Australian Competition and Consumer Commission v BlueScope Steel Limited

Introduction 1 By interlocutory application dated 3 April 2020, the applicant (ACCC) seeks leave pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (FCR) to file and serve an amended originating application in the form provided to the Court and the respondents on 20 March 2020. The first respondent (BlueScope) opposes the grant of leave. The second respondent (Mr Ellis) neither opposes nor consents to the grant of leave. 2 The ACCC's application was supported by written submissions filed on 3 April 2020. BlueScope filed written submissions in opposition on 15 April 2020 and Mr Ellis filed written submissions on 16 April 2020. The parties agreed that the Court should determine the application on the papers without the need for a hearing. 3 For the following reasons, leave is granted subject to the condition that the amendment takes effect from the date of filing the statement of claim on 19 December 2019, and not from the date of commencement of the proceeding.

The proceeding 4 The ACCC commenced the proceeding on 29 August 2019 by filing an originating application and concise statement. 5 On 1 November 2019, the Court made orders for the ACCC to file and serve a statement of claim, which the ACCC did on 19 December 2019. On 20 March 2020, BlueScope filed its defence to the ACCC's statement of claim. 6 On 23 March 2020, the Court gave the ACCC leave to file and serve an amended statement of claim which had been served on 19 March 2020. 7 The proceeding concerns BlueScope's business in Australia manufacturing and supplying various flat steel products. In general terms, the ACCC alleges that each of BlueScope and Mr Ellis attempted to induce various suppliers of flat steel products in Australia to make or arrive at an understanding that contained a cartel provision in contravention of s 44ZZRJ of the Competition and Consumer Act 2010 (Cth) (CC Act). At the time of the alleged conduct, s 44ZZRJ prohibited a corporation from making a contract or arrangement or arriving at an understanding that contains a cartel provision. Relevantly, a provision of a contract, arrangement or understanding is a cartel provision if the provision has the purpose or likely effect of fixing, controlling or maintaining the price of goods supplied by any or all of the parties to the contract, arrangement or understanding, and two or more of the parties to the contract, arrangement or understanding are in competition with each other in relation to the supply of those goods. 8 The ACCC alleges that BlueScope and Mr Ellis attempted to make or arrive at a separate understanding with each of the following 12 suppliers of flat steel products in Australia, each such understanding containing a provision that had the purpose or likely effect of fixing, controlling or maintaining the price for flat steel products supplied, or likely to be supplied, by BlueScope or the supplier concerned: (a) Southern Steel Group Pty Limited, OneSteel Pty Ltd, CMC Steel Distribution Pty Ltd, Apex Steel Pty Ltd, Selection Steel Trading Pty Ltd, Celhurst Pty Ltd trading as Selwood Steel and Vulcan Steel Pty Ltd, which were Australian distributors that acquired flat steel products from BlueScope; (b) Wright Steel (Sales) Pty Ltd, which was an Australian distributor that acquired flat steel products from overseas steel manufacturers; and (c) Shang Chen Steel Co Ltd and Shang Shing Industrial Co Ltd (which are related companies), Yieh Phui Enterprise Co Ltd, China Steel Trading Corporation and JSW Steel Ltd, which were overseas steel manufacturers that supplied flat steel products to Australian distributors. 9 The ACCC alleges that the conduct constituting the unlawful attempts began in around September 2013. The conduct continued for different periods for each of the suppliers referred to above. Relevantly for the present application, in respect of OneSteel Pty Ltd (OneSteel), the ACCC alleges that the unlawful attempts continued until June 2014. 10 In respect of the foregoing conduct, the ACCC seeks declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and the imposition of pecuniary penalties against BlueScope and Mr Ellis under s 76(1)(d) of the CC Act. In respect of the latter form of relief, s 77(2) provides that a proceeding by the Commission for the recovery of a pecuniary penalty under s 76 may be commenced within 6 years after the contravention.

