Australian Competition and Consumer Commission v Australian Egg Corporation Limited

James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458 Meissner v The Queen [1995] HCA 41; (1995) 184 CLR 132 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 R v Mohan [1976] 1 QB 1 Re Elgindata Ltd (No 2) [1993] 1 All ER 232 Re: Wilcox; Ex parte Venture Industries Pty Ltd (No 2) [1996] FCA 1132; (1996) 72 FCR 151 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 SPI PowerNet Pty Ltd v Commissioner of Taxation (No 2) [2014] FCA 356 Thalari v The Queen [2009] NSWCCA 170; (2009) 75 NSWLR 307 Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 256 Trade Practices Commission v George Weston Foods Ltd (No 2) (1980) 43 FLR 55 Trade Practices Commission v Mobil Oil Australia Ltd (1984) 3 FCR 168 Trade Practices Commission v Tubemakers of Australia (1983) 47 ALR 719 Van Hemmen v State of Queensland [2007] FCA 1185

WHITE J: 1 The Australian Competition and Consumer Commission (the ACCC) alleged that the six respondents to this proceeding had attempted to induce the 19 egg producers present at a meeting on 8 February 2012 (the Summit) to make an arrangement, or to enter into an understanding, to limit the supply of eggs which would contravene s 44ZZRJ of the Competition and Consumer Act 2010 (Cth) (the CC Act). 2 Shortly before the commencement of the trial of the liability issues, the fourth respondent, Mr Lendich, agreed with the ACCC that, in the period between 19 January and 8 February 2012, he had attempted to encourage egg producers to enter into an arrangement, or to arrive at an understanding, containing a provision with the purpose of preventing, restricting or limiting the production or supply of eggs. Mr Lendich also agreed that, at the time of his attempt, the egg producers were corporations and that two or more were in competition with each other in relation to the production and supply of eggs. The ACCC and Mr Lendich agreed on certain facts relating to the conduct, the orders to be made in respect of the conduct (including the penalty) and on submissions to be made jointly to the Court in support of the agreed orders. 3 I directed that the submissions of the ACCC and Mr Lendich be heard after the Court had delivered judgment on the ACCC claims concerning the remaining respondents. The trial against those respondents then proceeded. 4 In the judgment delivered on 10 February 2016, I found that the ACCC had not established its allegations against the remaining respondents: Australian Competition and Consumer Commission v Australian Egg Corporation Limited [2016] FCA 69. 5 These reasons concern three remaining matters: (a) the ACCC claims against Mr Lendich; (b) the applications by the successful respondents for their costs of the proceedings and the claim of the ACCC that it should have its costs in respect of an element of its claim which it contends three respondents had, unreasonably, refused to admit until shortly before the trial; (c) the applications by certain non-parties for the costs which they incurred in applying for confidentiality orders in respect of information they had provided to the ACCC pursuant to s 155 of the CC Act and which was to be discovered by the ACCC in the proceedings. 6 These reasons are to be read in conjunction with the principal reasons and assume a knowledge by the reader of them. I will endeavour to avoid repetition.

