Australian Competition and Consumer Commission v April International Marketing Services Pty Ltd

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First, Second and Sixth Respondents: Mr J Lockhart SC

Solicitor for the First, Second and Sixth Respondents: Minter Ellison

Counsel for the Fifth, Seventh, Eighth and Ninth Respondents: The Fifth, Seventh, Eighth and Ninth Respondents did not appear but their interests were represented by Mr J Lockhart SC.

Counsel for the Eleventh and Twelfth Respondents: Mr M Henry

Solicitor for the Eleventh and Twelfth Respondents: Clayton Utz

Solicitor for the Thirteenth Respondent: Ms S Karunakaran of PricewaterhouseCoopers Legal

Counsel for the Fifteenth Respondent: The Fifteenth Respondent did not appear.

NEW SOUTH WALES DISTRICT REGISTRY NSD 2394 of 2006

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: APRIL INTERNATIONAL MARKETING SERVICES AUSTRALIA PTY LTD ACN 106 134 472 First Respondent APRIL FINE PAPER TRADING PTE LIMITED (SINGAPORE) Second Respondent APRIL MANAGEMENT PTE LTD (SINGAPORE) Fifth Respondent KELVIN TAN Sixth Respondent JAMES LO Seventh Respondent DENNIS LIM Eighth Respondent GUS CHOO Ninth Respondent ASIA PULP & PAPER COMPANY LTD (SINGAPORE) Eleventh Respondent PT INDAH KIAT PULP AND PAPER TBK (INDONESIA) Twelfth Respondent PAUL GEORGE Thirteenth Respondent SUNIL SOOD

REASONS FOR JUDGMENT 1 These proceedings alleging contraventions of s 45(2)(a)(ii) and s 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) (the Act) and the Competition Codes as defined in s 150A and s 150I of the Act, were commenced around three years ago. The respondents can be grouped. The first to ninth respondents are companies within, or officers associated with, the April group of companies (the April respondents). The eleventh, twelfth and fifteenth respondents are companies alleged to be part of, or persons alleged to be officers of, a group referred to as the APP companies. The thirteenth respondent, Mr George, is a former officer of Asia Pulp & Paper (Australia) Pty Ltd, alleged to be a subsidiary of one of the APP companies (together the APP respondents). 2 When the proceedings were commenced, not all of the respondents were served. On 30 April 2009 the Commission applied ex parte to serve the second, fourth, fifth, seventh, eighth and ninth respondents (the April overseas respondents), the eleventh, and twelfth respondents (the APP corporate respondents), and the fifteenth respondent out of the jurisdiction. Leave to serve those parties was given and they were served. The proceedings against the fourth respondent have now been discontinued. 3 By notices of motion filed on 13 August 2009 and 11 August 2009 respectively, the April overseas respondents and the APP corporate respondents applied to set aside service, primarily on the basis that the Commission could not establish a prima facie case against them. The Commission had said that the evidence filed and served on the parties, including the overseas parties, represents the totality of its evidence in the proceedings, subject to subsequent discovery. 4 The hearing of the notices of motion commenced on 8 October 2009. On that occasion the APP corporate respondents indicated that they had substantial objections to one of the key affidavits filed by the Commission, that of Mr Lofgren. As the Commission said that it needed time to consider those objections, the matter was adjourned to 24 November 2009. 5 I was informed on 23 November 2009 that the April overseas respondents were not proceeding with their notice of motion but that the April respondents and the Commission wished to have the matter listed to seek consent orders. Accordingly, when the hearing of the notice of motion to set aside service resumed on 24 November, there was no appearance for the April respondents. The matter proceeded, but did not conclude, on that day. Reference was made in the course of that hearing to the fact that the Commission and the April respondents had listed the matter for the next day for proposed consent orders. 6 On 25 November 2009 the Commission and the April respondents tendered proposed short minutes of order and joint submissions, together with a statement of agreed facts and admissions pursuant to s 191(3)(a) of the Evidence Act 1995 (Cth) (the Evidence Act) (the Joint Document). A copy of those documents had been sent to my chambers in advance of the hearing and I had perused it briefly. The proposed orders were declarations, injunctions and penalties as against the first and second respondents, and an order dismissing the proceedings as against the first to ninth respondents, that is as against the April respondents. There was also an order for first and second respondents to contribute to the Commission's costs. 7 Counsel for the APP corporate respondents, supported by the solicitor for Mr George, applied to adjourn the hearing and objected to the tender of, and consideration of, the Joint Document. The bases for the adjournment were: · The APP corporate respondents wished to consider fully the contents of the Joint Document. · The APP corporate respondents wished to consider whether I should be the Judge to hear and determine the application being made jointly by the Commission and the April respondents (the Application) or whether they should apply for it to be transferred to another Judge. · If there were to be a determination of the Application by me, it should not yet be heard. · There is authority to the effect that the Court should not make orders in respect of the proposed short minutes of order agreed by the submitting respondents until such time as the continuing respondents have had their day in court and the Court has made final determinations and orders in relation to the continuing respondents. 8 Mr Henry, counsel for the APP corporate respondents, submitted that, where the critical issue in his clients' part-heard application to set aside service is whether or not the Commission has a prima facie case, it may not be appropriate for me to hear and determine whether the proposed consent orders should be made. He asserted a risk that I may be "infected" by knowledge of the contents of the Joint Document in my determination of the notice of motion to set aside service. He submitted that there was a risk of inconsistent findings, in particular where the Joint Document contains agreed facts and admissions concerning arrangements or understandings made at meetings at which the APP overseas respondents may have been present or represented. Mr Henry's concern was that the same arrangements or understandings, which form the basis of the proposed relief as against the April respondents, are denied by the APP overseas respondents. 9 The Commission and the April respondents opposed any adjournment. 10 I declined to adjourn the hearing of the Application. In order to complete that hearing, I said that I would provide reasons subsequently. I proceeded to hear the submissions of the Commission and the April respondents on the proposed orders, on the basis of the Joint Document.

