I have done, that it is arguable that in cases where what is claimed is economic loss arising from the purchase of an asset, no loss is suffered until there has been an actual balancing of benefits and burdens, leading to the conclusion that loss has been incurred. Alternatively, no loss is suffered until it becomes possible to ascertain that an adverse balance has been struck.’
34 His Honour cited the majority judgment in Wardley and the discussion of contingent losses. He also referred to Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 204 ALR 26. He referred to the statement by the High Court in that case that the expression ‘loss or damage’ should not be given a narrow meaning and was not confined to economic loss. He said (at [205]):
‘Importantly, the Court held that if a party enters a contract that exposes that party to a contingent loss or liability (that is, the possibility of future detrimental consequences), no damage is sustained until the contingency is fulfilled and the loss becomes actual.’
35 His Honour acknowledged that there was no question of Energex having entered into a contract that exposed it to a contingent loss or liability. Nevertheless, the reasoning in Wardley, Karedis and Murphy lent some support to the Energex argument that it did not suffer loss or damage at the moment it entered into each of the agreements pleaded. Rather, it suffered loss only at the point that it could be ascertained that the price it had paid exceeded the market value of the goods. That was on the basis that ‘market value’ was treated as a value untainted by market rigging. His Honour therefore found it unnecessary to determine whether Energex’s alternative contention about the meaning of the word ‘suffers’ was arguable. There was sufficient of an arguable case to conclude that Energex should not be shut out of court on the basis of the time limitation in s 82(2). It was also unnecessary to accept as arguable the Energex submissions regarding what it might do if the respondents sought to rely upon the time limitation. It was pointed out that it was theoretically possible that they would not plead the limitation defence. However, his Honour was not persuaded by that submission. The notices of motion before the Court made it abundantly clear that the respondents would, if required to file defences, plead the limitation defence.
36 Energex foreshadowed that if such a defence were pleaded, the statement of claim would be amended to seek damages based not on the original breaches of s 45 but rather upon the unconscionable conduct involved in pleading the defence. Such relief, it was said, would arise under s 51AC of the Act. His Honour was not persuaded by the submission that a party who entered into a contract and sought to plead a defence or take advantage of a legal right in circumstances where it would be ‘unconscionable’ to do so thereby contravening s 51AC. That submission required the expression ‘in trade or commerce’ to be given an unduly wide meaning. His Honour referred to a number of authorities in that connection – Little v Law Institute of Victoria (No 3) [1990] VR 257 at 273 and Australian Associated Motor Insurers Ltd v NRMA Insurance Ltd [2002] FCA 1061; (2002) 124 FCR 518. He found no basis for invoking an estoppel of the kind raised in the Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394. The respondents had not undertaken expressly or impliedly not to plead a limitation defence. In Hawkins, Deane J had raised the possibility that an injunction might lie to prevent reliance upon such a defence where it would be unconscionable to permit it to be raised. However that analysis had not commended itself to the other members of the court.
37 Energex also relied upon the doctrine of fraudulent concealment, as it is called in the United States, and cited Atlantic City Electric Co v General Electric Co 312 F2d 236 (2nd Circuit 1962), which was a decision of the United States Court of Appeals, Second Circuit. The court there held that the fraudulent concealment doctrine applied unless Congress expressly provided to the contrary in clear and unambiguous language. A similar approach had been taken by the US Supreme Court in Bailey v Glover 88 US 342 (1874).
38 However, his Honour found that the Full Federal Court in Wardley had expressly considered and rejected any such principle – Western Australia v Wardley Australia Ltd (1991) 30 FCR 245. In that case the Full Court had said (at 269):
‘The equitable doctrine of concealed fraud does not operate to prevent a defendant to a purely legal claim, not being a claim also cognisable in the concurrent jurisdiction of an equity court, from pleading the Statute of Limitations.’
Nothing said by the High Court in Wardley, on appeal, had cast any doubt upon the correctness of the approach taken by the Full Court. His Honour referred also to Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302 at 306 and 308 (Handley JA) which he said pointed in the same direction. In any event, notwithstanding his Honour’s scepticism about the application of equitable doctrines to defeat a limitation plea, he was not persuaded that the Energex claims for damages under s 82(1) were untenable. He also referred to what the High Court said in Wardley (at 533):
‘We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.’