The claim against Mr Lendich 7 It is necessary to set out the course of events with respect to Mr Lendich's agreed resolution of the claim against him because, despite joining in a submission that the Court should make the orders he had agreed with the ACCC, Mr Lendich submitted that the Court should not be satisfied that it was appropriate to make those orders. This was a curious submission and brought to mind the saying that those who sit straddling a fence usually find themselves in an uncomfortable position. 8 The joint submissions provided by the ACCC and Mr Lendich at the commencement of the trial attached minutes of the orders the parties proposed and a Statement of Agreed Facts and Admissions (SOAFA). 9 The ACCC and Mr Lendich submitted then that the Court should make a declaration and orders for the imposition of a pecuniary penalty as follows: [1] Between 19 January and 8 February 2012, the fourth respondent (Zelko Lendich) attempted to encourage certain egg producers in Australia to enter into an arrangement or arrive at an understanding containing a provision to limit the production for supply and the supply of eggs in Australia in circumstances were: (a) at the time of the attempted encouragement: (i) each of the egg producers was a corporation within the meaning of s 4 the Competition and Consumer Act 2010 (Cth) (CCA); (ii) at least two of the egg producers were in competition with each other in relation to the production for supply and the supply of eggs; and (b) the provision of the arrangement or understanding, if entered into, would have the purpose of directly or indirectly preventing, restricting or limiting the production for supply and the supply, or the likely production for supply and the likely supply, of eggs by any or all of the egg producers, and, by doing so, Zelko Lendich attempted to induce the egg producers to contravene s 44ZZRRJ of the CCA. [2] Zelko Lendich pay to the Commonwealth of Australia a pecuniary penalty in the sum of $120,000 within 90 days of this order in respect of the contravention of the CCA declared by the Court in paragraph 1 above. 10 In addition, the ACCC and Mr Lendich submitted that the Court should make an order that Mr Lendich undertake, at his own expense, particular forms of training and that he make a contribution to the ACCC's costs. 11 Following the delivery of the principal judgment, the ACCC and Mr Lendich filed on 26 February 2016 an amended joint submission. The amendments took account of the decision of the Full Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 and the decision of the High Court on appeal in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (Commonwealth v DFWBII) concerning the ability of parties to civil penalty proceedings to agree upon, and make submissions concerning, the penalty to be imposed. There were no other material changes. 12 The amended submissions indicated that they were made in support of the proposed resolution of the claim against Mr Lendich and that the parties had agreed, for the purposes of s 191(2) of the Evidence Act 1995 (Cth), on the facts set out in the SOAFA at [3]-[42]. The SOAFA contained an express admission by Mr Lendich that he had made the attempt to induce a contravention of Pt IV of the CC Act alleged by the ACCC. In addition, the SOAFA contained numerous other acknowledgments by Mr Lendich of his conduct. The parties referred to the attempt admitted by Mr Lendich as a "contravention" and it is convenient to do likewise in these reasons. 13 Three days after the amended joint submissions were filed, Mr Lendich filed a document entitled "Supplementary Submission of the Fourth Respondent". In this document, he submitted that the Court had to assess, in the light of the Court's findings in the principal judgment and the facts agreed in the SOAFA, whether it was appropriate to accept his admissions and to make the proposed declarations. Mr Lendich referred the Court to the judgment of Gray J in ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794; (2007) 160 FCR 321 at [49] and submitted that the Court should assess whether his admissions should be accepted, or whether there is "reason to doubt the correctness" of his admissions as to the legal consequences of the facts agreed in the SOAFA. The submission concluded with the following two paragraphs: [8] If the Court is satisfied that the admission should be accepted and that Mr Lendich's conduct did amount to a contravention of the Act, Mr Lendich submits that the Joint Submission should also be accepted, and the proposed declarations and penalties should be ordered. [9] If, however, the Court is not satisfied that Mr Lendich's conduct amounted to a contravention of the Act, the proposed relief should not be ordered. 14 The supplementary submission did not indicate on its face that Mr Lendich was seeking to resile from the joint submissions, from the agreement which he had reached with the ACCC, or from the facts which he had admitted. It seemed to be no more than a reminder that the Court must be satisfied that the facts he had admitted justified the proposed orders. 15 In the oral submissions 23 days later, Mr Lendich's position shifted. He said that he was not seeking to resile from the facts he had agreed with the ACCC, but repeated that the Court was obliged to consider whether those facts warranted the declaration and other relief which he had agreed with the ACCC. In support of this submission, counsel referred to Leahy Petroleum at [43]-[50] (Gray J) and to Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWRL 492 at [148]-[160] (Heydon JA). In particular, counsel noted the observation of Heydon JA at [157] that "the court is not bound to act on admissions made by the parties or on [statements] of fact agreed between the parties". 16 In Leahy Petroleum, Gray J said at [51]: [A]n admission may amount to a concession as to a matter of law, or a conclusion on a matter of mixed fact and law. If law is complex, or there is difficulty in determining on which side of an indistinct line the particular facts fall, it is necessary to be wary of accepting an admission conflicting with conclusions drawn on the evidence, and with the benefit of full submissions as to the law. 17 Mr Lendich referred to the passages in the principal judgment in which the Court found that the ACCC had not proven that the other respondents had the requisite intention for an attempt to induce the alleged contravention of s 44ZZRJ. He submitted that the facts which he had agreed with the ACCC did not take proof of the ACCC case any further in his case, with the effect that, if the Court gave effect to his agreement with the ACCC in the way contemplated by the joint submissions, there would be inconsistent verdicts. 18 Thus, by the conclusion of his oral submissions, Mr Lendich's position was that, despite the joint submissions and the SOAFA filed on 26 February 2016, the Court should not make the declaration and other orders which he had joined with the ACCC in presenting to the Court.

