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Federal Court of Australia |
Last Updated: 12 May 1999
PRACTICE AND PROCEDURE - Pleadings - striking out statement of claim - Court's overriding discretion to control pleadings - flexible approach of the Court in the application of the rules of pleading - whether pleadings of conclusions necessarily impermissible - pleading of "overt acts' as a means of serving the object of pleadings where an action based on a clandestine arrangement - importance of pleading facts showing connection between conduct complained of and loss thereby caused.
DECEIT - Damages recoverable are limited to the sum representing the loss suffered by the applicant because it acted in reliance on the defendant's false representation - in the absence of pleaded facts , such damages do not extend to losses the applicant would have suffered if the respondent had not only not made the misrepresentation but had disclosed the true position about the subject matter of the misrepresentation.
CONSPIRACY - Whether permissible to sue on a conspiracy to commit a joint tort when the joint tort is also actionable.
CONSPIRACY - Whether applicant can sue at common law on a conspiracy to commit an unlawful act where the act, previously lawful, is only made unlawful by a statute which also gives a remedy for any loss thereby suffered.
IMPLIED WARRANTY - Requirements for pleading implied warranty in tripartite and bipartite contracts.
Trade Practices Act 1975 (Cth) ss 45, 52, 82
Criminal Code (Qld) 1899 s 430
Federal Court Rules O 11 r 2, O 10 r 1
Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd & Ors (1998) 157 ALR 135 followed
Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 cited
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR |P41-552 cited
Astrovlanis Compania Naviera SA v Linard [1972] 2 QB 611 cited
Beech Petroleum NL v Johnson (1991) 105 ALR 456 cited
Republic of Peru v Peruvian Guano Co (1887) 36 Ch D 489 cited
Bruce v Odhams Press Ltd [1936] 1 KB 697 not followed
Australian Competition and Consumer Commission v Golden West Network Pty Ltd (Federal Court of Australia, 19 August 1997, unreported) cited
Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (Federal Court of Australia, 3 September 1991, unreported) cited
Australian Competition and Consumer Commission v Mobil Oil Australia Ltd (Federal Court of Australia, 5 June 1997, unreported) not followed
Dow Hager Lawrance v Lord Norreys (1890) 15 App Cas 210 cited
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 cited
Gould v Vaggelas (1985) 157 CLR 215 cited
Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 3 All ER 479 cited
Marks v GIO Australia Holdings Ltd [1998] HCA 69; 158 ALR 333 cited
Smith Newcourt Securities Ltd v Citibank NA [1996] UKHL 3; [1997] AC 254 cited
Sibley v Grosvenor [1916] HCA 14; (1916) 21 CLR 469 distinguished
Smith v Kay [1859] EngR 38; (1859) 7 HLC 750 distinguished
Broadlex Pty Ltd v Computer Co Pty Ltd (1983) 50 ALR 92 applied
Bunny Industries Ltd v Jones (1979) 53 FLR 160 distinguished
Galea v Cooper [1982] 2 NSWLR 411 not followed
New South Wales v McCloy Hutcherson Pty Ltd (1993) 43 FCR 489 not followed
Galland v Mineral Underwriters Ltd [1977] WAR 116 not followed
Jervois Sulphates (NT) Ltd v Petrocarb Explorations NL (1974) 5 ALR 1 cited
Brisbane Shipwrights' Provident Union v Heggie [1906] HCA 4; (1906) 3 CLR 686 distinguished
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 cited
JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435 cited
Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 cited
Heilbut, Symons & Co v Buckleton [1912] UKHL 2; [1913] AC 30 cited
STATE OF QUEENSLAND v PIONEER CONCRETE (QLD) PTY LTD & ORS
QG 199 OF 1997
DRUMMOND J
23 APRIL 1999
BRISBANE IN THE FEDERAL COURT OF AUSTRALIA BETWEEN: Applicant AND: (ACN 009 679 734)
First Respondent
BORAL RESOURCES (QLD) PTY LIMITED
(ACN 009 671 809)
Second Respondent
CSR LIMITED
(ACN 000 001 276)
Third Respondent
HYMIX INDUSTRIES PTY LIMITED
(ACN 000 582 221)
Fourth Respondent
GOODMIX CONCRETE PTY LIMITED
(ACN 009 845 578)
Fifth Respondent
AMATEK LIMITED trading as ROCLA CONCRETE
(ACN 000 032 191)
Sixth Respondent
EXCEL CONCRETE PTY LTD
(ACN 010 891 773)
Seventh Respondent
QUEENSLAND DISTRICT REGISTRY QG 199 OF 1997
STATE OF QUEENSLAND
PIONEER CONCRETE (QLD) PTY LTD
|
JUDGE: | DRUMMOND J |
| DATE OF ORDER: | 23 APRIL 1999 |
| WHERE MADE: | BRISBANE |
THE COURT ORDERS THAT:
1. The action be adjourned for further directions to 7 June 1999 at 2.15 pm.
2. Costs are reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| QUEENSLAND DISTRICT REGISTRY | QG 199 OF 1997 |
|
BETWEEN: | STATE OF QUEENSLAND
Applicant |
|
AND: | PIONEER CONCRETE (QLD) PTY LTD
(ACN 009 679 734) First Respondent
BORAL RESOURCES (QLD) PTY LIMITED (ACN 009 671 809) Second Respondent
CSR LIMITED (ACN 000 001 276) Third Respondent
HYMIX INDUSTRIES PTY LIMITED (ACN 000 582 221) Fourth Respondent
GOODMIX CONCRETE PTY LIMITED (ACN 009 845 578) Fifth Respondent
AMATEK LIMITED trading as ROCLA CONCRETE (ACN 000 032 191) Sixth Respondent
EXCEL CONCRETE PTY LTD (ACN 010 891 773) Seventh Respondent |
JUDGE:
DRUMMOND J DATE: 23 APRIL 1999 PLACE: BRISBANE
2 The actions arise out of proceedings brought by the Trade Practices Commission some time ago against the respondents. These proceedings culminated in each being ordered to pay a substantial penalty for contraventions of s 45 of the Trade Practices Act 1974 (Cth) involving collusive pricing and collusive tendering arrangements in respect of the supply by each of pre-mixed concrete. The State of Queensland and the applicants in the other proceedings now before the Court have sued the respondents to recover the losses they alleged they suffered as a result of these contraventions. Each applicant also sues to recover these same losses on a number of common law and other statutory causes of action based on the same conduct of the respondents that is said to contravene s 45.
3 The period of supply of the concrete in question is the five years to July 1994. The allegation is that all the respondents engaged in the conduct complained of in the Brisbane concrete market, although the seventh respondent only commenced its involvement in that conduct in December 1993; that the first to fourth respondents and a fifth organisation, Nucon Pty Ltd, engaged in the conduct complained of in the Gold Coast market (save for the period from June 1992 to December 1993) and that the first, second and third respondents and a fourth organisation, Wagner's Concrete Pty Ltd, engaged in the conduct complained of in the Toowoomba concrete market.
4 The parties agreed that the Court should deal with the respondents' attacks on the amended statement of claim delivered by the State of Queensland in action No QG 199 of 1997, treating it in effect as a test case. Their notices of motion filed in the other actions were accordingly adjourned.
5 The lead argument attacking the State of Queensland's pleading was presented by the sixth respondent. The other respondents adopted its submissions and all made additional submissions confined to matters of relevance to each's own position. It is appropriate to deal first with the submissions of the sixth respondent.
Contravention of s 45
6 Firstly, there is a complaint that the cause of action based on contraventions of s 45 Trade Practices Act is inadequately pleaded in so far as nowhere is any particular provision or provisions of the various agreements, arrangements and understandings relied on by the applicant identified as those upon which this cause of action is based. I rejected a similar argument advanced by the first to fourth respondents in attacking the statement of claim delivered against them in an action that has been brought by the Gold Coast City Council also arising out of the involvement of those respondents in the conduct the subject of the complaints by the State of Queensland in this action: see Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd & Ors (1998) 157 ALR 135 at 146 - 147. For the reasons I there gave, and even if the pleading should be read as alleging a compact to achieve certain objectives rather than a compact containing certain provisions designed to achieve those objectives, I reject the complaint now made in this regard.
7 Complaint is made about the way the applicant has identified the markets of relevance to its s 45 case. It is said that conclusions only, rather than material facts, have been pleaded in identifying the existence and boundaries of these markets. Submissions were made as to what a party has to do to comply with "the principles of pleadings". Other allegations of considerable importance to the applicant's case to which I will refer later were also said to be bad because they allege only conclusions.
8 Paragraph 3 of the statement of claim begins by asserting that there existed at all material times what is described as "the Brisbane concrete market" for the supply and delivery of pre-mixed concrete to builders, local authorities and industrial end-users in an area described as "the cities of Brisbane and Logan as defined approximately by the municipal boundaries of those cities". The pleading goes on to assert that on occasions this market extended to certain adjacent localities. Paragraph 3 also asserts that:
"The product market was for the supply and delivery of pre-mixed concrete. Pre-mixed concrete was produced at batching plants within the market area, delivered by truck to construction sites, and poured. Different grades of pre-mixed concrete were supplied, differentiated by compressive strength, in the range of 15 megapascals to 80 megapascals..."9 Paragraph 4 of the pleading further refines the description of the geographic extent of each of these three markets, asserting that that was in each case determined by the location of batching plants and areas associated with each batching plant, described approximately as "a radius equivalent to ninety minutes driving time from a batching plant". It is also said that "the location of batching plants in the southeast Queensland area at the material times (ie, June 1989 to July 1994) changed from time to time". The applicant says that full particulars of the location of batching plants from time to time are peculiarly within the knowledge of the respondents and, if required, particulars of these locations will be given after discovery.
10 The "Gold Coast concrete market" and the "Toowoomba area concrete market" are similarly described.
11 The pleading does not plead facts capable of showing that, during the relevant period, there was a market in the sense of a range of activities that included the supply and delivery by the respondents of the product in question to large consumers within the changing geographic area identified in the pleading. In these respects, it can be said to assert conclusions rather than material facts.
12 The primary function of pleadings and particulars is to ensure a fair trial by putting the opposite party on notice of the case to be met and by defining the issues for decision so that the preparation of the case and the trial itself can be controlled. See Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664 and Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR |P41-552 at 42,679. Pleadings and particulars, between which the rules of pleading draw a distinction, contribute to this end in different ways: see Campbell v Metway Leasing Ltd (1998) ATPR |P41-630 at |P40,919. Under these rules, a pleading must contain only a statement in summary form of the material facts, but not the evidence by which those facts are to be proved, while the primary function of particulars is to ensure that effect is given to "the overriding principle that the litigation between the parties, and particularly the trial, should be conducted fairly, openly and without surprises and incidentally to reduce costs": Astrovlanis Compania Naviera SA v Linard [1972] 2 QB 611 at 620 and cf Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214 at 219 and 221.
13 Authority acknowledges the blurring, in recent times, of the distinction between pleadings and particulars: see, eg, Beech Petroleum NL v Johnson (1991) 105 ALR 456 at 466, where von Doussa J referred to the tendency now "towards narrative pleading as there is a growing concern that pleadings according to traditional rules do not adequately make known to the court and to the parties the nature of the opposing cases in complex matters". His Honour also commented that: "[t]echnical objections raised to pleadings on the ground of alleged want of form will be received with less enthusiasm today than in times past".