39 The respondents submitted to his Honour that if the claim for damages under s 82(1) was time barred, then Energex’s reliance upon s 87(1) to claim damages as a ‘bi-product of a spurious application for injunctive relief’ amounted to abuse of process. Given his Honour’s conclusion that the claims for damages under s 82(1) were not so clearly time barred as to warrant summary dismissal, it was not strictly necessary to deal with this alternative argument. But even if the claims brought under s 82(1) were statute barred it would not follow that bringing an alternative claim under s 87(1) in conjunction with a claim for injunctive relief would amount to an abuse of process. He acknowledged that the ACCC had already obtained injunctive relief against the relevant respondents in earlier proceedings. While that might affect the exercise of the discretion to grant additional injunctive relief, it was not a bar to it. Once it was accepted that Energex was entitled to seek injunctive relief there was no reason why it should be prevented from seeking damages under s 87(1). His Honour said (at [242]):
‘If Energex can make good its claim that the respondents have systematically engaged in collusive tendering over many years, there would be every justification, in my view, for permitting it to plead its case under s 87(1) so that it could recover damages’.
40 His Honour accepted that the current weight of authority in Australia lies against the existence of a doctrine of fraudulent concealment in answer to a limitation defence save for purely equitable proceedings. But the principles underlying the doctrine are relevant when considering whether an applicant’s attempt to find an alternative basis upon which to press its claim should be regarded as an abuse of process. His Honour could see nothing wrong with Energex’s claim in this respect. If, as alleged, the respondents had engaged in systematic fraud they could hardly complain about Energex’s reliance upon a remedy for which the Act expressly provides. He did not accept as a valid characterisation, the respondents’ description of Energex’s conduct as an attempt to ‘circumvent’ the protection afforded by the Act. Not only was fraudulent conduct alleged against the respondents in the case, but also fraudulent concealment of the conduct. It was ‘quite inappropriate’ to describe Energex’s reliance upon s 87(1) to claim both injunctive relief and damages as an abuse of process.
41 His Honour dealt briefly with the deceit pleading. He accepted that it was at least arguable that the conduct of the respondents in engaging in the tender process, as it was alleged they did, gave rise to an implied representation that the process was being conducted in a proper and lawful manner. Energex did not have to rely upon the existence of any duty on the part of the respondents to inform it of the true position. The question was simply whether their conduct was apt to indicate that what were in truth collusive tenders were genuine and separate bids. It was at least arguable that the respondents, by their alleged conduct in submitting tenders in accordance with the regulated tender process, made the representations pleaded. That was sufficient to avoid summary dismissal or a strike out application.
The proposed grounds of appeal by the Alstom respondents
42 The Alstom respondents prepared a draft notice of appeal which was exhibited to the affidavit of Katherine Ann Watts, sworn 22 July 2004 and filed in support of the application for leave to appeal against his Honour’s decision. The grounds were as follows:
‘Section 82 of the Trade Practices Act
3. The learned primary Judge should have found that the claims for damages under s 82(1) of the Trade Practices Act 1974 (Cth) (the Act) were clearly time barred by the provisions of s 82(2) of the Act and should therefore be summarily dismissed.
4. The learned primary Judge should have found that, having regard to the manner in which Energex pleaded its case in the statement of claim (especially in paragraphs 381-385 thereof), Energex first suffered loss or damage for the purposes of s 82(1) of the Act, and any cause of action relating thereto accrued for the purposes of s 82(2), no later than the times at which Energex acquired and paid for (or agreed to acquire and pay for) each of the subject transformers.
5. The learned primary Judge erred in holding (in paragraph 236) that it was at least arguable that any loss or damage suffered by Energex did not occur until after 26 July 1998, the date on which time began to run.
6. The learned primary Judge erred in holding (in paragraphs 178 to 179) that it was reasonably arguable that Energex could not be said to have paid more for the transformers than it ought to have done in the free market until it became clear what the market value was, and this could not have occurred until it was discovered the market was rigged.
7. The learned primary Judge erred in holding (in paragraph 179), having regard to the manner in which Energex’s case was pleaded, that it was reasonably arguable that Energex did not suffer loss or damage within the meaning of s 82(2) of the Act, and accordingly that Energex’s cause of action in relation to that loss or damage did not accrue, until discovery of the contravening conduct and/or the market rigging became manifest.
Section 87(1) of the Act
8. The learned primary Judge should have found that the claim for injunctive relief under s 80 of the Act was in all the circumstances an abuse of process, and that claim, together with the claim for consequential orders under s 87(1) of the Act, should be summarily dismissed.