The agreed penalty 32 Separate consideration needs to be given to the agreed penalty. The decision of the High Court in Commonwealth v DFWBII indicates that it is appropriate for a regulator such as the ACCC to agree a penalty with a contravenor and for the parties to submit that the Court should impose that penalty. 33 One of the matters bearing on the appropriateness of the agreed penalty in the present case is the credit to be granted to Mr Lendich for his admission before trial of his culpability, his agreement with the ACCC and his willingness to facilitate the course of justice. Considered by themselves, these were significant matters as they involved a display of honesty and, given the attitude of his fellow respondents, some courage. They are matters which would warrant a marked reduction in the penalty which would otherwise be appropriate. 34 However, this is where the discomfort resulting from Mr Lendich's attempt to sit on both sides of the fence becomes apparent. By his submissions at the penalty hearing, Mr Lendich sought to avoid the consequences of his admissions even though he knew that he had had the proscribed intention and had formally admitted it. To my mind, that detracts from the sincerity which the Court would otherwise have accepted was indicated by his admission and cooperation with the ACCC and, in turn, requires the Court to consider closely whether the agreed penalty of $120,000 may be inadequate. 35 Although my mind has wavered about this, I have concluded ultimately that the amount agreed by the parties for the penalty is appropriate, and within the permissible range. In reaching this conclusion, I have had regard to the principles discussed in the authorities to which the joint submission referred, namely, Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 256 at 259; NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 at 290-1, 298-9; ACCC v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 at [18]; Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 at 48,626.

