Non-Targeting Arrangement - Make
57 This relates to [9]-[9E] of the ASOC and [1]-[1A] of the AOA.
58 Although a number of complaints were made by NQCranes in this regard, as noted above, two were highlighted as critical. First, NQCranes submitted that there was no meeting of the minds in respect to this "single" provision. Second, the ACCC's case is now incoherent. Each will be addressed separately.
59 Paragraph [9] of the ASOC, which the respondent impugns in its submissions, must be considered in the context of the pleading as a whole.
60 The paragraphs in the ASOC preceding [9] address the following. The ASOC describes the parties at [3]. The relevant markets are identified in [4], with particulars. It is pleaded at [5] that at all material times, NQCranes and MHE-Demag were participants in the Overhead Crane Servicing Markets. At [6] it is pleaded that at all material times, NQCranes and MHE-Demag were in competition with each other, or but for the arrangements would have been, or would have been likely to be, in competition with each other, within the meaning of s 44ZZRD(4) of the CCA, as in force prior to 6 November 2017, and s 45AD(4) of the CCA since 6 November 2017, in the Overhead Crane Servicing Markets.
61 Although NQCranes criticised [7] and [8] of the ASOC, NQCranes does not seek to strike out those paragraphs. It is appropriate to recite [7] and [8] because that is the immediate context in which [9] is pleaded. Paragraphs [7] and [8] are as follows:
62 It is accepted that the Non-Targeting Arrangement is said to have occurred during the negotiation process which resulted in the Distributorship Agreement.
63 In that context [9] is in the following terms:
64 Before directly addressing the submission as to the first basis, the meeting of the minds, it is appropriate to make two preliminary observations.
65 First, the ACCC's submission that during a negotiation, parties might reach an understanding about an aspect(s) and put that into effect as a separate arrangement to that ultimately negotiated, can be accepted for present purposes. To put it another way, there is no reason as a matter of law why that could not occur.
66 Second, it can also be accepted, as contended by the ACCC, that whether an understanding or arrangement is reached can be established by circumstantial evidence, the strength coming from the inference drawn from the combination of considerations: see for example ACCC v Air New Zealand at [464] and Australian Competition and Consumer Commission v Colgate Palm-Olive Pty Ltd (No 4) [2017] FCA 1590; (2017) 353 ALR 460 at [428]-[429].
67 Turning to NQCranes' submission as to the first basis. NQCranes contended that the pleading in [9] is conclusory, citing Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 (TPC v David Jones) per Fisher J. Contrary to NQCranes' submission, TPC v David Jones does not stand for the proposition that a mere conclusory statement in a pleading, without more, will necessarily be liable to be struck out: see for example Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd [1991] FCA 557; (1991) 217 ALR 171 at [7] and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union v Stanwell Corporation Ltd (No 3) [2014] FCA 1324 at [12]. For example, a pleading of a conclusion may, in some circumstances, constitute a material fact: Eastern Colour at [40]. Even if that be so, it is not sufficient simply to plead a conclusion drawn from unstated facts, or otherwise stated at too high a level of generality, such that the other party does not know the case it has to meet: Wright Rubber Products Pty Ltd v Bayer AG [2008] FCA 1510 at [5]; Eastern Colour at [40]. Whether that is so is case specific.
68 I note at the outset that although the respondent complained in oral submissions that [9A] and [9B] (and as a result the paragraphs which follow) are deficient because, inter alia, they adopt the language of the statute without pleading material facts, such paragraphs are also pleaded in respect to the Distributorship Agreement at ASOC [13]-[16] without complaint by the respondent. It is not suggested that [13]-[16] insufficiently pleads matters relevant to the Distributorship Agreement such as they ought to be struck out, or that as a result of those paragraphs of the pleading the respondent does not know the case it has to meet. I note also that the pleading in respect to the make allegation in relation to the Distributorship Agreement, in effect does no more at [10]-[12] than plead the terms of the agreement. No challenge is made to the adequacy of that pleading. As a consequence, I focus the consideration on [9], which was in practical terms, the pleading to which most attention was directed in the respondent's submission.
69 In [9], it is alleged that the existence of the Non-Targeting Arrangement can be inferred from what is then identified or referred to as three particulars.
70 The respondent's submission on [9] was directed, at least in part, to the evidence and documents underpinning these particulars, to address what the respondent said could, or on its submission, could not, be inferred from them. It involved an assessment of the evidence underpinning these particulars, leading to a submission that the Non-Targeting Arrangement could not be established. For example, in respect to the particular (iii) it was contended that what is pleaded is "plucked" from a longer document, and the document read as a whole does not support the particular. However, on a strike out application, one is only addressing the face of the ASOC. As observed in Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920; (2008) 252 ALR 41 at 43 (emphasis in original):
The fundamental thing to understand about the strike-out rule, which the language of O 11 r 16 itself makes clear, is that the rule is concerned only with the adequacy of the pleading (or to be more precise, the allegations and the causes of action asserted therein) as a matter of law. The rule does not permit or allow consideration of facts or evidence outside the pleadings: Dey v Victorian Railway Cmrs [1949] HCA 1; (1949) 78 CLR 62 at 91 and 109; see also General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 at 129; [1965] 165 ALR 636 at 638 (General Steel). Indeed…the court must, for purposes of deciding the strike-out motion and deciding whether a pleading discloses a reasonable cause of action, assume the truth of the allegations in the statement of claim and draw all inferences in favour of the non-moving party because the question is whether those allegations, even if proved, cannot succeed as a matter of law: General Steel at CLR at 129; ALR 638.