14 Notwithstanding O 11 r 2(a), a respondent does not have an absolute right in every case to insist upon the applicant pleading in the statement of claim every material fact necessary to show the existence of a complete cause of action.
15 Once, a pleading that failed to do this would be struck out on special demurrer: see Jowitt's Dictionary of English Law, 2nd ed, title "Demurrer". By Federal Court O 20 r 3, however, demurrers to the adequacy of a pleading are not permitted. Moreover, O 11 r 16(a), which provides for the striking out of a pleading which discloses no reasonable cause of action, in terms confers discretionary power on the Court. Cf Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 3) [1970] Ch 506 at 537. Even if the Court is confined, on an application under this sub-rule, to what appears in the pleading itself, a question which it is not necessary to resolve now, the word "reasonable" in the rule still has significance. In Republic of Peru v Peruvian Guano Co (1887) 36 Ch D 489 Chitty J said of the similarly worded English rule, at 495 - 496:
"But obviously some meaning must be assigned to the term `reasonable'. Demurrers are abolished, and it could not have been intended to abolish demurrers by the right hand and restore them by the left ... I think that this rule is more favourable to the pleading objected to than the old procedure by demurrer. Under the new rule the pleading will not be struck out unless it is demurrable and something worse than demurrable. If, notwithstanding defects in the pleading, which would have been fatal on a demurrer, the Court sees that a substantial case is presented the Court should, I think, decline to strike out that pleading; but when the pleading discloses a case which the Court is satisfied will not succeed, then it should strike it out and put a summary end to the litigation."16 Reference should here be made to Bruce v Odhams Press Ltd [1936] 1 KB 697, where Scott LJ said, of the English equivalent of Federal Court O 11 r 2 at 712:
"The cardinal provision in r 4 is that the statement of claim must state the material facts. The word `material' means necessary for the purpose of formulating a complete cause of action; and if any one `material' fact is omitted, the statement of claim is bad; it is `demurrable' in the old phraseology, and in the new is liable to be `struck out' under O XXV., r. 4 ..."17 As the cases cited in sub-par (1) of par 18/19/10 of the 1999 White Practice show, this is the current English approach. But, in my opinion, it is inconsistent with abolition of demurrers and the adoption of the procedure conferring a discretion on the Court to strike out pleadings that fail to disclose a reasonable, as distinct from a complete cause of action. This was recognised in England until recently: see the 1973 and 1991 editions of the White Practice at para 18/19/1.
18 While, prima facie, the Court's rules with respect to pleadings must be complied with, compliance is enforced by the invocation of the Court's discretion to strike out non-conforming pleadings. Consistently with the comments in Beech Petroleum, judges of this Court have dealt with challenges to the adequacy of pleadings in a more flexible way than would be required by a strict application of those rules. This is an approach that reflects the discretionary nature of the Court's power to control pleadings and the objective of the Court's case management system, provided for by O 10 r 1, of achieving efficient and economical use of the resources of all the parties, as well as those of the Court. Australian Competition and Consumer Commission v Golden West Network Pty Ltd (Federal Court of Australia, 19 August 1997, unreported) provides an example. There Lockhart J said:
"It is important that I say something about motions to strike out statements of claim in the conduct of modern litigation. Today, courts are playing an increasingly active role in case management. Motions to strike out pleadings are matters of practice and procedure. In its role of case management, courts devise various procedures to overcome deficiencies in pleadings other than by simply ordering that the offending paragraphs be struck out. Sometimes it is appropriate to strike them out, sometimes not. On some occasions it is better for the court to direct the applicant, whose statement of claim is under challenge, to furnish particulars or to file and serve affidavits to show that there really are facts which can be proved and which, if proved, would support the general statements made in the statement of claim. ... This is not, of course, intended to be a substitute for a defective pleading in every case because, as is well known, pleadings must assert basic or constitutive facts, not the evidence by which they are to be proved. But case management is a sensible and flexible thing. It must not be unduly circumscribed."19 When it is said that a pleading is so bad that it should be struck out, the outcome, in my opinion, is now to be governed not just by whether the pleading fails to comply with one or other of the rules of pleading. The Court will take into account whether the defects are of substance, ie, whether, notwithstanding any deficiencies in the pleading, the fundamental function of pleading is still served. The Court will also take into account how these objectives can best be achieved, where a pleading does not do that: striking out may be appropriate in some cases while an order for particulars or directions under O 10 r 1(2), including directions of the kind referred to by Lockhart J, may be appropriate in others.
20 In any event, that a pleading alleges conclusions does not mean it is necessarily bad. The requirement of O 11 r 2 to plead the material facts, is subject to the established qualification to rules in this form that allows, in appropriate cases, pleading at a level of generality which excuses the failure to plead every fact material to the cause of action sued upon: Charlie Carter Pty Ltd v SDAEA (WA) (1987) 13 FCR 413 at 417. In Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (Federal Court of Australia, 3 September 1991, unreported) French J, in dealing with a complaint that a statement of claim alleging contraventions of s 45 of the Act pleaded conclusions in terms of the section, rather than the material facts underlying them, said:
"I do not accept that the pleading of something which can be described as a conclusion cannot also be a pleading of a material fact. The real issue in a case where such an objection is raised is whether the facts are pleaded at too great a level of generality. In my opinion, the level of generality of the statement of claim in this case is too great for Rothmans to know with any precision what case it has to meet."21 The modern approach to litigation in this Court is not to strike out or order further particulars of a conclusionary pleading, if it appears that that is unnecessary in the circumstances of the particular case to achieve the object of pleadings. See also Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR |P41-552 at 42, 679.
22 It is, in my opinion, a legitimate and necessary exercise of the controlling discretion the Court has over pleadings to utilise that power to ensure that a party is not required to incur the expense of providing masses of information in its pleadings that can be seen to be unnecessary for the proper disposition of the case, even though the prima facie obligation of a party to plead all material facts necessary to make out its cause of action could be said to require that. This is not to suggest that clarity in pleading is not important. The need to focus on pleadings being used to identify the matters really in issue is particularly pressing in a complex case. But the rules of pleading do not now provide the only means for achieving this. And above all, those rules are not now intended to be an arsenal for litigation by attrition.
23 Each of the three markets the subject of the applicant's claims is identified in a complex way. But the pleading in my opinion adequately defines these markets by reference to a range of compressive strengths of concrete and by reference to the supply and delivery of this concrete to large consumers in particular geographic areas, eg, in the case of the Brisbane concrete market, an area defined by reference to the municipal boundaries of Brisbane and Logan cities and the identified adjacent areas. Paragraph 4 removes any embarrassing uncertainty that would otherwise exist in the way the geographic limits of each of the three markets is defined in para 3: it fixes those limits by reference to the location of all batching plants that supplied, during the relevant period, this product to this range of consumers.
24 Further, it is unlikely that the existence of markets very like those alleged by the applicant will be in issue at the trial. The three market definitions provided by the applicant in its pleading have been largely copied from the way these markets were defined in the pleadings delivered by the Trade Practices Commission in the proceedings it brought against the first three respondents and the seventh respondent. All, by responsible officers, assisted in the process that resulted in the formulation of the cases the Commission presented against them in the penalty proceedings. Although the Commission did not deliver a pleading against any of the fourth to sixth respondents in the penalty proceedings it brought against them, those proceedings, like the Commission's action against the other four respondents, came before the Court in circumstances in which each of these respondents, by responsible officers, had co-operated with the Commission in the formulation of the case which the Commission presented against each by way of uncontested written submissions and affidavits provided by those responsible officers. So far as the fourth to sixth respondents are concerned, those proceedings were brought in respect of their activities in a Brisbane concrete market accepted in the information provided to the Commission and the Court by each of these respondents as comprising the Brisbane and Logan City areas. It is not just the case that the facts relevant to the market issue are within the knowledge of the respondents: all co-operated in the penalty proceedings in the formulation of how the three markets should be identified in a manner that is much the same as that adopted by the applicant in these proceedings. Given this (and quite apart from the extent, if any, to which the applicant may be able to rely on s 83 the Trade Practices Act and on what occurred in the penalty proceedings as constituting admissions by the respondents probative of issues in these proceedings), it is unlikely that any of the respondents will be able properly to deliver defences contesting the allegations as to the existence of the three markets. This is another reason why the attack on the way the pleading of the markets involves conclusions should be rejected.
25 I consider that, in the circumstances of this case and subject to two qualifications, the pleading adequately identifies the product, functional and geographical boundaries of the markets of relevance to the applicant's s 45 case to satisfy the applicant's pleading obligations with respect to this issue.
26 The first qualification to the adequacy of the applicant's pleading the relevant markets is this: the loss which the applicant claims it suffered as a result of the respondents' conduct in contravention of s 45 is alleged to flow from the combination of the respondents' almost complete market share of the product in each of the three markets and their collusive conduct which resulted in prices for the product supplied both directly and indirectly to the applicant being substantially higher than those which would have obtained in each of those markets, in the absence of that conduct. It may be that it will ultimately be revealed as necessary for the applicant to identify the location of each of the batching plants upon which market definition depends to properly prove the loss component of its claim, before the respondents are in a position to fully prepare their evidence in answer to that component of the claim. It was not submitted, nor is it apparent at the moment, that that is in fact the position. But if, as the action progresses towards trial, the respondents do need such information in order to deal with the damages issue, they will be entitled to have it, either by way of particulars or a written statement of evidence.
27 The second qualification is this: The applicant, in par 3, defines the markets by reference to "the supply and delivery of pre-mixed concrete". However, in par 6, in pleading the various respondents' market shares, the allegation is that they "produced and supplied" various shares of pre-mixed concrete sold in each of the three markets. I accept the respondents' submission that this allegation in par 6 is embarrassing, given the way the markets have earlier been identified: a market for the supply and delivery of pre-mixed concrete in a particular area can embrace a quite different range of participants on both the supply and demand sides from a market for the production and supply of that concrete in that same area. It is clear from its submissions that the applicant's concern is with markets focussing on the supply and delivery of concrete. Paragraph 6 must be amended to reflect this.
28 The next challenge to the pleading can be dealt with by reference to the allegations concerning the Brisbane concrete market. The applicant's case here, as pleaded in pars 10, 15 and 16, is that an agreement or arrangement was made or an understanding arrived at, in respect of this market, at one or more meetings in mid 1989 between representatives of the first six respondents, which agreement, arrangement or understanding, by the means alleged in par 16, would prevent price competition between the respondents and maintain both their respective market shares and prices at levels satisfactory to the respondents. The applicant further alleges that at a meeting in about December 1993 between representatives of all seven respondents, the seventh respondent joined in the earlier agreement, arrangement or understanding.
29 The applicant acknowledges that the introductory words in par 10 of the pleading need attention to make it clear that the applicant's case is based upon an initial agreement, arrangement or understanding reached in mid 1989 which was implemented over the ensuing five years. Paragraph 202 needs similar clarification. Leave is granted to make the appropriate amendments.