9. The learned primary judge erred in concluding that there was no reason why Energex should not seek the additional protection of the injunction under s 80 of the Act (and consequential relief under s 87(1) of the Act), without stating reasons for that conclusion and when (inter alia):
(a) Energex was seeking to re-litigate the claim for injunctive relief already litigated in concluded proceedings instituted by the ACCC;
(b) Energex had not sought to make any allegations against the appellant in its statement of claim that would justify injunctive relief additional to that already granted by this honourable Court at the suit of the ACCC;
(c) there was undisputed evidence before the learned primary judge indicating that there was no reasonable likelihood of any repetition of the subject conduct by any of the appellants;
(d) the learned primary Judge should have inferred that the principal, if not the only, reason for the inclusion of a claim for relief under s 80 of the Act was to grant a consequential claim for an order under s 87(2)(d) of the Act in circumstances where a claim for damages under s 82 would have been time barred.
10. The learned primary Judge erred in holding (in paragraph 243) that the principles underlying the equitable doctrine of fraudulent concealment were relevant when considering whether Energex’s attempt to find an alternative basis upon which to press its claim for damages should be regarded as an abuse of process.
Deceit
11. The learned primary Judge erred in holding (in paragraphs 246 and 251) that it was at least arguable that the conduct of the respondents in engaging in the tendering process gave rise to an implied representation that the process was being conducted in "a proper and lawful manner", or to the particular representations pleaded in the statement of claim.
12. The learned primary Judge failed to follow or have regard to the decision of Lindgren J in ACCC v CC (NSW) Pty Ltd [1999] FCA 954; (1999) 92 FCR 375 at [203] – [213], to which he was referred in argument.
13. The learned primary Judge failed to find that the damage pleaded in paragraph 407 of the statement of claim was insufficiently connected, in a causal sense, with the pleading of deceit and this part of the claim should be summarily dismissed or struck out.
Generally
14. The learned primary Judge:
(a) erred in failing to deal with the orders sought by the Appellants at paragraph 2, 2A, 2B and 2C of the Notice of Motion filed by the Appellants.
(b) should have found that paragraphs 344 to 347 and 354 to 355 of the statement of claim do not disclose a reasonable cause of action and have a tendency to cause prejudice, embarrassment or delay and should be summarily dismissed or struck out.
(c) in the alternative to paragraph 3 above should have found that paragraphs 185-186, 193-207; 215-216; 230-235; 240-243; 248-273; 282-300; 307-308; 314-319; 328-335 and 342-343 of the statement of clam failed to disclose a reasonable cause of action and/or had a tendency to cause prejudice, embarrassment or delay in the proceedings and should be summarily dismissed or struck out.’
The proposed grounds of appeal by the Wilson Transformer respondents
43 A draft notice of appeal on behalf of the Wilson Transformer respondents was attached to an affidavit of David Andrew Brewster and was as follows:
‘Loss or damage under s 82(1) of the Trade Practices Act
1. The learned primary judge erred in concluding that it was arguable that the respondent ("Energex") did not suffer loss or damage for the purpose of s 82(2) of the Trade Practices Act ("the Act") until the conduct alleged to be in contravention of the Act became manifest and ought to have concluded that any loss or damage that Energex may have suffered was suffered at the moment it paid (or contracted to pay) for the transformers.
2. The learned primary judge erred in holding that Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 supported the conclusion referred to in paragraph 1 and ought to have held that Wardley supported the opposing contention that Energex suffered loss or damage (if at all) at the moment when it paid (or contracted to pay) for the transformers.
3. The learned primary judge erred in holding that Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 supported the conclusion referred to in paragraph 1.
4. The learned primary judge erred in holding that the claim for loss or damage pleaded by Energex was analogous to that of a purchaser in the latent defect building cases.
5. The learned primary judge erred in holding that the case pleaded by Energex was that Energex suffered loss or damage at the moment when the conduct alleged to be in contravention of the Act became manifest and ought to have found that the case pleaded for Energex was that it suffered loss at the moment it paid for the transformers.
Abuse of process
6. The learned primary judge erred in rejecting the contention by the appellants that the claims for injunctive relief and damages under s 87(1) of the Act were an abuse of process and ought to have found that such claims were an abuse of process.
7. The learned primary judge erred in (apparently) holding that, if the appellants (and the other respondents) had engaged in systematic fraud as alleged, such conduct disentitled them from complaining that the purported reliance by Energex upon a remedy for which the Act expressly provides was an abuse of process.
8. The learned primary judge erred in holding that the making by Energex of the allegations in the Statement of Claim concerning the conduct of the appellants (and the other respondents) (which his Honour characterised as fraudulent conduct and fraudulent concealment of such conduct) answered the contention by the appellants that the application for injunctive relief and damages under s 87(1) of the Act constituted an abuse of process.
Deceit
9. The learned primary judge ought to have held that the facts pleaded in the statement of claim could not give rise to a liability in deceit.