The proposed amendment 11 The dispute between the parties over the grant of leave concerns a proposed amendment to the ACCC's originating application by which the ACCC seeks to add a claim for relief (both declaratory relief and a pecuniary penalty) in respect of the alleged conduct involving OneSteel. It is necessary to briefly describe the originating application and pleadings leading up to the proposed amendment. 12 The originating application filed on 29 August 2019 sought declaratory relief and pecuniary penalties for conduct constituting the unlawful attempts in relation to 11 of the 12 suppliers referred to above, the exception being OneSteel. Both the originating application and the concise statement omitted any reference to OneSteel, but made claims and allegations against the other 11 suppliers in a form that has been maintained in the current pleadings. 13 The statement of claim that was filed on 19 December 2019 added a new allegation involving unlawful attempts in relation to OneSteel. However, at that time, the ACCC did not seek leave to amend its originating application to include a claim for relief in respect of those newly added allegations. The allegations concerning OneSteel were not relevantly altered by the amended statement of claim dated 19 March 2020. 14 By its application made on 3 April 2020, the ACCC now seeks leave to amend its originating application to include a claim for relief in respect of the OneSteel allegations. It wishes to add a paragraph 1(l) to its originating application by which it seeks a declaration with respect to BlueScope that: during the period around September 2013 to June 2014 BlueScope, through the conduct of, amongst others, Ellis, attempted to induce OneSteel Pty Ltd (OneSteel), a competitor for the supply of steel products, to make an arrangement or arrive at an understanding containing a cartel provision, namely that BlueScope would publish a particular monthly price which was to be used by it and by its competitors as a benchmark for raising their prices, which had the purpose or likely effect of, fixing or controlling the price of steel products supplied or likely to be supplied by (i) BlueScope; and/or (ii) OneSteel contrary to s 44ZZRJ of the CCA. 15 By paragraph 3 of its originating application, the ACCC seeks pecuniary penalties against BlueScope under s 76 of the CC Act in respect of the conduct referred to in the originating application. Accordingly, the effect of adding paragraph 1(1) is that the application for pecuniary penalties in the originating application is extended to the alleged conduct involving OneSteel. 16 The ACCC also proposes to add a paragraph 2(l) to its originating application by which it seeks a declaration with respect to Mr Ellis in relation to alleged conduct involving OneSteel. The declaration is similar to the declaration proposed to be sought in respect of BlueScope, save that the conduct is alleged to have occurred in September 2013 (in contrast to the period September 2013 to June 2014 in the case of BlueScope). 17 The ACCC proposes to amend paragraph 3 of its originating process to exclude paragraph 2(l), implicitly accepting that it is not entitled to seek a pecuniary penalty against Mr Ellis in respect of the alleged OneSteel conduct because it occurred more than 6 years before the ACCC brought a proceeding in respect of it and it is therefore time-barred. However, no such exclusion is proposed in respect of paragraph 1(l) concerning BlueScope. Hence, BlueScope opposes the proposed amendment which would see it exposed to a claim for a pecuniary penalty in respect of the alleged OneSteel conduct, whereas Mr Ellis does not oppose the proposed amendment. 18 The dispute involves a relatively narrow question relating to the grant of leave to amend an originating application in circumstances where the amendment may raise a claim for relief after the expiry of a relevant period of limitation. It should be noted at the outset that the limitation issue only affects the claim for a pecuniary penalty. No limitation period applies to the proposed application for declaratory relief. Accordingly, the area of dispute principally concerns the question whether the amendment should be allowed without making a further amendment to paragraph 3 to exclude the claim for pecuniary relief in respect of the conduct in proposed paragraph 1(l) concerning BlueScope in like manner to the proposed exclusion in respect of the conduct in proposed paragraph 2(l) concerning Mr Ellis.