Reasoning 11 The submissions of the APP corporate respondents raised three issues: (1) the timing of hearing of the Application; (2) whether the Application should be heard and determined by another Judge of the Court; (3) the timing of the making of the proposed declarations and orders.

The timing for making submissions on the Application 12 Mr Henry expressed concern that I was "infected" with knowledge of the fact that an agreement had been reached between the April respondents and the Commission and that they sought consent orders. If such knowledge of itself constituted "infection", I was already infected by knowledge of the fact that a joint application was being made. The inference arising from the listing of the proceedings for the making of a joint application and from the fact that the April overseas respondents had taken no further part in the application to set aside service out of the jurisdiction was apparent. That is, that some agreement had been reached. 13 As to Mr Henry's submission that I would be "infected" by reading the Joint Document or hearing submissions from the April respondents and the Commission, there was little further infection that was likely to arise from a recitation of facts and admissions that reflected the second further amended statement of claim. As the docket judge, I was already aware of the nature of the allegations in the statement of claim. Admissions of contraventions of the Act were a likely reason for the making of the Application. 14 The APP corporate respondents wanted time to consider the Joint Document. Mr Henry did not accept that a short adjournment to consider the Joint Statement which still permitted the hearing to take place that day would be sufficient. He did have some time to consider the document during the course of the hearing. Counsel for the April respondents directed the Court (and other interested parties) to the key paragraphs which reflected the allegations in the second further amended statement of claim. 15 A number of legal representatives for the Commission and the April respondents were in Court. The APP respondents did not offer to pay costs thrown away by an adjournment. 16 Counsel for the Commission said that prejudice if the hearing were adjourned may extend beyond costs. He said that, because of my familiarity with the matter, the opportunity for a joint submission and jointly proposed orders by the Commission and the April respondents might be lost if the Application were sent to another Judge. This was because more facts would likely need to be agreed in order for another Judge to understand the factual complexities of the Commission's case. 17 Of some importance was that the facts and admissions in the Joint Statement were and are relevant only to the April respondents. They are admissible only against the April respondents. They are not relevant to, nor admissible against, the APP respondents, including the APP corporate respondents and Mr George. One of a number of respondents may, for its own reasons, admit a fact in litigation but that admission does not affect the requirement for the applicant to make out a case against other, continuing, respondents. One of a number of respondents may choose to settle proceedings. That does not affect the requirement for the applicant to make out a case against the continuing respondents. One of a number of respondents may advance a particular construction of a statutory provision or admit that a statute applies to his, her or its actions. That does not mean that other respondents are in any way precluded from advancing a different construction, or denying that the statute applies to them or to their actions. A witness for one respondent may accede to a proposition in cross-examination as to the activities of company A on whose behalf he or she acted. That does not constitute an admission by or against another party to the proceedings, say company B, and another rule of evidence may operate to exclude the witness' admission as evidence against company B (s 83(1) of the Evidence Act). 18 More specifically, in this case, allegations are made that, at certain meetings referred to as "AAA Club" meetings, a number of parties arrived at arrangements which were then implemented, in contravention of the Act. The April respondents constituted one of those parties. It is alleged that the APP respondents represented another of those parties. Other parties are also alleged to have been present at the meeting. The facts and admissions in the Joint Document are framed in terms of the April respondents entering into arrangements or understandings with "competitors" or "participants" at AAA Club meetings. Nowhere are the APP respondents referred to by name or by necessary implication. None of the proposed declarations or orders name any of the APP respondents. 19 I have also been informed by the Commission that it does not intend to adduce further evidence against the APP respondents following upon the Application. In particular, it does not intend to rely on anything contained in the Joint Document as against the APP respondents. 20 I decided that it was not necessary or appropriate to defer the hearing of submissions by the Commission and the April respondents on the Application.