30 But the sixth respondent contends that if the pleading is to be read in this way, the particulars in par 10 of the pleading are insufficient to support what is there alleged. It is said, firstly, that par 15, which is incorporated in par 10, only asserts conclusions and that no particulars are given of the substance and effect of the oral communications referred to in par 10(a) and (b), in reliance upon which it is said that the particular compact was arrived at. Secondly, it is said that the particulars of the compact given in par 10(c) are insufficient to support the allegation of the making in mid 1989 of the "umbrella" agreement upon which the applicant's case is based because par 17, incorporated in par 10(c), refers to a large number of meetings and significantly, to a large number of individual agreements or arrangements said to have been made at various times that extend over much of the five year period after mid 1989. Reference is here made to par 17(f) (which refers to numerous meetings about "pet" customers, ie, those for whose business the respondents agreed not to compete among themselves), 17(g) (which refers to a large number of individual collusive tendering agreements by means of which the respondents selected which one of their number who would win the contract for each particular project), 17(i) (which refers to two price-fixing agreements, one made in June 1991 and the other in December 1993) and 17(j) (which refers to a number of collusive tendering agreements for particular Brisbane City Council and Logan City Council projects).
31 As to the first submission, pars (a) and (b) of the particulars in par 10 of the pleading identify the meetings and their participants at which it is alleged all seven respondents became parties to what was called the "umbrella" agreement, arrangement or understanding in 1989 and in December 1993 upon which the applicant's s 45 case in respect of the Brisbane concrete market is founded. The applicant has access to the affidavit material relied on by the Trade Practices Commission in the penalty proceedings. This deals in detail with these meetings. Counsel for the applicant stated that it would give the best particulars it can of the substance and effect of the oral communications that took place at these meetings and upon which the applicant relies to prove the making of the arrangement in question and then of the extension of that arrangement to include the seventh respondent. The applicant will therefore be ordered to provide these particulars.
32 These particulars should also meet the objection as to par 15 stating conclusions only, although I would not have considered this a valid objection given the considerations to which I have referred, which arise from the background to these proceedings in the earlier penalty proceedings.
33 As to the second submission, par 10(c) alleges that "the formation of the agreement, arrangement or understanding is to be inferred from the overt acts of [the seven respondents] set out below in paragraph 17".
34 Where a claim is based on a clandestine compact between a number of respondents, the applicant can be expected to be unable to give precise particulars of material facts sufficient to support its allegation of the making of that compact. In such cases, the entitlement of the respondents to be apprised before trial of the nature of the applicant's case must, as McPherson J observed in Adsteam Building Industries Pty Ltd v The Queensland Cement & Lime Co Ltd (No 4) [1985] 1 Qd R 127 at 133, "be accommodated to the nature of that case itself". It will generally be appropriate (and necessary) for the applicant to plead the overt acts it intends to rely on to justify the inference that a compact to the effect alleged was made: see Adsteam at 133 - 134 and Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd & Ors at 140 - 141. The applicant is well-placed by its access to the evidence in the penalty proceedings to be able to particularise with some precision the facts relied on referred to in par 10(a) and (b) to show that the compact in question was made, as it has now undertaken to do. But I do not think that disentitles it to rely also on material said to constitute overt acts to supplement that material or as an alternative factual foundation to prove that compact.
35 Overt acts are evidence, often circumstantial only, from which the applicant contends the existence of the relevant arrangement can be inferred. In cases of the kind referred to in Adsteam, they also serve that function of particulars of limiting the area of factual inquiry with respect to the issue of whether such an agreement was made. In this way, the important function of pleadings is served.
36 An important class of overt act relied on in par 10(c), and pleaded in detail in par 17(g) and (j), consists of the many individual arrangements made by the respondents with respect to the supply of pre-mixed concrete to a large number of projects, which include the applicant's.
37 If a number of persons agree, on a particular occasion, to embark on a course of criminal conduct over a period of time, the offence of conspiracy is committed at the moment of agreement, but they remain conspirators and their conspiracy continues until their agreement has been brought to an end. R v Simmonds [1969] 1 QB 685 at 696. Moreover, such an arrangement will remain a single conspiracy no matter who joins or leaves it, as long as there are at least two of them at any one time acting in combination to achieve the original criminal objective. R v Masters (1992) 26 NSWLR 450 at 458. These authorities support the approach taken by the applicant in pleading an initial unlawful compact made in 1989, implemented over time, and to which the seventh respondent only became a party in December 1993.
38 The matters alleged in par 17(g) and (j) of the pleading are, when taken together, well capable in my opinion of providing circumstantial evidence that a compact of the kind alleged in paragraph 10 was entered into by the first six respondents by mid 1989, that it continued to mid 1994, and that the seventh respondent became a party to it in late 1993. There are many of these matters in the relevant period and they are all similar in kind: that points to the existence of an overarching agreement of the kind alleged rather than to a large number of unconnected arrangements only made ad hoc. See The King v Associated Northern Collieries [1911] HCA 73; (1911) 14 CLR 387 at 400 and Latham v Singleton [1981] 2 NSWLR 843 at 859. I reject this attack upon the pleading.
39 The sixth respondent also contends that it is embarrassing for the applicant to rely on the many particular arrangements referred to par 10(c) and par 17(g) and (j) and set out in more detail in pars 20 to 88 and 101 to 107 both as overt acts evidencing the making of the initial unlawful arrangement and as conduct whereby the respondents "gave effect" to the alleged "provisions" of that arrangement. Australian Competition and Consumer Commission v Mobil Oil Australia Ltd (Federal Court of Australia, 5 June 1997, unreported) was referred to. Heerey J is there said to have held that it is not permissible to rely upon the same conduct both as evidence from which the unlawful arrangement can be inferred and as conduct by the respondents in giving effect to that unlawful arrangement. At pp 26 and 27 of his reasons, Heerey J explained his conclusion by referring to what Ryan J had said in an earlier judgment dealing with an earlier version of the same pleading in the Mobil Oil litigation. Reference to Ryan J's judgment (9 September 1996, unreported) shows that what his Honour was concerned to reject was the Commission's suggestion that particulars of conduct said to constitute acts done in giving effect to an anterior compact contravening s 45 could constitute what his Honour termed "the usual particulars" of the kind given when a contract, written, oral or implied, is sued on, ie, particulars of the making of that same compact. What was said there does not provide any support for the respondents' proposition. But Ryan J also stated that the circumstantial evidence from which the Commission said the arrangement sued on should be inferred could not be properly given as particulars of that same arrangement. His Honour was apparently not referred to the Adsteam decision. For the reasons given in Adsteam, I think it is appropriate for an applicant who is unable to give "the usual particulars" of a clandestinely made compact to discharge its obligation to inform the respondent of the case to be met by pleading, as overt acts, the various items of circumstantial evidence the applicant intends to rely on as justifying the inference that the compact in question was in fact made. See also Associated Northern Collieries at 401. Such items of evidence will often be confined, for want of further information available to the applicant at the time it pleads its case, to acts done in implementation of the compact sued upon.
40 The sixth respondent also alleges that each of these many arrangements in par 10(c) should themselves be pleaded with "the usual particulars" appropriate to a claim based on a contract. The complaint is that the pleading of each of the many individual collusive arrangements referred to in, eg, par 17(g) and thus par 10(c), is instead, conclusionary in so far as it simply asserts the making of the arrangement at a particular time in respect of a particular tender. This is said to deny the respondents the entitlement of the ordinary litigant thus the opportunity to destroy, on a piecemeal basis at the pleading stage, this part of the case made against them.
41 I have already explained why I think the notion that every litigant is entitled as of right to a pleading which identifies every material fact necessary to make out the cause of action is a false one. In a case based on a contract not in writing, evidence of the content of the communications relied on to show that a binding agreement containing particular provisions was concluded between the parties will be essential to proof by the claimant of an element of its cause of action, viz, the existence of that contract and its relevant terms. Hence the justification for acquiring such a claimant to plead with particularity the substance and effect of those communications. But the particular agreements here in question are relied on as overt acts, ie, circumstantial evidence from which the "umbrella" agreement can be inferred, not as themselves constituting transactions in respect of each of which the applicant claims relief. It will generally therefore be sufficient, in order to disclose the case to be made out, for the applicant to provide the information that has been pleaded here without having to plead the additional matters required where a claim is made on an oral contract.
42 Moreover, this body of information appears to have come from the respondents themselves, something that deprives the claim that they need particulars of the kind sought to fully understand and prepare to meet the case made out against them in this respect of cogency. For example, of the arrangements in relation to the collusive tender referred to in par 28(a) and incorporated in par 17(g), Barrett, the fourth respondent's Queensland Regional Manager, says in material he provided for use in the penalty proceedings that he recalls having discussed that matter with representatives of the other respondents at meetings very like those pleaded and the information which is picked up in par 28 of the applicant's pleading concerning this matter is based on information which Mr Barrett says was "taken from Hymix's internal project lists". He identifies the project, the builder, the approximate date, the approximate quantity of concrete supplied and who was agreed to be the successful tenderer. The same pattern appears in the material prepared by senior representatives of most of the other respondents and put before the Court in the penalty proceedings. The applicant has, in pars 17(g) and (j), sufficiently identified each separate arrangement. If the respondents need more information here, the pleading does not have to be cluttered up with it: they have it available in convenient form in the affidavits their officers gave to the Commissioner in the other proceedings.
43 A major complaint made by the respondents is that no material facts have been pleaded sufficient to establish the existence of any causal connection between the conduct of the respondents complained of and any of the loss or damage sought to be recovered. It is also submitted that the applicant, in relying upon the "umbrella" agreement, is seeking to make the respondents liable for loss and damage far beyond that attributable to any of the successful, but collusive, tenders which the various respondents submitted to the applicant, ie, the tenders referred to in pars 17(g). This part of the pleading, in par 111, is as follows:
"As a result of the Respondents' conduct in entering into the agreements, arrangements or understandings alleged in Section B and/or giving effect to the provisions alleged in paragraph 15(a), (b), (c) and (d) herein the Applicant has suffered loss and damage in that:-44 It is not the applicant's case that any one of the transactions in par 17(g) caused a discrete loss which the applicant seeks to recover, although the applicant was involved as project owner in some of those transactions. The applicant's case instead is that the "umbrella" arrangement and its implementation had the effect of putting a floor to the market prices for concrete that were, throughout the five year period, always substantially higher than the prices at which concrete would have been supplied to the applicant in a competitive market: it was this that is said to have resulted in the applicant paying more, throughout the whole of the cartel period, for all the concrete supplied to its many projects that are listed in Schedule C to the statement of claim.
(a) as a result of the Respondents' conduct the price of pre-mixed concrete sold and delivered in the Brisbane, Gold Coast and Toowoomba area concrete markets during the relevant period was significantly higher than it would have been but for the Respondents' conduct (that is, it was higher than it would have been in a competitive market).Particulars In relation to the Brisbane concrete market, the prevailing market price was higher than a competitive price by an average of approximately $21.00 per cubic metre in December 1996 prices.
...
