Adsteam Building Industries Pty Limited v The Queensland Cement and Lime Company Limited

3. The fourth respondent have liberty to apply within seven days to argue that the applicant should not be at liberty to deliver an amended pleading of the kind referred to in Order 2 against it.

4. In the absence of application by the fourth respondent under Order 3, the applicant have leave to file and serve on that respondent after 3 July 1998 an amended pleading raising a claim for damages under s 82 the Trade Practices Act 1974 (Cth) in respect of the respondents' alleged contraventions of s 45 of that Act which gives effect to these reasons.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: THE COUNCIL FOR THE CITY OF THE GOLD COAST

The respondents apply to strike out the applicant Council's amended statement of claim.

The case arises out of proceedings brought by the Trade Practices Commission against the respondents. These proceedings culminated in orders by Lockhart J that each of the first three respondents pay $6.6M as a penalty for its contraventions of s 45 the Trade Practices Act 1974 (Cth) and that the fourth respondent pay $250,000 penalty for its contraventions of that provision. A fifth organisation, Nucon Pty Ltd, was alleged to have been involved in the contraventions of s 45 the subject of the Commission's action against the four respondents, although it does not emerge from the material before me whether the Commission took action against it.

This action originally took the form of a representative proceeding under Part IVA the Federal Court of Australia Act 1976 (Cth) brought by the Council on its own behalf and on behalf of certain other persons and organisations; one complaint then made was that each respondent contravened the provisions of s 45 the Trade Practices Act by engaging in collusive pricing and collusive tendering in respect of certain grades of pre-mixed concrete manufactured or supplied by each respondent within the local government area of the Council during portions of a period between June 1989 and July 1994. In July last, I ordered that the proceeding no longer continue as a representative one; I ordered that the Council's original statement of claim to be struck out and gave it leave to deliver an amended statement of claim if (as happened) the Council decided to continue the proceeding for its own benefit.

The Council's claim in respect of s 45 the Trade Practices Act 1974 (Cth) contraventions

The amended statement of claim, now attacked by all respondents, identifies a market for the supply and delivery of specified grades of pre-mixed concrete by the four respondents and Nucon, being product made within "and/or" delivered to sites within the local government area now under the control of the Council, during a period called "the cartel period", defined as follows:

The arrangements and understandings referred to in paragraph 12 operated on contracts for the supply of product formed or priced between June 1989 and July 1994 inclusive but not on contracts formed or priced between June 1992 and September 1993 ('the cartel period'). (Para 6)

No complaint is made in respect of sales made between June 1992 and September 1993 because that was the period of "a price war" when a sixth organisation "temporarily entered competition" with the four respondents and Nucon. (Para 9)

Two classes of product are the subject of the Council's complaint: first, concrete sold during the cartel period by each of the respondents and Nucon directly to the Council, ie, under contracts with the Council, and secondly, concrete "indirectly supplied" to the Council as end consumer by being supplied by one of the respondents or Nucon to contractors who had entered into construction contracts with the Council. (Para 4)

In terms, the Council's complaint in its pleading is in respect of pre-mixed concrete supplied directly and indirectly to it during the cartel period, being concrete produced at batching plants or delivered to sites all within "the geographical area delineated by the boundaries of the present territorial unit of the Council For The City Of The Gold Coast". (Para 7) But it appears from the correspondence sent by the Council's solicitors before the present hearing that the Council's complaint is as the successor to the causes of action that may have accrued in respect of the respondents' actions to the "old" Gold Coast City Council and the "old" Albert Shire Council, which were merged some time ago into the applicant Council. The applicant does not appear to be complaining of any supplies of concrete to itself. The applicant's title to sue the respondents is not mentioned in the pleading, as it should be.

Paragraph 15 of the pleading alleges that "the arrangements and understandings referred to in paragraph 12" were entered into for the purpose and had the effect of substantially lessening competition and so contravened s 45(2)(a) the Trade Practices Act. Paragraph 16 alleges that the respondents, by giving effect "to the arrangements or understandings referred to in paragraph 12" contravened s 45(2)(b) of the Act. Paragraph 17(i)A and (ii)A allege that "[t]he arrangements or understandings referred to in paragraph 12" had, or by reason of s 45A are deemed to have had, in respect of the supply of concrete in the market I have referred to, the anti-competitive effect proscribed by s 45(2)(a)(ii) and (b)(ii). Paragraph 17(i)B and (ii)B allege that these arrangements or understandings had or are deemed to have had the effect of "maintaining the price of goods used in the manufacture of the product by bodies corporate related to each of the respondents and Nucon".

Paragraph 12 of the pleading is of central importance to the Council's case based on s 45 contraventions. Under the heading "The anti-competitive arrangements or understandings", this paragraph alleges that during the cartel period and in the market referred to, the respondents and Nucon entered into certain arrangements and understandings. Six such matters are identified.

The first is an arrangement and understanding between the five that they would not compete so as to entice certain regular customers of each individual respondent away from that respondent. Particulars identify each of the four respondents' so-called "pet" customers, none of whom include the Council. While Nucon is said to have been a party to this particular arrangement and understanding, it is not alleged that it had any "pet" customers of its own. The second arrangement and understanding alleged is to the effect that the respondents and Nucon would engage in collusive tendering "for major construction projects". The third is to the effect that the five would act to maintain their respective market shares by monitoring the market share of each other and by allocating to each other jobs so as to maintain those respective market shares. The market shares that each of the five held, inter se, during the cartel period and the combined share of the whole market "of the respondents", ie, apparently not including Nucon, during that period are also identified (paras 8, 10 and 11). The fourth is that the respondents and Nucon would regulate and maintain the market price for product. The fifth is that each respondent and Nucon, between 1993 and 1994, would act to increase the sale price of product "at least in respect of 20 mpa concrete" from an average of approximately $75 to $105 per cubic metre. By way of particulars of this allegation, the pleading asserts the entry by unidentified representatives of each of the five into a series of three arrangements in late 1993, early 1994 and in about March 1994 to increase "the base product price" of 20 mpa concrete, firstly, to $90 and finally to $105 per cubic metre. The sixth arrangement pleaded is that the respondents and Nucon would conceal from consumers these other arrangements and understandings.

