ABB Power Transmission Pty Ltd v Australian Competition & Consumer Commission

The documents in question 5 It is convenient to discuss the documents by reference to three categories which, broadly speaking, correspond with different stages of the Commission's investigation and litigation of the allegations. Investigation period 6 The first period commences with what was referred to as a co-operation agreement which the Commission made with each of the admitting respondents. Letters were sent to each admitting respondent by the Commission, substantially in the form of the following letter to Alstom dated 14 July 1999: "Re: Transformer Market Arrangements As discussed in our meeting of 13 July 1999, attached is an outline of the Commission's approach to this matter. The Commission is aware that Alstom Australia Limited (Alstom) and senior executives of Alstom have been involved in collusive arrangements involving price fixing and market sharing agreements in the Australian and New Zealand markets for power transformers. The Commission considers this conduct to be of a very serious nature. In this context I note that the Trade Practices Act 1974 (the Act) provides for corporate penalties of up to $10 million per offence and individual penalties of up to $500,000 per offence along with other remedies. The Commission wishes to give Alstom and its officers the opportunity to cooperate with its investigation at an early stage. The investigation will proceed with or without cooperation. The Commission and the Federal Court recognise the benefits to all parties of cooperation. The Commission has developed a leniency policy for corporations and individuals that provide full cooperation with it in an investigation. Full cooperation of your corporation and officers and employees involved in breaches of the Act in this matter will comprise the following elements: a) Providing the Commission with full and frank disclosure of the activity and all relevant documentary and other evidence available. This would include: i) details of all meetings and communications including dates, venues, participants and the agreements/arrangements reached or attempted to be reached; ii) details of the implementation of the arrangements including details of market shares, prices, identification of customers affected, volume of business involved and all relevant documentation; iii) details of all officers and employees of Alstom who were involved in or had knowledge of the arrangements including complete details of their involvement or knowledge, their position and who they reported to; iv) providing these details to the Commission in a comprehensive and open report; b) Cooperating fully with the Commission's investigation and any ensuing court action. This would include: i) providing officers to be interviewed as required; ii) providing evidence in any subsequent proceedings (including making witnesses available);

c) Your company taking immediate steps to discontinue this conduct and ensuring that it does not happen again.

Material provided by Alstom and its officers must be complete, accurate, truthful and open. The Commission considers complete, accurate, truthful and open cooperation beginning at an early stage to be a matter that would be favourably reflected in subsequent court imposed penalties. At the appropriate time the Commission would be prepared to discuss with Alstom possible settlement proposals which might be put to the Court on an agreed basis.

The Commission does not propose to give any publicity to the matter, nor issue s 155 notices upon Alstom or its current officers or employees until its consideration and assessment of the report provided by Alstom. After consideration of the report the Commission will discuss the further conduct of the matter with you.

The Commission seeks an in principle agreement from Alstom to cooperate on the above mentioned basis by no later than close of business Friday 16 July 1999.

Should this undertaking of cooperation be given the Commission seeks the full report outlined above by no later than Tuesday 3 August 1999.

The Commission will speak with the Chief Executive Officers of each of the companies involved. The Commission seeks your acknowledgment that Alstom and its officers, employees or representatives will not contact any of its competitors or their officers, employees or representatives in relation to this matter or discuss in any way the issues raised in this letter or the Commission's investigation with any such parties. The Commission seeks this acknowledgment by no later than close of business on Friday 16 July 1999,

Should Alstom or any of its officers, employees or representatives be contacted by any of its competitors or their officers, employees or representatives in relation to this matter Alstom should immediately provide the Commission with full details of these communications.