(b) during the relevant periods the Applicant acquired substantial quantities of pre-mixed concrete in each of the markets. In respect of the projects particularised in schedule "C" the Applicant acquired approximately 260,363 cubic metres of pre-mixed concrete. Full particulars of the volumes of concrete acquired will be provided prior to trial;
(c) in the case of projects other than those referred to in (d) below, the Applicant did not acquire the concrete directly from any of the Respondents, but the higher prevailing market price for concrete was entirely or substantially passed on to the Applicant by the contractor identified in schedule C;
(d) in the case of projects for which the contractor is designated `Main Roads Day Labour' or `Department of Public Works and Housing Day Labour' the Applicant acquired the concrete directly from one or more of the Respondents, on average, at the prevailing market price."
45 There is substance in the respondents' complaint about the failure of the applicant to plead facts sufficient to show a causal link between the conduct in question and this loss. This issue will probably be the major one at trial.
46 The case presently pleaded by the applicant on the element of loss is not such as to make the connection between the conduct complained of and the loss sought to be recovered "sufficiently apparent" in the sense in which that expression was used by Lord Watson in Dow Hager Lawrance v Lord Norreys (1890) 15 App Cas 210 at 221, referred to in Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222. See also Multigroup Distribution Services at 42,685. Further explication by the applicant of this part of the claim is therefore required at the pleading stage.
47 As to par 111(a), the respondent correctly submits that what is pleaded here is another conclusion rather than material facts: it is, I think, a conclusion at a level of generality which conceals the nature of the case the applicant intends to make out at trial. This appears to be that the respondents' conduct inflated the prices the applicant should have paid for the concrete it acquired for each of its projects listed in Schedule C because that conduct had an enduring market-wide impact on concrete prices over five years. The assumption also is that the applicant paid for all its direct and indirect supplies at the prevailing "rigged" market prices which are said to have been higher than competitive prices by an average of $21/m3 in adjusted figures throughout the whole five year period.
48 It can be accepted that the conduct complained of in par 16(b), (e), (f) and (g) and possibly (a) also, as the means by which the respondents implemented their "umbrella" agreement, would have had an impact on the pricing of the projects referred to in par 17(g) and (j). But these include a few only of the projects in Schedule C in respect of which the applicant claims damages. And (except for the conduct alleged in pars 16(c) and 17(i), which is said to have had a market-wide impact), there is an absence in the pleading of any facts to show how the conduct complained of may have had a market-wide impact and thus an impact on all the applicant's projects in Schedule C by reference to which it claims a sum measured by the product of the average "rigged" surcharge of $21/m3, in adjusted prices, that is said to have existed throughout the period of the cartel and the total of about 260,363 m3 of concrete acquired by the applicant for those projects during that period. Nor are the respondents told anything about how the applicant intends to prove the critical $21 average figure by reference to which it apparently proposes to quantify this large damages claim.
49 It is very likely that calculations and expert opinion will be relied on to support this allegation. Even though there might be some refinement of the applicant's case on damages by the time the matter is ready for trial, the applicant having chosen to make this allegation, the respondents are entitled to know now what is the case sought to be made out against them in this regard. How the applicant intends to prove this part of its case - that $21 is the appropriate average figure and that a surcharge of this order should be inferred to have been imposed on all the concrete in Schedule C - will not only inform the respondents of critical parts of the case they have to meet, but will also control to a very significant degree the content of each party's discovery.
50 There are other problems with the way the applicant has pleaded its loss. Most of the supplies of concrete in respect of which the applicant claims it suffered loss by reason of the respondents' conduct are what I have called indirect supplies, ie, supplies under contracts entered into by the applicant with various builders for the carrying out of work, which included the placement of concrete purchased by those builders. Most of these indirect supplies are of quite small amounts of concrete, although some very large supplies are also involved, eg, over 46,000 m3 of concrete was used by the builder, Leighton Contractors, in the Brisbane Convention and Exhibition Centre. Another assumption in the applicant's approach to pleading loss is that the full extent of the surcharge imposed by the respondents' conduct on what would have been lower competitive market prices was passed on to the applicant, not only in every instance of direct supply listed in Schedule C to the pleading, but also in the many instances of indirect supply there listed. Counsel said that the applicant intended to demonstrate that, if the market had been a competitive one, the whole of this surcharge on concrete supplied indirectly to the applicant would have been passed on wholly or perhaps at least substantially to the applicant by relying on the theory that builders, in preparing their bid for a job, would have included in it an estimate of the cost of the necessary concrete by simply using what they were given as the then prevailing, but inflated, rates by the respondents (and perhaps other concrete suppliers). From the time the builders got these estimates from concrete suppliers, "the damage is done", counsel suggested.
51 It is difficult to accept that all builders work in accordance with this simple theory. Some large builders and builders with a long relationship with a particular respondent may, notwithstanding the anti-competitive arrangement between the respondents, have been in fact able to negotiate from time to time prices more favourable than the prevailing average high market prices for the purposes of preparing bids for particular projects. For example, it is difficult to accept that Leighton's, in preparing its winning bid for the Brisbane Convention and Exhibition Centre, accepted without question the concrete prices then prevailing which the applicant says were on average $21/m3 higher than a truly competitive price. It cannot be assumed that if builders had bought concrete for the applicant's projects at competitive prices, they would have passed on the full differential: depending on the nature of the particular environment, so far as competition between builders was concerned and on the willingness of particular builders, in the face of or with only limited competition, to absorb costs and bid low to get work, none of the differential or a part only of it might, in a particular project, have in fact been passed on to the applicant. It is for such reasons that the respondents submit they are being charged with losses that do not flow from the conduct they engaged in. It is one thing, they say, for them to have made price-fixing deals about specific projects, but it is another to be saddled with liability far more wide-ranging said to flow from the knock-on effect of the respondents' conduct in inflating market-wide prices.
52 It is not sufficiently apparent how the applicant intends to show that it would have received the benefit of the whole of that surcharge or differential in respect of every one of the indirect supplies listed in Schedule C to the pleading, even if it can prove that the respondents' conduct had a market-wide impact by artificially inflating prevailing prices above what they would have been in a competitive market. The pleading in this respect suffers the same deficiency as the pleading in Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd which I discussed in 157 ALR at 146.
53 Moreover, if the applicant recovers damages on the simple basis currently claimed, viz, by applying an average surcharge of $21/m3 (adjusted) to every m3 of concrete supplied to it, it will recover more than it has lost by reason of the respondents' conduct to the extent that builders did not, in fact, pass on to the applicant the whole of whatever may truly have been that surcharge.
54 I do not accept that the applicant can by relying on this theory (not in any event identified in the pleading as a foundation for the loss claim) set up a reasonable cause of action. This theory is so flawed and its loss claim generally is so lacking in detail that the applicant should not be allowed to force the respondents into complex and expensive litigation unless it is prepared to outline now a case for claiming the millions of dollars it says it lost that can be seen to have some cogency.
55 It is not clear from the pleading whether damages are claimed in respect of any of the concrete supplied directly to the applicant under the day labour sales listed in Schedule C because the applicant may have paid for some concrete at either of the inflated rates specifically referred to in par 17(i) and whether, if so, those damages are claimed at different rates from rates inflated by the average surcharge of $21. Paragraph 111 should be amended accordingly. Subject to that and subject to disclosure to the extent necessary for pleading purposes of how the $21 figure is intended to be made out, the pleading is, I think, adequate for the loss claimed in respect of the direct acquisitions of concrete by the applicant.
56 I think the difficulties in providing a proper statement of the case the applicant intends to make out on the issue of loss are such that traditional particulars are not likely to satisfy the relevant requirements for disclosure of this case at this stage of the litigation. In the Golden West Network case, Lockhart J said:
"A case such as the present, where allegations are made of contraventions of Part IV of the Act (in particular ss 45 and 47), raises special issues of market definition, anti-competitive behaviour, public benefit, public detriment and competition generally. Evidence of experts is generally given, including economists. Documents tendered often include reports of government bodies, official statistics and similar documents. Factual material in Part IV cases is usually of a more sophisticated nature than a typical commercial dispute between parties, and the line between fact, opinion and conclusion is sometimes blurred. These circumstances are relevant when considering whether the alleged offending paragraphs of the statement of claim state conclusions rather than facts."57 It is these considerations which are well capable of justifying the Court in a case like the present refusing to strike out the offending parts of the pleading, but requiring the applicant now to file a statement setting out, in outline, how it intends to prove the losses it claims. This statement should cover the issues I have identified as requiring explication, viz, how the conduct complained of resulted in inflated prices for all the supplies in Schedule C, how the $21 figure is arrived at and how damages in respect of the direct supplies of concrete are calculated.
58 As to showing in the pleading that the applicant would have received the full benefit of the differential between the prevailing market prices for concrete supplied indirectly to it, ie, otherwise than by way of "day labour" sales, I do not think it appropriate, at this stage, to put the applicant to the effort and expense of providing that information in relation to everyone of those indirect supplies. Many of them are in respect of small quantities of concrete. But unless the applicant is required to expose the outline of the case it intends to make out in this respect now, the respondents will, I think, be significantly disadvantaged in knowing the case they have to meet here and in making their own preparations to meet it and the Court will be deprived of proper opportunity to control the interlocutory process, including discovery, which may well include third party discovery.
59 I therefore propose to require that the applicant segregate all the indirect supplies listed in Schedule C to the pleading into what it regards as classes of supplies possessing common features. It must then in its loss statement spell out, at least in outline, the boundaries of the case it proposes to make in proving this aspect of its lost claim in relation to each such class. There must be at least two classes, one comprising large indirect supplies and one comprising smaller supplies. The applicant may, on review of its case, consider more classes should be identified.
60 The object of this requirement is, however, to have a permanent impact on the shape of the applicant's case in proving up its loss. That the statement may, to a degree, be based on provisional opinions of those responsible for working up the loss claimed is no reason not to order it now. In the course of argument about the adequacy of the pleading of the loss claimed, senior counsel said that the applicant had evidence to prove its entitlement to the losses claimed on the basis pleaded, although that evidence "only proceeds at a general level". But the statement I think should be prepared is capable of serving a useful purpose in providing a broad framework for the case the applicant may well be held to in proving its loss. It will I expect be difficult for the applicant to depart at a later stage of the litigation from the broad outlines of its loss case to which it must now tie itself.
61 Paragraph 111 will be struck out unless the applicant files and serves, within a time to be agreed by the parties or directed by the Court, this damages statement.
62 There are other deficiencies in par 111: it is embarrassing in so far as it is not clear whether the applicant contends that the conduct of the various respondents in each of the three markets referred to in the pleading cumulatively led to the losses claimed or whether the applicant's case is that it suffered separate losses in each of the three markets due to the conduct of those of the respondents involved in each particular market. The applicant says that it is obvious enough that the pleading should be read in the latter sense given its reliance on three separate geographic markets. I do not accept that, given the propinquity particularly of the Brisbane and Gold Coast markets and their fluctuating boundaries governed by the location from time of time of batching plants. The applicant must amend, to make clear, the sense in which its pleading is here to be read (and deal with the issues involved in its damages statement).