Relevant principles 19 The applicable rules governing the amendment of an originating application are contained in rule 8.21 of the Federal Court Rules 2011 which is as follows: (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: (a) to correct a defect or error that would otherwise prevent the Court from determining the real questions raised by the proceeding; or (b) to avoid the multiplicity of proceedings; or (c) to correct a mistake in the name of a party to the proceeding; or (d) to correct the identity of a party to the proceeding; or (e) to change the capacity in which the party is suing in the proceeding, if the changed capacity is one that the party had when the proceeding started, or has acquired since that time; or (f) to substitute a person for a party to the proceeding; or (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. (3) However, an applicant must not apply to amend an originating application in accordance with subparagraph (1)(g)(ii) after the time within which any statute that limits the time within which a proceeding may be started has expired. 20 The circumstances listed in r 8.21(1) are not exhaustive: McGraw-Hill Financial Inc v Clurname Pty Ltd (2017) 123 ACSR 467 (McGraw-Hill) at [23]. 21 The factors to be considered in granting leave to amend an originating application were summarised by Gleeson J in Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2015] FCA 1098 at [127]. Apart from the possible expiry of the applicable limitation period, in my view the relevant factors point in favour of the grant of leave in this case. In particular, the proposed new claims for relief are based on allegations contained in the statement of claim filed on 19 December 2019, being the first statement of claim in the proceeding and which was filed early in the proceeding. While BlueScope advanced a submission that leave should be refused because the allegations concerning OneSteel in the statement of claim are unclear or imprecise, I would not refuse leave on that basis. The allegations concerning OneSteel in the statement of claim are in the same form as in relation to the other 11 suppliers named in the pleadings. I am not persuaded that there is any lack of clarity in the pleading. Even if there was, that can be addressed in other ways and, in my view, does not provide a basis to refuse leave to amend the originating application. Accordingly, the remainder of these reasons addresses the limitation period issue. 22 While rr 8.21(2) and (3) specifically address the circumstance that an amendment might be made after the end of a relevant period of limitation, they too should not be read as an exhaustive statement of rules to be applied and due consideration must also be given to rr 1.32 to 1.35. As the Full Court observed in McGraw-Hill (at [25]): Rules 1.32 to 1.35 are important weapons in the Court's armoury to enable the overarching purpose of the "civil practice and procedure provisions" (defined in s 37M(4) of the Court Act to comprise the Rules and "any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Court") to be achieved as identified in s 37M(1) of the Court Act. The overarching purpose is to facilitate the just resolution of disputes according to law, as quickly, inexpensively and efficiently as possible. Faced with these provisions to construe r 8.21(1)(g) as an exclusive power to permit a statute barred amendment let alone a merely arguably statute-barred amendment (as in the present case) only in the circumstances permitted by r 8.21(2), is inconsistent with the language of the Rules and inimical to the overarching purpose in s 37M of the Court Act. As the present case demonstrates, given the competing arguments about when the cause of action first accrued and the potential operation of s 55(1) of the Limitation Act, if there is a reasonable argument the claim is not statute-barred, there is no reason in principle that an amendment should not be permitted, particularly if all rights are preserved by the date on which the amendment takes effect being determined as part of the final judgment rather than on an interlocutory basis. 23 Rules 1.32 to 1.35 are in the following terms: 1.32 The Court may make any order that the Court considers appropriate in the interests of justice. 1.33 The Court may make an order subject to any conditions the Court considers appropriate. 1.34 The Court may dispense with compliance with any of these Rules, either before or after the occasion for compliance arises. 1.35 The Court may make an order that is inconsistent with these Rules and in that event the order will prevail. 24 In considering the ACCC's application for leave to amend, it is also necessary to bear in mind that limitation questions usually involve complex questions of fact and law and, for that reason, it is generally not appropriate for them to be determined at an interlocutory stage of a proceeding: Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514 at 533.

Submissions of the parties 25 On this application, the ACCC advances two arguments in support of leave to amend being granted. 26 First, it says that the claim for pecuniary relief against BlueScope in respect of the alleged OneSteel conduct is not time barred because it is alleged that conduct constituting the attempt continued until June 2014, which is less than 6 years prior to its application to amend. The ACCC argues that to establish that there has been an attempt at inducement, there must be "an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement", relying on Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] ATPR 41-877 at [112], quoted in Australian Competition and Consumer Commission v Flight Centre Ltd (No 2) (2013) 307 ALR 209 at [155] and Australian Competition and Consumer Commission v Australian Egg Corporation Limited (2016) 337 ALR 573 at [68]. The ACCC argues that its allegation concerns a course of conduct by BlueScope that continued until June 2014. The ACCC says that a question that has not yet been answered in any decided case is how the 6 year limitation period in s 77(2) of the CC Act is to be applied to a contravention that involves a course of conduct that took place over a period of time that is partly within and partly outside the applicable limitation period. 27 In response to the ACCC's first argument, BlueScope says that the ACCC's statement of claim does not allege an attempt at inducement through a course of conduct. It argues that the statement of claim alleges that BlueScope undertook various actions, most of which occurred in September 2013, and that the conduct alleged to have occurred after that date does not relevantly constitute an attempt at inducement. 28 I reject BlueScope's argument. In my view, based on the allegations made in its statement of claim, it is open to the ACCC to argue that BlueScope engaged in a course of conduct (being the conduct alleged in the pleading) which continued until June 2014. Whether the ACCC is able to establish that allegation at trial will depend on the evidence adduced at trial in support of the pleaded case. Assuming the ACCC is able to establish the allegation, whether the conduct so proved satisfies the limitation period in s 77(2) is also a question that should be determined at trial. Accordingly, based on the ACCC's first argument, I consider that the proposed amendment may not be time-barred and the question of the application of the applicable limitation period should be determined at trial. 29 The ACCC's second argument is that its proposed amendment is permitted by r 8.21(1)(g)(i) because the new claim for relief arises out of the same facts, or substantially the same facts, as those already pleaded to support an existing claim for relief. The ACCC argues that the new claim for relief with respect to OneSteel, whether considered against the concise statement or the statement of claim, arises out of the same or substantially the same facts as those already relied upon in support of existing claims for relief in the originating application. 30 In response to the ACCC's second argument, BlueScope says that the proposed amendment does not arise out of the same facts, or substantially the same facts, as those pleaded in the concise statement and therefore rr 8.21(1)(g)(i) and 8.21(2) do not apply. 31 I accept BlueScope's argument. In accordance with proper practice, the ACCC's concise statement briefly but clearly articulated the basis of the claims for relief in the originating application that was filed contemporaneously with it. The legal and factual bases for the relief claimed were stated in paragraph 16 as "separate attempts by Ellis and other BlueScope representatives, on behalf of BlueScope, to induce agreements containing a price fixing provision" with 11 named suppliers. The 11 named suppliers did not include OneSteel. Paragraph 19 stated, under the heading "Primary grounds for the relief sought", that: In each of the instances referred to at paragraph 16, BlueScope, through Ellis and other BlueScope representatives, attempted to induce BlueScope's competitor to enter into an arrangement or arrive at an understanding, containing a cartel provision, contrary to section 44ZZRJ of the CCA. In each instance, the cartel provision was one that had the purpose or likely effect of fixing, controlling or maintaining the price for flat steel to be supplied by BlueScope and the respective steel company within the meaning of s 44ZZRD(2)(a) and (c) of the CCA. 32 In my view, the concise statement makes clear that the allegations concerning each of the named suppliers was that BlueScope separately attempted to induce each supplier to make a separate contract, arrangement or understanding with BlueScope containing a cartel provision. The claim now sought to be made in respect of OneSteel, being a further separate attempt to induce OneSteel to make an understanding with BlueScope containing a cartel provision, does not arise out of the same facts, or substantially the same facts, as those pleaded in the concise statement.