10. The learned primary judge failed to have regard to the decision of Lindgren J in ACCC v CC (NSW) Pty Ltd [1999] FCA 954; (1999) 92 FCR 375.’
The statutory framework – sections 82 and 87 of the Act
44 Section 82 of the Act in its present form provides:
‘Actions for damages
(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
...
(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.’
45 Prior to 26 July 2001, s 82(2) provided a limitation period of three years only. The amendment to extend that limitation period to six years came into effect on that date. The relevant transitional provisions appeared in Item 21 of Sch 1 to the Trade Practices Amendment Act (No 1) 2001 (Cth) and provided:
‘Application of item 20
(1) The amendment made by item 20 [ie the amendment to s 82(2))] applies in relation to conduct engaged in on or after the commencement of that item.
(2) The amendment made by item 20 also applies in relation to conduct engaged in before the commencement of that item, but only if the period that:
(a) relates to the conduct; and
(b) applied under subsection 82(2) of the Trade Practices Act 1974 before the commencement of that item;
had not ended when that item commenced.’
46 Section 87 of the Act provides, inter alia:
‘(1) Without limiting the generality of section 80, where, in a proceeding instituted under this Part, or for an offence against Part VC, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IV, IVA, IVB, V or VC, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, 86C or 86D, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.
...
(2) The orders referred to in subsections (1) and (1A) are:
...
(c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;
(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;’
The criteria for the grant of leave to appeal
47 Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides, inter alia, that an appeal shall not be brought from an interlocutory judgment of a judge of the Court unless the Court or a judge gives leave. There is no dispute that the judgment of the learned primary judge dismissing the strike out motions was interlocutory in character. The Alstom and Wilson Transformer respondents therefore require the leave of the Court to appeal against that judgment.
48 In this case the argument for leave and the substantive argument on the merits of the appeal were heard together. The application for leave itself necessarily involved some canvassing of the merits of the judgment at first instance. Given the complexity of the statement of claim that could not be done in any superficial way. Presentation of an integrated argument on the question of leave and on the merits was accepted as a matter of convenience and economy.
49 Criteria for the grant of leave to appeal from an interlocutory judgment were enunciated in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397. Before leave will be granted it must be shown that the decision at first instance is attended with sufficient doubt to warrant its reconsideration on appeal. It must also be shown that substantial injustice is likely to result if leave were refused – see also Minogue v Ling [2000] FCA 125 and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 at 584.
50 These are the criteria to be applied on the motions for leave to appeal now before the Court. It is convenient to consider the leave question by considering the submissions going to the merits of the three principal issues agitated before his Honour. The first of those questions is whether the causes of action in damages under s 82 of the Act are statute barred by virtue of the time limits applicable under s 82(2) at the time the proceedings were commenced. The second is whether the alternative reliance upon s 87 to claim damages is an abuse of process. The third issue is whether the claims in deceit are tenable.
The viability of the claims for damages under s 82
51 In par 382 of the statement of claim Energex alleges that ‘in light of accepted economic principles’ the conduct of the respondents resulted in the suppliers of transformers charging higher prices than they otherwise would have charged. In par 383 it is said that SEQEB and Energex ‘during the period from 1983 until 2002’ paid prices for transformers which exceeded the prices which would have prevailed but for the conduct complained of. A mode of calculation of the prices ‘which would have prevailed but for the conduct’ is set out in par 384. Then it is said in par 385 that SEQEB and Energex suffered damage as a result of the price paid by them for the transformers exceeding the prices which would have prevailed but for the conduct.
52 The Alstom respondents submit that, by reason of the provisions of s 82(2) as they stood before 26 July 2001 when the three year time limit became a six year time limit, causes of action which accrued more than three years before 26 July 2001, ie before 26 July 1998, were statute barred when the amendment came into effect. The present proceedings were instituted on 23 May 2003. The Alstom respondents referred to the chronology of the impugned tenders in the statement of claim. The tenders pleaded in pars 69 to 343 were performed before the cut-off date of 26 July 1998. The remaining tender, set out in pars 343 to 348 was performed on 30 April 1999. As particularised, it was said not to have involved any of the Alstom respondents.
53 A similar submission was made by the Wilson Transformer respondents. At the heart of their argument was the proposition that, on the pleaded case, the loss or damage suffered by Energex necessarily arose immediately upon entry into each tender contract pleaded. There was no question of contingent liabilities or unfairness in compelling an applicant to institute a proceeding before the existence of its loss was known. There was no possibility that the Court would be placed in a position of estimating damages on the basis of likelihood or probability, instead of assessing damages by reference to established events. The agreements imposed upon Energex an obligation to pay an amount of money without acquiring a corresponding benefit. The Wilson Transformer respondents submitted:
‘From the moment that Energex entered into each tender contract it subjected itself to an obligation to pay a price for power transformers and distribution transformers allegedly "exceeding the prices which would have prevailed but for the conduct referred to in paragraphs 362-380 hereof".’)
