FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Visy Industries Holdings
Pty Ltd (No 2) [2007] FCA 444
LEGAL PROFESSIONAL PRIVILEGE – allegations of price fixing and market sharing –
information concerning allegations came to knowledge of applicant on 22 November 2004 –
in principle decision to commence proceedings on 28 November 2005 – claim for privilege
for documents created after 15 December 2004
Held:
1.
2.
3.
Litigation reasonably anticipated by applicant by 15 December 2004.
Document created for dominant purpose of use in litigation.
Documents concerning grant of immunity not discoverable.
WORDS AND PHRASES – “Clayton’s”
Trade Practices Act 1974 (Cth) ss 2, 4, 18, 19, 25, 26, 155
Evidence Act 1995 (Cth) s 135(c)
Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] 225 ALR 266 at [30] applied
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998)
81 FCR 526 discussed
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 cited
Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026 cited
Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005]
FCA 503 cited
Australian Competition and Consumer Commission v Rural Press Ltd (2000) 96 FCR 389 cited
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
applied
Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 cited
Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 applied
Australian Flight Test Services Pty Ltd v The Minister for Industry, Science and Technology
[1996] FCA 1031 applied
Grant v Downs (1976) 135 CLR 674 cited
Palmer v The Queen (1988) 193 CLR 1 cited
Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109
followed
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
INDUSTRIES HOLDINGS PTY LTD & ORS (NO 2)
VID 1650 OF 2005
HEEREY J
29 MARCH 2007
MELBOURNE
v VISY
GENERAL DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1650 OF 2005
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
Applicant
AND:
VISY INDUSTRIES HOLDINGS PTY LTD
First Respondent
VISY INDUSTRIES AUSTRALIA PTY LTD
Second Respondent
VISY BOARD PTY LIMITED
Third Respondent
RICHARD PRATT
Fourth Respondent
HARRY DEBNEY
Fifth Respondent
ROD CARROLL
Sixth Respondent
JUDGE:
HEEREY J
DATE OF ORDER:
29 MARCH 2007
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.
The first to fifth respondents’ motions dated 5 December 2006 and 1 February 2007
are dismissed with costs.
2.
Subparagraphs (aa) to (ad) of par 222 of the first to fifth respondents’ amended
defence filed 8 January 2007 are struck out.
3.
The first to fifth respondents file and serve further and better particulars of the
allegations in par 222 (ae) and (af) of their amended defence by 27 April 2007.
4.
The first to fifth respondents pay the applicant’s costs of the motion dated 21
-2February 2007.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
GENERAL DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1650 OF 2005
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
Applicant
AND:
VISY INDUSTRIES HOLDINGS PTY LTD
First Respondent
VISY INDUSTRIES AUSTRALIA PTY LTD
Second Respondent
VISY BOARD PTY LIMITED
Third Respondent
RICHARD PRATT
Fourth Respondent
HARRY DEBNEY
Fifth Respondent
ROD CARROLL
Sixth Respondent
JUDGE:
HEEREY J
DATE:
29 MARCH 2007
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
1
The applicant Australian Competition and Consumer Commission alleges that
companies in the Visy Group and certain officers of those companies have engaged in
price fixing and market sharing with companies in the Amcor Group contrary to s 45
of the Trade Practices Act 1974 (Cth).
2
Interlocutory disputes have arisen, primarily in relation to claims for legal
professional privilege by the ACCC. There also are some questions in relation to
pleadings and particulars. The principal issue, which has occupied the bulk of this
four day hearing, is when litigation in respect of the alleged contraventions of the Act
-2-
was reasonably anticipated by the ACCC. The ACCC first became aware of the
allegations on 22 November 2004 when senior officers of the Amcor Group,
accompanied by solicitors, approached the Commission. The ACCC says that by 15
December 2004 litigation was reasonably anticipated by it.
However, the
Commissioners of the ACCC did not formally resolve in principle to commence
proceedings until almost a year later, on 28 November 2005. The respondents say
that the relevant date was 28 November 2005. The application and statement of claim
were filed on 21 December 2005.
In addition, on the subject of legal professional privilege there is a dispute as
3
to whether the dominant purpose for the creation of the documents was use in
litigation as distinct from investigation of possible litigation. Also, there is a question
as to documents related to the grant of immunity to Amcor and some of its former
officers and whether those documents are discoverable at all, or only relevant as to
credit.
The relevant legal principles on legal professional privilege have recently been
4
the subject of a comprehensive summary by Kenny J in Commissioner of Taxation
(Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266 at [30]. There is no dispute as to
the correctness of this statement and I incorporate it by reference in these reasons.
The sixth respondent Mr Rod Carroll is separately represented and did not
5
participate in these interlocutory applications. The term respondent in these reasons
does not include him.
The documents in question
The documents in question total 216 and can be summarised as follows. The
6
officers referred to are the ACCC’s General Counsel Mr Robert Alexander, Mr
Geoffrey Williams, a Director of its Enforcement Division, and Ms Susan Pryde of
the Australian Government Solicitor’s office.
Category of Number
of Date range
documents
documents
A
4
17 Jun 2005 – 21
Basis of privilege claimed
Confidential communications to Mr
Alexander from legal representatives
-3-
Oct 2005
B
4
15 Mar 2005 – 16
Mar 2005
C
2
17 Jun 2005 – 24
Jun 2005
D
No longer in
dispute
-
E
77
1 Jan 2005 – 16
Dec 2005
of proposed witnesses. The dominant
purpose
of
Mr
Alexander’s
communication with those persons
was to obtain information for use in,
or in relation to, the proceeding and to
use that information to obtain legal
advice in relation to the proceeding.
Documents created by Mr Alexander
for the dominant purpose of being
used in, or in relation to, the
proceeding and to obtain legal advice
in relation to the proceeding. The
documents consist of:
1. notes made by Mr Alexander
as to evidentiary matters to be
discussed with witnesses (nos
36 and 37);
2. note
of
a
confidential
communication between Mr
Alexander and solicitors for a
witness (no 38);
3. Mr Alexander’s note of a
confidential
communication
between himself and a witness
(no 41).
Documents containing information in
respect of proposed witnesses collated
at Mr Alexander’s request by the
solicitor for the employer of the
proposed witnesses and provided to
Mr Alexander. His dominant purpose
in requesting the information in
respect of the proposed witnesses was
to obtain information for use in, or in
relation to, the proceeding and to use
that information to obtain legal advice
in relation to the proceeding.
1. Documents
recording
confidential communications
between, on the one hand, Mr
Williams and other officers of
the ACCC or AGS and, on the
other hand, a proposed witness
or a representative of a
-4-
F
4
1 Jul 2005 – 1
Nov 2005
G
95
22 Dec 2004 – 27
Nov 2005
H
11
17 Dec 2004 – 6
May 2005
proposed witness.
2. In some cases, the documents
also
record
internal
communications of officers of
the ACCC related to the
communications referred to in
1.
3. In
each
instance,
the
communications recorded in
the documents were made by
Mr Williams or at his request.
The dominant purpose of Mr Williams
in making those communications, or
requesting those communications to be
made, was to obtain information for
use in, or in relation to the proceeding
and to use that information to obtain
legal advice in relation to the
proceeding.
Internal ACCC working documents
prepared by officers of the ACCC at
Mr Williams’ direction. His dominant
purpose in directing that those
documents be created was to record
information for use in, or in relation
to, the proceeding and to obtain legal
advice in relation to the proceeding.
Witness statements or draft witness
statements prepared by Mr Williams,
other officers of the ACCC at his
direction, and officers of the AGS or
counsel at Mr Williams’ request. In
some cases the draft witness
statements
contain
suggested
amendments made by Mr Williams,
other officers of the ACCC or AGS, or
counsel.
Mr Williams’ dominant
purpose in preparing or requesting
those documents was to use them in,
or in relation to, the proceeding and to
obtain legal advice in relation to the
proceeding.
In some cases Mr
Alexander was the officer who
amended the draft witness statements
and he did so with the same dominant
purpose.
Records of interviews of potential
witnesses conducted by Mr Alexander
and Mr Williams. Their dominant
-5-
I
19
11 Oct 2005 – 25
Nov 2005
purpose in conducting the interviews
was to obtain information for use in,
or in relation to, the proceeding and to
use that information to obtain legal
advice in relation to the proceeding.
The interviews were not conducted
under the powers conferred by s 155
of the Act.