63 The respondent also submits that the pleading is embarrassing because the applicant relies in par 111 on the respondents' conduct in entering into the arrangements in question "and/or" giving effect to the provisions of those arrangements set out in para 15, but does not identify in the pleading the losses caused by entry into the arrangements and, separately, the losses caused from implementation of the arrangement; it is said that the assumption cannot be made that it is the one and the same loss that is involved. The applicant points out that it is obvious that if none of the respondents implemented the arrangement, no loss could have flowed; its case is that all the respondents, as parties to the arrangement, are responsible for all the losses flowing to the applicant from implementation of the arrangement, even if it turns out that one or other of the respondents did not take part in particular activities engaged in by others of the respondents in implementation of the "umbrella" arrangement. The applicant must, however, amend par 111 to show that its claim is based on implementation of the agreement.
64 The case against the seventh respondent, Excel, unlike that against the other respondents in relation to the Brisbane concrete market, is that it only became a party to the arrangement complained of late in the day. It was not suggested that that can relieve Excel from liability for conduct of the other respondents after Excel joined the arrangement in December 1993, but in which Excel did not itself engage. But no facts are pleaded to show how Excel can be made liable for any of the losses that may have been inflicted on the applicant as a result of implementation of the arrangement prior to Excel's becoming a party to it. The applicant in argument accepted that it could not recover such losses from Excel. The applicant must therefore amend to identify the limited losses it claims against Excel.
65 The respondents also attack the allegations in par 109 that each of the provisions of the arrangements alleged in par 15 had the purpose of or was likely to have the effect of substantially lessening competition in the Brisbane area concrete market as the pleading of a conclusion rather than essential material facts. Again, it is said that conclusions only are pleaded. Paragraph 15 pleads the ambit of the arrangements arrived at at the outset, ie, in 1989. The evidence in the penalty proceedings indicates that it supports this allegation. The ambit of the facts raised for investigation by the allegation in par 15(a) is defined by what is said in pars 16(a) and 17(f). There is, in my opinion, no legitimate ground for complaint that the case here has not been adequately identified and defined. The same can be said of the other paragraphs of par 15.
66 Complaint is also made about par 110, which alleges that by engaging in the conduct alleged in Section C of the pleading, the respondents gave effect to the provisions alleged in par 15. The conduct in Section C includes that alleged in par 17(g). This paragraph may be poorly framed as an allegation of overt acts in so far as it omits, for no apparent reason, any reliance as an overt act on the implementation, as distinct from the making of the many individual collusive tender arrangements. It seems clear enough that in both par 10(c) and par 110 the applicant intends to rely on both the making and implementation of these many arrangements. If that is indeed the case, the applicant should amend par 110 (and par 10(c)) to make it clear that reliance is placed not only on the making of the many arrangements in question, but also on the implementation of each. But apart from that consideration, par 110 of the pleading is free of any ambiguity, in my opinion, in so far as it picks up all the conduct in Section C as conduct which will be relied upon to show that the respondents gave effect to the provisions of the "umbrella" agreement: eg, the making of the arrangement referred to in par 20(a) is as much conduct available to show that as is the implementation of that arrangement which is also pleaded in par 20(b).
Deceit
67 In Section K (pars 112 to 197) of the pleading, the applicant claims damages in deceit against all the respondents. However, it acknowledges that it has no basis for making this particular claim against Excel. The applicant would have to amend its pleading to exclude Excel from this claim, if the deceit claim were to remain.
68 This claim is based upon misrepresentations that the prices at which various of the respondents offered to supply concrete to nine of the applicant's projects were competitive and non-collusive prices. Various of the respondents are said to have made these offers in tenders for concrete supply subcontracts they lodged with various head contractors engaged by the applicant to construct these projects for it. In making these subcontract tenders, the respondents were required to comply with the applicant's Standard Code of Tendering. Some of the misrepresentations are said to have been made implicitly, by each of the first to sixth respondents submitting collusive tenders in circumstances in which they knew the applicant required competitive tenders, while others were made expressly, in statutory declarations to the effect that the respondent providing it had no knowledge of the prices at which any one else was offering to supply concrete for the relevant project. These declarations were furnished by the second to the fourth respondents.
69 The conduct of these six respondents in submitting the tenders and statutory declarations, in the context of what is plainly a competitive tendering process established by the applicant's Standard Code of Tendering is, in my opinion, capable of involving misrepresentations of the two kinds relied on. I therefore reject the respondents' submission that no reasonable cause of action is here pleaded.
70 It is also said that no reasonable cause of action is disclosed because the applicant was alert to the possibility that collusive tenders might be submitted. This, it is said, prevents the applicant from showing that it acted upon any representations of the kind pleaded which may have been made by the respondents. I reject this submission. It involves the untenable proposition that an organisation which deals in the course of its business with many suppliers cannot sue in deceit if it knows there is a risk that some supplier may try to deceive it and a particular supplier is cunning enough to be able to do that. A representee will succeed in an action for deceit if it can prove, as a fact, that the misrepresentation was at least one of the factors that caused it to act to its detriment by relying on it. See Gould v Vaggelas (1985) 157 CLR 215 at 237 - 238. Consistently with this rule, even if the representor shows that the representee was negligent or foolish in relying on the misrepresentation or had an opportunity for verifying it (or even attempted unsuccessfully to verify it: Donaldson v Freeson (1928) 29 SR(NSW) 113 at 116), it is still open to the latter to succeed in deceit by persuading the court that it did in fact rely on the misrepresentation: see Fleming, The Law of Torts, 9th ed, at pp 701 - 702.
71 Although it is alleged that various of the respondents between August 1989 and mid 1993 lodged successful but collusive tenders with builders who had contracted to build nine projects for the applicant, the applicant does not make any claim to recover in deceit any of the individual losses it suffered by paying indirectly, in its project payments to the builders, for the overpriced concrete supplied to these projects. The applicant here claims to recover damages on an entirely different basis as follows:
"197. The Applicant acted in reliance on the said representations, and was induced thereby, to accept, or approve or permit the acceptance of tenders lodged by the Respondents, as a result of which the Applicant has suffered loss and damage, in that by virtue of the deceit it lost the opportunity to take such steps as it was advised (including bringing proceedings under s.80 of the Act, or requesting the Trade Practices Commission to bring such proceedings) to prevent the Respondents continuing to give effect to the agreements, arrangements or understandings alleged in paragraphs 10 to 14, and consequently:-72 The applicant thus claims damages in respect of the loss of the chance it says it would have had, if the true position that each of these nine tenders was a collusive one had been made known to it when each was lodged, not only to prevent each of the respondents continuing to lodge collusive tenders in respect of those of the nine projects which then remained to be built, but to restore a competitive market overall and thus competitive prices of which it would have got the benefit. What is clearly enough sought to be recovered here is the whole of the damages claimed in par 111, but discounted in recognition that, even if the applicant had been told the true position at the outset, it may still not have been able to take action to prevent the whole of those losses. A heavy discount to properly measure the worth of this lost chance may be necessary in view of the alleged willingness of the respondents to engage, over a long period, in clandestine and deceitful conduct for their financial advantage.
(a) in respect of the project in respect of which the tenders were made; and
(b) all subsequent projects in the relevant period;
paid more for or in respect of pre-mixed concrete than it would otherwise have done."
73 It can also be seen that what is sought to be recovered in deceit from the respondents other than Excel is not limited to the loss of a single chance of discovering the true position at the outset and thus preventing something approximating to the totality of the losses the applicant suffered over the whole life of the cartel. Although the applicant here speaks of the actions "by the respondents", it says that par 197 is intended to be read as applying distributively to each of the several causes of action in deceit against them; it was said that the pleading has not been expanded to so claim in express terms "to avoid needless repetition". The applicant's claim here is really for damages for the loss of a series of separate chances, each of diminishing value: for example, the applicant's case is that, when CSR put in its successful collusive tender to Graham Evans & Co (Qld) Pty Ltd in mid 1989 for the first of the projects referred to in Section K of the pleading, the applicant at that time lost the chance it would have had, if it had then known the truth, of avoiding pretty well the totality of the losses identified in par 111 which it claims it suffered over the ensuing five years as a result of the respondents' cartel. A separate claim is then made against CSR who also submitted the successful collusive tender in respect of the second of the nine projects here in question. A further separate claim is then made against Pioneer who submitted the third of the nine tenders set out in Section K in August 1991; the damages the applicant can recover from Pioneer in respect of the loss of that chance are necessarily less than the damages it claims to recover from CSR because of the loss of the two more valuable chances that occurred earlier on.
74 The pleading is therefore defective in so far as it does not reveal that separate cases, involving claims to different damages, are intended to be made against each of the six respondents against whom it claims to have an action in deceit.
75 Even though it here claims damages for deceit only in respect of the loss of a chance or chances, to make out such a claim the applicant will first have to prove the totality of the losses the applicant says it suffered, ie, the losses claimed in par 111. Just as a claim under s 82 the Trade Practices Act must plead the facts showing the causal link between the conduct said to contravene s 45 of that Act and the loss said to have been so caused, so in a case such as this, the same information must be contained in the pleading of the deceit claim. See Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 3 All ER 479 at 485 - 486; Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664 - 665 and Barnes v Ranger Uranium Mine Pty Ltd (1993) 50 IR 38 at 45. If the deceit claim could otherwise stand, I would have required the applicant to provide a statement showing how it proposes to prove those losses.
76 However, quite apart from these defects in this part of the pleading, there is, in my opinion, a fundamental flaw in the applicant's deceit case, in so far as that can be gathered from the pleading and from what was said in argument.
77 Taking the first collusive tender relied on in Section K of the pleading as an example of the position that applies in relation to each of the other eight collusive tenders here referred to, if the misrepresentation as to that tender being a competitive one had not been made by CSR in mid 1989, it can be assumed that the applicant would not have suffered the loss it did by paying for overpriced concrete in respect of the Upper Mount Gravatt District Police Headquarters project. But that is the only loss it would have suffered, at least so far as the pleading suggests. There is nothing in the pleading to indicate how it might follow, if CSR had not made that misrepresentation, that the applicant could have lost the chance of putting a stop at the outset to the collusive tendering of the respondents over the next five years.
78 The applicant can recover the extensive damages here claimed only if it shows that if CSR had not only not made the first representation in mid 1989 but had then gone on to reveal "the true position", viz, the existence of the cartel in which the first six respondents were already involved, the applicant would have been armed with knowledge that may have prevented it from being duped and harmed by the conduct of all those respondents throughout the ensuing five years. No facts are alleged in the pleading that might suggest that CSR was required to make such a disclosure. The applicant's case here must therefore be that when a person makes a fraudulent misrepresentation about some subject matter, the victim's damages in deceit can be assessed on the basis of the gains the victim might have made or the detriments it might have avoided if the fraudster had not only said nothing but had done something different - disclosed the true position about the subject matter of the misrepresentation.
79 In my opinion, that is not the law.
80 In an action for deceit, the general principle is that "the plaintiff is to be put, so far as possible, in the position he would have been in if he had not acted on the fraudulent inducement ...". Gould v Vaggelas (1985) 157 CLR 215 at 220 - 221, or, as the High Court put it in South Australia v Johnson (1982) 42 ALR 161 at 169 - 170: "a position equivalent to that which he would have occupied had the transaction not taken place". In Marks v GIO Australia Holdings Ltd [1998] HCA 69; 158 ALR 333, McHugh, Hayne and Callinan JJ said at [41]:
"Leaving aside questions of remoteness of damages in assessing damages for deceit (a question that was left unresolved in Gould v Vaggelas), the damages for deceit will be the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendant's misrepresentation."81 In Gould v Vaggelas, Brennan J, at 255, said that the general rule is that damages recoverable in deceit are limited to those which flow directly from the fraudulent inducement, a proposition with which Gibbs CJ expressed agreement at 221 and 224, while reserving his opinion on whether such damages had also to be reasonably foreseeable to be recoverable. Both also observed that, where the fraud induces the acquisition of property, the plaintiff may recover, in addition to the difference between the price and the value of the property, consequential losses. But such losses must also be caused, ie, flow directly, from the fraudulent inducement.
