(1) Unchallenged trial findings that Mr Davey and/or Mr Fatouros did not make the alleged arrangement on behalf of Cussons
22 This argument by Cussons depends upon the proposition that the Commission's case at trial was nothing less than that Mr Davey and/or Mr Fatouros made the alleged arrangement on its behalf, relying in particular upon the following paragraphs of the Trial Judgment: [215], [446]-[447], [516]-[518], [548], [627]. Cussons takes aim at the contention made by the Commission at the appeal that someone other than Mr Davey or Mr Fatouros might have made the arrangement on its behalf, characterising this as a hopeless argument. Cussons submits that it was not possible to put to one side the significance of the involvement of Mr Davey or Mr Fatouros in the Commission's formulation of its case. It contends that the Commission cannot on appeal "run a new case based upon a different theory", characterising this as not being supported by any evidence "whatsoever", and as "contriving some other unspecified basis for an arrangement on the appeal". Thus Cussons pitches its argument on this first factual issue by way of a quite confined characterisation of the Commission's case at trial. This is the foundation for correspondingly limiting the case that could conceivably succeed on appeal as a matter of foresight, not hindsight.
23 The Commission counters by submitting that Cussons misstates both its case, and the trial judge's recording of that case. Rather, the Commission submits, its closing trial submissions in reply (20 July 2016 at [5], a copy of which was placed before me) stated (footnotes omitted; emphasis added):
The Court asked the ACCC to identify the persons that it contends were responsible for causing Cussons to enter into the Withhold Supply and Aligned Transition Arrangements. The ACCC candidly states that it does not know which individual was responsible for causing Cussons to enter into the relevant Arrangements. That is unsurprising in a case of this kind where the relevant arrangements and understandings are illegal by their nature and Cussons chose not to call a great many relevant witnesses.
24 Cussons' response to the Commission's reply submissions (1 August 2016 at [10], a copy of which was placed before me) stated (footnotes omitted):
The Court asked the ACCC to identify the individuals that it says made the alleged arrangements. The ACCC has been unable to do so but has submitted that this is unsurprising because (a) PZ Cussons chose to not call many witnesses and (b) the alleged arrangements are illegal by nature.
The following paragraphs of those response submissions then took issue with the Commission's reply submissions, characterising them as lacking merit and explaining briefly why that was said to be so. However, they did not suggest any understanding that the Commission's case was confined to the alleged arrangement being brought into existence, on Cussons' behalf, only by Mr Davey and/or Mr Fatouros.
25 These opposing sets of closing trial submissions are consistent with what was earlier said in oral closing submissions for the Commission on 5 July 2016, especially in response to prior questions from the trial judge. It is important to read the extracts of those oral closing submissions reproduced below in the context of one another, and also in the context of portions not reproduced. The following is illustrative of both the broader and the narrower ways in which the Commission put its case, principally, but not only, relying upon an inference it sought to have drawn from all of the evidence:
(1) at transcript page 1001, lines 6 to 14 (Mr Scerri QC, senior counsel for the Commission):
We haven't heard from Mr Fatouros. But from Mr Davey we have heard that he had objections to the Colgate proposal version 1 and version 2; didn't like that. But he was in favour of agreement in principle to transition at the same time. And he has given evidence. The answer to your Honour's question of who within Cussons, you know, made this arrangement, because a company is an artificial entity and it can't make arrangements, well, we say those two people, and especially Mr Fatouros, ultimately has to be the person responsible. The reason I say that, your Honour, is that there were people below them who acted on the basis that that's what was happening.
(2) at transcript page 1002, lines 11 to 25 (Mr Scerri QC, senior counsel for the Commission):
Now a direct answer to your Honour's question is, who made the agreement and when: we can't say. We can't say Mr Fatouros admitted that in a phone call or in … a meeting he agreed with his counterparts of the other companies.
We say - and this is where we accept that our case is circumstantial in this sense, that you add up all the communications. And that's why we put the annexure where you put the communications with the different parties in the same - in the chronological context, that you infer from that there must have been an agreement. It has been said in many cases that [with] these sorts of arrangements, you don't normally have a piece of paper where it is all written down and everyone has formally signed it and witnessed it. But the court - our case is no higher than the court can infer from these communications and these documents and what the witnesses said and understood was happening, that the court can infer there was the relevant arrangement or understanding.
(3) at transcript page 1013, lines 21 to 32:
HIS HONOUR: And as I have said, circumstantial cases can be overwhelming on occasions. I'm not deprecating it on the fact it is circumstantial but it really just - that point just does emphasise, it is really inferences that flow from documents.