Witness statements or draft witness
statements prepared by Ms Pryde or
other officers of AGS at the direction
of Mr Williams or Ms Pryde. In some
cases the draft witness statements
contain suggested amendments made
by Ms Pryde, Mr Williams or other
officers. Ms Pryde’s dominant purpose
in preparing or requesting those
witness statements was to use the
documents in, or in relation to, the
proceeding and to obtain legal advice
in relation to the proceeding. In some
cases Mr Alexander was the officer
who amended the witness statements
and he did so with the same dominant
purpose.
Events up until 15 December 2004
7
On 10 November 2004 Amcor commenced proceeding VID 1383 of 2004 in
the Federal Court against, amongst others, certain of its former executives alleging
breaches of their employment contracts and fiduciary duties. Amcor obtained an
Anton Piller order and as a result of the subsequent search certain material came into
the possession of Amcor’s solicitors Allens Arthur Robinson. On 15 November
James Hodgson, another former Amcor executive, was joined as a respondent. I will
refer to this action as the Hodgson Proceeding.
8
On 22 November, Mr Pat Ryan of Allens approached Mr Graeme Samuel, the
Chairman of the ACCC, in connection with a proposed leniency application
concerning serious cartel misconduct.
9
In June 2003 the ACCC had published a Leniency Policy for Cartel Conduct.
In the policy the ACCC stated:
-6“Detecting, stopping and deterring significant domestic or international hard
core cartels operating in Australian markets is a high priority for the ACCC.
In these circumstances the harm caused to Australian consumers, businesses
and the economy is likely to be substantial.
…
Cartel behaviour is inherently anti-competitive and considered by the ACCC
as some of the most damaging conduct prohibited by the TPA.”
10
In essence, the Policy provides that the Commission will grant a corporation
immunity from ACCC-initiated proceedings where the Commission is unaware of the
alleged cartel and the corporation is the first person to disclose its existence. The
corporation must meet a number of requirements, including full and frank disclosure
and continuing cooperation. It must not have coerced other corporations to participate
in the cartel and must not have been the “clear leader” (i.e. ringleader). Similar
provisions apply to individuals.
11
A video conference was arranged for later that day. Those present on behalf
of the ACCC were Mr Samuel, Mr David Smith, a Commissioner and Chairman of
the Commission’s Enforcement Committee, Mr Brian Cassidy, the Commission’s
Chief Executive Officer, Ms Cherie Noy, Assistant Director of the Commission’s
Enforcement Division and Mr Alexander. Present on behalf of Amcor were Mr Chris
Roberts its Chairman, Mr Russell Jones, its then Managing Director, and three
partners from Allens, Mr Ryan, Mr Paul Meadows and Mr Bob Santamaria.
12
At the meeting the Amcor representatives foreshadowed a formal application
for leniency for cartel conduct in relation to corrugated fibre board packaging (CFP)
between approximately 2002 and 2004. One of the Amcor representatives said that
Amcor had received certain audio recordings (the Hodgson Recordings) of
discussions between Mr Hodgson and other Amcor executives. Allens had advised
Amcor that the Hodgson Recordings evidenced cartel conduct. Mr Ryan said that the
Hodgson Recordings had been obtained by Amcor following a court order permitting
a search of the home of one of Mr Hodgson’s colleagues. Mr Ryan also said that the
Hodgson Recordings included discussions between Mr Hodgson and Mr Peter Brown,
who was until his retirement in October 2003 Amcor Australasia’s Managing
Director, and Mr Peter Sutton, who replaced Mr Brown.
-7-
13
Shortly after the meeting Mr Samuel instructed Mr Alexander to work in
conjunction with Mr Williams, who was to be the Case Officer for the matter. Mr
Alexander was instructed to report directly to the Chairman as to progress rather than
to the ACCC’s Enforcement Committee. This was the first time in Mr Alexander’s
34 years with the ACCC and its predecessor that the Enforcement Committee was bypassed in this way.
14
In accordance with Mr Samuel’s instructions Mr Williams and Mr Alexander
set up and managed a team of ACCC staff for the Amcor-Visy matter. Since 22
November these two officers have discussed all major issues relating to the progress
of the matter. Agreed action of an investigatory nature is effected by Mr Williams
and his team of investigators.
Agreed action on legal issues is effected by Mr
Alexander through AGS, the ACCC’s solicitors.
15
Also on 22 November Mr Alexander drafted a notice to Amcor under s
155(1)(b) of the Act requiring Amcor to produce the Hodgson Recordings. He also
sent a letter to Mr Ryan advising that the ACCC was giving consideration to granting
conditional leniency to Amcor under Part A of the ACCC’s Leniency Policy. The
letter also sought the production of relevant electronic material concerning Messrs
Hodgson, Brown and Sutton. These were produced by Allens on the following day.
16
On 23 November Amcor published a press release stating that it had advised
the ACCC that it had received information that led it to believe that it “may have been
involved in conduct which breaches competition laws” and that it had informed the
ACCC that it would provide full co-operation in any investigation and was initiating
its own investigation.
17
On 23 November the ACCC received a letter from solicitors A J Macken &
Co on behalf of Mr Hodgson and Messrs Trevor Barnes and Ian Sangster, all former
employees of Amcor and respondents in the Hodgson Proceeding. The letter referred
to the Amcor press release and stated that the firm’s clients, as “former senior
executive officers”, were aware of information relating to the conduct to which
Amcor had referred. The clients wished to co-operate fully with the ACCC but were
effectively constrained by the interim injunctive orders obtained by Amcor in the
-8-
Hodgson Proceeding. The firm was obtaining instructions from its clients to apply to
the Court to vary or discharge such orders. They wished to make application for
leniency. They were aware of the terms of the ACCC’s Leniency Policy.
18
On 24 November Carter Holt Harvey Ltd made a confidential submission to
the ACCC seeking its approval for the acquisition of a company called Wadepack
Ltd. The proposed acquisition was to take place in the “highly competitive fibrebased packaging (folding carton and corrugated packaging) industry”. There was
reference to Amcor as a “vigorous and effective competitor” and “increasing
substitution of corrugated packaging for folding carton packaging”.
19
Also on 24 November the ACCC issued a notice under s 155(1)(b) to Visy and
certain officers seeking various documents.
20
On 25 November Mr Meadows telephoned Mr Alexander saying he believed
the Hodgson Recordings may be subject to confidentiality restrictions in the Hodgson
Proceeding. Mr Alexander, having obtained a copy of the orders, formed the view
that the ACCC required the leave of the Federal Court if the ACCC were to use this
material. An application was made to Goldberg J on 2 December. His Honour made
an order permitting Amcor to provide materials, including the Hodgson Recordings,
to the ACCC. The order was made with retrospective effect from 22 November.
21
On or shortly after 25 November the ACCC engaged Mr Peter Jopling QC
with Mr Chris Caleo of Counsel in relation to the application for leave in the Hodgson
Proceeding and in relation to the ACCC’s investigation of the alleged cartel.
22
On 26 November Mr Ryan and Mr Meadows made a formal written
application for leniency on behalf of the Amcor Group and its current and former
officers and employees, excluding Messrs Hodgson, Mihelic, Sangster, Bayley and
Barnes. The letter stated that the information available to Amcor appeared to indicate
that at some time in or about 2001 “an understanding may have been reached between
at least Amcor and Visy Board concerning the supply of (CFP)” involving market
sharing and price fixing. The understanding appeared to have been entered in or
about 2001 and may have been given effect to up until the end of September 2004.
-9-
23
On 7 December Amcor issued a press release stating that its Board had
resolved to accept offers of resignation by Mr Russell Jones (Managing Director) and
Mr Peter Sutton (Managing Director, Amcor Australasia) from their employment and
any directorships and other positions. The consultancy of Mr Peter Brown, a former
Managing Director, had been terminated. This was said to be in the light of an
interim report from Amcor’s legal advisors. Messrs Jones and Sutton would “receive
their minimum legal entitlements only on termination”. Mr Alexander regarded the
action by Amcor as a significant indicator that there was likely to be substance to the
allegations that Amcor had made to the ACCC.
24
On 7 December Mr Tom Jarvis of Deacons telephoned Mr Alexander. Mr
Jarvis said that he was acting on behalf of Mr Sutton who, Mr Jarvis said, was very
keen to co-operate with the ACCC. Mr Jarvis said that Mr Sutton had “walked into a
situation in which those above and below him were acting in a particular way and he
had no real option but to go along with it”. Mr Alexander replied the next day stating
that if immunity were granted to Amcor it would extend to Mr Sutton provided he
cooperated fully with the ACCC.