82 The position in England as to remoteness has now been settled by Smith Newcourt Securities Ltd v Citibank NA [1996] UKHL 3; [1997] AC 254, where the House of Lords held at 264 - 265 and 282 - 285 that at least where a contract has been induced by fraudulent misrepresentation, the measure of damages is reparation for all the actual damage directly flowing from (ie, caused by) entering into the transaction, whether or not any of the loss was reasonably foreseeable.
83 Given that damages for deceit are designed to provide the plaintiff with the sum representing the loss suffered by it because it acted in reliance on the defendant's false representation, the comparison to be made in assessing those damages is between the position of the plaintiff as it was before the fraudulent statement was made to him and his position as it became as a result of his reliance on that statement. In assessing those damages, the Court, in my opinion, is not required or entitled to go beyond assuming that the defendant did not make the misrepresentation and instead, investigate everything the plaintiff might have done or refrained from doing, either at the time or during an indefinite subsequent period, if the defendant had not only refrained from making the misrepresentation but had made a full disclosure of all matters touching on what was misrepresented. The defendant is required to compensate the defendant fully for the loss caused by his fraud. But the plaintiff cannot use the occasion of being a victim of that fraud as sufficient, without more, to impose on the defendant a duty of disclosure and a liability for non-performance of that duty which would not otherwise have existed.
84 Sibley v Grosvenor [1916] HCA 14; (1916) 21 CLR 469, an authority upon which the applicant relied, does not support the applicant's claim to enlarged damages. When Griffith CJ, at 473, observed that there could be no doubt that, if the plaintiffs "had known the real truth as to" the nature of the sale, they may have refrained from making the purchase in respect of which they claim damages in deceit, he was doing nothing more than explaining why the trial judge was wrong in holding that the plainly false representation made by the agent as to the nature of the sale had not been relied on by the plaintiffs when they committed themselves to the purchase at the over-valued price. His Honour was not considering how damages for deceit should be assessed. It is that which is the issue here. The applicant also relied upon a dictum in Smith v Kay [1859] EngR 38; (1859) 7 HLC 750 at 759. But, again, it is apparent that what the Lord Chancellor was concerned with was whether the misrepresentation sued on was capable of operating as an inducement to the plaintiff to enter into the transaction in respect of which complaint was made, not with the assessment of damages. No other authority was cited.
85 In my opinion, it is only if the applicant pleads and proves the existence of a duty of full disclosure that it can recover the wider damages claimed here, unless it can say that those wider damages directly flow from, ie, were caused by CSR's initial narrow misrepresentation (or by one or other of the subsequent eight misrepresentations).
86 On no view, in my opinion, can the wider range of losses here sought to be recovered be said to be losses that flowed "directly" from the narrow fraudulent inducements sued upon. What caused those subsequent losses was not CSR's initial misrepresentation, but rather the agreement made beforehand between the respondents and its implementation by each of them over the five years following that initial misrepresentation.
87 The applicant does not wish to claim in deceit for the losses that flowed directly from the respondents' supply of overpriced concrete to the applicant's nine projects. It wants to recover much more than those limited damages. It is not entitled to do that. The claim in deceit will be struck out.
Contravention of s 52
88 In Section L, damages are claimed under s 82 the Trade Practices Act 1974 (Cth) in respect of the same misrepresentations alleged in the deceit claim in Section K on the basis that the making of those misrepresentations involved conduct in contravention of s 52 of the Act. (pars 198 and 199) It is also alleged that the wider range of conduct of the respondents in holding themselves out as competitors with one another in their respective concrete markets in the manner described in Sections D to I and K, coupled with keeping their arrangements secret as alleged in Section C, constituted conduct in contravention of s 52. (pars 200 and 201)
89 In its deceit claim, the applicant seeks to recover damages only for the loss of the chance to avoid the whole or part of the losses sought to be recovered in the action based on contraventions of Part IV of the Trade Practices Act. Here, however, the applicant in terms claims to recover the entirety of those losses on two separate bases (pars 199 and 201).
90 In Marks, it was said at par [38]:
"It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage `by conduct of another person' that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with tort such as deceit or with equity but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies."91 The Court added, at par [42]:
"It follows, then, that a comparison must be made between the position in which the party that allegedly has suffered loss or damage is and the position in which that party would have been but for the contravening conduct ... For the moment it is enough to say that s 82 requires identification of a causal link between loss or damage and conduct done in contravention of the Act."92 As to the first ground on which the totality of the losses in par 111 are claimed (in pars 198 and 199), though based on the nine sets of misrepresentations the subject of the deceit claim, the pleading appears to allege here that the totality of these losses flow from all the misrepresentations operating cumulatively. But, without the pleading of further facts, pars 198 and 199 do not sufficiently set up such a case: it is not self-evident how nine separate misrepresentations made between mid 1989 and mid 1993 together could cause the totality of the losses the applicant claims it suffered over the five years of the life of the cartel from mid 1989. However, if these paragraphs should be read as applying distributively to the respondents so as to allege separate claims against each based on their contraventions of s 52, it is open to the same defect in the way loss is pleaded in the deceit claim. On either reading, pars 198 and 199 must be struck out.
93 The second ground upon which the applicant seeks to recover the totality of its losses resulting from the cartel is that every collusive tender lodged by each respondent over the whole of the five year period in respect of Brisbane market projects owned not only by the applicant but by others which have been identified in Sections D, G, H and K of the pleading together caused that loss (pars 200 and 201). By acting throughout the five year period to continuously maintain artificially high market prices for concrete, it is said this loss resulted to the applicant. So read, this part of the pleading does not adequately identify how such a loss claim can be made out. Paragraph 201 must therefore be struck out for the same reason that the claim in Section J, based on contraventions of s 45 of the Act, is bad unless the applicant files the loss statement I have discussed in dealing with par 111, that will cure this pleading defect.
Conspiracy
94 In Section M of the pleading, a single conspiracy to commit four different classes of unlawful conduct is alleged against the various respondents as a means of recovering damages for the whole of the losses suffered by reason of what can be referred to generally as the price-fixing arrangements made by the respondents. (I have some doubt whether the applicant must be taken to have pleaded a single conspiracy or three - not four - different conspiracies. But the respondents did not take any point about this and little seems to turn on what is the correct reading of the pleading in this respect for present purposes.)
95 It is sufficient in assessing the validity of the complaints made about this part of the pleading to deal with the allegations concerning the Brisbane concrete market. They are as follows:
"202. The Brisbane participants, by entering to the agreements or arrangements or arriving at the understandings referred to in paragraph 10 in relation to the Brisbane concrete market conspired to engage in unlawful conduct namely the conduct set out below.
203. (a) The first type of conduct was expressly or impliedly making false and dishonest representations of the kind alleged in Section K herein, in relation to the various projects described in Sections D, G, H and K herein and the projects particularised in Schedule C where tenders were let for pre-mixed concrete, such projects to be further particularised after the completion of interlocutory steps;96 It is clear from the applicant's submissions that par 202 is intended to refer to the single "umbrella" arrangement the subject of par 10, not to a number of separate arrangements, despite the wording of par 202.
(b) The representations made by the Brisbane participants to the Applicant were that their respective tender prices:
(i) were competitive prices;
(ii) were not the subject of any agreements, arrangements, understandings or collusion between the tenderers or any of them.Particulars The representations were express, insofar as they were made in the statutory declarations.
In relation to the projects described in Sections D, G and H herein and those projects identified in Schedule C where tenders were let for pre-mixed concrete, the representations are to be implied from the participation of the relevant participants in a tender bid process.
(c) The said representations were false in that the tenders were not at competitive prices, but at prices affected by the lack of a competitive market for pre-mixed concrete resulting from the agreements, arrangements and understandings alleged in paragraph 10 herein.
(d) The said representations were made dishonestly, in that they were made with knowledge of their falsity.
204. The second type of conduct was by engaging in conduct in trade or commerce that was misleading or deceptive or likely to mislead or deceive, viz., the conduct referred to in paragraph 203 and Section L above [ie, the conduct said to constitute contraventions of s 52 is here relied on].
205. The third type of conduct was by engaging in conspiracies by deceit or fraudulent means to affect the price of something sold, namely, pre-mixed concrete, and to defraud the public or buyers or consumers of pre-mixed concrete, including the Applicant, in contravention of s.430 of the Criminal Code.Particulars The conspiracies are the agreements, arrangements and understandings alleged in sections D, G and H herein [ie, the arrangements made for collusive tendering for the projects in the Brisbane area, a few only of which are projects in which the Applicant had an interest, the collusive arrangements made for submitting tenders to the Brisbane and Logan City Council referred to in G and H respectively].
The deceit or fraudulent means are the conduct alleged in paragraphs 203 to 204 above.
206. The fourth type of conduct was by engaging in conspiracies to use fraudulent tricks or devices to induce other persons, viz., purchasers and consumers of concrete, including the Applicant, to pay a greater sum of money for pre-mixed concrete than they would otherwise have paid, in contravention of s 429 of the Criminal Code.Particulars The conspiracies are the agreements, arrangements or understandings alleged in sections D, G and H herein.
The fraudulent tricks or devices are the conduct alleged in paragraphs 203 to 204 above."
97 It is alleged (par 207) that the conspiracy in par 202 was engaged in by the Brisbane participants for purposes which included the purpose of injuring the applicant and particulars are given. The only claim to damages made is in par 208:
"By virtue of the conspiracy alleged in paragraph 202 the Applicant suffered loss and damage, being the loss or damage alleged in paragraph 111 herein insofar as it relates to the Brisbane concrete market."98 The conspiracy, in so far as it involved agreement to engage in the making of the misrepresentations of the kind alleged in the deceit claim in Section K, is said to have resulted in the whole of the loss and damage referred to in par 111 "in so far as it relates to the Brisbane concrete market", although only the loss of a chance was claimed on the basis of these misrepresentations in the deceit claim.
99 The case in Section M is based on a conspiracy to commit unlawful acts, ie, the second kind of conspiracy to which I referred in the Gold Coast City Council case at 149.
100 The conspiracy constituted by the "umbrella" agreement made in mid 1989 is said to be a conspiracy to commit what are different classes of unlawful conduct. The first class of conduct the subject of the conspiracy is described in par 203 in a complicated way as the making of false representations "of the kind" alleged in Section K (which refers only to false representations made by six of the respondents in the period between mid 1989 and mid 1993 in respect of a total of nine of the applicant's own projects); par 203 goes on to assert that false representations of this kind were made in relation to the projects described in Sections D, G, H, as well as K. (Sections D, G and H describe many projects for many owners in the Brisbane markets, as well as the nine projects of the applicant referred to in Section K, which were located in the Brisbane and Toowoomba markets. Paragraph 203 also alleges that this first class of unlawful conduct included the making of false representations of the kind alleged in Section K in relation to other projects, viz, "the projects particularised in Schedule C [but only] where tenders were let for pre-mixed concrete, such projects to be further particularised after the completion of interlocutory steps". Schedule C lists all of the direct supplies by the respondents of concrete to the applicant and all of the supplies of concrete to builders of a large number of the applicant's projects, including the nine referred to in Section K.