MR SCERRI: It is. And with hindsight I'm happy to say we would say that the court could conclude that by August the arrangement had been entered into, in terms - one of your Honour's questions was when; we would say by August it is safe to conclude [it] had been such an arrangement. Because that's what Cussons['] people were saying. I still can't answer the question of who did it and that's the nature of the circumstantial case. We don't have - some cases, you know, I have been in cases for the commission where someone goes along with a secret recorder and records the arrangement. That's not this sort of case.
26 The Commission therefore submits that while it identified Mr Davey and Mr Fatouros as people who may have entered into the alleged arrangements, it did not exclude any other persons by this approach. The Commission places reliance upon the trial judge's reasons at [444], to which I add the paragraphs before and after for context, where his Honour said:
[443] In relation to the date on which the Withhold Supply Arrangement was alleged to have been entered into or arrived at, the Commission maintained, after all the evidence had been tendered, that it did not and could not contend that the arrangement was entered into at any particular time prior to January 2009. It did, however, submit that it would be open to the Court to find that the arrangement had been entered into by August 2008. The primary basis of that submission, it would seem, was the statement in Cussons' NPD1 document that "[r]etailers are driving timing based on collaborative advice and agreement to launch between Colgate, Unilever and [Cussons]". The NPD1 document was discussed in detail earlier in the context of the chronology of facts and evidence. For the reasons given then, on balance that statement in the NPD1 document was more likely than not simply a poorly worded reference to the discussions that had been taking place in the context of the Accord proposal. Considered in context, it does not support an inference or finding that Cussons had entered into, or arrived at any arrangement or understanding with Unilever and Colgate in August 2008, let alone one that included the Withhold Supply Provisions.
[444] In relation to who, from Cussons, was said to be responsible for causing Cussons to enter into or arrive at the arrangement or understanding, in its closing submissions the Commission appeared to submit that two people may ultimately have been responsible in that regard: Mr Fatouros and Mr Davey.
[445] The Commission's case that Mr Fatouros must have been ultimately responsible appeared to be based on the evidence concerning three events involving him: first, his attendance at the 30 April 2008 Accord meeting; second, his 24 July 2008 email to Ms Capanna and the other attendees at the 30 April Accord meeting; and third, his telephone call to Mr Pedersen of Colgate shortly after the October 2008 Accord meeting. The Commission also relied on the fact that Mr Fatouros did not give evidence and the Jones v Dunkel inference that it contended should be drawn from that fact.
27 In reply, and in oral submissions, Cussons relies upon particular passages of the Appeal Judgment, suggesting that this discloses not merely another formulation of an inference, but rather acknowledging what the trial judge decided for what it was, being a finding of fact that the inference sought to be drawn by the Commission was not available. Cussons submits that the following passages of the Appeal Judgment are to be read as meaning that the reliance upon Mr Davey and Mr Fatouros as forming the requisite intention was so fundamental to the cogency of the Commission's case that it could not be dispensed with on appeal:
[131] The tenth finding challenged by the Commission was that:
[i]f any collusive arrangement or understanding had been reached by Cussons, Mr Davey and Mr Wilson would have been aware of it.
[132] This is said to relate to [549] and [561]:
That is an important consideration in all the circumstances. Given Mr Davey's position and involvement in aspects of Project Mastermind, including the Accord meetings, if any collusive arrangement or understanding with Unilever and Colgate was made, arrived at or existed, it is difficult to imagine that Mr Davey would not have been aware of it.
…
Nothing that was put to Mr Wilson in cross-examination, and none of the evidence that he gave, suggested in any way that he was involved in or had any knowledge of the existence of any arrangement or understanding along the lines of the alleged Withhold Supply Arrangement. As was the case with Mr Davey, that is of some significance. If any collusive arrangement or understanding with Unilever and Colgate was entered, arrived at or existed, it is difficult to imagine that Mr Wilson would not have been aware of it.
[133] We reject this submission. As Cussons pointed out in its submissions, the Commission in fact alleged that Mr Davey and Mr Wilson made the arrangement on Cussons' behalf. It was not coherent to suggest that they could have made the arrangement on Cussons' behalf unknowingly. The Commission also said that this submission was dealt with in 'Section C'. Neither Section C of the amended notice of appeal nor of the Commission's written submissions deal with this fact.