54 Energex’s argument in support of the viability of its s 82 claims began with the proposition that the language of the section is not concerned simply with when loss or damage is incurred within the conceptions of the general law or other statutes – Wardley at 258-259. A similar point could be derived from passages in the judgments in I and L Securities Pty Ltd v HGW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at 135 (McHugh J) and Murphy at 34.
55 Energex submitted that it did not suffer loss until the fact of the cartel and the fact that the market was ‘rigged’ emerged. Until then, its loss was neither ascertained nor ascertainable. There was, at the time of purchases, no market by reference to which it could be shown that the transformers were worth less than it paid for them. There was no possibility of establishing a true value until the false market problem was corrected. This approach was said to be ‘consistent with common sense and fairness in that it avoids the result that a right of action might be lost before the party on whom it was conferred even knew or could have known of the facts which gave rise to it, an intention not lightly to be attributed to the legislature which created the cause of action in s 82(1) of the Act.’ There is, it was said, no authority which denied this construction of s 82.
56 Energex referred to a number of authorities to support the proposition that a construction of s 82 was supportable under which loss or damage was suffered when ascertained. By way of example, in Wardley’s case in the High Court, Brennan J said (at 536-537):
‘...if a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time the burden is borne – that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of the liability. The transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur.’
57 In Karedis, the Full Court of the Federal Court was concerned with a case involving the lease of premises for the purpose of conducting a café business. The tenants’ entry into the lease was said to have been induced by misrepresentations as to the likely takings of the café. The losses included trading losses from December 1988 which were said to be barred by s 82(2). Burchett and Hill JJ held that the entry into the lease gave rise to the potential to suffer loss which could only be calculated over time. The question was, when was the loss reasonably ascertainable.
58 In the same case Sackville J, agreeing with Burchett and Hill JJ, said (at 48):
‘Another approach is to determine the date damage has been sustained by reference to the nature of the interest infringed, in accordance with the approach taken by Gaudron J in Hawkins v Clayton [(1988) [1988] HCA 15; 164 CLR 539]. Where a business is purchased, the interest is presumably the value of the business. On one view, the value of the business and therefore the loss is always "ascertainable" at a particular date, since it is only necessary for the purchaser to seek appropriate expert advice as to that value. On the other hand, the existence of a loss is not necessarily ascertainable by the purchaser at that time, unless the purchaser has some reason to suspect a disparity between the price paid and the true value of the business. Finally, it is arguable that the reasoning in Wardley should be extended to cases involving the purchase of an asset, even where there are no apparent countervailing benefits or detriments as the result of the transaction. From the purchaser’s perspective, the existence of a loss may not be ascertainable until events unfold. On this approach, a loss would not be sustained for the purpose of s 82 until the purchaser had either ascertained or, acting reasonably, should have ascertained, that the asset was worth less than the price paid for it.’
59 The Court is concerned in the present proceedings with what is arguable in the application of s 82. Section 82 confers a right upon a person ‘who suffers loss or damage by conduct of another person that was done in contravention of a provision of Pt IV, IVA, IVB or V or s 51AC’ to recover the amount of the loss or damage by action. The time limit imposed by s 82(2) runs from ‘the day on which the cause of action that relates to the conduct accrued’. It is important in construing and applying the section to keep in mind the diversity of the classes of contravention to which it relates. Most of the jurisprudence dealing with its construction and application has been developed in the context of contraventions of Pt V of the Act. The causes of action in such cases generally involve the acquisition of an asset and/or the assumption of a liability induced by some form of misleading or deceptive conduct. The loss is incurred because the asset is worth less at the time of acquisition than the price paid for it or, as in the case of a business, engenders ongoing losses in connection with its operation. Where a liability is assumed it may be that the burden imposed by that liability is greater than the benefit derived from it.
60 Loss and damage suffered by anti-competitive conduct in contravention of Pt IV of the Act may arise in a somewhat different conceptual framework. Conduct in contravention of s 45 occurs in a market for goods or services. The loss analysis may have to be undertaken in the light of the effect of such conduct upon competition in a market. That kind of analysis may involve consideration of information available to the market. The state of knowledge of consumers in a market may affect the value of goods in it in terms of the prices they are prepared to pay. Where market prices are elevated by collusive tendering or price fixing, it may be arguable that there is not a ‘true market price’ defining ‘true value’ and somehow underlying the ‘false market price’ generated by the anti-competitive conduct. It may be that the true and lesser price of goods or services in the market and the true value of assets acquired in that market crystallises only upon discovery of the anti-competitive conduct in question. So like the latent defect which affects the market value of a building when it becomes known and not before, the concealed defect in the market affects value only when it has been ascertained. In so saying the difficulty of loss analysis involving ageing assets acquired originally in a market with falsely elevated prices, is not to be underestimated.