Farm Pride's claim for indemnity costs 40 Farm Pride submitted that the ACCC should pay its costs on a party/party basis up to and including 2 April 2015 and thereafter on an indemnity basis. 41 In the ordinary case, the Court will exercise the discretion under s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) to order that costs following the event be paid on a party/party basis. The Court may, however, depart from that basis if there is "some special or unusual feature in the case" justifying that course: Re: Wilcox; Ex parte Venture Industries Pty Ltd (No 2) [1996] FCA 1132; (1996) 72 FCR 151 at 152-3. 42 Farm Pride submitted that such a feature exists presently because of a so-called Calderbank offer it had made to the ACCC on 30 March 2015. Before that date, Farm Pride had made without prejudice offers of settlement to the ACCC which it relied upon as part of the background to its offer. By the letter of 30 March, Farm Pride offered to consent to orders having the following effect: (i) A declaration in the terms sought by the ACCC with respect to Farm Pride in its originating application; (ii) An injunction with a term of five years in the terms sought by the ACCC with respect of Farm Pride in the originating application; (iii) Payment by Farm Pride of a pecuniary penalty of $400,000; (iv) The establishment by Farm Pride of a compliance program in the terms sought by the ACCC in its originating application; (v) Payment by Farm Pride to the ACCC of the sum of $100,000 on account of its costs. 43 The 30 March letter concluded with following: This offer is made in accordance with the principles applied in Calderbank v Calderbank [1975] 3 All ER 333 and Cutts v Head [1984] Ch 290 and as developed in subsequent case law. In the event that the offer is not accepted, Farm Pride will rely on this letter in support of an application for its costs on an indemnity basis. This offer will remain open for acceptance for 14 days from the date of this letter. 44 The ACCC responded to the offer by an email of 2 April 2015 which was marked "Without Prejudice Save as to Costs". The substance of the ACCC response was as follows: The ACCC has considered your client's offer but is not prepared to accept it. In our discussion on 24 February 2015, we conveyed the ACCC's without prejudice offer of $1.25m, with an upfront payment, and a willingness to consider a payment plan if that would assist your client in making the payment. Your client's current offer with respect to penalty and costs has not substantially changed from that indicated in a supplementary submission dated 17 February 2015, notwithstanding the indication of the ACCC's position that was conveyed on 24 February 2015. While it is apparent that the parties' respective positions on this issue remain far apart, the ACCC is willing to continue settlement discussions if there is a genuine prospect for negotiation to occur. Are you able to advise whether your client's offer of 30 March 2015 represents its final position in relation to penalty and costs? 45 It seems that there were no further discussions with respect to resolution of the claim against Farm Pride and the trial of the action commenced on 20 April 2015. 46 Farm Pride submits that its 30 March 2015 offer was reasonable; that it has obtained an outcome which bettered that offer; and that the ACCC rejection of the offer was imprudent or unreasonable, such as to make it appropriate for it to have costs on an indemnity basis after the date of the rejection. 47 The question for the Court's determination is whether the particular facts and circumstances relating to the ACCC allegations involving Farm Pride and its rejection of the 30 March 2015 offer warrant the making of an order for payment of costs other than on a party/party basis: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 234; ACCC v Australian Safeway Stores Pty Ltd (No 3) [2002] FCA 1294 at [22]. 48 Although an unreasonable or imprudent rejection of an informal offer of settlement made by letter will often warrant a court departing from the usual order that costs be paid on a party/party basis, this is not the single criterion on which the exercise of the Court's discretion turns. Farm Pride referred in this respect to the observation of Doyle CJ and White J in BHP Billiton Ltd v Parker [2012] SASCFC 73; (2012) 113 SASR 206 at [263]: It is also important to bear in mind that the question is not simply whether, having regard to a Calderbank letter, a court should order the defendant to pay costs on a basis other than as between party and party. The court will be exercising a broad discretion, and the making of an informal offer of settlement is merely one of a number of matters relevant to the exercise of that discretion … And a Calderbank letter is but one instance of how a party might make an offer which has been "imprudently refused" … Imprudent refusal of an offer of settlement is often raised as the basis for an application for an order for costs on a basis other than as between party and party, but once again it has to be borne in mind that while "imprudent refusal" conveniently encapsulates an approach to the exercise of the discretion, in the end the issue is whether the discretion should be exercised to depart from the usual basis of an order for costs. (Citations omitted) 49 Sackville J referred to similar considerations in ACCC v Amcor Printing Papers Group Ltd [2000] FCA 163 at [9]: The authorities in this Court have accepted that the rejection of a Calderbank offer (in the sense of an offer to settle