25
On 7 December Mr Alexander received from Mr Williams transcripts of
excerpts from the Hodgson Recordings.
26
On 8 December Allens provided to the ACCC extensive transcripts of the
Hodgson Recordings.
Mr Alexander read the transcripts and realised that these
recordings included not only conversations between Mr Hodgson and other Amcor
executives but also a recorded conversation between Mr Hodgson and the respondent
Mr Harry Debney, the Chief Executive Officer of Visy. This conversation included
the following passage:
“Hodgson: And, so we want to condition the market that early each year
we’ll be picking up on or about bloody CPI.
Debney:
You can’t do that unless there is a total arrangement of the
[group] because otherwise people just play silly games. I think, my view is
that it’s worked pretty well over the last couple of years.
Hodgson:
It has.
- 10 Debney:
We’re prepared, I just spoke to Rod about this, we’re prepared
to have another, yeah, moderate increase. You can’t keep going for big
weeks. [sic – bucks?]
Hodgson:
Just three and a half?
Debney:
Yep, CPI type increase. Yes, first quarter each year. And I
don’t care who leads it. If you want us to lead it, we’ll lead it.
Hodgson:
We’ll talk about that. We’ve done the last few and maybe we
still do it because …
Debney:
But the, the answer’s yes. But you wouldn’t do it until the first
quarter of next year though, I think that’s about the right time …
27
Hodgson:
increase.
I’d be putting letters out in late January, February for a March
Debney:
Sounds fine.”
Another recorded discussion between Mr Hodgson and Mr Brown, another
senior Amcor executive, included the following:
“Hodgson: So I want him out of Theiss [sic] and I want the dairy industry
sorted out and I want the wine industry sorted out and I want Southcorp and
that … I just want a macro understanding.
Brown:
He needs to have that conversation with you.
Hodgson:
at the top.
And you did say that bloody Pratt had squared off with Jones
Brown:
Yeah, shit, don’t talk about that. You haven’t told anyone?
Hodgson:
I haven’t told anybody anything.
Brown:
I tell you things I don’t tell anybody.
Hodgson:
I know, I just want to make sure that those blokes have an
understanding, because if they haven’t …”
28
Between 9 and 15 December Mr Alexander, together with Mr Williams,
interviewed Mr Sutton, the recently resigned Managing Director of Amcor
Australasia, Mr Jones, the recently resigned Managing Director and Chief Executive
Officer of the Amcor Group, Mr Daryl Roberts, the Manager of Amcor’s fibreboard
box container division and Mr Peter Brown the former Managing Director of Amcor
Australasia.
- 11 -
29
Mr Sutton was interviewed on 9 December. He said amongst other things that
he recognised his voice and that of Mr Hodgson on the Hodgson Recordings. Some
time around July 2003 he (Sutton) had become aware that an arrangement existed
between Amcor and Visy in relation to CFP. He had been told of that arrangement by
Mr Brown who had said that Amcor and Visy had decided that they were not going to
let the price war between the two companies continue and that some action would be
taken to get prices back up.
30
On 14 December Mr Williams and Mr Alexander interviewed Mr Jones. He
said that in 2001 Mr Brown had explained to him (Jones) that there was an
arrangement in place between Amcor and Visy with regard to some major CFP
accounts and that Mr Brown had asked him if he (Jones) could approach Mr Richard
Pratt of Visy about the arrangement. Mr Brown told Mr Jones to ask Mr Pratt to
speak to Mr Debney of Visy to reaffirm the arrangement. Thereafter Mr Jones met
with Mr Pratt to reaffirm the arrangement. During the discussions Mr Jones told Mr
Pratt that he (Jones) had been advised by Mr Brown that the arrangement Mr Hodgson
had in place with Mr Debney was not holding and that he (Jones) had been asked to
have Mr Pratt confirm that the arrangement was something that he supported and that
he would talk to Mr Debney about it being affirmed. In response Mr Pratt said that he
was aware and acknowledged that and that he would talk to Mr Debney. After the
meeting with Mr Pratt, Mr Brown told Mr Jones that the arrangement was continuing
and that discussions between Mr Hodgson and Mr Debney were to continue from time
to time.
31
On 14 December Mr Williams and Mr Alexander interviewed Mr Roberts who
had become Amcor’s manager of its fibreboard box container division eight weeks
previously. He said he did not know anything about the cartel. Mr Alexander formed
the view at the time of the interview that Mr Roberts “did not know much about what
happened in the past”.
32
On 15 December Mr Williams and Mr Alexander interviewed Mr Brown. Mr
Brown said that the arrangement between Visy and Amcor had commenced following
a meeting between himself and Mr Debney at Mr Brown’s home in Glen Iris in about
- 12 -
2000. Mr Debney laid out what he would like to do in terms of managing the CFP
market place. The essence of the arrangement proposed to Mr Brown by Mr Debney
was to freeze the CFP market and for Visy and Amcor not to compete for extra CFP
volume. Visy and Amcor were colluding on prices. Mr Jones had told him (Brown)
that he (Jones) had a meeting with Mr Pratt and that they had gone through a list of
customers. Mr Brown had several meetings with Mr Debney endeavouring to get the
arrangement between Amcor and Visy “back on track”. During at least one of these
meetings, according to Mr Brown, Mr Debney had said that he would “tell my guys to
back off”. In at least one conversation between Mr Brown and Mr Debney, Mr
Debney had said that Mr Pratt was aware of what was happening and that he agreed
with it.
Mr Brown confirmed the excerpt from the Hodgson Recordings of a
discussion on 27 September 2002 between Mr Hodgson and himself (quoted at [27]
above).
33
On 13 December Mr Williams had two telephone conversations with Mr
Marcus Bezzi, a solicitor in the office of AGS in Sydney, regarding the engagement
by the ACCC of AGS to act as solicitors. In the conversation Mr Williams enquired
about the possibility of junior counsel being engaged, asked for AGS to take a role in
the drafting of pleadings, enquired whether solicitors within AGS would be available
to work on the matter, discussed the preparation of a case management plan and
enquired about the use of a “Ringtail Casebook” as an evidence and document
handling system for litigation.
34
Shortly after that conversation Mr Bezzi had a discussion with a solicitor in
his office, Ms Jackie Gleeson.
He told her that the ACCC had a new matter
commencing in Melbourne, that Ms Susan Pryde of AGS in Melbourne would
identify possible junior counsel in Melbourne to work on the matter. Ms Gleeson said
that she was happy to take a role in drafting pleadings and Mr Bezzi discussed the
preparation of a case management plan with her.
35
Mr Alexander deposes that following the conclusion of the interview with Mr
Brown on 15 December he formed the opinion that the ACCC would commence
proceedings against Visy in relation to the allegations made by Amcor. By this time
- 13 -
he had determined that he would recommend to the Commission that such a
proceeding be commenced and he considered that the Commissioners would accept
that recommendation. At the time he discussed the case with Mr Williams who was
of the same view.
In summary, Mr Alexander says his conclusion was that the ACCC would
36
commence legal proceedings against Visy after the Commissioners, and in particular
its Chairman Mr Samuel, had considered a number of matters. They included the
following:
(a)
Mr Jones, Mr Brown and Mr Sutton, all former senior executives of Amcor had
provided detailed information to the ACCC about anti-competitive conduct
engaged in by Amcor and Visy;
(b)
all three were prepared to give evidence in court;
(c)
the evidence of Messrs Jones and Brown would incorporate direct evidence of
conversations they had with senior executives of Visy (the respondents Mr Pratt
and Mr Debney) in which anti-competitive arrangements were made;
(d)
the ACCC was in possession of apparently reliable audio recordings of covertly
recorded conversations which supported the allegations made by Amcor about
its own conduct and that of Visy;
(e)
those recordings including one conversation between a senior executive of
Amcor (Mr Hodgson) and a senior executive of Visy (Mr Debney) in which the
two men spoke about agreed price changes.
37
Mr Alexander was aware that further work needed to be done to prepare a
statement of claim and that a formal decision by the ACCC to commence legal
proceedings would not be taken by the Commissioners for some time.
38
On 15 December A J Macken & Co on behalf of Messrs Barnes, Sangster,
Hodgson, Mihelic and Bayley replied to a letter from Mr Alexander of the 13th. In
that letter Mr Alexander noted that the restrictions in the Hodgson Proceeding had
- 14 -
now been lifted to the extent that the A J Macken clients could communicate with the
ACCC. The ACCC was unable to grant leniency under its policy because the clients
were not the first to apply for leniency. However, under the ACC’s cooperation
policy it had a discretion to offer leniency, including immunity, to those who assist
ACCC investigations. Before the ACCC would be prepared to make any offer it
would need to “understand in broad, dot-point form, what information your clients
would provide to the ACCC”.