28 The above passages of the Appeal Judgment are addressing the narrower primary case based on Mr Davey and Mr Fatouros, but in the process acknowledging the existence of the wider secondary case that the Commission made at trial going beyond those two men being responsible for making the alleged arrangements. The point being made by the Full Court as relevant to the present submission by Cussons was that the wider case had a logical conundrum identified by the trial judge at TJ [561]. This was that even if Mr Davey (or Mr Wilson) was not a person who made the alleged arrangement on behalf of Cussons (thereby acknowledging the wider case that the Commission was bringing), it was difficult to imagine that he (or Mr Wilson) would not have been aware of its existence. This was in the context of the trial judge's reasoning on the issue being somewhat less than emphatic - that it was "difficult to imagine" that Mr Wilson would not have been aware of the alleged arrangements. The Full Court took that a step further in regarding this as a harder logical barrier to the wider case succeeding, but necessarily not a denial of its existence, or of the Commission's continued reliance upon it. Of course, such a conclusion of non-awareness was not available in relation to Mr Fatouros, because he did not give evidence, leaving open the possibility that if the alleged arrangement had been proven, Mr Fatouros could have been aware of it, without being the person involved in it being brought into existence. Thus, there was an appeal finding that the trial judge's finding on the narrower case contained a firm logical difficulty that stood as a barrier to the wider case still maintained. It was a nuanced conclusion, but it is going too far to say, as Cussons' seems to, that it was inevitable because it was logical, and that therefore the Commission had no alternative in bringing a viable appeal but to challenge directly the finding made on the narrower case. An argument ultimately found to be weak because of a logical flaw, is not inevitably the same as a hopeless argument.
29 Cussons also submits in reply that the Commission is overlooking its closing submissions at trial, quoting from the portion of transcript reproduced at [25(1)] above, to which has been added the last sentence omitted from those submissions which refers to the alleged involvement of lower level people. Cussons submits upon this basis that the Commission's case was confined to the alleged arrangements being made only by Mr Fatouros and Mr Davey, a submission that cannot survive the subsequent passages also reproduced above. Once again, Cussons' focus is incorrectly confined to the Commission's primary case, ignoring its wider (and weaker) case that, it is tolerably clear, was never abandoned, even if it did have significant difficulties once the narrower, stronger, case was found wanting.
30 Cussons further submits in reply that the trial judge was not using the word "may" at TJ [444] to imply the existence of other potential responsible persons, but rather in the sense that such a finding as to Mr Davey and Mr Fatouros being responsible was open. The most that can be said about this reference in Cussons' favour is that, as it appears in the Trial Judgment, this paragraph might be read as ambiguous. However, that is not how I would read it, especially in the context of the oral and written submissions for the Commission reproduced above, which clearly enough support the Commission's interpretation by making clearer what his Honour most likely had in mind. His Honour was plainly enough aware that the Commission was advancing a broader circumstantial case, but principally relied upon their narrower, stronger, but ultimately insufficient case, said to be supported by particular events.
31 It incorrect for Cussons to submit that there was no evidence whatsoever for anyone other than Mr Davey or Mr Fatouros to have made the alleged arrangement on behalf of Cussons. While the circumstantial evidence ended up falling well short of satisfying the trial judge that the arrangement existed, that is not the same as there being no evidence of that at all. As his Honour acknowledged in the trial transcript passage reproduced above at [25(3)], the Commission's case was based on inferences flowing from documents, and such cases can ultimately be found to be strong or weak. Circumstantial cases can improve or worsen at trial, being upheld upon, or not surviving, the searching scrutiny of an astute trial judge. Such a process may result in more benign inferences being drawn, or conclusions being reached, as happened in this case.
32 The final point made by Cussons in reply is that the notion advanced by the Commission that the appeal might have succeeded because someone other than Mr Davey or Mr Fatouros was responsible for the alleged arrangement is absurd. I did not find this rhetorical submission a helpful way to evade the problem for Cussons that the Commission's case, however unconvincing it ended up being to the trial judge, was plainly not as narrow as Cussons contends. The Commission was not barred from contending for the wider case on appeal, even if that contention was difficult to sustain.
33 The conclusion that I reach is that while the Commission's strongest and therefore primary case was that Mr Davey and/or Mr Fatouros made the alleged arrangement on behalf of Cussons, that was not its only case. The Commission also candidly said that it did not know for sure who had made the alleged arrangements. Right up to and including its closing oral and written submissions at the trial, the Commission left open the possibility, however difficult to make out, that other, unidentified persons at Cussons could have been responsible. It follows that I reject Cussons' argument that the success of the Commission's appeal necessarily turned on the Full Court finding that only one or both of those two men were responsible for any arrangement entered into. Certainly that was the Commission's narrower and higher case, but it was not its entire case. I am unable to accept that success on appeal was inevitably dependent upon overturning this aspect of the conclusions reached by the trial judge. It is not to the point that the Appeal Judgment favoured the trial judge's reasoning on this issue, and took it a measure further, by relying upon awareness rather than intention as a barrier to success. An alternative outcome cannot fairly be characterised as prospectively devoid of any reasonable prospect of success. This first aspect of Cussons' primary application for indemnity costs therefore does not succeed because I am not satisfied that it was unreasonable for the Commission to bring the appeal without challenging the factual findings upon which the rejection of its narrower case was based.