101 The claim here appears to be that the overarching conspiracy agreed upon in mid 1989 involved an agreement to make false representations as to the competitiveness of prices bid or offered by the respondents throughout the five year period of the cartel in respect of projects for a wide range of owners, including all the applicant's projects the subject of its damages claim.
102 The second class of unlawful conduct, which it is said in par 204 the respondents also agreed to engage in back in mid 1989, is similar to, but not exactly the same conduct as that referred to in par 203.
103 Paragraphs 205 and 206 identify the other two classes of conduct which the applicant says the respondents agreed to engage in when they entered into the conspiracy in mid 1989. This conduct is confined in both paragraphs, to the respondents collusive tendering activities set out in Sections D, G and H of the pleading. It is clear enough that the purpose of pars 205 and 206 is to set out two different bases upon which the same body of conduct said to have been the subject of the conspiracy agreement of mid 1989 is to be regarded as unlawful conduct.
104 So far as the allegations in pars 202 and 204 are concerned, the only basis upon which the conduct here relied upon can be said to be unlawful is that s 52 the Trade Practices Act applies to it. (Conduct within s 52 is not, of course, declared to be unlawful; the Trade Practices Act only makes that conduct the basis upon which losses caused by it are recoverable under s 82 of the Act. But for the purposes of a conspiracy claim it is analogous to conduct actually declared by statute to be unlawful.) The sixth respondent submits that it is not open to the applicant to sue at common law on a conspiracy to commit an unlawful act where the act, previously lawful, is only made unlawful by a statute which also gives a remedy for any loss thereby suffered. It is upon this basis that I struck out a similar conspiracy claim made by the applicant in the Gold Coast City Council case at 152. In Broadlex Pty Ltd v Computer Co Pty Ltd (1983) 50 ALR 92, Clarke J accepted that this rule of construction applied to make a proceeding under s 82 the Trade Practices Act the only remedy for loss caused by a contravention of s 52 of that Act.
105 Counsel for the applicant referred me to three cases upon which it relies to submit that, notwithstanding my ruling in the Gold Coast City Council case, it is not sufficiently certain that the conspiracy claim here made cannot be maintained to justify striking it out. The applicant's approach is in accordance with what was said in Dey v Victorian Railway Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 - 92.
106 In Bunny Industries Ltd v Jones (1979) 53 FLR 160, Dunn J, in refusing to strike out an action, held that the Supreme Court could deal with a claim on an unlawful act conspiracy even though the acts in question were only unlawful because they contravened s 45 the Trade Practices Act and even though, by Part VI of that Act, only the Federal Court had jurisdiction to determine claims for damages caused by contraventions of a provision of Part IV or V, such as s 45. It was because the action was framed as one at common law that Dunn J considered it could not be regarded as an action under Part VI the Trade Practices Act. Gibbs CJ agreed that that the Supreme Court had jurisdiction even though the claim in Bunny Industries could be said to be a matter that arose under Part IV of the Act: Stack v Coast Securities (No 9) Pty Ltd [1983] HCA 36; (1983) 154 CLR 261 at 277. Dunn J accepted that the rule of statutory construction, which I relied on for my ruling in the Gold Coast City Council case at 151 - 152, applied so as to make the remedies provided for by Part VI of the Trade Practices Act the only remedies available in respect of conduct that was unlawful only because it contravened s 45 of that Act. In my opinion, this should have led to the conspiracy claim there in question being struck out as not maintainable at law, even though the challenge to the Supreme Court's jurisdiction to determine that claim was rightly rejected: a claim on such an unlawful act conspiracy is not a claim under Part VI the Trade Practices Act, which alone was then within the exclusive jurisdiction of this Court. But it is not a claim maintainable at common law because, on the proper construction of the Trade Practices Act which makes unlawful the act in question, which was previously lawful, the only remedy for loss caused by that act is an action given by Part VI the Trade Practices Act.
107 In Galea v Cooper [1982] 2 NSWLR 411, the Master held that the Supreme Court was not deprived of jurisdiction by s 86 the Trade Practices Act to determine a cause of action based on a common law conspiracy to commit unlawful acts, viz, acts made unlawful because they contravened certain provisions of Part IV the Trade Practices Act for the reason that: "there is no basis that I see for inferring that the intention of the Legislature must have been that only the special avenue of redress in damages provided by s 82 was to be available". For the reasons given in the Gold Coast City Council case at 151 - 152 and for those given in Broadlex, I think this is exactly what the Federal Parliament did intend.
108 In New South Wales v McCloy Hutcherson Pty Ltd (1993) 43 FCR 489, Beasley J, at 507, held that a common law claim on a conspiracy to contravene s 45 the Trade Practices Act by engaging in collusive tendering was maintainable. Her Honour considered that, even if she was wrong in thinking that Trade Practices Commission v Allied Mills Industries Pty Ltd (1980) 48 FCR 102 and Ward v Lewis [1955] 1 All ER 55 did nothing more than lay down a non-binding rule of practice, she was not prepared to accept them as authority to the contrary, saying: "I do not see anything in the Trade Practices Act which prohibits the pleading of a conspiracy charge." For the reasons given in Gold Coast City Council at 150 - 151, I agree with her Honour's conclusion that neither Allied Mills nor Ward v Lewis is authority for the proposition that a common law claim for conspiracy based on conduct made unlawful because it is a contravention of s 45 the Trade Practices Act is not maintainable. If her Honour meant only that it was open to the plaintiff to bring a lawful act conspiracy in the Supreme Court based on conduct that happened to contravene s 45, the decision would be consistent with what I said in the Gold Coast City Council case at 152. But, I am unable to agree that the Trade Practices Act, properly construed, does not prevent such an unlawful act conspiracy being maintained, if that is how her Honour's statement should be understood. The considerations to which I referred in Gold Coast City Council at 151 - 152 that I thought decisively showed that such a common law count could not be maintained were not the subject of argument before her Honour.
109 Given that I remain of the view I expressed in the Gold Coast City Council case on the point, I will strike out par 204.
110 The conspiracy allegations in pars 202 and 203 are not open to the same attack. The unlawful conduct here relied upon is conduct that is unlawful because it consisted of the making of fraudulent misrepresentations, not as the sixth respondent submits, unlawful because it is conduct proscribed by s 45 the Trade Practices Act. A conspiracy to make fraudulent misrepresentations has always been actionable at common law as an unlawful act conspiracy. It is unnecessary for the applicant, in proving the conspiracy case based on par 203, to show that the conduct there complained of may also have constituted contraventions of s 45. Since it is open to the applicant to make out this unlawful act conspiracy case without going into that question at all, the sixth respondent's submission must be rejected.
111 The fourth and fifth respondents, in reliance on Galland v Mineral Underwriters Ltd [1977] WAR 116 submit that the applicant is not entitled to claim in respect of pars 202 and 203 because it involves a claim on a conspiracy constituted by a series of frauds each actionable in tort as a deceit. It can be said that the applicant does claim on a conspiracy to engage in a particular class of unlawful conduct comprised solely of conduct said to constitute the series of torts of deceit alleged in Section K. The claim therefore falls within the ratio in Galland. But, as Burt CJ there said at 120, he could find no authority to support his conclusion that the plaintiff is confined to suing on the tort itself and that it is not permissible to sue on a conspiracy to commit a tort that was carried into effect, where the defendants are jointly liable for the tort. Burt CJ found support at 121 in a statement in Halsbury to the effect that in this situation: "...the prior agreement adds nothing to the tort and has been said to merge in it, for the parties will be joint tortfeasors".
112 Although entitled to the fullest respect, Galland does not bind me. It represents but one of two conflicting judicial views on whether, where the wrongdoers are joint tortfeasors, the conspiracy merges in the tort. See Law of Torts, 2nd ed, Balkin & Davis at pp 627 - 629 and E Goodman, Civil Conspiracy: Better Dead than Alive? (1991) 3 Bond LR 66 at 79 - 78.
113 There seems to me no convincing reason why it should not be open to a plaintiff to sue in the alternative both on a conspiracy to commit a tort and on the joint tort. It is true that, by suing on a conspiracy, the plaintiff may obtain procedural advantages not available if it were to sue only on the joint tort ultimately committed. See, eg, Ward v Lewis at 56. But it is not apparent why that must necessarily involve an abuse of the process of the court that warrants striking out the conspiracy claim. A plaintiff obtains the advantage of not having to prove actual or threatened damage if it claims an injunction under the Trade Practices Act on the basis that the defendant has contravened s 52, whereas he must prove damage if he brings a passing off action on the same conduct: see Central Equity Ltd v Central Corporation Pty Ltd (1995) ATPR |P41-443 at 40,997 - 40,998. But that does not justify confining the plaintiff to the cause of action upon which it is more difficult for it to succeed. There are many instances where the courts have countenanced an action on an unlawful act conspiracy to commit a joint tort, without any concern that the so-called doctrine of merger prevents that course being followed. In Jervois Sulphates (NT) Ltd v Petrocarb Explorations NL (1974) 5 ALR 1 at 33, Forster J saw nothing wrong with the plaintiff suing on such alternative causes of action, so long as it did not have two sets of damages in respect of the same tortious acts "one for the acts themselves, another for the conspiracy to commit them". Concerns, often well founded, about the fairness of prosecutors charging criminal conspiracies when they can rely on charges of substantive offences are not, in my opinion, sufficient to justify denying an injured plaintiff the right to choose its remedy. It is those concerns that may be at the root of this so-called doctrine of merger, as Goodman, ibid, suggests.
114 This is not to say that, in particular circumstances, a plaintiff may, by suing on a conspiracy to commit a joint tort rather than on the tort itself, abuse the process of the Court. It was submitted by the fourth and fifth respondents that the conspiracy claim was here brought to gain a forensic advantage in so far as it was suggested that damages for conspiracy can be recovered on a more generous basis than damages for the underlying joint tort: see McGregor on Damages, 16th ed, par 1936. However, even if this is so, I cannot see why a plaintiff should be denied a full remedy for the defendant's wrongful conduct because a less generous one is available. I reject this submission.
115 The sixth respondent, in attacking the conspiracy allegations in pars 202 and 203, refers to a number of principles of the criminal law including that referred to in Archbold, 42nd ed, par 28-27: "as a general rule where there is an effective and sufficient charge of a substantive offence, the addition of a charge of conspiracy is undesirable". It also submits that, here, the applicant is seeking to use a series of conspiracies of limited scope to support its claim to a conspiracy of larger scope and that this infringes the practice I have referred to. The justification for these rules of criminal practice is the importance of avoiding prosecutions so complex as to make trial by jury unworkable - see The Queen v Hoar [1981] HCA 67; (1981) 148 CLR 32 at 38 and 41 - and to avoid the real risk of that complexity resulting in injustice to some or all of the accused: see the cases referred to in Verrier v Director of Public Prosecutions [1966] 2 AC 195 at 224. I do not think that these rules of criminal practice have any application to the civil side where a wronged applicant seeks to recover not just part of its losses, but the whole of its losses caused by unlawful conduct, even though it may only be in a position to prove the conspiracy which caused the totality of its losses by relying upon overt acts in the form of a number of conspiracies of smaller scope and even though each of the latter may also have separately caused some of the totality of the applicant's loss.