39
In their reply, A J Macken & Co complained that if Amcor was to be treated
as the first to apply for leniency that would be unfair in circumstances where Amcor
was a party principal to collusive conduct, was in breach of an undertaking to the
Federal Court of Australia at the time of its application for leniency, supported its
claim for leniency by material which the A J Macken clients had provided to the
solicitors for Amcor but which Amcor and the clients were prohibited from supplying
to the ACCC by orders obtained by Amcor “and which material would be in part
unhelpful and misleading unless supplied by persons with knowledge of its
provenance. Our clients are those persons”.
40
The letter went on to request reconsideration of any decision under the
leniency policy or, if necessary, extension to them of the cooperation policy. Nothing
in the letter was to be taken as indicating any unwillingness on the part of the clients
to cooperate with the ACCC. The letter enclosed a statement from Mr Hodgson in the
following terms;
“RE ACCC REQUEST FOR COOPERATION
1.
The information I intend to provide to the ACCC includes but is not
limited to the following:
* why the collusive behaviour started;
* when the collusive behaviour started;
* how the collusive behaviour worked (including across Divisions in
Amcor and Visy Board;
* who was involved (see below);
* how extensively it applied;
* contracts affected;
* where meetings took place and who attended;
* why and how I sought to extricate myself from this environment;
- 15 -
* the companies involved and respective company officers (so far as
within my own knowledge) were:
Visy Board:
Amcor:
Mr Harry Debeney [sic] and Mr Rod Carroll;
Mr Russell Jones; Mr Peter Brown; Mr Peter Sutton;
Mr Darryl Roberts; Mr Ted Laidlaw; Mr Ian Sangster
and the undersigned
Yours faithfully,
JG Hodgson”
There was also enclosed a statement from Mr Trevor Barnes which was to the effect
that he was aware that cartel arrangements between Visy and Amcor were in place as
a result of a meeting which took place in 2000 in Melbourne when Amcor had won
the Lion Nathan account from Visy and Amcor would be losing certain accounts to
Visy in exchange. He was provided with a pricing policy and asked to move prices
up over a period at accounts which were below the pricing policy. These activities
occurred in 2000-2002. He had never spoken with the opposition on pricing issues or
acted in any manner other than to implement Amcor pricing policies.
Events after 15 December 2004
41
On 16 December the ACCC’s Enforcement Committee met and directed that
conditional leniency be granted to Amcor and its current and former employees (other
than those excluded from its application) and that Messrs Hodgson, Sangster and
Barnes be offered conditional immunity under the cooperation policy.
42
On 30 December AGS wrote to Ms Rose Webb, Regional Director of the
ACCC’s Sydney office, providing an estimate of legal costs up to the end of March
2005 and stating:
“I confirm that we expect by the end of March 2005, the ACCC will have
completed its preliminary planning for the matter (phase one) and will be well
advanced in its investigation (phase two).”
43
On 20 January 2005 the ACCC Enforcement Committee met to consider
“Alleged Cartel – Packaging, Description: Price fixing/market sharing arrangements
between Amcor Ltd and others”. A memorandum for that meeting prepared by Ms
Webb stated that the purpose of the submission was
- 16 “To seek EC approval for allocation of funding for legal expenses associated
with the further investigation of this matter.”
The submission contained comments such as “should this matter proceed to litigation”
and “while good evidence is likely to be obtained from co-operating witnesses,
identifying the specific arrangements and the giving of effect to arrangements which
can be clearly pleaded as breaches of the TPA may be complex”.
44
From March to October 2005 the ACCC issued a number of notices under s
155 to various persons. In the body of such notices the description and period of time
of the alleged cartel varied. A number of examinations under s 155 took place,
including Mr Peter Dwan, Visy’s General Manager, Marketing, on 22 July and Mr
Pratt on 26 July.
45
Witnesses were interviewed at various times up until November.
46
On 17 August Mr Alexander sent an email to Mr Samuel stating that Mr Ryan
and Mr Meadows had requested a further meeting in the week commencing 29
August. This request arose from a radio interview Mr Samuel had given about the
Steve Vizard matter on 1 August in which Mr Samuel said “we may get ourselves into
a not dissimilar position in the not too distant future” and “I am going to have to
explain at the time why it is we have not prosecuted certain individuals or certain
companies for being involved in a cartel”.
Mr Alexander said that he and Mr
Williams thought that it was “too early to be contemplating any such discussion when
there is a way to go in the investigation and we have not clearly formulated the
proceedings”.
47
On 14 November counsel were briefed to settle an application and statement
of claim.
48
On 28 November Mr Williams swore an affidavit in the Hodgson Proceeding
stating that during the past years the ACCC “had been conducting an investigation
into alleged contraventions of section 45 of the Trade Practices Act 1974 in the
corrugated fibreboard containers industry” and that “[t]he matters the subject of the
ACCC investigation are highly confidential at this time”.
- 17 -
49
By late November 2005 Mr Alexander and Mr Williams together with other
ACCC staff and solicitors from AGS had substantially completed the ACCC’s
preparation for the commencement of proceedings but the statement of claim had not
been settled by counsel. The ACCC was aware that it needed the leave of the Federal
Court prior to commencing the proceeding because Goldberg J, in making the orders
on 2 December 2004 permitting Amcor to provide the Hodgson Recordings to the
ACCC, had stated that a further order would be required for the ACCC to use those
recordings in court proceedings.
50
On 22 November Mr Alexander and Mr Williams prepared a staff paper for
the Commissioners seeking an in-principle decision to commence proceedings against
Visy. On 28 November there was a meeting of Commissioners at which the staff
paper was considered. The Commissioners made an in-principle decision to institute
proceedings as recommended.
51
On 9 December Mr Alexander and Mr Williams prepared a staff paper for the
Commissioners seeking a final decision.
On 16 December the Commissioners
considered that paper and made a final decision to institute proceedings. As already
mentioned, the application and statement of claim were filed on 21 December.
52
One matter that which attracted some discussion in the present application
occurred after the commencement of proceedings. On 1 December 2006 the ACCC
served its second further amended statement of claim. In relation to the allegations
against Mr Pratt there was a substantial change. The original statement of claim
alleged three meetings between Mr Jones and Mr Pratt, on or about 21 May 2001, 7
February 2003 and 13 February 2004 (pars 28, 31 and 34), all at the All Nations Hotel
in Lennox Street, Richmond. In its second further amended statement of claim the
ACCC deleted par 31 and amended par 34. The net result was that the allegation of
the 2003 meeting was dropped and what was said at that meeting is now alleged to
have been said at the 2004 meeting.
Reasonable anticipation of litigation – the test
53
In Australian Competition and Consumer Commission v Australian Safeway
- 18 -
Stores Pty Ltd (1998) 81 FCR 526 at 559 Goldberg J said that the concept of
anticipated proceedings involves
“the notion that there is a reasonable probability or likelihood that such
proceedings will be commenced – not that they will be but rather that more
probably than not they will be.”
54
Subsequent decisions have adopted a somewhat lower test. In Mitsubishi
Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 at [19]
Batt JA, with the concurrence of other members of the Victorian Court of Appeal,
held that there must be a “real prospect” of litigation, as a distinct from a mere
possibility, but it does not have to be more likely than not. In Microsoft Corporation
v Ben Zhong Fan [2003] FCA 1026 at [73]-[75] Jacobson J preferred the Mitsubishi
view, as did Allsop J in Australian Competition and Consumer Commission v
Liquorland (Australia) Pty Ltd [2005] FCA 503 at [8].
55
The weight of authority now seems to favour the Mitsubishi “real prospect”
test. If necessary, I would prefer that to the Safeway “more likely than not” test.
However, for the reasons which will hereafter appear, I am satisfied that the higher
standard has been met in the present case.
Institutional structure of ACCC
56
As the respondents point out, the question is whether at the relevant time legal
proceedings in respect of the alleged Amcor-Visy cartel were reasonably anticipated
by the ACCC – not whether they were reasonably anticipated by the author of a
particular document. The respondents accept that the opinion of particular officers
within the ACCC such as Mr Alexander and Mr Williams is at least relevant, but not
conclusive. As will be seen, a strong attack was made on the reasonableness of such
opinions.