71 It must be apparent on the face of the ASOC that the facts pleaded, if proved, could establish the cause of action relied upon by the relevant plaintiff or plaintiffs. Moreover, a "reasonable cause of action" in this context means "one with some chance of success, having regard to the allegations pleaded, even if weak": Polar Aviation at [42]; and see Allstate at 236; Sabapathy v Jetstar Airways [2021] FCAFC 25 at [50]. It is a high hurdle that the respondent must cross to establish that a pleading be struck out: Uber Australia Pty Ltd v Andrianakis [2020] VSCA 186; (2020) 61 VR 580 at [35] (considering an application under r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) to strike out a statement of claim as either not disclosing a cause of action or being embarrassing), cited in Gall v Domino's Pizza Enterprises Ltd (No 2) [2021] FCA 345; (2021) 304 IR 300 at [60]; Impiombato v BHP Group Ltd (No 2) [2020] FCA 1720 at [142] (I note that leave was given by the Full Court on a limited basis, and the primary judge's conclusions in respect to the strike out application were not disturbed: BHP Group Ltd v Impiombato [2021] FCAFC 93).
72 On its face, particular (iii) appears to be minutes of a meeting of NQCranes' management on 17 August 2016, and not a communication between the parties, and particulars (i) and (ii) are communications between Mr Pidgeon of NQCranes and Mr Costanzo of MHE-Demag on 15 and 16 August 2016 respectively. In respect to the inter-parties communications, as pleaded, particular (ii) is not without its difficulties in the absence of the full documents. If it refers to the list of topics discussed, referred to in particular (i), it appears that MHE-Demag is responding to that list, which includes a statement to the effect that the non-targeting "all looks good", except for one unrelated aspect. However, this is in the context of the pleading in [7] and [8]. Particular (iii) and the meeting of NQCranes' management is in the context of those communications in (i) and (ii).
73 I note ultimately the issue as pleaded is not whether only this provision was agreed in the negotiations, but whether it has been established that by no later than 17 August 2016, there was an arrangement to do as alleged. For present purposes, the issue is whether, given the basis of this application as articulated, it is established that there is no reasonable cause of action disclosed.
74 I appreciate that the respondent contended that the documents do not support the particulars and therefore the pleading is an abuse of process. NQCranes in its written submissions contended that in considering whether to strike out part of a pleading on the basis of an abuse of process, the Court is entitled to examine the cause of action which may involve a consideration of the evidence in the substantive case. For that proposition, the respondent refers to Parbery & Ors v QNI Metals Pty Ltd & Ors [2018] QSC 240 (Parbery) per Jackson J at [146]-[147], noting that the rule under consideration in Parbery was r 171 of the Uniform Civil Procedure Rules 1999 (Qld), which by r 171(3) expressly refers to the receipt of evidence by the Court in a strike out application. No such provision exists in the Rules. The respondent also referred to Batistatos v Roads & Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 where the High Court referred to the power of the Court to "inform… its conscience upon affidavits" in protecting its own processes, per Gleeson CJ, Gummow, Hayne and Crennan JJ at [11]. I note that there the High Court was considering whether a stay of proceedings ought to be granted on the basis that the proceedings are an abuse of process. There will be circumstances where, given the basis of an application for a stay, it will be necessary for evidence to be considered (for example a stay based on prejudicial publicity, or the ill health of an accused). This is a strike out application, and considered at an early stage of the proceedings. The basis for the abuse of process argument in this case appears to be because it is alleged that the pleading has been introduced to get around the anti-overlap defence, which I have addressed above at [56]. I note that the respondent did not contend that the ACCC's conduct in amending the pleading per se was improper. In effect, the respondent alleges that the pleading is an abuse of process because there is no reasonable cause of action as the evidence does not support the pleading. The failure to disclose a reasonable cause of action is a separate identified basis on which a pleading can be struck out. The argument was rather circular. In the circumstances of this case, the submission ought not circumvent the orthodox approach to an application to strike out the pleading on the basis that there is, inter alia, no reasonable cause of action. The submission is dependent on an assessment of the documents to which attention was drawn. That is a submission on the merits as to what inferences can be drawn. In any event, in this case, it is plainly not appropriate to determine what inferences, or which competing inferences, ought to be drawn or accepted from the documents which were addressed separately at this stage of the proceedings, and in isolation from other evidence. Lastly, in any case, I note that the respondent accepted at the hearing that if the arrangement is properly pleaded, the pleading is not an abuse of process (as noted above at [28]).