61 The preceding observations do not involve the expression of any concluded view about the operation of s 82 in cases involving contraventions of Pt IV. They are offered simply to make the point that there is considerable room for the development of the law in that context. The problems of applying s 82 to contraventions of Pt IV are not simply resolved by consideration of cases relating to its application in the context of Pt V.
62 None of the preceding considerations involves an acceptance of the proposition that concepts of fairness and public policy justify the importation into the words of s 82 of some general principle that loss or damage is not suffered until the victim of contravening conduct knows that it has been suffered. It would be stretching the construction of the section to breaking point to import, through the word ‘suffer’, an element of awareness of loss necessary to complete the cause of action.
63 It is true that the way in which the loss has been pleaded in this case is consistent with the proposition that loss or damage was suffered at the time that the purchases were made pursuant to the various tenders. On the other hand as Energex submits, the pleading in pars 381 to 385 can be read as going to quantification of loss rather than limiting the time at which the loss was suffered. The statement of claim should not be struck out by reason of any lack of clarity in this respect as Energex is not obliged to plead facts to show that its claim was within the limitation period. However if the respondents plead the expiration of the limitation period as foreshadowed, Energex will have to ensure that its pleadings disclose the matters on which Energex relies in answer to that defence. This is not a case in which the application of s 82(2) is so clear as to render the claims untenable under the accepted tests for summary disposition or striking out of the pleading.
64 A further consideration of some importance in this case, is that if the alternative claims for relief under s 87 are to stand there would be little to be gained in terms of time and efficiency by striking out the s 82 claims.
65 While, with respect, we do not necessarily agree with every aspect of his Honour’s reasons for refusing to accede to the arguments advanced by the Alstom and Wilson Transformer respondents in relation to s 82, his conclusion that the claim is arguable is not attended with sufficient doubt to warrant the grant of leave to appeal. The case should proceed so that the way in which s 82 applies, if it applies, can be determined in the light of concrete factual findings and a full consideration of its interaction with the relevant provisions of Pt IV of the Act.
Whether the claims for relief under s 87 can properly be maintained
66 Energex claims damages pursuant to s 87(1) and (2)(b) of the Act. This claim, as the Alstom respondents pointed out, is necessarily ancillary to the claim in par 1 of its application for an injunction pursuant to s 80 of the Act.
67 The Alstom respondents submitted that the claim for injunctive relief was in effect an abuse of process having regard to the injunctive relief previously granted against them in the ACCC proceedings. They further submitted that the only reasonable inference was that Energex was seeking an injunction under s 80 of the Act not because it wanted to restrain conduct or threatened conduct by the Alstom respondents, but solely so that it could claim an ancillary order for damages under s 87(1) and (2)(d) unaffected by any time limitation difficulty.
68 The Alstom respondents pointed out that the injunctions sought by Energex in par 1 of its application are substantially similar to those imposed by the Court in the ACCC proceedings. They identified three differences between the injunction sought by Energex in these proceedings and the injunction imposed in the ACCC proceedings, namely:
1. The injunction in the ACCC proceedings was limited to a four-year period from the date that orders were made on 5 April 2001, whereas Energex seeks a perpetual injunction.
2. The injunction granted in the ACCC proceedings applied to the supply of power or distribution transformers to anyone, whereas the injunction sought by Energex in these proceedings applies only to the supply of transformers to Energex.
3. Rexel was not a party to the ACCC proceedings and so was not bound by any injunction.
69 In support of its argument that the injunctive relief is claimed for the collateral purpose of accessing the relief for which s 87 provides without time limitation, the Alstom respondents made the following points:
1. The injunction sought by Energex is essentially the same as that which was in force under the ACCC proceedings at the time that these proceedings were commenced.
2. An injunction in perpetuity cannot have any more utility to Energex than the injunction issued in the ACCC proceedings because Energex is protected by the provisions of the Act as much as by any injunction.
3. Rexel has not carried out the business of the manufacture and sale of transformers since the sale of its transformer division to Alstom on 30 June 1989. Energex does not allege that any of Rexel’s current staff are involved in contraventions of the Act. That a claim for an injunction should be brought against Rexel 14 years after it exited the market, demonstrates the starkness of the abuse.