I note that former employees of Alstom may have been involved in these arrangements. Should Alstom undertake to cooperate with the Commission, Alstom may approach these persons to assist it in providing the report to the Commission. Alternatively Alstom may, in the report, provide the Commission with contact details of these persons along with full details of Alstom's understanding of their involvement. However, if these persons are currently employed by a relevant competitor of Alstom, the Commission seeks your acknowledgment that these persons will not be contacted, as discussed in the preceding paragraph. The Commission reserves its right to contact and interview former employees of Alstom in relation to this matter." 7 Alstom acceded to this proposal. An officer of the Commission recorded a telephone conversation with Alstom's solicitor the following day in which the solicitor said that Alstom "would be co-operating" although she did have some difficulty with one of the Commission's requirements "given that we were not talking settlement". This is an explicit contemporaneous recognition of what his Honour found to be the nature of the communications at this stage, as distinct from the later stage when the parties entered into the negotiation of an agreed statement of facts. Alstom provided to the Commission a report dated 4 August 1999 as requested. It was not in evidence before his Honour and no claim for privilege was made. A copy has been provided to ABB. 8 Alstom's solicitors provided to the Commission on 29 and 30 September 1999 a number of draft statements of its officers. These statements and the circumstances of their production are discussed in his Honour's judgment at [14] to [24]. His Honour (at [37]) was not persuaded that these documents were furnished to the Commission as part of a course of communications directed to compromise or settlement. They were provided in the spirit of co-operation to ensure leniency by the Court and to avoid formal interrogation under s 155 of the Act. As to legal professional privilege, his Honour was not satisfied that the documents were brought into existence or provided to or obtained by the Commission for the dominant purpose of conducting litigation. Rather his Honour thought that they were made pursuant to the co-operation agreement in the expectation that as a consequence the Commission would support a lenient approach to penalty by the Court in the event that contraventions were established: [38]-[42]. 9 Between August and November 1999 Wilson provided several reports to the Commission. No privilege was claimed and copies were furnished to ABB. 10 Between August and October 1999 Schneider provided reports and some of its officers were interviewed by the Commission. Copies of the reports and transcripts of the interviews have been provided to ABB. 11 The Commission wrote to Tyree on 15 October 1999 requesting cooperation in substantially the same terms as the letter to Alstom already quoted. Tyree was initially somewhat less forthcoming than the other admitting respondents. However it agreed to the Commission interviewing one of its officers. The interview took place on 22 November 1999. Part of the transcript of that interview has been provided to ABB. Up until 30 November 2000 there followed extensive correspondence and discussions between the Commission and Tyree's solicitors, summarised by his Honour at [117] to [131]. His Honour concluded (at [132]) that the Commission was, as far as Tyree and its officers were concerned, still engaged in the process of investigation and that discussions concerning a proposed statement of facts that would form the basis for the assessment of penalties had not yet commenced. Therefore documents provided by Tyree up until that stage were not privileged: [151]. 12 Thus documents produced in what his Honour characterised as the investigation period are not now in issue. Either they had already been provided to ABB or have been held by his Honour to be not privileged. Negotiation of an agreed statement of facts 13 The admitting respondents provided various draft statements to the Commission in the context of negotiating an agreed statement of facts. In the case of Alstom this took place between 5 November 1999 and the filing of agreed statements of facts in the power proceeding (19 December 2000) and in the distribution proceeding (28 March 2001): see [47]-[54]. 14 In the case of Wilson the period was from 24 January 2000 to the filing of agreed statements of facts on 13 March 2001 (power proceeding) and 15 June 2001 (distribution proceeding): see [80]-[86]. 15 In the case of Schneider the period was from 2 February 2000 to the filing of an agreed statement of facts on 23 July 2001 in the distribution proceeding: see [95]-107] (Schneider was not a party to the power proceeding). 16 In the case of Tyree the period was from 21 February 2001 to the filing of an agreed statement of facts in the distribution proceeding on 16 June 2001: see [133]-[134] (Tyree also was not a party to the power proceeding). 17 His Honour found that the documents in this category were protected by without prejudice privilege. In relation to Alstom his Honour said: "55. The suggestion by the Commission in November 1999 that the matter proceed by way of an agreed statement of fact was directed to a compromise. While the Commission had made it clear up to that stage that it expected cooperation from Alstom in connection with its investigation, no settlement proposal had been suggested. However, the purpose for proceeding by way of an agreed statement of facts was to achieve a compromise of the whole proceeding, or at least a narrowing of the issues raised by the proceeding. 56. It is true that the possibility of compromise was foreshadowed in the Commission's letter of 14 July 1999. Further, there was reference to the arrangements for cooperation in connection with the discussions concerning the proposed agreed statements of facts. However, part of the correspondence after November 1999, which was for the most part expressed to be 'without prejudice', was directed to achieving a compromise between the Commission, on the one hand, and Alstom, on the other, of the Power Proceeding and, subsequently, the Distribution Proceeding. 57. I consider that the drafts of the agreed statement of facts prepared by the Commission were submitted to Alstom in order to reach a settlement with Alstom of the facts that would be put before the Court for the purposes of assessment of penalty. Alstom's comments were directed to achieving the same end. I am satisfied that the communications relating to the proposed agreed statement of facts from November 1999 were communications directed to the settlement of the proceedings. Accordingly, they are protected by without prejudice privilege." 18 His Honour made similar findings in respect of the other admitting respondents. For example in the case of Tyree his Honour noted (at [134]) that the communications concerning the draft statement of facts were part of a course of negotiation of an agreement as to the facts upon which the Court would be asked to assess penalty. 19 No question of legal professional privilege arose in relation to this category of documents. Further draft statements and affidavits 20 The third category consisted of draft statements and affidavits obtained from officers of the admitting respondents after their respective penalty hearings and in the course of the Commission's continuing litigation against ABB. These are described at [64]-[67] (Alstom), [87]-[88] (Wilson), [108]-[111] (Schneider) and [135]-[142] (Tyree). 21 His Honour concluded (at [68]) in relation to Alstom that these documents were covered by legal professional privilege. While it may be that the admitting respondents co-operated with the Commission pursuant to the co-operation agreement, that was not decisive. The dominant purpose for the creation of the documents in dispute in this category was the continued conduct of the relevant proceedings as against ABB. The same reasoning applied to the other admitting respondents: see [147] (Wilson), [149]-[150] (Schneider) and [151] (Tyree).