Faced with complaints that the allegations in para 12 of entry into six different lots of arrangements and understandings in the cartel period is embarrassing given that the cartel period is defined as not covering the period of the price war, the Council, both in correspondence and in submissions at the hearing by its counsel, put a gloss on its pleading by asserting that its primary case was that there was one "umbrella" arrangement and understanding entered into either prior to or at the beginning of the cartel period which continued throughout that period, with the six sets of arrangements and understandings alleged in para 12 of the pleading being provisions of that "umbrella" arrangement. It was then asserted, in the alternative, that at various times throughout the cartel period, separate arrangements and understandings of the same nature as those pleaded in para 12 were entered into by the respondents and Nucon. It is said that the Council is unable, until after discovery, to particularise when each of these arrangements and understandings the subject of the alternative case was entered into. (The Council is less clear about its intention to run such an alternative case in certain formal particulars of para 12 which it gave to the second respondent.)

The Council's existing pleading gives no hint of this alternative case, although in the correspondence I have mentioned, the Council's solicitors raised the alternative case and also gave particulars identifying by name the representatives of each respondent who entered into "the arrangement and understanding" complained of (not, it is to be noted, each of the individual arrangements and understandings) and who monitored it on behalf of each respondent. This correspondence goes on to assert that "the arrangement or understanding was entered into and monitored" at certain meetings between these representatives of the four respondents held at regular intervals between 1989 and about 1992 and between about 1993 and 1994 (save that no representative of CSR actually attended the meetings held between about mid 1991 and June 1992, although its identified representative is alleged to have entered into and monitored "the arrangement or understanding" in this period by regular pre-meeting and post-meeting communication with one or other of the representatives of the other three respondents). Some, eg, the fourth respondent, but not all of the respondents are said to have had one representative for part of the cartel period and a different representative for the rest of that period. It is also alleged that "the arrangement or understanding" was entered into and monitored by regular telephone contact between these representatives of the four respondents between 1989 and 1994. There is no mention of Nucon being represented, although it is said in the pleading to be a party to what was done.

The information given in this correspondence highlights how the Council has failed to give any attention, in pleading its case, to the consequences of setting up both the "umbrella" agreement and the alternative case of a number of separate agreements made at different times during the cartel period: eg, Barrett, the Hymix representative, cannot, on the face of what is said in this correspondence, have been involved in the making of any agreement prior to 1991, yet he is still said to be one of the representatives who entered into "the arrangement or understanding", ie, presumably the "umbrella" arrangement. Further, "the arrangement or understanding", which must at least include the "umbrella" agreement, is also said to have been "entered into" at regular meetings held during the whole of the cartel period.

The respondents also argue that this being a case based on a clandestine arrangement or arrangements between the respondents, the applicant who can be expected to be unable to give precise particulars of the arrangement or understanding should still particularise the overt acts it intends to rely on to justify the inference that that arrangement or understanding was made. Reference was made to Adsteam Building Industries Pty Limited v The Queensland Cement and Lime Company Limited (No 4) [1985] 1 Qd R 127 at 133 - 134. I agree that this should be accepted as the general rule.

Another major defect in the pleading is the Council's failure to identify the material facts relied on to show the necessary causal relationship between each of the contraventions of s 45 now asserted and the loss and damage claimed: cf Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222.

I would ordinarily strike out a pleading such as is found in para 12 because of these deficiencies. But the ultimate question for me is whether I think this part of the pleading should be struck out under O 11 r 16.

None of the respondents, as I understand their submissions, suggests the s 45 case is without reasonable foundation. The explanation for this is clear. During the hearing, the Trade Practices Commission's statement of claim against the first three respondents and others was put in evidence, together with the parties' joint written submission to Lockhart J in the penalty proceedings. The main allegations in para 12 of the applicant's pleading are plainly taken from the allegations in the Commission's statement of claim that the four respondents and Nucon contravened s 45. The Commission's statement of claim, in so far as it deals with the activities of the four respondents and Nucon in the Gold Coast market, is confined to their activities during the period the subject of the present action; it alleges that "[f]rom not later than early 1989 until in or about June 1994" the respondents and Nucon "made a number of arrangements or arrived at a number of understandings among themselves in relation to the supply and delivery of pre-mixed concrete in the Gold Coast concrete market" (para 19). This market was defined to include, but to extend a little more widely than, the market described in the applicant's pleading. The Commission's pleading goes on to allege (in para 21) that these arrangements or understandings "included arrangements or understandings" to the effect of that alleged in para 12(i) of the applicant's pleading; (the Council's pleading, however, contains a more extensive list of "pet" customers for each respondent than does the Commission's pleading). In paras 23 and 24, it is alleged that they made and gave effect to arrangements or understandings to much the same effect as those pleaded in para 12(ii) of the applicant's pleading. It is clear from para 27 that the Commission's case was that the arrangements or understandings referred to in paras 19, 21 and 23 of its pleading and on which it based its case that s 45 was contravened were entered into, not on one occasion but in the course of regular meetings of representatives of the four respondents and Nucon held during the "cartel period". It is also clear that this part of the Commission's pleading is the source of much of the information provided by the Council's solicitors in the correspondence I have referred to about the Council's alternative case (although those solicitors provided some information additional to that which is contained in the Commission's pleading). In para 120, the Commission also alleged that these five organisations made and gave effect to arrangements or understandings to increase "the base concrete price", which are similar to the arrangements alleged in para 12(v) of the applicant's pleading. In para 25, the Commission alleged that the arrangements or understandings described in paras 21 and 23 of its pleading were given effect to by each of the four respondents and Nucon, inter alia, monitoring one another's compliance with those arrangements and understandings; this allegation is not mirrored in the applicant's pleading, although the latter, in para 12(iii)A, does contain an allegation that the five organisations acted to maintain the market share of each "by monitoring the market share of each other".

The joint submission tendered in the penalty proceedings states that "[t]he central facts of the matter are set out in the statement of claim and the affidavits of" Mr Torrisi (the first respondent's sales manager), Mr Forbes (the chief general manager of that respondent's parent company), Mr Stiles (who during the cartel period held various executive positions with the second respondent) and Mr Davis (an in-house solicitor with the third respondent). This submission records that "the victims of the conduct were not only private sector contractors but the municipal governments of", inter alia, the Gold Coast and that once the Commission began its investigation the first, second and third respondents provided the Commission with "comprehensive admissions and other evidence" which the Commission regarded as sufficient to enable it to bring the matter before the Court for resolution. The joint submission also states:

The parties have reached agreement as to suggested penalties, injunctions, undertakings and other orders and submit the agreement to the Court for its consideration and approval.