4. The only relief sought under s 87 of the Act is relief that could and ordinarily would be sought under s 82.
5. Energex waited four years from the time when the ACCC first publicised its proceedings against the Alstom respondents and more than two years from when those proceedings concluded before instituting these proceedings on 26 May 2003.
6. Energex does not allege any continuation or threat to continue the contravening conduct.
7. No application has been made for any interim or interlocutory injunctive relief.
It was also submitted that the claim for injunctive
relief amounted to relitigation of the proceedings which had been brought by the
ACCC, albeit it was acknowledged that Energex was not a party to those
proceedings.
70 The Wilson Transformer respondents advanced similar arguments, submitting that the formulation of the claims for relief ‘transparently reveals an attempt to overcome the time bar in respect of damages under s 82’. Energex, it was said, purports to claim injunctive relief as its primary relief in the proceedings. An order for compensation for loss and damages is then sought under s 87(1) of the Act, notwithstanding that relief under s 87 is discretionary. A claim for damages under s 82 is mentioned only as a mere alternative claim in par 3 of the application. All of this, it was said, occurs in circumstances where there can be no utility in granting the injunctive relief having regard to the orders made in the ACCC proceedings against the Wilson Transformer respondents. The contravening conduct alleged against the Wilson Transformer respondents in the proceeding is said to have terminated on 19 February 1999 and, by reason of the pleading, it is said that Energex accepts that it terminated at that time. However the proceeding itself was commenced more than four years later, on 26 May 2003 following the disposition of the ACCC action. The Wilson Transformer respondents argued that there is no allegation of any threat nor could there be any allegation of a threat by them to continue conduct in contravention of the Act. Arguments about collateral purposes, similar to those advanced by the Alstom respondents, were put.
71 Energex submitted in answer that there is no allegation in the statement of claim of any threat of continuing contravention because s 80(4) of the Act provides that injunctions may be granted whether or not future contraventions are threatened. In any event the likelihood of future contravention goes to the discretion to grant an injunction, not to whether an application to strike out or dismiss the claim should succeed.
72 It was submitted that the Court can place no weight on arguments made on behalf of the Alstom and Wilson Transformer respondents who had engaged in sustained illegal and secret conduct in the course of their trade. Even if no injunction were sought against Rexel, the fact that the contravening conduct was in the nature of a conspiracy meant that, in the course of making findings that Energex had suffered loss by the conduct of Rexel’s co-conspirators, the Court would make a finding that it had suffered loss by the conduct of Rexel so that orders under s 87(1) could still be made.
73 As to the invocation of s 87 it was submitted that an applicant may pursue a right which the Act makes available. There could be no abuse of process involved in a party seeking the protection of an injunction which it could enforce itself in circumstances where, for example, the ACCC might be unable or unwilling to act. Energex was not a party to the ACCC proceedings and could not enforce its orders. This was especially so in circumstances where the parties arguing against injunctive relief were also urging that the victims of their misconduct could have no monetary compensation for loss secretly inflicted on them and which secret was kept for the duration of the limitation period. It was not a ‘collateral advantage’ to seek the fullest protection from misconduct.
74 The question whether injunctive relief is useful and whether the relief sought under s 87 of the Act is sought for a collateral purpose are matters essentially going to the discretion of the Court to grant or refuse relief in the light of factual findings made after a trial of the issues. No doubt there are circumstances in which the Court in its discretion might refuse the grant of injunctions under s 80 and yet grant relief under s 87. It might also, in the exercise of its discretion, withhold relief under s 87 on the basis, inter alia, that the claim for injunctive relief was mounted solely for a collateral purpose. That is not, however, a judgment to be made upon a motion for summary dismissal of the proceedings or of claims for relief made in the application.
75 In our opinion, it would not have been appropriate for his Honour to have struck out the claims for relief under ss 80 and 87 at this stage of the proceedings. The question of fraudulent concealment which was also agitated in this context may be relevant to the availability of relief under s 87. That is not a matter which it is necessary to determine here.
The viability of the claims in deceit
76 The allegations of deceit appear at pars 400 to 406 of the statement of claim which have been set out earlier in these reasons. They involve the broad proposition that by submitting a tender in response to the invitation from SEQEB or Energex each tenderer impliedly represented that the price and other terms of the tender had been arrived at without any knowledge of any other tender and was not the subject of any collusive arrangement. In the pleaded case it is said that the representations made by the respondents in submitting the pleaded tenders were false. They were made with knowledge of their falsity and were made with the intention of inducing SEQEB and Energex to accept one of the tenders. Moreover it is said that Energex acted in reliance upon those representations and was induced on that basis to accept one of the tenders.