116 I think there is sufficient doubt about the point taken by the fourth and fifth respondents to justify my not striking out this part of the applicant's statement of claim.
117 In pars 202 and 205 the applicant seeks the forensic advantages of suing on a further unlawful act conspiracy. Paragraphs 202 and 205 allege a conspiracy to engage in conduct that is unlawful because it contravenes s 430 the Criminal Code (Qld): it is easier to prove the harmful intent element of such a cause of action than it is to prove that element where the claim is brought on a lawful act conspiracy. The applicant here alleges that the respondents contravened s 430 by conspiring, ie, agreeing to affect, by fraudulent means, the market price for concrete sold publicly. Various of the respondents submit that a conspiracy to conspire does not give rise to a good cause of action as an unlawful act conspiracy. I was not prepared to so rule in the Gold Coast City Council case at 153, although for other reasons I struck out a similar cause of action there raised.
118 The only conduct that s 430 makes unlawful is the making of an agreement of the kind therein described: s 430 does not make unlawful the acts done in implementation of such an agreement (though such acts would no doubt provide strong evidence of the making of the proscribed agreement and would be unlawful as fraudulent acts at common law). But the only act that s 430 makes unlawful - the making of the agreement - cannot cause damage which is an essential element of an action on an unlawful act conspiracy. Or at least it does not so readily appear that that can be the situation as to free the applicant of the task of pleading facts sufficient to show that that may indeed be the position. And none are pleaded.
119 In the absence of pleaded facts to show that the only act made unlawful by s 430 was capable of causing the damage claimed, I do not think the applicant can have the advantage of suing on a conspiracy to harm by an act made unlawful by s 430, viz, by a second conspiracy.
120 The applicant relies on Brisbane Shipwrights' Provident Union v Heggie [1906] HCA 4; (1906) 3 CLR 686 to support this claim. But that case did not hold that an action would lie on a conspiracy to do an unlawful act which act was constituted by the making of a second unlawful agreement. The Court there held that it was an actionable malicious injury for A to interfere with the rights of B where that was the direct result of an unlawful act by A and that, because the defendant unionists had committed a breach of s 543 of the Code (which prohibited persons from conspiring, ie, from making an agreement, to injure another in his trade) when they agreed to coerce an employer into dismissing the non-unionist plaintiff, and had carried the conspiracy into effect (p 702), they had committed an actionable malicious injury, viz, an unlawful act of which the direct result was the plaintiff's loss of his employment. The case is not one of an unlawful act conspiracy where the unlawful act is confined to a second conspiracy: ie to the making, as distinct from the implementation, of a conspiratorial agreement.
121 It may be open to the applicant to sue the respondents directly on a breach of s 430 without alleging any anterior agreement. But to do that, the applicant would have to undertake the difficult task of showing that a breach of s 430 does confer a private right of action on a person injured by the breach. The applicant does not wish to do that.
122 Paragraph 205 will be struck out.
123 I do not accept that the allegations in par 207 are inadequate to apprise the respondents how the applicant intends to make out that element of its conspiracy case requiring proof of an intention to harm the applicant, in view of the conspiracy's market-rigging objective and the acts of the respondents in submitting collusive tenders for the applicant's own projects.
124 The pleading is, however, deficient in respect of the allegation of loss for the reasons already mentioned when dealing with par 111. Paragraph 208 will therefore be struck out unless the applicant includes in its statement of loss and damage information showing how it intends to prove the loss suffered here.
Breach of implied warranty
125 The applicant's claim here is to recover the losses referred to in par 197 of Section K of the pleading, viz, damages for the loss of the chance to avoid the totality of the losses suffered by the applicant in acquiring, throughout the whole five year period of the cartel, overpriced concrete from the respondents. (par 227)
126 The claim is made on two bases: firstly, that by submitting tenders for the supply of concrete to the head contractors engaged by the applicant for nine of the applicant's projects, the particular respondent who submitted the successful tender in each of these cases expressly or impliedly warranted to the applicant that its tender prices were competitive prices and not subject to any collusive arrangement with other tenderers for that project. It is then said, in effect, that a contract between the particular respondent and the applicant collateral to the supply contract between that respondent and the head contractor came into existence upon the applicant permitting the head contractor to accept that respondent's concrete supply tender. The claim is on what is referred to in Cheshire & Fifoot's Law of Contract, 7th Aust ed, at pars 3.7 and 10.5 as a "tripartite collateral contract". (pars 223 and 224) Secondly, it is alleged that the express or implied warranty I have referred to was also a term of the contract between the particular respondent and the particular head contractor that was both given for valuable consideration and for the benefit of the applicant who, in turn, accepted the warranty by permitting the head contractor itself to accept that respondent's concrete supply tender (par 225) and so can sue the relevant respondent directly. The claim appears to invoke s 55 the Property Law Act 1974 (Qld), although no mention is made of that provision.
127 It is to be noted that both warranty claims are made only against those respondents who submitted the successful tenders for the supply of concrete to the head contractors in respect of the nine projects referred to in Section K, ie, only against Pioneer, CSR and Goodmix. But the wide damages sought may in principle still be recoverable here.
128 The first respondent refers to BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 and Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 422 - 423 and submits that there is no basis for implying the warranty pleaded in par 223.
129 But as I have pointed out, the applicant's warranty claim is framed on two quite different bases. Paragraphs 223 and 224 allege a contract between the particular respondent who submitted the relevant successful tender and the applicant, which is collateral to the concrete supply subcontract entered into between that respondent and the head contractor to the applicant for the particular project. Whether a reasonable cause of action has been here pleaded depends upon whether the conduct of the particular respondent said to constitute the warranty is, firstly, capable of conveying the meaning alleged: see Handbury v Nolan (1977) 13 ALR 339 at 348 - 349 - and, if so, whether it was promissory or only representational in character: see JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435. This, in turn, depends upon the intention of the parties: Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 at 5. Both issues are questions of fact to be determined in the light of all the circumstances of the case: Heilbut, Symons & Co v Buckleton [1912] UKHL 2; [1913] AC 30 at 50 - 51 and Handbury v Nolan, ibid.
130 In my opinion, I do not think there is any room for the application to such a claim of the principles, referred to in BP Refinery and Byrne, which govern whether a term will be implied into a written contract or, in the case of oral or partly oral and partly written contracts, into contracts of that kind. The sole question here relevant is whether the conduct identified in par 223 is capable, as a matter of fact, of supporting an inference that a particular respondent did, by engaging in that conduct, make promises of the kinds alleged in par 223(a) or (b).
131 For the same reasons that I rejected the contention that a reasonable cause of action in deceit was not pleaded because the conduct relied on (par 193) to support the allegations of misrepresentations was incapable of having that effect, I reject a similar submission made in relation to par 223.
132 As is recognised in par 225(a), the first question is whether a warranty to the effect pleaded in par 223 should be implied into the relevant concrete supply subcontract that was made between the head contractor and the particular respondent, since the claim here, in contrast to the first warranty claim, is what Cheshire & Fifoot describe in par 10.5 as a "bipartite collateral" contract.
133 The applicant does not identify in its pleading whether each of the subcontracts here relied on was a formal contract apparently complete on its face or a contract which the head contractor and the relevant respondent did not purport to reduce completely to writing. See, eg, the way the subcontract between Pioneer and Statham (Qld) Pty Ltd for the Toowoomba Hospital Works is pleaded in Section K at pars 113 to 121. The latter kind of contract has to be spelled out by the Court from an examination of all the relevant circumstances. Such should be pleaded. Given the more complex nature of the task of implying a term in a contract of the latter kind, referred to in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 422, the pleading is deficient if the subcontract was one the parties did not purport to reduce to writing.
134 But whether each subcontract takes the form of a document apparently complete on its face or an informal contract, Byrne establishes that a term will not be implied in circumstances like the present unless "the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case". In relation to the second basis upon which the implied warranty claim is pleaded, I accept the first respondent's submission that no facts are pleaded in the statement of claim (as they should have been) to suggest that it might be necessary for the reasonable or effective operation of the concrete supply subcontract between the relevant respondent and head contractor to the applicant to imply into each such subcontract a term to the effect alleged in par 223. Paragraph 225 will therefore be struck out.
135 While the claim in pars 223 and 224 is otherwise adequately pleaded, for the reasons that the pleading in par 197 of the loss sought to be claimed in Section K is deficient, this implied warranty claim discloses no cause of action because it fails to sufficiently plead the link between the breach of warranty relied on and the loss sought to be recovered. Paragraph 227 will be struck out unless the applicant remedies this defect with the loss statement I have required to be filed.
Miscellaneous matters
136 In the course of argument, a number of other defects were identified in the pleading accepted by the applicant as needing correction. Eg, the inappropriate reference in par 203(b) to "to the Applicant" and the failure of the applicant to identify which of the supplies listed in Schedule C to the pleading were in respect of projects for which the various respondents submitted tenders referred to in the various sections of the pleading itself. The applicant will no doubt attend to all such matters.
137 Much of what I have had to say is directed to the pleading of the various causes of action in respect of the Brisbane market. My comments apply equally to the pleading in relation to both the Toowoomba and Gold Coast markets. The sixth respondent must take responsibility for bringing into court draft minutes of the orders which give effect to my reasons in relation to the statement of claim in action QG 199 of 1997, if that cannot be agreed.
|
I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment herein
of the Honourable Justice Drummond. |
Associate:
Dated: 23 April 1999
|
Counsel for the Applicant: | Mr JC Sheahan SC
Mr PJ Flanagan |
| Solicitor for the Applicant: | Crown Law |
| Counsel for the First Respondent: | Mr PL O'Shea |
| Solicitor for the First Respondent: | Minter Ellison |
| Counsel for the Second Respondent: | Mr KA Barlow |
| Solicitor for the Second Respondent: | Blake Dawson Waldron |
| Counsel for the Third Respondent: | Mr JD McKenna |
| Solicitor for the Third Respondent: | Mallesons Stephen Jaques |
| Counsel for the Fourth Respondent: | Mr JE Gallagher QC
Mr JK Bond |
| Solicitor for the Fourth Respondent: | Allen Allen & Hemsley |
| Counsel for the Fifth Respondent: | Mr JE Gallagher QC
Mr JK Bond |
| Solicitor for the Fifth Respondent: | Allen Allen & Hemsley |
| Counsel for the Sixth Respondent: | Mr G Nettle QC
Mr L Glick |
| Solicitor for the Sixth Respondent: | Clayton Utz |
| Counsel for the Seventh Respondent: | Mr W Sofronoff QC
Mr RN Traves |
| Solicitor for the Seventh Respondent: | Allen Allen & Hemsley |
| Date of Hearing: | 29 July 1998 |
| Date of Judgment: | 23 April 1999 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/1999/499.html