The arrangements and understandings referred to above involve contraventions of s 45(2)(a)(ii) of the Act including by way of the deeming provisions of s 45A of the Act, which refer to the fixing, controlling and maintaining of prices. The giving effect to those arrangements and understandings also involved contraventions of s 45(2)(b)(ii) of the Act including by way of s 45A of the Act.

The respondents do not propose to file any defences to the statement of claim. By not filing defences, they admit, for the purposes of these proceedings only, the allegations made against each of them by the applicant's pleading and the Court should proceed to the fixing of penalty from the standpoint that all of the allegations against each of the respondents in the pleading are made out.

I will assume, without deciding the point, that by their qualification to their admissions of the allegations in the Commission's pleading referred to in the passage from the joint submission last quoted, the first three respondents can quarantine those admissions to the Commission's action and so prevent them being used in the present proceedings by the applicant. But that assumption does not require me to ignore what the joint submission reveals about the co-operation of the first three respondents with the Commission in the process that resulted in the formulation of the allegations in the Commission's pleading which are repeated in the applicant's own pleading; nor does it require me to ignore what the joint submission reveals about the full understanding each of these respondents have of those allegations.

In these unusual circumstances, I do not consider that any of the respondents would suffer any of the disadvantages which it is the object of O 11 r 16 to prevent if the Council, so far as the issue of liability is concerned, were to confine itself to much the same case that the Commission relied on against the respondents. A case so confined would be limited to the alternate case which the Council has said in its solicitor's letter it intends to rely on and which is based on the entry by the four respondents and Nucon into a number of arrangements made over time, during the cartel period, to the effect of those alleged in paras 12(i), (ii) and (v) of its current pleading. I have not arrived at this conclusion on the basis that the true facts, so far as concerns the applicant's s 45 case, are well-known to the first three respondents; nor have I assumed that the participation by the first three respondents in the penalty proceedings is capable of founding admission evidence in support of the applicant's allegations of contraventions of s 45. Rather do I consider that a case so confined will provide the respondents with a proper pleading, ie, one that will sufficiently put them on notice of the case to be met and sufficiently define the issues for decision so that the preparation of the case and the trial can be controlled: cf Mick Skorpos Petrol Discount King Pty Ltd v The Shell Company of Australia Limited (1997) ATPR ¶41-556 at 43,693 - 43,694. This is so because the first three respondents, by responsible officers, assisted in the process that resulted in the formulation of the case the Commission presented in the penalty proceedings and because those respondents displayed a clear understanding of the way that case was formulated by their attitude to how the Court should dispose of the penalty proceedings.

As is apparent, I recognise that the fourth respondent was not party to the penalty proceedings I have referred to. However, it is common ground that that respondent was the subject of similar action by the Commission in respect of its participation with the first three respondents in their combined activities in the Gold Coast market, which is the subject of the present action by the applicant. Moreover, the joint submission I have referred to records, in relation to the fourth respondent, that it too co-operated with the Commission in the penalty proceedings brought by the Commission against it and that it also assisted the Commission in its inquiries in relation to the first three respondents, so much so that the early resolution of the proceedings against the fourth respondent was a significant factor in the resolution of the penalty proceedings against the first three respondents. Similar statements appear in the reasons Lockhart J gave for imposing the penalty I have referred to on the fourth respondent: see Trade Practices Commission v Hymix Industries Pty Limited (1995) ATPR ¶41-369 at 40,103. I do not, however, have before me evidence of the case which the Commission made out against the fourth respondent or of the submissions made in the penalty proceedings against it by the Commission. I will therefore give the fourth respondent liberty to apply to put evidence and submissions before me, should it wish to contend that it is not appropriate for me to dispose of its own attack on the applicant's s 45 case against it on the basis on which I have disposed of the other respondents' attack upon that part of the applicant's action.

But the "umbrella" case on which the Council relies as now pleaded in para 12 formed no part of the Commission's case in the penalty proceedings: it is a significantly different case, in terms of the evidence needed to make it out, from the Commission's case and from the Council's alternative case in so far as that is based on the Commission's case. Moreover, the allegations in paras 12(iii) and (iv) appear to form no part of the case pleaded in the penalty proceedings (although it is asserted in the joint submission that the main purpose of the regular meetings referred to in the Commission's pleading was "to allocate work among the participants in accordance with pre-existing market shares"). The applicant may intend, by its "umbrella" case (and by paras 12(iii) and (iv) of its pleading), to open up an area of factual inquiry beyond that encompassed by the issues to which I have referred, which were raised in the pleadings in the penalty proceedings. The applicant cannot rely on what took place in the penalty proceedings to protect these particular allegations or its "umbrella" case from the stigma of relevant embarrassment.

The key para 12, which at the moment sets up only the "umbrella" case, should be struck out. Paragraphs 13(iv) and (v) and para 19(ii), which relate to the allegations in para 12(iii) and (iv), should also be struck out.

For the reasons given, but subject to what I say below about the pleading of damages, the Council should have leave to replead the alternative case foreshadowed in its solicitors' correspondence, in so far as that case is based on allegations to the effect of those in para 12(i), (ii), (v) (and (vi)). But if it wishes to resurrect the "umbrella" case, it must apply for leave to make an amendment to do that, which will need to be accompanied by a draft of the proposed amendment with proper particulars, including particulars of the overt acts relied on, to justify the inference of such an agreement. If it wishes to include in its case allegations of arrangements or understandings of the kind set out in para 12(iii) and (iv), it will also have to apply for leave to amend.