57
The respondents place particular stress on the institutional structure of the
ACCC. They submit that under the Act only members of the Commission, meeting as
the Commission, or meeting as a duly constituted Division of the Commission, or a
member of the Commission acting under delegation, have the power to authorise the
institution of legal proceedings by the Commission under Pt VI of the Act in respect
- 19 -
of contraventions of Pt IV.
58
The manner in which the ACCC may exercise its powers and perform its
functions is governed by ss 18, 19, 25 and 26 of the Act. Section 18 deals with
meetings of the Commission and covers such matters as the location of and the
chairing of the meeting and meeting procedures. Section 19 empowers the Chairman
to direct that the powers of the ACCC under the Act in relation to a particular matter
shall be exercised by a division of the Commission consisting of the Chairman and
such other members, not less than two, as are specified in the direction. Under s 25
the Commission may by resolution delegate to a member of the Commission, either
generally or otherwise as provided by the instrument of delegation, any of its powers
under the Act (with some exceptions) and certain other powers given to the
Commission in other statutes, other than the power of delegation.
Section 26
authorises the Commission to delegate any of its functions and powers under Pts IVA,
V, VC and VI to a staff member.
59
The respondents point out that ss 25 and 26 are to be contrasted. Section 25
does not authorise the Commission to delegate its statutory functions and powers to
its own staff members. It may only delegate those functions and powers to a member
of the Commission; see also the definition of “Commission” in s 4 which includes a
member of the Commission or a Division of the Commission performing functions of
the Commission. By referring to a member of the Commission or a Division of the
Commission, the definition is referring to members to whom a power has been
delegated under s 25 and a Division established under s 19: Australian Competition
and Consumer Commission v Rural Press Ltd (No. 2) (2000) 96 FCR 389 at [13].
60
The respondents say that the Act has expressly regulated the extent to which
the Commission may delegate the exercise of its powers and functions. Certain
powers are expressly conferred on a member of the Commission, as opposed to the
Commission acting in a meeting, e.g. issuing a notice under s 155. Otherwise the
powers and functions vested in the Commission are intended to be exercised by
members of the Commission acting in a meeting at which a quorum is present or
through a Division established by s 19, or through a member acting under a delegation
- 20 -
under s 25.
61
The conclusion, the respondents submit, is that the Act contains a clear
statutory indication that the Commission is not to delegate to one or more members of
its staff the power to decide whether to institute proceedings under Pt VI. This is
consistent with the Commission’s published documents. For example, in a public
statement in 2006 the Commission said:
“Decisions to start court action, to approve or reject a major merger, or to
authorise anti-competitive behaviour if it is shown to be in the public interest,
are only made by the Commission.”
62
Accepting, as I do, these submissions does not however lead to the conclusion
that litigation cannot be reasonably anticipated for the purpose of the law of legal
professional privilege unless and until the Commission has formally resolved to
commence proceedings, or that only the Commissioners themselves, or Divisions or
formally appointed delegates of the Commission, can have the necessary reasonable
anticipation.
63
The reasonable anticipation test is not a question of the exercise of some
power by the Commission, such as the power to commence litigation. It is rather
concerned with a state of mind which may or may not exist at a particular point in
time. Only human beings can anticipate events. Whether the state of mind of a
particular individual can be attributed to an incorporated body such as the ACCC
depends on the particular law in question, in the present case the common law rules
relating to legal professional privilege: see Meridian Global Funds Management Asia
Ltd v Securities Commission [1995] 2 AC 500 at 506-509. One does not look in this
context for the “directing mind and will” of the ACCC: see Lord Hoffmann’s
explanation in Meridian at 509-511 of the sometimes misunderstood decision in
Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705.
64
The law of legal professional privilege necessarily assumes that the privilege
may, indeed usually will, arise before the actual commencement of litigation –
otherwise there would be no point in the concept of reasonable anticipation.
Therefore, in applying that law to the ACCC it would be misleading to focus on the
state of mind only of those who have the power to commence litigation on the
- 21 Commission’s behalf. Looking at the policy behind the law of legal professional
privilege (cf the approach of Lord Hoffmann to the legislation in question in Meridian
at 511), the protection needs to apply at a time when the prospect of litigation is less
than certain (whether the Safeway or the Mitsubishi test applies). By this stage there
is a need for frank and candid communication between client and lawyer, or other
persons such as potential witnesses, on the subject matter of the litigation – no less
than there is when the litigation actually starts. The privilege exists to serve the
public interest in the administration of justice by encouraging full and frank disclosure
by clients to their lawyers: Esso Australia Resources Ltd v Federal Commissioner of
Taxation (1999) 201 CLR 49 at [35]. The people who are supervising the actual work
which generates the documents in question will not necessarily be the ones who can
decide to commit the corporate body to litigation.
However if, as matter of
organisational reality, they are responsible for the work in question it will be
appropriate to impute their state of mind to the corporation.
65
In the present case, Mr Alexander and Mr Williams were senior and
experienced officers. As already mentioned, Mr Alexander had 34 years experience
with the ACCC and its predecessor. He was the senior legal officer on the staff of the
Commission.
Under Legal Services Directions issued by the Attorney-General,
Commonwealth agencies usually require legal advice from an external lawyer that a
proceeding has reasonable prospects of success before a decision is made to
commence litigation. However, Mr Alexander holds a specific exemption from the
Attorney-General to the effect that his advice will be sufficient for the ACCC to
commence proceedings.
In the way this particular matter was arranged
administratively, he reported directly to the Chairman. The state of mind of Mr
Alexander and Mr Williams can be attributed for present purposes to the Commission,
although of course that state of mind has to be objectively reasonable.
Investigation v litigation
66
The respondents’ argument assumes a clear demarcation between the function
of investigation and work done in preparation for litigation. The respondents point to
a number of occasions after 15 December 2004 where officers of the ACCC, such as
Mr Alexander and the Enforcement Committee, had spoken of the matter as an
- 22 “investigation”.
I do not think such a demarcation exists, at least in the circumstances of the
67
present case. One cannot say that investigation ceases one day and then litigation
preparation commences the next, like spring ending and summer starting. In a case
like the present one, investigation, in the sense of seeking out information, never
stops. The same conduct, such as a lawyer interviewing a potential witness, asking
the witness for more detail, or seeking the reaction of the witness to a document or
circumstance, can be characterised as investigation by an officer preparing a budget,
or as case preparation by the lawyer. What is important is not the label attached to
some activity but the true characterisation of that activity in the circumstances of this
case.
Respondents’ criticism of the quality of material available to ACCC
The respondents criticised the quality of the material available to the ACCC
68
by 15 December 2004. It was unsworn and not in admissible form. No attempt had
been made to obtain Visy’s version of events. There was particular criticism of Mr
Hodgson. This was based in part on what other Amcor representatives had said about
him in their interviews with Commission officers. For example, Mr Sutton said that
“Jim Hodgson was a person that talked a lot. He was a good talker, he is a
salesman by background and he would run off at the mouth on a whole [sic]
of issues and he would, you know, from one meeting to the next change his
position on issues quite dramatically. So even in the relatively short time that
I had been dealing directly with him you learnt not to take everything he said
as the gospel, you know, as being accurate.”
Mr Brown said of Mr Hodgson:
69
“I don’t think you can take much notice of what Jim says, because he knows
he is wearing a tape recorder, I don’t”.
Mr Roberts claimed that Mr Hodgson had been “systematically defrauding
70
Amcor” and had said of Mr Sutton “I can’t stand that guy. I’ll get him”.
In cross-examination by Mr Sher QC on behalf of the respondents Mr
71
Alexander conceded some doubts about the credibility of Mr Hodgson. He was
asked:
- 23 “Did you have any doubts about Mr Hodgson? Well, I formed the view he
had a barrow to push.
In fact the word blackmail was used in one of the discussions wasn’t there, by
the Amcor people? There was certainly no love lost between Amcor and Mr
Hodgson.”
72
There was the letter from A J Macken & Co already referred to (see [38]-[40]
above) which, the respondents argued, showed that the ACCC “had been advised by
Mr Hodgson’s solicitor that the recordings might be misleading”.
73
Stress was put on what was said to be the lack of evidence concerning Mr
Pratt. It was said the Hodgson-Debney tape only contained a hearsay account of a
conversation supposedly between Mr Jones and Mr Pratt sometime earlier. The A J
Macken & Co letter of 15 December 2004 enclosing an outline of information to be
provided by Mr Hodgson and Mr Barnes to the ACCC contained no reference to Mr
Pratt. In cross-examination Mr Alexander was asked:
“But thus far, apart from some hearsay probably two or three times removed
at best, if not worst, you had absolutely nothing against Mr Pratt at all, other
than what Mr Jones had told you? Yes, Mr Jones was the critical factor, so
far as Mr Pratt was concerned.”