Date from which the amendment should take effect 33 As I have formed the view that the proposed amendment to the originating application is not necessarily time-barred, I will grant leave for the ACCC to file and serve the amended originating application. However, it is also necessary to consider the date from which the amendment should take effect, as that will be relevant to the possible application of the limitation period in s 77(2) at trial. 34 The assumption underlying r 8.21 is that the usual position is that an amendment to an originating application takes effect from the commencement of the proceeding. Based on that usual position, rr 8.21(2) and (3) provide that an amendment to an originating process will not be allowed where the effect is that a respondent will lose the protection of an applicable limitation period, unless the new claim arises out of the same facts or substantially the same facts as those already pleaded. 35 As stated earlier, rr 8.21(2) and (3) should not be treated as an exhaustive statement of rules to be applied in the case of amendments that may be affected by limitation periods. Rules 1.32 to 1.35 provide ample power to frame orders that are consistent with the underlying principles reflected in rr 8.21(2) and (3) but which address the particular circumstances of this case. The principles reflected in those rules are that a respondent "should not generally lose its right to a successful limitation defence where an amendment arose out of facts which were not substantially the same" as already pleaded: Voxson Pty Ltd v Telstra Corporation (No 7) (2017) 343 ALR 681at [15] per Perram J. 36 In the present case, the ACCC did not plead allegations relating to OneSteel in its concise statement, but it did plead such allegations in its statement of claim filed on 19 December 2019. While it did not apply to amend its originating application at that time (which it should have done), BlueScope was on notice from that date of the allegations being made. I do not consider that the Court should rigidly adhere to distinctions between originating applications and pleadings, both of which are directed to the communication of a party's case. If the ACCC had applied as at 19 December 2019 to amend its originating application to align with its statement of claim, I would have granted leave for the same reasons as given above (ie, the new claims may not be time-barred). In those circumstances, I consider it appropriate to grant leave to the ACCC to amend its originating process on the basis that the amendments take effect on 19 December 2019. 37 By its defence filed on 20 March 2020, BlueScope has already pleaded reliance on s 77(2) of the CC Act in relation to the OneSteel allegations (even though the ACCC's originating application did not include a claim for pecuniary relief in relation to the OneSteel allegations). Accordingly, it will not be necessary for BlueScope to amend its defence in response to the ACCC's amended originating application. At trial, it will be necessary to determine whether the ACCC's claim for a pecuniary penalty in respect of the OneSteel allegations is time-barred by s 77(2), which will be determined on the basis that the claim was brought on 19 December 2019.

Conclusion 38 In conclusion, I will grant leave to the ACCC to amend its originating process on the basis that the amendment takes effect on 19 December 2019. I will make no order as to costs. While BlueScope opposed the grant of leave and was unsuccessful, the application was made more complicated by the ACCC's failure to apply for leave to amend in December 2019 and the final order reflects some mixed success on the application. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Bryan.