Prior to the hearing, the respondents complained that the Council should, as part of its obligation to expose in the pleading its case that the respondents' conduct in contravention of s 45 caused it loss, identify the Council's direct acquisitions of concrete the subject of paras 19, 21 and 22 and also the Council's indirect acquisitions of concrete the subject of paras 20, 21 and 22 of the pleading. These complaints produced, so far as the direct acquisitions are concerned, a bundle of 267 pages listing individual acquisitions of concrete by what is called the "old" Gold Coast City Council during the cartel period. This material identifies a very large number of individual deliveries of concrete by each of the four respondents and an organisation described as "Neumanco". I assume, although it is not made clear in the pleading, that this is Nucon or at least an associate of Nucon. The information for each delivery is taken from the invoice given to the Council by the particular respondent or by Neumanco. In addition to the identity of the particular supplier, the invoice number and date, the description and quantity of product the subject of the delivery and the price charged to the Council by the relevant supplier are all listed.

No information relating to direct supplies to the "old" Albert Shire Council of the kind provided in respect of direct supplies to the "old" Gold Coast City Council was initially given to the respondents: the applicant's solicitor instead told them that "it is extremely difficult for us to particularise the consumption of the old Albert Shire Council" during the cartel period and that "it may be impossible for us to adequately particularise that consumption until completion of discovery". However, the applicant's solicitors subsequently provided a bundle of 162 pages of particulars of product supplied directly to the "old" Albert Shire Council. These particulars are identical in format to those of direct supply to the "old" Gold Coast City Council previously delivered to the respondents. The applicant's solicitors then said that some of the "old" Albert Shire Council records had been destroyed. Later again, those solicitors provided a further 17 pages of similar particulars of direct supplies to the "old" Albert Shire Council, which they said were taken from certain computer records of that organisation.

The applicant's position now appears to be that it has provided all the information it can, prior to discovery, to identify all the direct supplies of concrete to both the "old" Gold Coast City Council and the "old" Albert Shire Council in respect of which it intends to claim damages in its s 45 case. If that is confirmed on oath, I would be prepared to accept that the applicant and its advisers have sufficiently pleaded and particularised their case, in so far as it is necessary for it to identify the direct supplies of concrete the subject of the damages claim, and that they should not be required to give any further particulars of this aspect of the case until after discovery.

But the present pleading of loss and damage is, as I have said, still insufficient to plead that issue in the manner normally required, even with respect to the direct supplies and even if the Council only intends to rely on the alternative case limited in accordance with the leave I will give to amend the pleading. For example, the Council does not state how its damages claim in respect of direct supplies is related (if at all) to the implementation of the arrangement or understanding in para 12(i) or in para 12(ii) or in para 12(v). It is not "sufficiently apparent", in the sense in which that term is used in the passage cited in Bond Corporation at 222, how these losses could have been caused by the implementation of arrangements of the kind the subject of paras 12(i), (ii) and (v). The conduct referred to in para 12(i) does not strike me as conduct that necessarily would have resulted in the Council paying higher prices for direct supplies of concrete. The same can be said of the conduct referred to in para 12(ii), which appears on its face, to be capable of affecting only the prices of concrete indirectly supplied to the Council. As to para 12(v), while "rigged" prices of the kind there referred to can affect in an obvious way the cost to Council of direct supplies, the Council can still not hope to recover in respect of the many direct deliveries made prior to 1993 which are included in its present "direct supply" claim. So far as the Commission's pleading and the joint submissions in the penalty proceedings reveal, it was no part of the case there presented to the Court that conduct of the kind referred to in para 12(i), (ii) or (v) of the Council's current pleading caused either of its predecessor Councils loss of the kind sought to be recovered by the Council in that part of its s 45 claim that relates to direct supplies. Paragraph 19(i) cannot therefore stand. Paragraph 22 cannot make the pleading a sufficient one on the issue of damages: it does no more than state how a causal relationship between the conduct in para 12(i), (ii) and (v) and the loss claimed in respect of direct (and indirect) supplies will bring about that loss, if such a relationship exists, without giving any hint as to how the existence of that relationship may be able to be proved.

There are also serious defects in the pleading of loss and damage in respect of indirect supplies.

By way of particulars identifying the indirect supplies of which the Council complains, its solicitors delivered to the respondents a three page schedule identifying, with some precision, 45 contracts entered into between the "old" Gold Coast City Council and a number of contractors, for the construction of various projects for that Council. The applicant has provided no information at all in respect of indirect supplies of concrete to the "old" Albert Shire Council. The applicant's solicitors have advised the respondents that this is all the information they are able to provide until after discovery in respect of indirect supplies of concrete. It is difficult to accept that the applicant is entirely unable to identify any project constructed for the "old" Albert Shire Council during the cartel period in respect of which it considers it has a claim against the respondents under its indirect supply claim. I would not be prepared to accept the applicant's assertion without a convincing explanation on oath as to why the applicant finds itself in such a state of ignorance about relevant activities of its predecessor, the Albert Shire Council.

Further, so far as this part of the Council's s 45 case is concerned, the causal link (if there is one which the Council may wish to assert) between the conduct alleged in para 12(i) and also in (v) and the loss the subject of the indirect supply claim is not obvious and is not identified in the pleading, as it should have been in order to comply with the normal pleading requirements to which I have referred. This deficiency can no more be made good by reference to the penalty proceedings than can the similar deficiency in the pleading of loss in respect of direct supplies. Paragraph 20 cannot therefore stand either.

The respondents also point to the obvious consideration (touched on in my judgment of July 1997) that, just because a contractor to the Council may have used concrete obtained from one of the respondents when the cartel arrangements were in force, that does not necessarily mean that, if that contractor had instead been able to acquire the concrete at a truly competitive price, it would have passed the whole or some part of that "saving" onto the Council. I agree with this submission, notwithstanding what counsel for the applicant has to say about the Council being a body obliged by law to award construction contracts of the kind the subject of its schedule only after a process of public tendering has been engaged in. For example, for the applicant to say only that a council is bound by a process of public tendering throws little light on whether one of its predecessor Councils could have expected to obtain the benefit of a truly competitive concrete price for a particular project if that Council received only one tender for that project. Even if the Council's claim for loss suffered in respect of indirect supplies were confined to loss said to flow from the conduct referred to in para 12(ii), para 20, which incorporates para 19(i) and (iii), and para 22, against the background of the penalty proceedings to which I have referred, would, for this reason, still not be adequate as a pleading on the issue of such damages.