74
There was criticism of the fact that at interviews with Commission officers
the lawyers for the interviewee intervened in what was said to be a leading fashion.
The following exchange took place in Mr Alexander’s cross-examination. Honours
were about even.
“Now, what you got out of that was, doing the best you could with this
witness, aided and abetted by his two lawyers, and you feeding him leading
questions was, there had been a matter of fact discussion for less than a
minute with Mr Pratt and according to what he said, in that minute, he also
discussed some particular customers? Yes.
So what you had at best was a passing reference to some ill-defined or
undefined arrangement or understanding, that is the best your case ever got
against Mr Pratt, didn’t it? [sic] At that time.
And it is not getting any better since has it? Well, I-I don’t want to talk about
any witness statements since.
Don’t you, why not? Because they are privileged.
I see. What, you are going to sandbag Mr Pratt in Court are you if you get
- 24 -
the chance, just drop it on him without warning? No, no, there is an order by
his Honour that the witness statements be exchanged in June.”
Speaking of an interview with Mr Jones about his meetings with Mr Pratt, Mr
Alexander was asked:
“So the best you got out of Mr Jones, on this occasion, and I suggest nothing
better since, is less than a minute’s discussion on the first occasion and an
oblique, or a very oblique reference on two others, is that right? Yes, that
sounds right.”
75
There was criticism of Amcor’s handing material to the ACCC in breach of
Court orders.
76
Reference was made to interviews of the witnesses at which Mr Alexander and
others made comments indicating that the ACCC was at an early stage of
investigation. For example, in his interview of Mr Jones, Mr Alexander said
“We are at the very early stages of this investigation, and so, of course, we
don’t know as much. We only know a very small amount.”
At another stage in the interview Mr Alexander said to Mr Jones:
“I just make the point, we will be conducting a number of interviews, we will
be cross-checking what everyone says against what other people say. So that
I think that is the technique we have found is the best way of arriving at the
truth of what happened. And so we will be cross-checking what you say, and
if there is something which we can’t quite work out down the track, we would
like to come back to you and ask you some more questions. So it is important
that you understand that co-operation and truthfulness are the key to all of
this.”
77
In Mr Roberts’ interview he had used the term “Clayton’s cartel”. He said;
“I mean, I know what the papers have been – the papers sort of say, well, you
know, if you’ve got – you know – and it’s a bit of a farce, really, you know, if
you’ve got – you’ve a Clayton’s cartel here and you’re supposed to be
organising the market, it doesn’t show in the results, and it doesn’t really, so
whatever the hell is going on is, you know, almost status quo and all I can
interpret from that is – and there[sic] are my words, not anyone else’s- is that
it must be tit for tat. You know, if you lose a customer, you go and pick up a
customer. You know, if it’s that sort of cartel and it keeps the market share
constant, then maybe that’s what it is. But there’s no – no sort of high price
setting here that I can see in the early day – in my early stages in this- with
this fibre job. So it’s a strange – a strange arrangement. Now, what I – what
the papers are saying is, given that it’s a Clayton’s cartel and everybody in
- 25 the industry knows everything about what everybody else is doing, that’s not
quite right. The information that those guys took was pretty – pretty
sensitive.”
Conclusion: litigation reasonably anticipated as at 15 December 2004
78
I emphasise that my current task in no way involves any finding as to the
credibility or otherwise of present or former Amcor personnel, or any finding of fact
as to what was said or not said. The Amcor personnel have not given any evidence,
let alone been cross-examined. There has been no evidence at all, even on a hearsay
basis, from the Visy side. When the Amcor personnel do give evidence at the trial,
the foreshadowed criticisms may or may not be effective. For present purposes I am
only concerned with the extent to which the respondents’ criticism throws light on the
reasonableness of the assertion of Mr Alexander and Mr Williams that as at 15
December 2004 they were of the view that litigation over the Amcor-Visy cartel
allegations was reasonably anticipated.
79
I am quite satisfied that they in fact held that view. It is true that, as the
respondents point out, there was no contemporaneous record of this. But I do not
think reconstruction, whether conscious or otherwise, is involved. On the day in
question, the Commission had just concluded its series of interviews with senior
Amcor executives Mr Sutton, Mr Jones, Mr Roberts and Mr Brown, so it was a
logical milestone in the Commission’s dealings with this matter.
80
But that is not enough. The critical question is whether such a view was
objectively reasonable, such that a reasonable person in their position might hold on
the material then available. As was stressed by the respondents, the information that
the ACCC had was not on oath. Nevertheless that fact does not seem particularly
relevant since in civil litigation it would be the norm rather than the exception that a
plaintiff has only evidence in unsworn form when proceedings are commenced.
81
The respondents submitted that “no rational person, no fair-minded person”
could have formed the view that as at 15 December 2004 litigation was likely, as
distinct from possible. I accept that the standard is that of a rational or fair-minded
person, as long as fair-minded in this context is understood as conveying the notion
that such person is not driven by malice or collateral considerations. However, there
- 26 -
can be no suggestion of some kind of natural justice obligation vis-a-vis the potential
defendant. A potential plaintiff does not have to give a potential defendant a hearing
before commencing litigation, or arriving at a reasonably based anticipation of such
litigation.
82
Cartel behaviour is by its nature clandestine and unlikely to be recorded in
unambiguous documents. Members of the business community would recognise it as
seriously unlawful and subject to substantial penalties if revealed. Discovery of such
conduct is likely to be difficult. One might expect that the ACCC’s investigations at
times may commence with little more than rumour and mildly suspicious market
behaviour. The present case stands in stark contrast. The ACCC’s encounter with
this matter came, so to speak, big end first. The Chairman and CEO of a major public
company, accompanied by three partners from Allens, waited on the Commission on
Monday 22 November 2004 and stated that information which had come to them the
previous Friday suggested that Amcor “might be involved in breaches of the TPA in
the corrugated box area”. It soon became apparent at the meeting that the breaches in
question involved cartel behaviour or that, as Mr Meadows delicately put it, “certain
practices may have existed in relation to customers in the corrugated box industry”.
83
Within two weeks or so the Commission had audio recordings not only of
admissions by Amcor executives but one of, at least arguably, a clear admission by a
very senior executive of the other party to the cartel.
84
Some of the detailed criticism by the respondents does not withstand closer
examination. For example, it is not correct to say that Mr Hodgson’s solicitors had
advised the ACCC that “the recordings might be misleading” if that is intended to be
read as casting some doubts on Mr Hodgson.
The correspondence between the
Commission and A J Macken & Co ([38]-[40] above) concerned the firm’s complaint
that at that stage the Commission had not granted immunity to the firm’s clients,
including Mr Hodgson. As one might expect, the firm was not denigrating its own
client. On the contrary, it was putting him forward as someone who could provide
valuable evidence, including explaining the background to the Hodgson Recordings
and the persons involved.
- 27 -
85
The “Clayton’s cartel” comment came from Mr Roberts, whose relevant
involvement with Amcor commenced at a very late stage, only eight weeks before his
interview.
In any event, the term in the present context is equivocal.
The
manufacturers of a non-alcoholic drink called Clayton’s Tonic coined the catchy
slogan “The drink you have when you’re not having a drink”. “Clayton’s” has passed
into modern Australian usage as conveying the notion that something is not the real
thing, not authentic or genuine.
Mr Roberts’ comment may be open to the
interpretation, not that there never was a cartel, but that there was one which was not
working or was, as Mr Jones said in his interview, “fraying at the edges” or as Mr
Brown said, needed to be put “back on track”.
86
It is true, as the respondents point out, that as at 15 December 2004 the ACCC
had no information as to specific customer transactions. However, entering into a
price fixing or market sharing arrangement is a separate and distinct contravention (s
45(2)(a)) from giving effect to such an arrangement (s 45(2)(b)). So if there was a
sufficient basis to anticipate litigation over the former, it is not to the point that
information was not yet available about the latter.
87
The respondents submitted that as at 15 December 2004 the information
concerning Mr Pratt was “desultory”. Mr Jones’ account of the 2001 meeting was
that the discussion about the alleged arrangement lasted “no more than a minute” and
Mr Jones “could not recount anything that Mr Pratt said in the meeting in respect of
any arrangement; and instead gave the ACCC his opinion of what Mr Pratt
understood about the discussions”.