specifically made with a view to being used, if not accepted, in relation to a costs application) does not of itself justify an order for costs on an indemnity basis if the offeree fails to secure a more favourable outcome in the proceeding … The significance to be attached to a Calderbank offer depends on its terms and the circumstances of the litigation, including the time at which the offer is made and the understanding of the parties as to the strengths and weaknesses of their respective cases … (Citation omitted) 50 The authorities indicate that the matters bearing upon whether the rejection of an informal offer of settlement may warrant a later order of indemnity costs include: (i) the stage the proceedings had reached when the offer was made; (ii) the time allowed to the offeree to consider the offer; (iii) the extent of the compromise offered; (iv) the offeree's prospects of success, assessed as at the date of the offer; (v) whether the offeree should have appreciated that its claim would fail; (vi) whether the offeror explained why it considered the offeree will fail or, at least, not better the offer; (vii) the clarity with which the terms of the offer are expressed; and (viii) whether the offeror foreshadowed an application for indemnity costs in the event of the rejection of its offer. 51 I respectfully agree with the observation of Pagone J in SPI PowerNet Pty Ltd v Commissioner of Taxation (No 2) [2014] FCA 356 at [3] concerning factors of this kind: Those factors are not to be applied slavishly but provide indicators to determine whether an offer had been rejected unreasonably. One may add to those factors such matters as may now relevantly arise by virtue of ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) which imposes overarching obligations on parties and their lawyers to conduct and dispose of proceedings efficiently. 52 The ACCC acknowledged that the only material difference between the parties concerning Farm Pride's informal offer had been the amount of the proposed penalty. 53 In resisting Farm Pride's application for indemnity costs, the ACCC relied on the following: (a) the civil penalty nature of the proceedings and its position as the regulator responsible for enforcement of the CC Act. Amongst other things, this meant that it did not have the freedom to agree upon an appropriate penalty in the same way as does a private litigant in civil litigation. It can agree a penalty, but it is for the Court to determine its appropriateness. Its role in making submissions to the Court in support of the appropriateness of a proposed penalty requires it to be satisfied that the penalty in a proposed resolution is within an appropriate range of penalties for a contravention of the kind in question; (b) its commencement and pursuit of the case against Farm Pride had been reasonable; (c) its rejection of the 30 March 2015 offer had not been peremptory; (d) its rejection of the offer had not been unreasonable as a penalty of $400,000 would have been insufficient had it made out its case; (e) it had been open to Farm Pride upon the rejection of its offer to come to the Court, admit its contravention with a statement of the basis for that admission and then to have submitted that a penalty of $400,000 was appropriate, and Farm Pride had not done so. 54 In my opinion, some of these matters are of no significance. The circumstance mentioned in (e) that Farm Pride could have chosen, after 3 April 2015, to admit a contravention and make submissions in support of a proposed penalty of $400,000 is, to my mind, immaterial. In the first place, that circumstance does not bear upon the reasonableness, or otherwise, of the ACCC rejection of the offer which Farm Pride did in fact make. Secondly, the submission overlooks that what Farm Pride was proposing was an agreed resolution of the proceedings pursuant to which submissions would be made to the Court by both the ACCC and it in support of the agreed position. It was seeking to avoid a circumstance in which its fate would be at large. 55 Similarly, I do not regard the issue mentioned in (b) as being pertinent. The question is not whether it was appropriate for the ACCC to commence and pursue the allegations, but whether, having done so, it was unreasonable for the ACCC not to have accepted Farm Pride's proposed resolution of the claims against it. 56 Farm Pride submitted that the circumstance that its offer had been rejected "in a mere three days" suggested "a peremptory rejection by a closed mind". This was a submission that the ACCC had not given proper consideration to its offer. I do not regard the time at which the ACCC rejected the Farm Pride offer to be significant for present purposes. The ACCC had been in discussions with Farm Pride about a possible resolution for some time before 31 March 2015 and had had ample opportunity to consider the issues concerning a resolution of its claims against Mr Lendich. The Farm Pride offer did not come out of the blue. There is no reason to suppose that, in the context of the negotiations which had preceded the Lendich offer, a period of three days was inadequate for proper consideration by the ACCC of the offer. The circumstance that the ACCC rejected the offer within three days is just as consistent with it considering the offer and its implications in an efficient way and making a decision expeditiously. 57 This means, to my mind, that the principal matters bearing upon the Farm Pride application for indemnity costs are the ACCC's position as regulator, the civil penalty nature of the proceedings, and the reasonableness or otherwise, of the ACCC's rejection of the offer. 