If the Council wishes to pursue its claim in respect of indirect supplies of concrete under the contracts it has already identified (and under any other contracts to which either of the old councils were parties), it must also undertake the discipline of identifying, so far as that is possible in advance of discovery, each construction contract entered into by that council which it has some evidentiary basis for thinking it can prove was entered into in circumstances in which price differences between those actually paid to the particular respondent by the council's contractor and those said to represent truly competitive prices would have been passed on by that contractor to the council, in whole or in part.

Paragraphs 19(i), 20 and 22 will also be struck out.

Various of the respondents said the pleading in paras 15 and 17 was deficient because it fails to identify the particular provision or provisions of the various arrangements and understandings relied on which has the character proscribed by the relevant sub-section of s 45. They complain, in effect, that s 45(2), on its proper construction, does not prohibit the making of or the giving of effect to any contract, arrangement or understanding, that the sub-section only operates when there is a contract, arrangement or understanding which contains, as one of its provisions, ie, as one of its terms or parts or clauses, a provision (or provisions) that has the prohibited character. While none of the respondents put the submission in exactly these words, this, in my opinion, is the effect of the submission. So put, the lack of substance in this particular attack on the pleading I think stands revealed. The term "provision" in s 45 cannot be limited in the way contended for by the respondents. That term is not given any special meaning in the Act. In my opinion, it bears that which it has in ordinary usage. According to the Shorter Oxford English Dictionary (3rd ed), this word can, in an appropriate context (such as I think is provided by s 45(2) the Trade Practices Act) mean "[e]ach of the clauses or divisions of a legal or formal statement, or such a statement itself, providing for some particular matter". The object of the section - to proscribe the making of and the giving effect to binding agreements and non-binding express or implied arrangements and understandings in so far as they have the requisite anti-competitive character - requires, in my opinion, s 45(2) to be read as prohibiting the making of and the giving effect to a term of a contract, arrangement or understanding that has the requisite anti-competitive character and also as prohibiting the entirety of a contract, arrangement or understanding, if the whole transaction can be seen to possess that character.

However, one of the complaints about para 17 is, I think, well-founded: para 17(i)(B) alleges that the arrangements or understandings referred to in para 12 had the effect of "maintaining the price of goods used in the manufacture of the product by bodies corporate related to" each of the respondents and Nucon. This is the only suggestion in the pleading that others apart from the respondents and Nucon were involved in the production of the concrete: the case as pleaded elsewhere, eg, in para 5, describes the concrete as having been both produced and supplied by those five organisations. Moreover, the significance to the Council's claims for relief of the assertions made in paras 17(i)B and (ii)B is nowhere identified. The general allegation in para 55 that, by reason of all the matters referred to in the pleading, the applicant suffered the loss and damage it seeks to recover in the action cannot be relied on as explaining the relevance of these sub-paragraphs. Paragraph 55 cannot be read as referring to the respondents' conduct in contravention of s 45 the Trade Practices Act, which is the subject of the allegations in paras 12 to 18 of the pleading. Paragraphs 19 to 22 of the pleading appear to be intended to set out, in an exhaustive way, the loss-causing consequences for the Council of the respondents' contraventions of s 45: para 55(i) in fact repeats the allegation in para 19(i)C and (ii)B, while para 55(ii) repeats the allegation in para 19(iii)C. And there is nothing in paras 19 to 22 which can be related to the allegations in para 17(i)B and (ii)B. These two sub-paragraphs are therefore embarrassing and must be struck out also.

Paragraph 21, which appears to add nothing to paras 19, 20 and 22 should also be struck out.

If the Council can show by an amended pleading how the conduct referred to in paras 12(i), (ii) and (v) may be causally linked to loss suffered by the Council in respect of both direct and indirect supplies, I do not think that any useful purpose will be served by forcing the Council to undertake before discovery the task of quantifying its s 45 damages claim: information held by the respondents and available to the Council on discovery is likely to provide hard evidence as to the quantum of the loss recoverable by the Council which will render irrelevant such estimates of that overall loss that the Council could make before discovery.

Complaint is also made about paras 23 to 32 of the amended statement of claim in which the applicant purports to set up a claim in deceit based on the activities of the respondents "in secretly giving effect to the arrangements and/or understandings referred to in [para] 12".

Central to this cause of action is the making of a false representation. It is apparent that little thought has been given to properly pleading such a case. For example, the respondents' conduct in secretly giving effect to the arrangement or understanding not to compete for the business of each other's "pet" customers cannot, of itself, constitute the making of a representation of fact to the applicant that the respondents and Nucon were in relevant respects engaged in price competition with each other. Nor can the respondents' conduct, in secretly giving effect to their arrangement or understanding to monitor the market share of each in order to maintain their respective market shares of itself constitute the making of a representation to the applicant that the respondents were relevantly engaged in price competition. Yet those are two of the allegations contained in para 23 of the pleading by the facile expedient of incorporating the entirety of the allegations in paras 12, 13 and 14 in the deceit claim.

The first respondent's complaint that much of the conduct pleaded by the applicant in its deceit claim as giving rise to representations said to have been relied on by the applicant was conduct of which the applicant could not have been aware until well after entering into the relevant contracts to purchase concrete produced the response from the applicant's solicitors that "[t]he alleged representations are to be implied from facts alleged in paragraphs 12, 13 and 14". The applicant did not, however, attempt to show how it says that can be done, although it later told the second respondent that the representations were to be implied from the respondents' conduct in putting "a price on supplying a product either by tender, quote or other means without advising the Applicant that the price was not a true and fair market price". This is embarrassing, even if it should be understood as particulars of the representations relied on: the reference to "or other means" deprives this statement of any use it may have as exposing the case the Council here intends to make out at trial.

The applicant in para 23 also pleads representations "to the applicant and other consumers" and seeks in this deceit claim to recover damages for its entire losses in respect of both direct and indirect supplies: the reference to "other consumers" must be a reference to the contractors who indirectly supplied the concrete in question to the applicant. Yet in the particulars of these representations recently supplied to the second respondent, the applicant speaks only of representations being made to "servants or agents of the Applicant who … were responsible from time to time for purchasing product".

Further, as counsel for the third respondent pointed out, if some of the always small quantities of concrete supplied directly to the Council were supplied in response to a request by a Council officer and without any discussion as to price, something which senior counsel for the applicant says did sometimes occur, it would not be an easy matter to make out, by a process of implication, the representation in para 23(i) upon which the applicant is relying.