88
However, the relevant passage in the transcript of Mr Jones’ interview reads:
“We discussed – I don’t recall the order, but I recall a reference to being
advised by Peter Brown and Hodgson through Peter Brown, I didn’t talk to
Hodgson about it, that whatever arrangement Hodgson had in place with
Debney was not holding and I had been asked to have Mr Pratt confirm that
that arrangement was something that he supported and he would talk to
Debney about it being affirmed and he acknowledged that – he was aware and
acknowledged that he would talk to Debney.”
A fair reading of that passage is that Mr Jones is giving an account, albeit in indirect
- 28 -
speech, of what Mr Pratt had said to him.
It was pointed out that Mr Jones had said that Mr Pratt’s reference to the
89
arrangement in later meetings to stability was “oblique”, and “very oblique, if a
reference at all”. Reference was made in this context to the amendments to the
statement of claim (see [52] above). However, if the purpose of the meetings with Mr
Pratt was, as Mr Jones and Mr Brown say, to get confirmation from the top man at
Visy that the cartel was still on foot, a lengthy and detailed conversation on the topic
might not have been expected.
Stepping back for a moment from detailed criticism, a powerful factor
90
affecting the judgment of a reasonable person in the position of Mr Alexander and Mr
Williams, or anyone else at the ACCC, as at 15 December 2004, would be the motives
of the former Amcor personnel who had agreed to give evidence. Because of the
continuing cooperation requirement and ringleader exclusion in the ACCC Leniency
Policy there is obviously a motive for a person under immunity to downplay his or her
own role and exaggerate that of a person on the other side of the cartel. But it is not at
all clear why the Amcor personnel would have a motive to invent an Amcor-Visy
cartel which never existed.
Approaching the ACCC and admitting cartel conduct is not a step to be taken
91
lightly.
Admission cannot be made without prejudice.
There is the risk that
somebody else may have already made admissions, or that the ACCC may be already
aware of the cartel. Even if immunity is granted, a corporation is not protected from
the prospect of massive claims by parties claiming to have suffered damage by the
cartel (as has now occurred in this case) or, in the case of an individual, dismissal
from highly paid employment in humiliating and career-threatening circumstances.
The likely awareness of such consequences tells against the invention of fictitious
cartels.
92
There is also the particular role and responsibility of the ACCC. It is not like
a commercial corporation which will decide (quite properly) whether or not to
commence litigation solely in terms of what will be to the benefit of its own interests.
The ACCC exists to give practical effect to the Act’s objective as stated in s 2: to
- 29 -
enhance the welfare of Australians through the promotion of competition and fair
trading and provision for consumer protection. Litigation to enforce the Act is part of
the ACCC’s raison d’être.
93
With the material in its possession by 15 December 2004, summarised in [36]
above, the prospect of litigation was certainly more likely than not, and verged on the
inevitable.
Sufficient identification
94
The respondents submitted that the ACCC’s list of privileged documents did
not disclose dates or the name of the author of the document (whether an employee of
the ACCC or the AGS or a third person) nor, in respect of information provided by a
third person to the ACCC, the name of that person.
95
As to dates, in fact the actual or estimated date of the documents in question
has been provided. A protocol between the parties provides for a limited method of
capturing the estimated dates. Where a document is dated with a day and a month but
not year and the year can be reliably estimated then that date is used. If the document
has a year but no day or month then the date is entered as at the 1st January of that
year. If the document has a month and a year but no day the date is entered as the 1st
of that month. If the document’s content refers to a date and that date provides a
reasonable basis for estimating the date of the document then that estimated date can
be used.
96
As to the name of the author, this complaint was made as to the ACCC’s
original list of documents dated 26 July 2006. The ACCC served a revised list on 27
November 2006 which included, as requested, information setting out “whether the
statements were prepared by the ACCC or the AGS or counsel”. The ACCC submits,
and I accept, that it is not obliged to state the name of the author of each individual
discovered document. No authority was cited for that proposition. The purpose of the
requirement that a document be described is simply that the other party may know
from the description whether or not it should be inspected and so that it can be
identified subsequently: Australian Flight Test Services Pty Ltd v The Minister for
- 30 -
Industry, Science and Technology [1996] FCA 1031 at 6-7. These requirements have
been met in the present case. I note that the number of documents in question in this
case is comparatively modest.
The descriptions of them in the ACCC’s list of
documents suggest that the respondents would not be in any quandary as to whether
or not to inspect. And they would have no lack of legal manpower to do so, if they
were permitted.
Dominant purpose
97
The principle now endorsed by the High Court in Esso at [61] is that of the
minority judgment of Barwick CJ in Grant v Downs (1976) 135 CLR 674 at 677:
“[A] document which was produced or brought into existence either with the
dominant purpose of its author, or of the person or authority under whose
direction, whether particular or general, it was produced or brought into
existence, of using it or its contents in order to obtain legal advice or to
conduct or aid in the conduct of litigation, at the time of its production in
reasonable prospect, should be privileged and excluded from inspection.”
98
His Honour goes on to say that where the judge who hears the application for
inspection may possibly be the trial judge sitting without a jury, it may be better to
decide the matter upon the evidence as to the purpose of the production of the
document rather than upon an inspection of it, thus avoiding any complication which
might arise from the document having been seen by the judge and privilege from
inspection accorded it. Since this matter has been fixed for trial before me next
October, I shall follow that injunction.
99
My conclusion that by 15 December 2004 there was a high degree of
likelihood that litigation would be instituted gives rise to an irresistible inference that
the production of the documents was for the dominant purpose of contemplated
judicial proceedings. As at 15 December 2004 was the ACCC ready to commence
proceedings? Obviously not. There needed to be detailed assessment of evidence
including, but by no means limited to, that coming from the Amcor personnel and,
based on that evidence, careful formulation of the ACCC’s case in a statement of
claim. Until that task was completed there was little point in the Commissioners
formally resolving to commence proceedings. But that does not gainsay the fact that
as 15 December 2004, given the unprecedented nature of the material in the
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possession of the ACCC, litigation was unavoidable.
100
The descriptions of the nature of the documents (see [6] above) indicates that
they were necessitated by the need of preparing for litigation. They are virtually all
concerned with the laborious process of preparing witness statements, the very stuff
of litigation preparation.
101
There was some complaint in the respondents’ submissions of the “formulaic”
assertion by Mr Alexander and Mr Williams of a dominant purpose. However, I note
that in Microsoft at [77] there was criticism of a deponent who had used the adjective
“primary”. His Honour thought that it was “unsatisfactory that (the witness) has not
spoken in the language of dominant purpose”. Thus there may be something of a
dilemma for witnesses swearing affidavits in support of privilege claims. Witnesses
may feel they have to use either the formulaic term “dominant” or search around for
some synonym – a process which may be equally formulaic. In Grant v Downs at 678
Barwick CJ preferred the word “dominant” to describe the relevant purpose. In his
Honour’s opinion, neither “primary” nor “substantial’ satisfied the true basis of the
privilege. So it may be that the formula, however tedious, will continue to be used.
Confidentiality
102
In their closing submissions the respondents did not assert lack of
confidentiality as a separate ground for denial of privilege.
I think this tacit
conclusion is correct. Once it is accepted that the dominant purpose was for use in
litigation, the nature of the documents, as evidenced by their description, compels the
conclusion that they were created in circumstances imposing obligations of
confidentiality.
Documents concerning immunity
103
The respondents sought production of (i) documents relating to the terms of
any leniency and/or immunity arrangements between the ACCC on the one hand and
certain companies and past or present employees of the Amcor group on the other, (ii)
documents relating to the ACCC’s decision to grant leniency or immunity to any of
those persons and (iii) documents provided by Amcor entities and past or present
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Amcor employees in support of any application to the ACCC for leniency or
immunity.
The respondents say in support of the application:
104

the documents are relevant to central issues in the case;

the conduct of Amcor in seeking and procuring immunity is relevant to para
222 of Visy’s amended defence;

the material goes to the credit of ACCC’s witnesses;

the ACCC as “prosecutor and model litigant” is duty bound to disclose the
documents.
105
The fourth ground can be disposed of shortly. This is a civil proceeding.
These documents are either discoverable or not in accordance with the law relating to
discovery and legal professional privilege. That law confers rights on all litigants,
whether they are model ones or not.