58 The first two matters are important considerations. Allsop J in ACCC v Baxter Healthcare Pty Ltd [2005] FCA 860 at [12] said: A rejection of an offer in a penalty case such as this brings with it considerations of public responsibility for the administration of an important piece of Commonwealth legislation that do not attend an offer in a civil suit. 59 In his costs decision in ACCC v Leahy Petroleum Pty Ltd [2007] FCA 1844, Gray J also referred to particular considerations bearing upon the determination of applications for costs orders against the ACCC: [24] The ACCC is a statutory body, established by s 6A of the Trade Practices Act. … [T]he ACCC has cast upon it significant responsibilities on behalf of the public, to ensure as far as practicable that there is compliance with the provisions of the Trade Practices Act. When the ACCC has commenced and pursued a proceeding in respect of alleged contraventions of a provision of the Trade Practices Act, and there is no suggestion that it has acted with any ulterior motive, the Court should not be quick to award costs against it on anything other than the usual party-party basis when the ACCC has suffered a loss in the proceeding. Excessive readiness to force the ACCC to compensate the winning party to a greater extent than the normal party-party costs incurred might operate as a deterrent to the ACCC against bringing proceedings in the exercise of its public functions. 60 Those observations are, in my view, as pertinent now as they were when made in 2007. 61 Several of Farm Pride's submissions went to the appropriateness of its proposed penalty of $400,000. It emphasised that the allegation made against it was of an attempt only, and not of a completed contravention of s 44ZZRJ; that the proposed penalty of $400,000 was a substantial sum and more than three times the penalty which the ACCC later agreed with Mr Lendich; that the ACCC had the "comfort" of knowing that, if the Court considered that a penalty of $400,000 was inappropriate, it had the ability to impose an increased penalty; and that it had, in its earlier correspondence, set out in some detail matters bearing upon the reasonableness of its proposed penalty. 62 The Court should be wary about determining the likely ultimate outcome of proceedings for the sole purpose of determining questions of costs in relation to those proceedings: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194 at 201. This counts against the Court considering in any detailed way now the adequacy of Farm Pride's proposed penalty. It is sufficient to say that, in the circumstances as known to the Court presently, and on that basis only, the proposed penalty does not appear to be plainly unreasonable, especially taking into account the reduction in penalty to which Farm Pride may have been entitled for its acknowledgement of its contravention. 63 Although with some hesitation, I have concluded that it is inappropriate to order the ACCC to pay costs to Farm Pride on other than a party/party basis. I have reached that conclusion having regard to the following matters. First, the special position of the ACCC as a public regulator. Secondly, although it seems that the ACCC did not have any regard to "litigation risk", there is an absence of any indication that it acted in a highhanded manner or had sought to take advantage of its position as a publicly funded body in litigation with private entities and individuals. 64 Thirdly, the issue upon which the ACCC failed at trial was proof that Farm Pride had the requisite intention. Two considerations suggest that it was not unreasonable for the ACCC, as at 3 April 2015, to think that it had reasonable prospects of establishing that issue. First, there is the admission by Farm Pride's Managing Director, Mr Lendich, only two weeks later that he did have the intention alleged by the ACCC. The second is that the ACCC allegations were made against several respondents. Although the individual respondents had each invoked the privilege against self-incrimination, there was, at 3 April 2015, the prospect that each would give evidence in the trial with the consequence that the ACCC would be able to adduce additional evidence from them, including evidence as to their respective intentions. The rationale for the Court's caution in upholding an application for summary judgment by one of several defendants discussed in authorities such as Trade Practices Commission v George Weston Foods Ltd (No 2) (1980) 43 FLR 55 at 62 (Davies J); James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 401 (Toohey J); and J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458 at 465 (French J) is pertinent in the present context, namely, that account should be taken in proceedings in which there are multiple respondents of the possibility that evidence adduced by one or more respondents may implicate others. 65 Finally, I note that in Commonwealth v DFWBII at [109], Keane J suggested that it may be appropriate for a public regulator to take account of litigation risk in the settlement of litigation brought by that regulator. The parties in the present case did not address submissions to this question but, in any event, because the judgment in Commonwealth v DFWBII was delivered on 9 December 2015, the ACCC did not as at 3 April 2015 have the benefit of the reasons of the High Court on this point. 66 For these reasons I consider that the ACCC should pay Farm Pride's costs on a party/party basis.