This all shows that the applicant's pleader needs to invest a lot more thought in how the case in deceit should be formulated than has been expended on it so far, if the applicant wishes to maintain this particular claim.

It is basic law "that fraud must be pleaded distinctly and with particularity": Krakowski v Eurolynx Properties Limited (1995) 183 CLR 563 at 573. The deceit pleading breaches this rule. It is wholly insufficient in so far as it fails to identify the material facts from which implied representations acted on by the applicant can be identified. Moreover, paras 28 to 32, which attempt to deal with the issue of how loss flowed to the applicant as a result of its reliance upon fraudulent representations, hinted at but not properly pleaded, and which incorporate paras 19, 20, 21 and 22 of the pleading, are open to the same objections to which I have identified those four paragraphs are subject.

Paragraphs 23 to 32 will be struck out as embarrassing. The cavalier approach that the applicant's pleader has taken to pleading this claim disentitles the applicant to leave now to amend the current statement of claim to resurrect this claim. If the applicant wishes to replead a claim in deceit, it is always entitled to apply for leave to make an appropriate amendment. But it will have to support any such application with a properly pleaded draft of the proposed amendment.

In paras 33 to 38, the applicant purports to plead a claim for loss or damage recoverable under s 82 the Trade Practices Act by reason of conduct engaged in by the respondents, which is said to contravene s 52 of that Act. It is the same conduct that is said to constitute deceit that is here relied on. The expedient is adopted of relying on other paragraphs of the pleading without giving attention to identifying in clear fashion the conduct said to be misleading or deceptive: it is not obvious, eg, that the agreement of the respondents and Nucon not to compete with one another for each of the respondents' "pet" consumers of itself constitutes misleading and deceptive conduct (as the applicant's pleading alleges) let alone misleading and deceptive conduct capable of or in fact giving rise to the "detriment" to the applicant alleged. That is but one example of the problems the pleader's approach causes.

Precision in identifying the facts relied on as constituting the statutory cause of action is just as necessary as precision in pleading a case of common law fraud: see Harris v Cigna Insurance Australia Limited (1995) ATPR ¶41-445 at 41,009. For much the same reasons that the deceit claim is not adequately pleaded, I consider the s 82 claim to be also embarrassing.

Finally, the applicant pleads what it describes as a case of "tortious conspiracy to injure consumers by unlawful means".

The applicant acknowledged at the hearing that this section of its pleading was defective and proposed certain amendments, viz: to delete para 39, to substitute in paras 43, 46, 49 and 51 an allegation that the respondents entered into an agreement "to contravene" the various statutory provisions I have referred to, rather than that they entered into an agreement "in contravention" of each of those provisions; the applicant also proposes to insert a paragraph 51A to allege that these agreements were entered into "to effect the unlawful purpose specified in the respective paragraphs and in each case with the intention of doing injury to the applicant".

The applicant thus proposes to allege that the respondents' conduct referred to in para 12, viz, entering into certain arrangements and understandings, involved them entering into agreements to contravene ss 45(2) and 52 the Trade Practices Act and to contravene ss 427 (obtaining money by false pretences), 429 (obtaining a greater sum of money by a fraudulent trick or device than would otherwise have been paid) and 430 (conspiring with another by deceit to affect the market price of anything publicly sold) the Criminal Code (Qld), all with the intention to injure the applicant. Paragraphs 13 and 14 of the pleading are referred to in relation to all these agreements and it is alleged that all were carried into effect, and further, that as a result, the applicant suffered financial loss in the manner and of the kind alleged in paras 19 to 22 of the pleading.

In Vol 33, The Laws of Australia, subtitle 33.8 "Intentional Torts", para 80, it is said that the tort of conspiracy may take two forms:

(1) an agreement or combination between two or more persons to commit a lawful act with the predominant purpose of injuring or damaging the plaintiff, and the act is carried out and the purpose achieved; or

(2) an agreement or combination between two or more persons to commit an unlawful act with an intention to injure the plaintiff and the act is carried out and the intention achieved.

It is apparent from the pleading that the applicant purports to allege the second form of conspiracy. It is also apparent that the pleader failed until the hearing (when they finally realised the relevance to this cause of action of the respondents' intent) to turn their mind to just what are the essential elements of such a cause of action. This failure is no doubt one reason why the pleading is confused and embarrassing.

In Little v Law Institute of Victoria [1990] VR 257, Kaye and Beach JJ said, at 271 - 272:

[a] statement of claim pleading tortious conspiracy must allege an agreement or combination between defendants to injure or harm the plaintiff, overt acts of the defendants in furtherance of the agreement or combination, and consequential injury or damage suffered by the plaintiff … the pleadings do not disclose a cause of action unless the allegations of overt acts as pleaded are capable of sustaining the conclusion that the predominant purpose of the respondent's agreement was to injure the appellant in the practice of his profession …

This dictum, in so far as it identifies as an essential element of the cause of action in conspiracy, a predominant purpose to injure the plaintiff, must I think be taken as directed to the first form of conspiracy. But subject to that, I respectfully accept it as an accurate statement of the law governing the pleading of the tort upon which the applicant here relies.

The overt acts which must be pleaded to complete a proper allegation of conspiracy are acts which justify the inference that the conspiracy exists: cf Adsteam Building Industries at 133.

The requirement that a plaintiff claiming damages for the second form of conspiracy must plead overt acts evidencing not just an agreement to commit an unlawful act but an agreement made with an intention to injure the plaintiff is no mere technical requirement: it is an essential element of the second form of conspiracy, as the applicant now acknowledges, that the agreement to commit the unlawful act be made with an intention to injure the plaintiff (even though that need not be the conspirators' predominant intention for combining). But even with the amendment it now proposes, the pleading will be impermissibly defective, in so far as it will fail to identify anything which could qualify as overt acts sufficient to justify the inference that the respondents and Nucon entered into a series of agreements to contravene various statutory provisions with the intention of injuring the applicant (even if that was not the sole intention for combining). Nor is its pleading here of loss, which simply incorporates paras 19 to 22, adequate.