Should leave to appeal be granted? 22 In Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 399 a Full Court of this Court said that the approach discussed by the Full Court of the Supreme Court of Victoria in Niemann v Electronic Industries Ltd [1978] VR 431 provides "general guidance which a court should normally accept" when considering whether to grant leave. That approach involves two tests. First, whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the appellate court and, second, whether substantial injustice would result if leave were refused, supposing the decision to be wrong. Further, the Full Court in Décor noted (ibid) that the two tests bear upon each other so that the degree of doubt which is sufficient in one case may be different from that required in another. Implicit in that statement is the possibility that quite a slight degree of doubt would be sufficient in a particular case if the consequences of a wrong decision remaining unreversed were very serious. 23 A further relevant consideration, as the Full Court noted in Décor at 400, is whether the judgment below was in a matter of practice and procedure. In Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 Gibbs CJ, Aickin, Wilson and Brennan JJ repeated with approval the "oft-cited statement" of Sir Frederick Jordan in In re The Will of F B Gilbert (deceased) (1946) 46 SR (NSW) 318 at 323 as follows: "… I am of opinion that, … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal." 24 While the judgment below did not involve the exercise of a discretion (indeed, as will be seen, we reject one of ABB's arguments which suggested that in some respects it did) the observations of Sir Frederick Jordan are as compelling now as they were over half a century ago. The present case involved a hearing before Emmett J extending over six days. Three senior counsel and six juniors appeared. His Honour delivered a forty-seven page reserved judgment carefully analysing the different categories of documents and the settings in which they were produced by the various parties. As already noted, ABB were partially successful. ABB have had a very fair opportunity to ventilate their complaints about privilege in the forum which Parliament has designated as the usually appropriate one for disputes about matters of practice and procedure. 25 As often happens in applications for leave, it was not practicable to separate the arguments on the leave issue and then proceed to a subsequent hearing on the substantive appeal if leave is granted. Rather the parties presented at the same time their arguments on leave and also what would be their arguments on the appeal. In such a setting there is always a risk that attention will be concentrated on the substantive arguments as to the correctness or otherwise of the judgment below. However Décor makes it clear that one possibility is that leave will be refused even though the judgment is shown to be wrong. 26 What then is the substantial injustice which ABB would suffer if his Honour's decision, insofar as it upholds privilege, is wrong but remains unreversed? The only basis suggested is that ABB would not obtain access to some documents relating to statements previously made by witnesses to be called by the Commission at the trial. It is entirely speculative as to whether such material would be at all forensically helpful to ABB, as for example constituting prior inconsistent statements. It is further a matter for speculation as to whether such an advantage would affect the final result. ABB are thus at two removes from establishing that they will be deprived of substantive rights. 27 In one sense, for a party to be subjected to an erroneous decision is necessarily an injustice. Moreover, since rules of practice and procedure are usually made for good reason, it might be said that a wrong decision as to the application of such a rule is likely to produce injustice which is not trivial or inconsequential. Nevertheless the statement in Gilbert wisely accepts that there will necessarily be, in matters of practice and procedure, wrong decisions made which would be set aside if there were an appeal as of right, but there is a greater public interest in keeping litigation within reasonable bounds (especially when the litigants are well-resourced) which outweighs any such injustice. 28 In any event, we are not persuaded that his Honour's judgment is attended with sufficient doubt. Since we are dealing with the arguments in a leave context our reasons will be brief. (In some intermediate appellate courts the general practice is that no reasons at all are given for the grant or refusal of leave: see for example in relation to the New South Wales Court of Appeal Southern Cross Exploration NL v Fire and All Risks Insurance Company Ltd (No 2) (1990) 21 NSWLR 200 at 215, 218.) 29 As to without prejudice privilege it was argued that his Honour did not draw any distinction between admissions and statements of objective facts. Reference was made to Field v Commissioner for Railways for New South Wales (1957) 99 CLR 285 at 291-293 and Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 69 at 72-74. However the circumstances clearly supported his Honour's conclusions to the effect that the drafts of the agreed statements of facts and communications in relation thereto were for the purpose of achieving a compromise of the proceedings. An essential element of such a compromise was the production of a statement of agreed facts. If in such a context a party says "I would be prepared to admit facts A, B and C", that is clearly a matter of negotiation, as distinct from an assertion of an existing fact. The very nature of such negotiations make such assertions "hypothetical, conditional or tentative": see Davies v Nyland (1975) 10 SASR 76 at 91. 