75 Although there may be some strength to aspects of NQCranes' submission, considering the pleading in [9] in its context, the respondent has not established that there is no reasonable cause of action. NQCranes has not overcome the substantial hurdle necessary to succeed on this basis of the application.
76 Turning to the matter identified by NQCranes as the second basis of the complaint, that the pleading in relation to the Non-Targeting Arrangement is incoherent, likely to cause prejudice, embarrassment or delay. This submission also encompassed an allegation that the pleading is an abuse of process.
77 It was apparent from NQCranes' submissions that it did not appear really to be contended that it did not know the case it had to meet. Leaving aside the issue of proof, the allegation as pleaded is straight forward. Rather, NQCranes' complaint was really focussed on the Non-Targeting Arrangement being a contrivance.
78 There was some issue raised as to whether this arrangement was pleaded as an alternative. The ACCC submitted it is apparent from the ASOC that what is alleged is a separate arrangement. In its written submission NQCranes approached its argument on the basis that it is a separate arrangement. Indeed, that is the basis of the argument as to incoherence, that the same conduct is said to relate to separate arrangements. As the ACCC submitted, if that needed clarification they could do so by insertion of the words "further, or in the alternative" at the commencement of [10] of the ASOC, to make it clear that this is alleged to be a separate arrangement entered into by the parties. I would grant leave for that amendment to be made.
79 This second submission, although advanced in addressing the pleadings concerning the making of the Non-Targeting Arrangement, relied also on the pleadings in respect to the give effect case for the Non-Targeting Arrangement.
80 In this context, NQCranes submitted that there were "two separate and complete meeting of minds" relevantly to the same effect, and which were concurrent and operated for two years so that the same conduct was giving effect to both the Non-Targeting Arrangement and the Co-Ordinated Approach Provision. The submission is concerned with the artificiality of the allegation, which is said to be a contrivance to overcome the anti-overlap provisions
81 As previously observed, there is no logical basis to suggest that an understanding or arrangement cannot be reached and put into effect before a formal agreement. It is appropriate to return to that discussion. The submission advanced by the ACCC to illustrate the proposition was by reference to the fact that an interim agreement may be put in place. To be more specific, in that context, the ACCC submitted that:
It may turn out that the evidence will be that…the parties decided that they wanted to in the interim put in place - or maybe not even in the interim. Maybe an ongoing arrangement whereby, before finalising the detail of the distribution agreement, they would give effect to Brisbane and Newcastle.
82 The give effect case concerning the Non-Targeting Arrangement is pleaded as continuing at least until 18 October 2018, not as an interim arrangement. Two of the matters pleaded as giving effect to the Non-Targeting Arrangement are alleged to have occurred before entering into the Distributorship Agreement. The remainder are those also pleaded in relation to the Co-Ordinated Approach Provision.
83 Speaking at a level of generality, there appears to be no reason why, as a matter of logic, actions could not be undertaken pursuant to more than one agreement. That, of course, says nothing about whether that is so in the circumstances of this case. That was not the subject of any direct submission in this case. In any event, whether that occurred in this case would be a matter of evidence, and not a matter to be decided on a strike out application.
84 This aspect of the second submission by NQCranes was the basis of its contention that the Non-Targeting Arrangement should be treated analogously to Allied Mills, and therefore struck out as an abuse of process. It was submitted Allied Mills stood for the proposition that where a conspiracy to make an unlawful arrangement or understanding is pleaded in the alternative to making an identical unlawful arrangement or understanding in order to gain a forensic advantage, the conspiracy will be struck out on the basis that it is an abuse of process.
85 It may be accepted, as contended for by the ACCC, that the facts in this case are not analogous with those considered in Allied Mills, where Sheppard J concluded that the allegations were, in reality, identical. Sheppard J concluded that it was not appropriate to allege on the same facts as an alternative to an arrangement or understanding made unlawful by the Trade Practices Act 1974 (Cth) (then in operation), conspiracies which are themselves such arrangements or understandings. Nonetheless, only the part of the pleading which related to the conspiracy was struck out. Sheppard J found that in relation to the remainder of the pleadings, which he described as somewhat vague and unspecific, it was impossible to conclude that there was not a real question to be tried. Allied Mills obviously turned on an analysis of the pleadings in that case.
86 In this case, the Non-Targeting Arrangement is pleaded in the ASOC to have commenced at an earlier point of time to the Co-Ordinated Approach Provision, relates to a narrower geographical area and on the pleading was given effect to before the entry into the Co-Ordinated Approach Provision by the parties.
87 I am troubled at the commonality between aspects of the give effect pleading. However, as previously observed, as a general proposition whether an act could be in pursuance of one or both arrangements, if they are established, is a factual matter, dependent on the evidence. NQCranes have not established that overall the pleading is incoherent, causes prejudice, embarrassment or delay in the proceeding or is otherwise an abuse of process. NQCranes has not overcome the substantial hurdle necessary to succeed on this basis of the application.