Whether it may be possible for the applicant acting properly to plead a sufficient case of conspiracy, I am satisfied that its existing pleading in paras 40 to 54 is embarrassing and should be struck out.

The first respondent also contends that paras 40 and 41 of the pleading are bad, in that they add nothing to the allegations of contravention of s 45 in para 12 (and following) of the pleading, which are incorporated in this part of the pleading; it relies on the decision of Sheppard J in Trade Practices Commission v Allied Mills Industries Pty Ltd (1980) 48 FLR 102 at 112 - 113. Allied Mills was not an action under s 82 the Trade Practices Act for damages by an injured party, rather was it an action by the Commission for pecuniary penalties under s 76 of the Act. The Commission alleged, eg, in paras 12 and 31 of its pleading, that the respondents had made an arrangement that contravened s 45(2)(a) of the Act, which justified the imposition of a pecuniary penalty under s 76(1)(a). The Commission also alleged, eg, in paras 13 and 33 of its pleading, that that same conduct constituted a conspiracy to contravene s 45(2)(a) and thus a conspiracy within s 76(1)(f) in respect of which the Commission also claimed a pecuniary penalty. It was in this context that Sheppard J said, at 113, that the Act did not permit the Commission to charge: "as an alternative to charging arrangements or understandings made unlawful by s 45, conspiracies which are themselves such arrangements or understandings". It appears, in my opinion, that his Honour reached this conclusion as a matter of construction of the Trade Practices Act. The decision deals, moreover, only with whether the Commission (which alone can sue under s 76 for pecuniary penalties) can claim a penalty under s 76(1)(a) in respect of an agreement that constitutes a contravention of s 45(2) and can also claim a penalty under s 76(1)(f) on the basis that that same agreement constitutes a conspiracy to contravene a provision of Part IV of the Act, viz, s 45(2).

I do not think the first ground of decision in Allied Mills is directed to the present situation where a plaintiff seeks to recover loss on a claim under s 82 the Trade Practices Act based on a contravention of s 45 and, in the alternative, on a common law claim of conspiracy, based on that same conduct. In Allied Mills, the Commission was relying on exactly the same set of facts to show its entitlement to a penalty under s 76(1)(a) as it relied on to claim a penalty under s 76(1)(f). The elements of the applicant's cause of action under s 82 for damages for contravention of s 45(2) are different from the elements of the cause of action for tortious conspiracy. Unlike the Commission in Allied Mills, where both claims necessarily had to succeed or fail, it is possible for the applicant to succeed only on one of these two claims and fail on the other.

The other ground on which Sheppard J justified his refusal to allow the Commission to claim under both s 76(1)(a) and (f) was based on the dicta in Ward v Lewis [1955] 1 WLR 9 at 11. Beaumont J, in Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 414, in my respectful opinion, correctly treats these dicta as not dependent on any technical doctrine of merger, but rather on the principle that the process of the Court cannot be abused. The respondents did not suggest that the applicant's plea of conspiracy was open to challenge as such an abuse.

There is a principle referred to by Beaumont J in Pancontinental that where a statute, for the first time, makes unlawful certain conduct hitherto lawful, and provides a specific remedy, only the statutory remedy is available. This principle was applied in the Victorian Full Court decision of Korp v Egg and Egg Pulp Marketing Board [1964] VR 563 at 568 in which the Court explained why it rejected a litigant's claim to privilege against self-incrimination for conspiracy to commit the statutory offence of selling eggs to a person other than the Board to justify his refusal to produce certain documents on discovery. The Court said the particular criminal conspiracy relied on to justify non-production could not subsist at law for the following reason:

A criminal offence can of course be the subject-matter of a combination which is itself a separate and distinct crime and a conspiracy to commit it can be laid as such … But if the substantive offence is a new offence created by statute (so that conduct previously lawful then becomes unlawful), the facts which establish that offence, and no more, cannot be used also to found a conspiracy to commit the offence, because that offence attracts only the special remedy provided by the statute … The particulars of the alleged conspiracy would be in terms or in substance the very offence created by the statute …

The decision in R v Barnett [1951] 2 KB 425 referred to in both Korp and Pancontinental is to the same effect in so far as the Court there relied on this same principle to quash a conviction for conspiracy to commit a new statutory offence.

It is, in my opinion, wrong to think that these authorities govern when it is permissible to plead a civil conspiracy case. As Korp recognises, as a general rule a conspiracy to commit an offence can be charged as a separate offence. But where a statute makes conduct not previously in breach of the criminal law an offence, and that same conduct is, without more, capable of supporting a criminal conspiracy charge, the statute creating the new offence will be read as making the prosecution provided for by it the sole remedy for the new offence. A prosecution for conspiracy to commit such an offence is not, I think, open because the antecedent lawfulness of the conduct provides a reason for reading the statute, which now makes that same conduct unlawful, as providing the only action that can be taken in respect of that conduct. This approach to how the statute should be read would, I think, have to give way to a contrary intent. But I think that the principle, as one of statutory construction, is not confined to criminal statutes. The principle is equally applicable to statutes which proscribe certain conduct not previously unlawful and provide specific civil remedies for harm caused by such conduct.

I think it is applicable to s 45(2) the Trade Practices Act: that Act in s 45 makes the making of certain kinds of agreement unlawful and, in ss 80 and 82, provides specific civil remedies. It was not suggested that such conduct was previously unlawful. Various kinds of anti-competitive conduct within s 45(2) would appear not to be unlawful at common law: cf the highly anti-competitive concert which was accepted as lawful behaviour in Mogul Steamship Company, Limited v McGregor, Gow & Co [1892] AC 25. (It is not, I think, presently relevant that such conduct has long been proscribed under statutes, now repealed, such as ss 96 and 99 the Restrictive Trade Practices Act 1971 - 1973 (Cth) and ss 85 and 88 the Trade Practices Act 1965 - 1971 (Cth), which provided their own specific remedies.) It follows that no claim for relief can be made by an injured party outside ss 80 and 82 in respect of harm caused by a contravention of s 45(2). The applicant cannot therefore sue on a common law conspiratorial agreement of the second kind in respect of an agreement only unlawful because it is an arrangement that contravenes s 45(2).

The claim in paras 40 and 41 should be struck out for this reason also.