Costs reduction because of a refusal to admit facts? 67 The ACCC seeks a reduction of the costs it must pay to Farm Pride, IMS and Mr Ironside on account of their refusal, until just before trial, to admit a matter. It submitted that the refusal had been unreasonable and had caused it to incur significant unnecessary expense. 68 In order for the ACCC to make out the attempt it alleged, it had to establish that at least two of the attendees at the Summit were, or were likely to be, in competition with one another in relation to the production for supply and the supply of eggs: s 44ZZRD(4) (the Competition Condition). 69 The ACCC Statement of Claim (SoC) pleaded the following in relation to this element: [13] At all material times, and in particular between 26 November 2010 and 9 February 2012, at least two of the Specified Members were, or were likely to be, in competition with each other in relation to the production for supply and the supply of eggs to wholesale or retail businesses in the regions of South Australia (SA), Western Australia (WA), the Northern Territory (NT), Queensland (QLD), New South Wales (NSW), Victoria (VIC) and Tasmania (TAS) as denoted in Schedule A. 70 Schedule A was in the form of a table listing each Specified Member, the name of the person representing the Specified Member who attended the Summit, and the State(s) or Territory in which the Specified Member was in competition with other Specified Members. 71 The AECL and Mr Kellaway admitted the allegation in [13] of SoC. However, each of the defences of Farm Pride (15 August 2014), IMS (18 August 2014) and Mr Ironside (18 August 2014) denied the allegation in SoC [13], while adding pleas as to the activities of Farm Pride and IMS respectively. Farm Pride's defence to SoC [13] was as follows: [13] In answer to paragraph 13, the Third Respondent says as follows: [13.1] The Third Respondent refers to and repeats paragraph 5.2 above. [13.2] At all material times the Third Respondent: [13.2.1] produced eggs for supply only in Victoria and New South Wales; [13.2.2] supplied eggs to wholesale or retail businesses throughout Australia, but predominately in New South Wales, Victoria and Queensland; and [13.2.3] engaged in other commercial activities in relation to value-added egg products throughout Australia. [13.3] The Third Respondent does not admit the allegations in paragraph 13 insofar as it relates to the conduct of the other respondents. [13.4] The Third Respondent otherwise denies the allegations in paragraph 13. 72 The pleas of IMS and Mr Ironside to SoC [13] were (relevantly) identical: [13] In response to paragraph 13, it/he: (a) admits that at all material times it/Twelve Oaks Poultry carried on business as an egg producer based in Queensland; and (b) otherwise denies the allegation in paragraph 13. 73 None of these defences admitted the central allegation made by the ACCC in SoC [13]. 74 The ACCC contends that, on any reasonable view, the question of whether at least two or more of the attendees were in respect of the identified States and Territories in competition with one another should not have been an issue. The denials of Farm Pride, IMS and Mr Ironside had the consequence that it had had to undertake extensive work involving significant expense, to prove the Competition Condition before, by amended defences filed 12 days before the commencement of the trial, each of Farm Pride, IMS and Mr Ironside admitted that the Condition was satisfied. 75 Upon this basis, the ACCC submits that it should not have to pay the costs incurred by Farm Pride, IMS and Mr Ironside concerning the Competition Condition and that each should pay the costs which it incurred in obtaining the evidence to prove that element of its claim. 76 The work of the ACCC directed to this issue included the following: (a) discovering to the respondents the transcripts of examinations of various egg producers conducted pursuant to s 155 of the CC Act; (b) by correspondence dated 3 October 2014, informing the 74 individuals and companies who had been examined pursuant to s 155 or which had produced documents to it pursuant to s 155, as the case may be, of the discovery orders made by the Court on 18 September 2014 which gave them an opportunity to apply for orders to protect the confidentiality of the information they had provided to the ACCC and which it would be disclosing to the respondents; (c) dealing with telephone calls and correspondence from the egg producers referred to in (b) who raised concerns about the disclosure of their confidential information; (d) engaging in extensive correspondence with the respondents between 10 October 2014 and 27 October 2014 concerning possible agreement as to means of addressing the concerns of the egg producers; (e) considering and addressing interlocutory applications by seven non-party egg producers seeking orders for the protection of their confidential information which it was otherwise obliged by the Court's orders to disclose to the respondents; (f) attending at a substantial directions hearing on 29 October 2014 at which the applications of the seven egg producers and some of the respondents for orders protecting the confidentiality of their information were addressed; (g) preparing, filing and serving on 6 November 2014 a substantial notice to admit facts directed to the competition issue; (h) considering the notices of dispute filed by the respondents in response to the notice to admit facts; (i) filing, on 17 November 2014, an interlocutory application and supporting affidavit seeking leave to rely at trial on affidavits filed by a number of the non-parties in October 2014; (j) addressing the means by which the evidence from the egg producers on the competition issues was to be adduced at trial, including addressing this as a significant topic at the directions hearing on 3 February 2015; (k) obtaining leave to issue, and subsequently issuing, subpoenas to seven egg producers requiring them to produce documents relating to the Competition Condition; (l) issuing subpoenas to individual egg producers requiring them to attend at trial to give oral evidence; (m) addressing until April 2015, and at the pre-trial directions hearing on 8 April 2015, issues relating to the evidence to be given by the proposed egg producer witnesses, including identifying the portions of affidavits from six egg producers to be relied upon at trial, preparing outlines of the evidence to be adduced from the egg producer witnesses generally, and obtaining leave to inspect, and inspecting, documents produced on subpoena; (n) considering between 12 November 2014 and April 2015, various aspects of the evidence to be presented in support of its proof of the Competition Condition. 77 The evidence did not disclose the work of the respondents in relation to the Competition Condition. It is unlikely to have been as extensive as that of the ACCC but, nevertheless, is likely to have been significant. 78 The discretion with respect to costs granted by s 43 of the FCA Act may be exercised so as to deprive a successful party of some of its costs and, further, to require that party to pay some of the costs of the unsuccessful party: Cretazzo v Lombardi (1975) 13 SASR 4 at 11-12. In particular, a successful party which has unreasonably or improperly raised issues on which it has failed may be ordered to pay the costs of the other on those issues and may be deprived of part of its own costs: Re Elgindata Ltd (No 2) [1993] 1 All ER 232; Cummings v Lewis (1993) 41 FCR 559 at 603. 