106
The first three grounds really revolve around the same point. Documents
relating purely to credit are not discoverable. In a different context McHugh J, in a
dissenting judgment, has criticised any bright line distinction the evidence as to credit
and evidence as to the issues: Palmer v The Queen (1988) 193 CLR 1 at [51] et seq.
However the Full Court of the Federal Court in Reading Entertainment Australia Pty
Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 has reaffirmed the distinction in
the context of discovery. Beaumont J at [70] adopted the statement in Butterworths,
Practice & Procedure of the Federal Court at [40.760]
“Documents which relate only to credit do not relate to a matter in question
within the meaning of the traditional formulation.”
His Honour continued:
“This may be seen as an example of the general principle, still valid, that the
Court must always be satisfied that any order for discovery (including, as
here, a specific order) must be ‘reasonably’ necessary for the fair disposing of
the case.”
- 33 Tamberlin J at [116] in agreeing with Beaumont J “strongly endorsed” the
107
need for exercise of restraint in discovery.
The judgment in Reading is binding on
me.
In the present case, everyone knows that critical witnesses for the ACCC have
108
been granted immunity.
That fact can be, and no doubt will be, used by the
respondents as a legitimate basis for an attack on credibility the witnesses. The
effectiveness of such an attack cannot be predicted. However, documents which do
no more than evidence that fact are relevant only to credit and are not discoverable.
Particulars and pleading
On 8 January 2007 the respondents filed an amended defence to the ACCC’s
109
second further amended statement of claim. It included some new sub paragraphs to
par 222. These were not introduced pursuant to leave. This is not a criticism, since
the respondents had to plead to the ACCC’s amended statement of claim. However
the question of leave needs to be considered now. The new sub-paragraphs are as
follows:
(aa)
that in or about late January or February 1998 the Amcor Group
formed the belief that it has a higher cost structure than Visy Board in
its corrugated fibreboard packaging division and was significantly
uncompetitive with the corrugated fibreboard packaging business
conducted by Visy Board.
Particulars
The Amcor Group’s belief arose by reason of the fact that a
former employee of Visy Board, John Alan Morriss (“Morriss”),
provided the Amcor Group with, and the Amcor Group received,
confidential information of Visy Board concerning Visy Board’s
CFP business, including a copy Visy Board’s Managing
Director’s Report for the CFP Division dated June 1995 (“the
1995 Report”). The 1995 Report covered Visy Board’s sales and
included a detailed analysis of all major costs areas by month,
year to date performance against budget, and the previous year. It
included statistics on volumes, credit notes, employee numbers
and conversion cost per unit of volume and per employee. Morriss
provided extracts of the 1995 Report and other Visy Board
confidential information relating to Visy Board’s costs and sales
figures in respect of the CFP business to Peter Brown of the
Amcor Group
.
- 34 -
(ab)
that in or about November 1999, Morriss obtained a copy of the Visy
Board Managing Director’s Report – CFP Division for October 1999
(“1999 Report”), showed Brown, then the Managing Director of
Amcor Australasia, the summary of the key financial data contained in
the 1999 Report, and discussed the data with Brown.
Particulars
The 1999 Report covered an analysis of volumes, employee
numbers, costs and production statistics and profitability of each
Visy Board Manufacturing plant for Visy Board’s CFP business.
(ac)
that during the period of his employment with the Amcor Group
(approximately January 1998 until January 2000), Morriss disclosed
to Amcor Group personnel, including Brown and Hodgson,
confidential information of Visy Board concerning customers, volumes
of CFP products sold, and Visy Board’s costs of producing CFP
products.
(ad)
that the Visy Board confidential information referred to in the
particulars to paragraph 222(aa) and in paragraphs 222(ab) and (ac)
above (“the Visy Confidential Information”) was used by the Amcor
Group:
(i)
to evaluate the relative efficiency of the Amcor Group’s
processes and costs in comparison with the corresponding
processes and costs of Visy Board;
(ii)
in the development of the Amcor Group’s business strategies and
plans to compete with Visy Board’s CFP business, including as
the basis of capital expenditure requests to the Board of Amcor
Limited; and
(iii) to target Visy Board’s customers.
Particulars
(A) Morriss provided information in the 1995 Report to members
of the Executive Management Team of Amcor’s CFP business
including Brown, Peter Reichler, David Ley, Tony Myles, Max
Fitzgibbons, John Crawford, Hodgson and Laidlaw at an
Amcor strategy meeting in March 1998 at which the relative
CFP cost structures of Visy and Amcor were discussed.
Jones, then the Managing Director of Amcor Limited, visited
during the meeting and was briefed on strategy developments,
including the significance of the information in the 1995
Report.
(B) Brown and Morriss from time to time during the Period of
- 35 Service attended the Amcor Group’s Camberwell offices to
discuss issues about the CFP business with Jones. During
these meetings, Morriss, Brown and Jones discussed the
competitive position of the Amcor Group’s CFP business and
discussed information derived from the 1995 Report.
(C) Information derived from the 1995 Report was used by
Morriss at Board meetings of Amcor Limited that occurred in
1998 during the course of which Morriss made presentations
to the Board of Amcor Limited in the context of making
capital expenditure requests to upgrade facilities at the Amcor
Group’s corrugated factory at Brooklyn.
(D) The Visy Confidential Information, or parts of it, were cited in
presentations made to Jones, as Managing Director of Amcor
Limited, to verify submissions as to the true competitive
position of the Amcor Group and Visy Board, and in
presentations made to Jones in support of additional
injections of capital to fund a restructure of the corrugated
fibreboard packaging division of the Amcor Group. These
presentations were made by Brown, Morriss and others in or
about the first half of 1988 and later by Hodgson to Brown
and Jones at the Amcor Group’s Rocklea offices in or about
mid to late 1998. The presentation by Hodgson was made to
support his request for a new corrugator and supporting
infrastructure modernisation in order for the Amcor Group to
compete more effectively with Visy Board’s CFP business.
(E) The Amcor Group restructured its CFP business to reduce
costs and pursued increased market share by a “breadth”
strategy, including bundling CFP products with other primary
packaging which Visy Board did not offer at the time. This
was agreed at the March 1998 strategy planning meeting
referred to in sub-paragraph (a) above and ultimately
approved by the Board on Amcor Limited and implemented.
110
(ae)
that despite incurring and continuing to incur significant expenditure
aimed at regaining competitiveness in its CFP business, in or about
late 1999 or early 2000 senior management of the Amcor Group,
including Jones, Brown, and Hodgson, devised an alternative strategy,
(described by the Amcor Group as “price recovery”), namely attempt
to pursue collusive arrangements with Visy Board concerning prices
and competition in respect of the supply of CFP;
(af)
that the Amcor Group’s attempts to pursue the collusive arrangements
referred to in paragraph 222(ae) were unsuccessful.”
Sub-pars (aa) to (ad) raise allegations far removed from the numerous serious
issues of fact and law already present in this case. They have the potential of raising
- 36 -
countless side issues as to the rights and wrongs of the conduct of Mr Morriss and the
effect of that conduct on Amcor. Such evidence would be likely to be excluded as
resulting in an undue waste of time: Evidence Act 1995 (Cth) s 135 (c).
Such pars (ae) and (af) stand on a different footing. The respondents put them
111
as an alternative. In the end the respondents did not object to the provision of further
particulars.
Orders
There will be orders as follows:
112
1.
The first to fifth respondents’ motions dated 5 December 2006 and 1 February
2007 are dismissed with costs.
2.
Subparagraphs 222 (aa) to (ad) of par 22 of the first to fifth respondents’
amended defence filed 8 January 2007 are struck out.
3.
The first to fifth respondents file and serve further and better particulars of the
allegations in par 222 (ae) and (af) of their amended defence by 27 April 2007
4.
The first to fifth respondents pay the applicant’s costs of the motion dated 21
February 2007.
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I certify that the preceding one
hundred and twelve (112) numbered
paragraphs are a true copy of the
Reasons for Judgment herein of the
Honourable Justice Heerey.
Associate:
Dated:
29 March 2007
Counsel for the Applicant:
P J Jopling QC, CM Caleo SC, J Moore and P Wallis
Solicitor for the Applicant:
Australian Government Solicitor
Counsel for the first to fifth J L Sher QC, J Beach QC, P D Crutchfield, M H O’Bryan
Respondents:
and D Crennan
Solicitors for the first to fifth Arnold Bloch Leibler
Respondents:
Dates of Hearing:
28 February, 1, 13 and 15 March 2007
Date of Judgment:
29 March 2007