But even though it is not open to the Council to sue at common law on a conspiracy constituted by an agreement to contravene s 45 of the Act, that cannot, I think, prevent a claim being brought for a tortious conspiracy of the first kind in respect of the making of the agreement that may also happen to constitute a contravention of s 45(2). It is necessary neither to plead nor prove in such a case that the making of the agreement was a contravention of s 45. The agreement will still found an action for tortious conspiracy of the first kind, provided it was made with the necessary harmful intent and provided it has the requisite harmful consequences. The fact that the Trade Practices Act makes that conduct unlawful and provides a statutory remedy is no justification for denying the continued availability of any tort remedy that could hitherto have been based on that conduct. And since no action for conspiracy can be maintained on the agreement as an unlawful agreement which is itself actionable as such, but only on the agreement irrespective of any question as to its lawfulness, there is no room for the argument that the conspiracy claim is barred because it must be taken to have merged in the agreement, as is made clear in Mann v Eccott (Hunt J, Supreme Court of New South Wales, unreported, 22 February 1989) at 9 - 10.

It remains open, as a matter of law, to the applicant to plead, in respect of the respondents' conduct that may happen also to contravene s 45, a conspiracy of the first kind, but not of the second kind. But if it wishes to do that, the applicant will have to be satisfied that it has some prospect of proving that the predominant, rather than a necessary but subsidiary intent of the respondents, in making their arrangement to illegitimately advance their commercial interests, was to harm the applicant. That is a matter to which the applicant will have to give careful consideration if it decides to run such a case.

I consider, for similar reasons, that the conspiracy pleaded in paras 42 and 43, based on an alleged agreement to contravene s 52 the Trade Practices Act, should also be struck out, quite apart from the omission to plead any overt acts, which by itself justifies this course.

As to paras 50 and 51, while an agreement to affect the market price of anything publicly sold by the use of deceit or any fraudulent means would be actionable at common law both as a conspiracy of the first and second kind, if made with intent to harm the plaintiff and if carried into effect, that is not what those paragraphs allege. They set up instead a conspiracy to contravene s 430, ie, a conspiracy to conspire by deceit or any fraudulent means to affect the market price of anything publicly sold. Even though such a concept is tautologous, as Sheppard J observed in Allied Mills at 111, his Honour was not prepared to strike out the pleading there in question on a summary application. However, in the absence of sufficient particulars to show there is some foundation for this unusual allegation of an actionable agreement anterior to a conspiracy within s 430, I would not be prepared to allow this allegation to stand, even if there was no other reason to strike it out.

Much of the pleading of the Council's s 45 case must be struck out. There are many indications in the pleading of the author's lack of proper attention to the job in hand. While some may not constitute a significant deficiency, together they support the striking out of the entire pleading. By way of example, I mention the following: the core allegation in para 43 is that the respondents entered into an agreement to contravene s 52 the Trade Practices Act, by reason of what is said in para 34, yet that paragraph contains only an allegation that the respondents engaged in certain conduct subsequent to the time or times they are alleged to have made certain agreements; there is the unexplained change from reference to "arrangements and understandings" to "arrangements or understandings" (cf para 12 and para 16); there is an unnecessary reference in para 19, which deals only with direct supplies to the applicant, to "other consumers"; there is the apparently unintentional omission from para 10 of a competition allegation corresponding to that in para 8(ii). Finally, there is the apparent lack of concordance, in the respects listed in the schedule prepared by counsel for the third respondent, between the date parameters of the cartel and the dates of certain of the direct and indirect supplies the subject of the applicant's particulars and the apparent lack of concordance between the product parameters referred to in para 5 of the pleading and the grade of some of the direct supplies particularised. In the context of a pleading which betrays in many respects lack of proper thought by the pleader, I do not regard these matters as trivialities to be brushed lightly aside.

To prepare a proper pleading, even one confined to the respondents' s 45 contraventions, the Council will have to commit some resources to the further investigation of the case now. That is not too burdensome a task, even for the Council, as the representative of ratepayers, to have to undertake: the Trade Practices Commission's proceedings show that the Council may well be able to maintain, for the benefit of the ratepayers, a claim for a large amount of damages and it is apparent that the Council has access to material relied on by the Commission in the penalty proceedings.

That there is good reason for thinking that the respondents have engaged in conduct in contravention of s 45 the Trade Practices Act which may well give the applicant the right to substantial damages does not absolve the applicant from making reasonable efforts to identify, by a carefully thought out pleading, the conduct it seeks to prove against the respondents and how that conduct caused it the substantial losses it may well have suffered: each respondent is still entitled, by the applicant being held to its pleading obligations, not to be exposed to unnecessary and potentially significant expense in pleading to, and giving discovery in respect of, a case not properly investigated and so not properly pleaded by the applicant. The case is a fairly complex one and there may well be areas where the applicant cannot identify, in proper fashion, the precise case it hopes to make out until after discovery. But the Council's current pleading, even read with the explanatory correspondence and particulars, does not discharge its obligation to plead in proper fashion the case it wants to take to trial.

Since I consider that so much of the applicant's current pleading is embarrassing, I think the proper course is to strike out the whole pleading. Cf Trade Practices Commission v Australian Iron & Steel Pty Ltd (1990) 22 FCR 305 at 323. The applicant will have, as I have indicated, leave to deliver an amended pleading in respect of the s 82 Trade Practices Act claim based on certain contraventions of s 45. It is, of course, also fully entitled, if it wishes, to apply for leave to amend to raise any other case, including any other causes of action open to it, provided it does so on proper materials.

I certify that this and the preceding twenty-five (25) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond.

Associate: Dated: 26 June 1998 Counsel for the Applicant: Mr JA Griffin QC and Ms RL Seiden

Solicitor for the Applicant: Attwood Marshall

Counsel for the First Respondent: Mr ID Callinan QC and Mr PL O'Shea

Solicitor for the First Respondent: Minter Ellison

Solicitor for the Second Respondent: Blake Dawson Waldron

Counsel for the Third Respondent: Mr DJ Jackson QC

Solicitor for the Third Respondent: Mallesons Stephen Jaques

Counsel for the Fourth Respondent: Mr JE Gallagher QC and Mr JK Bond

Solicitor for the Fourth Respondent: Allen Allen & Hemsley

Date of Hearing: 17 December 1997