79 In Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; (2015) 327 ALR 192 at [6], the High Court deprecated applications for an apportionment of costs on an issue-by-issue basis requiring the exercise of the costs discretion to take into account the issues upon which the successful party has succeeded, and not succeeded. Nevertheless, there are cases in which such an apportionment is appropriate. Allsop J referred to one such circumstance in Baxter Healthcare at [10] when he said that "unnecessary stubbornness, unreasonable taking of points and a refusal to co-operate in the efficient running of litigation (including penalty litigation) should be able to be dealt with in a flexible way by orders for costs". 80 Farm Pride, IMS and Mr Ironside raised a number of matters in resisting the ACCC contention. These were to the effect that, at the time they filed their respective defences, they had insufficient knowledge to be able to make an admission of SoC [13]; that the identification of competition in a market involves complex questions; that it had been inappropriate for the ACCC to assume that the markets in which egg producers were in competition were defined by State or Territory boundaries; that it had been inappropriate for the ACCC to seek admissions of facts in the liability trial which were more pertinent to issues of penalty in the event that the contraventions were established; and that having regard to the fact that these were penalty proceedings, it had been open to them to require the ACCC to prove its case (citing Daniels Corporation International Pty Ltd v ACCC [2002] HCA 49, (2002) 213 CLR 543 at [31] and Rich v ASIC [2004] HCA 42, (2004) 220 CLR 129 at [24]). In addition, the respondents referred to correspondence with the ACCC in which they had indicated a willingness to admit that Farm Pride was, or was likely to be, in competition with Days Eggs Pty Ltd in relation to the supply of eggs in South Australia, which they had contended was sufficient for proof of the Competition Condition. 81 I consider that the ACCC submission should be upheld. The contention that the subject matter of SoC [13] was outside the knowledge of Farm Pride, IMS and Mr Ironside is simply implausible. None of these respondents adduced evidence at the costs hearing in support of this submission and it is belied by the evidence at the trial. Farm Pride is the third largest egg producer in Australia. It defies common sense to suppose that its directors and senior management know so little about the competition it faces in the markets in which it operates, and the egg industry generally, that it was unable readily to acknowledge the truth of the assertion made in SoC [13]. 82 Mr Ironside has had an extensive involvement in the Australian egg industry, having been Chairman of the Board of Directors of AECL since its incorporation in 2002; having previously held roles in the Australian Egg Industry Association, the activities of which were taken over by AECL upon its incorporation; having been Vice-President of the Queensland Egg Farmers' Association for about five years; having been Secretary of the North Queensland Poultry Farmers' Association from about 1977 to 1990; having held the position of Financial Controller in the International Egg Commission from 2009 to date; and having been President of Egg Farmers Australia from 2010 to date. Again, it defies common sense to suppose that Mr Ironside was not able readily to recognise the truth of the ACCC assertion in SoC [13]. Given Mr Ironside's background and experience, I am not willing to act on a bare submission from the Bar table that Mr Ironside did not have this knowledge. Further, I am satisfied that it is appropriate to attribute to IMS the knowledge of Mr Ironside. 83 It is true, as the respondents submitted, that the identification of competition within a market can in some contexts be a matter of complexity. In some contexts and for some purposes, it can, however, be a matter which is quite straightforward and the subject of common knowledge. On my assessment, the content of SoC [13] falls clearly into the second of these categories. 84 It was not reasonable for these respondents to put the ACCC to proof of the competition condition. Farm Pride and IMS did not have the benefit of the privilege against self-incrimination and, in any event, an unreasonable failure to admit facts is inconsistent with the overarching obligation imposed by ss 37M and 37N of the FCA Act. Those provisions apply as much in penalty proceedings as to other forms of litigation. 85 The circumstance that the markets in which participants in the egg industry are engaged are not confined by State or Territory boundaries is a matter of no consequence presently and did not bear upon the ability of the respondents to make the admission of SoC [13]. 86 Finally, the ACC was entitled to regard the proposed admission that Farm Pride was, or was likely to be, in competition with Days Eggs Pty Ltd in relation to the supply of eggs in South Australia as being inadequate in the circumstances. 87 It was common ground that, in the event that the Court considered that the ACCC should have its costs resulting from the denial of SoC [13], it should be reflected in a percentage reduction of the costs to be paid by the ACCC to these respondents. It was also common ground that the reduction should take account of the costs unnecessarily incurred by the ACCC as well as denying the respondents the costs they incurred in relation to the competition issue. I agree that that is sensible, as it will facilitate the taxation of the costs to be paid, should such a taxation become necessary. 88 The ACCC proposed a reduction of 15%. The respondents submitted that the reduction should be no more than nominal and, in particular, no more than 5%. 89 It is not possible for the Court to engage in any precision in assessing the appropriate reduction as it has been provided with only limited material for the purpose. Instead, the Court has to rely upon its own general experience of costs, have regard to the extent of the work carried out by the ACCC identified earlier as well as that likely to have been carried out by the respondents, and compare the likely costs incurred in connection with the Competition Condition with the costs likely to have been incurred by the respondents generally. These were the costs of a seven day trial, including the costs of substantial preparation on issues other than the Competition Condition. Account must also be made of the fact that the ACCC seeks that three respondents (effectively two because IMS and Mr Ironside had common representation) contribute to the one set of costs it incurred, so that there is the potential for it to be over compensated. 90 In those circumstances, the ACCC's proposed reduction of 15% is excessive. I consider that justice will be done by an order that the ACCC pay 90% of the costs of Farm Pride, IMS and Mr Ironside on a party/party basis.

[2014] SASC 188

[2012] SASCFC 73

[2004] HCA 42

(1983) 154 CLR 404

(2007) 160 FCR 321

(1999) 161 ALR 79

(1993) 44 FCR 194

(2012) 113 SASR 206

(1993) 46 FCR 225

(1993) 41 FCR 559

(1975) 13 SASR 4

(2002) 213 CLR 543

(2015) 327 ALR 192

(1986) 64 ALR 347

(1992) 38 FCR 458

(1995) 184 CLR 132

(1996) 71 FCR 285

(1996) 72 FCR 151

(2004) 220 CLR 129

(2009) 75 NSWLR 307

(1981) 37 ALR 256

(1980) 43 FLR 55

(1984) 3 FCR 168

(1983) 47 ALR 719

[2000] FCA 163

[2002] FCA 1294

[2007] FCA 794

[1993] FCA 585

[2015] HCA 46

[2001] NSWCA 87

[2005] FCA 1559

[2009] NSWCCA 170

[2005] FCA 860

[2007] FCA 1844

[2014] FCA 356

[2007] FCA 1185

[2002] HCA 49