77 The Alstom respondents submitted that the representations pleaded in the statement of claim could not be implied from the matters relied on. They referred to what was said by the majority of the Full Federal Court in Warner v Elders Rural Finance Ltd [1993] FCA 117; (1992) 41 FCR 399 at 402, quoting the following passage from the 8th Edition of Fleming’s, The Law of Torts:
‘Ordinarily mere silence or passive failure to disclose the truth are not actionable, however deceptive in fact ... Several qualifications are in any event recognised. In the first place, a half-truth may just as much be a false representation as a complete lie: for example, setting out favourable passages of a report without the qualifications. Secondly, one who makes a false statement honestly believing it to be true but later discovers it was false, or one who makes a true statement which later events falsify, must correct it at any time before the deal is actually closed. Finally a duty of disclosure is demanded when the parties stand in some fiduciary relation to each other, like principal and agent or trustee and beneficiary or where a special need for public protection has been recognised by legislation, as under company law which now requires directors to include specified information in a prospectus.’
78 The Alstom respondents contended that a failure by a party to disclose particular details does not amount to deceit where there is no duty to disclose those details. Similarly, it was said, the position at common law is that in a commercial transaction between two parties dealing at arms length a failure by one party to disclose to the other party that the transaction is not as the other would believe in the circumstances, does not give rise to a representation capable of founding an action in deceit. Reliance was placed upon the decision of Lindgren J in Australian Competition and Consumer Commission v CC (NSW) Pty Ltd [1999] FCA 954; (1999) 92 FCR 375. In that case Australia Construction Services had invited a number of companies to tender for a major Commonwealth construction project. Tenders were submitted by each of the companies. They had, however, entered into a secret arrangement involving a ‘special fee’ and an ‘unsuccessful tenderer fee’. The Court found the arrangement likely to have the effect of controlling the price that would be charged for the project and therefore in contravention of s 45(2) of the Act. The ACCC, in bringing the proceedings, also made a claim under s 52 of the Act. Lindgren J, however, found that s 52 had not been breached. This is said to have been on the basis that there was no duty or legitimate expectation in a tender context that would suggest, whenever a tender was submitted it was coupled with a representation that every law had been complied with. His Honour observed that the relationship between tenderer and client was not of a class that gave rise to a ‘duty’ or ‘reasonable expectation’ of disclosure. Nor, in his opinion, did any particular circumstances of the case do so. His Honour said that the implied representations contended for, which were in substance the absence of collusion, would apply to tenders universally.
79 Energex in reply pointed out that it did not rely on the mere act of submitting a tender. It was the submission of the tender in particular circumstances that were said to convey the representation. The representation might not be conveyed if a bid were submitted in different circumstances. Energex argued that there was no discussion in the case of CC (NSW) of circumstances such as those pleaded in par 401 of the statement of claim.
80 It is sufficient for present purposes to say that the observations of Lindgren J should not be taken as laying down a general principle that a collusive tender may never involve an implied representation that it is a competitive tender. The presence or absence of such a representation is a matter to be judged in the context of circumstances defined by factual findings after a trial of the action. In State of Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691, Drummond J accepted that lodgement of tenders in a competitive tendering process is capable of conveying the representation that the tender prices are competitive and not collusive. It is difficult to see how it can be said to be an untenable proposition that parties who conspire to have one of their number submit an apparently competitive tender pursuant to a secret collusive agreement are intentionally creating a false impression in the mind of the party inviting tenders. His Honour was correct to refuse to strike out the deceit claims.
Conclusion
81 For the preceding reasons we are of the opinion that his Honour’s decision was not attended by sufficient doubt to warrant the grant of leave to appeal. Indeed, in our opinion, his Honour took a correct approach in rejecting the motions for summary dismissal of the action and the striking out of elements of the statement of claim.
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I certify that the preceding eighty-one (81) numbered paragraphs are a true
copy of the Reasons for Judgment herein of the Court.
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Associate:
Dated: 21 September 2005
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Counsel for the Applicant:
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Mr PA Keane QC and Mr PL O’Shea SC
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Solicitor for the Applicant:
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Minter Ellison
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Counsel for the First to Fifth Respondents:
Solicitors for the First to Fifth Respondents: Counsel for the Sixth and Seventh Respondents: |
Mr J Hilton SC and Mr J Elliott
Gilbert and Tobin Mr AC Archibald QC and Mr PW Collinson |
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Solicitor for the Sixth and Seventh Respondents:
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Allens Arthur Robinson
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Date of Hearing:
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28 and 29 October 2004
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Date of Judgment:
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21 September 2005
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2005/215.html