30 Next it was argued that his Honour did not reveal any consideration being given to ABB's contention that the documents were provided "on an open basis without any qualification as to their use". As Gleeson CJ, McHugh and Gummow JJ have recently observed, the fact that a judge does not refer to an argument of the losing party is not in itself a ground for reversing the decision: Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62]. 31 This argument led to some discussion about the meaning to be attributed to the word "open" in the Commission's letter of 14 July 1999. Where the word first appears in paragraph (a)(iv) we think it is used as a term of art meaning not without prejudice. As such it would refer to the report which the Commission was requesting within the space of a few weeks. Where next appearing ("material provided by Alstom and its officers must be complete, accurate, truthful and open") we think it is used in the non-technical sense of candid and frank. But in any event we agree with his Honour's characterisation of the co-operation agreement as an arrangement relating to the investigative stage of the Commission's initial investigation. The documents were obtained after Alstom's penalty hearing and were clearly primarily for the purpose of the continuing litigation against ABB. 32 On its face, the cooperation agreement was spent once the investigation phase had concluded and the admitting respondents were negotiating an agreed statement of facts. In any case, even if the parties, or some of them, thought the co-operation agreement might have still been in operation, what is important as his Honour found was the dominant purpose. 33 Next it was said that his Honour's decision as to without prejudice privilege was "a mere statement of conclusion without analysis" and contained "only limited consideration of the governing principles". We think, however, that his Honour's reasons provided a careful analysis of the documents in question and cogent reasons for finding that the respective privileges either did or did not apply. The relevant legal principles were not in dispute. His Honour did not embark upon a dissertation as to the law of privilege. But this was not called for. 34 Then it was argued that the rejection of ABB's application for access followed automatically from the holding that the documents were subject to without prejudice privilege "without any exercise of the discretion as to whether access should be granted in any event". This argument is misconceived. There are of course circumstances in which considerations of fairness might make it inappropriate to apply the privilege. Some examples are given by Lord Griffiths in Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280 at 1300. And, no doubt, such categories are not closed. But this is not to say that the law confers a general discretion to grant or withhold without prejudice privilege. 35 We were not directed as to any proper basis upon which without prejudice privilege, if otherwise established, should be withheld. Of course the Commission seeks in these proceedings, as ABB pointed out, very large pecuniary penalties. The consequences for ABB are potentially severe. Nonetheless major litigation usually has severe consequences for the losing party and that in itself is no ground for abrogating privilege. It was said that the Commission was required to conduct the prosecution as a "model litigant" by virtue of the Attorney-General's Legal Services Directions. That may be so, but claiming a well-established privilege, and having that claim upheld by a judge, is not unreasonable conduct for a litigant, whether model or otherwise. 36 Also as to without prejudice privilege it was contended that the privilege did not extend to the Commission because no admissions had been made by it. The rationale of the rule, it was argued, was that it was to protect parties who had made admissions. However it is clear that without prejudice privilege is a joint privilege applicable to both parties to the negotiations: Cross on Evidence (6th Australian Edition) at [25350]. Moreover the privilege continues to subsist notwithstanding that the negotiations have succeeded and a settlement has been reached: Rush & Tompkins at 1300. 37 In relation to legal professional privilege it was said that his Honour did not address the "threshold requirement" of confidentiality. But we were not directed to any evidence to show that the documents in question were not confidential. Given a finding, which was plainly open, that the documents were produced for the dominant purpose of use in litigation, it would usually follow that confidentiality was implicit. His Honour was not obliged to deal with questions which were not in issue. 38 It was said that his Honour did not address the fact that the documents over which the privilege was held to exist has passed between opposing parties. However the claim for legal professional privilege was upheld in relation to draft statements and affidavits created after the proceedings had been resolved against the admitting respondents. It was not in the context of communications between opposing parties. Once the proceedings had been resolved against them the admitting respondents were not in the position of opposing litigants vis-ŕ-vis the Commission.

Conclusion 39 In our opinion leave should be refused. ABB must pay the Commission's costs of the application. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Heerey, Stone and Bennett.

Counsel for the Appellants: N J Young QC and J M Faulkner

Solicitor for the Appellants: Blake Dawson Waldron

Counsel for the Respondent: N J Williams SC and S T White

Solicitor for the Respondent: Australian Government Solicitor