Whether the Application should be transferred to another Judge 21 In considering whether to transfer the Application to another Judge, a relevant factor was whether I was necessarily precluded from continuing as docket Judge and, in particular, from concluding the hearing to determine the notice of motion of the APP corporate respondents. 22 In Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2000] FCA 1258; (2000) ATPR 41-786, certain respondents, the Baker Bros parties, had admitted that the conduct engaged in by them was in breach of the Act. The Commission and those parties presented joint submissions, including a joint statement of agreed facts. Based on those facts, Goldberg J found that the agreements in issue constituted contraventions of s 45(2)(a)(i) and (ii) and s 45(2)(b)(i) and (ii) of the Act and imposed injunctions and penalties on those respondents. The other party to the alleged contract, arrangement or understanding was the SIP company, which denied the conduct alleged against them or that they had committed any contraventions of the Act. The SIP parties submitted that it may be more appropriate that a different judge hear the proceedings against them and raised an apprehension of bias. The SIP parties made an application that his Honour disqualify himself from hearing the proceeding on the ground of a reasonable apprehension of bias. It was put to Goldberg J that, as he had made findings of fact by consent and, on the basis of those facts, had found contraventions of the Act and imposed penalties in respect of that conduct, he might be seen to be influenced in adjudicating the contested findings of fact and law with respect to the SIP parties and that he might be embarrassed in coming to a different conclusion. 23 His Honour said at [18]-[20]: · He had no embarrassment or concern about hearing this matter, nor did he consider, consistently with the authorities (e.g. Livesey v New South Wales Bar Association (1983) 151 CLR 288; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70), that a reasonable and informed bystander would have a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the issues to be placed before him. · He had not made any findings of fact against the Baker Bros parties on the basis of resolving contested issues of fact. He had not seen or heard from any witnesses in order to make the proposed orders. · A statement containing agreed facts and admissions was placed before him. Those agreed facts reflected facts taken from the statement of claim. There was no need, nor did his Honour, give detailed consideration to those facts - they formed the rehearsed basis for the consideration of the appropriateness of the jointly proposed orders to be made. · There was no need to give any detailed consideration to the issue whether as a matter of law, the agreed facts and admissions correctly founded contraventions of the Act. That the allegations constituted such contraventions had been admitted. · He had expressly noted in his earlier judgment that the continuing parties were not a party to the agreed submissions or to the agreed facts or admissions. They are not to be taken as accepting any part of the statement. · No issue of credit or credibility of any witness arose at this stage. 24 In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (2001) 115 FCR 436, it was submitted to Finkelstein J that it would be inappropriate for him to retain conduct of a case in his docket with which he had partially dealt because proposed consent orders were sought against some of the respondents. It was argued that it was possible that, dependent upon the facts that would be found after a contested hearing, when it came to determining the penalties that should be imposed on the continuing respondents, his Honour may be required to deal with them on a basis that was inconsistent with how the other respondents had been dealt with (at [8]). In that context, Finkelstein J observed at [9] that the continuing respondents did not contend that, because he had dealt with some of the respondents on the basis of agreed facts, there was a reasonable apprehension that he would not decide the case against them impartially or without prejudice. His Honour noted that a submission that he should disqualify himself for apprehended bias for such a reason would not be accepted in light of what was said by Goldberg J in SIP. Rather, the ABB parties submitted that it would be "appropriate" for his Honour to remit the cases to another Judge to determine the cases against them where it was said that it was possible that conflicting and inconsistent findings may be made. Justice Finkelstein considered Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 and concluded that it would not only be inappropriate for him to refuse to hear the cases, it would also be declining to do his duty. His Honour also said that principles of case management suggested that he retain control. 25 Turning to the issue of possible conflicting and inconsistent facts, Finkelstein J noted (at [13]) that it was not unusual to have a situation where the Commission could establish the existence of certain facts against one respondent but not against another because of admissions or lack of cogent evidence. His Honour observed that, in those circumstances 'it could hardly be supposed that the docket judge, if there be no trial of facts, or the trial judge after a trial, should do anything other than take the case to its conclusion. Any other approach would produce so much disruption, delay and additional cost to the parties as to make it untenable' (at [14]). 26 The APP corporate respondents drew my attention to the two following cases which, they submitted, constitute authority for my declining to proceed to hear the joint submissions and to make the proposed orders. 27 In Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 524, Allsop J noted at [9] that there was ample authority for Judges of the Court dealing with settlements in multi-party cases to continue with the contested hearing for remaining parties. His Honour found it unnecessary to examine any of those cases to see whether the one before him was different. Having heard some days of evidence, his Honour was concerned that it might be said that there was a "residual apparent disability" in that case to deal with the same issues on a different body of evidence in the contested and uncontested matters. The Commission did not seek to tender in evidence against the continuing respondent the fact of the settlement or the agreed material but it is apparent that there was only one other party to the alleged contravening arrangement: the continuing respondent. His Honour concluded that he should not take a step in relation to a consent application 'which might in any way have the possible result of providing anyone with an argument that the hearing before [him] has in any way miscarried or in any way might be seen to demonstrate an inappropriate course of conduct in the administration of judicial power of the Commonwealth' (at 10]). In the exercise of his discretion, in the circumstances of that case, Allsop J decided to transfer the matter of the consenting respondent to a different, available, Judge. His Honour did not analyse the authorities nor the considerations discussed in SIP or ABB. 28 In Australian Competition and Consumer Commission v Woolworths (South Australia) Pty Ltd (t/as Mac's Liquor) (2003) 198 ALR 417, the proposed consent orders contained declarations that were general in their terms and specifically named the continuing party as a party to the contravening arrangement. Justice Mansfield declined to make those declarations until the whole proceedings were completed. His Honour did not have the same difficulty in respect of the proposed consent injunctions which were specific to the submitting parties and based upon the admitted conduct. His Honour said that if made, and if the continuing party successfully defended the proceedings, there would not be potential inconsistency in orders of the court, even if it were found that the continuing party was not a party to the alleged arrangement. The deferral of the making of declarations where the continuing party was the other necessary party to the admitted arrangement was consistent with Australian Competition and Consumer Commission v Australian Medical Association Western Australian Branch Inc (2001) 114 FCR 91and Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79. 29 The Commission and the April parties in this case distinguish those cases by framing the proposed declarations not in terms of any specific party to the arrangements but in terms of "competitors", not necessarily any of the APP parties. 30 The conditions before Goldberg and Finkelstein JJ substantially mirrored the considerations before me. I did not consider that the fact that I was part-heard in the notice of motion to set aside service on the APP corporate respondents, nor the fact that I was the docket judge for the proceedings, disqualified me from hearing the Commission and the April respondents on the proposed orders. It followed that there was no sufficient reason to refuse to hear those joint submissions. 31 The settlement in Liquorland had been finalised, in that it had been made public. In this case, the Commission suggested that settlement on the basis of the Joint Document, which is in the interests of the parties and the public, may not survive transfer to a Judge not familiar with the underlying facts. 32 Accepting that there is a discretion to transfer the matter to another Judge, taking into account the matters discussed in ABB and SIP, I was not satisfied that it should be exercised in this case or that, as the docket Judge, I should decline to hear the Application. 33 If no orders were made immediately on the hearing of the Application, the APP corporate respondents and Mr George could be given time to consider the detail of the Joint Document and to make further submissions. I gave the APP respondents the opportunity to consider the Joint Document and its position and to file further written submissions on the proposed orders, including the declarations. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.