Australian Competition and Consumer Commission v Pratt - [2009] FCA 407 - FCA 2009 case summary — Zoe

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Australian Competition and Consumer Commission v Pratt

[2009] FCA 407

Federal Court of Australia|2009-04-29|Before: Ryan J

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Source facts

Court

Federal Court of Australia

Decision date

2009-04-29

Before

Ryan J

Source

Original judgment source is linked above.

Judgment (191 paragraphs)

[1]

REASONS FOR RULING ON ADMISSIBILITY OF ALLEGED ADMISSIONS BY THE DEFENDANT 1 On 2 December 2008, I made the following orders for questions to be tried and decided in these proceedings separately from any other question and before any trial in the proceedings; A. Pursuant to s 189 of the Evidence Act 1995 (Cth) ("the Evidence Act") and O 29 of the Rules of this Court the following questions be decided after a hearing to commence on 8 December 2008 separately from any other question and before any trial in the proceedings herein; (1) Are any and which of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence admissible as evidence in these proceedings pursuant to any of ss 81, 82(b), 87 or 88 of the Evidence Act? (2) If yes to (1), in respect of any of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence (which are hereinafter collectively called "the prima facie admissible documents") are any and which of the prima facie admissible documents inadmissible in these proceedings by reason of; (a) s 85(2) of the Evidence Act; or (b) s 137 of the Evidence Act? (3) If (2) be answered no in respect of any of the prima facie admissible documents; (a) will the Court refuse to admit such document as evidence in these proceedings in the exercise of the discretion conferred by; (i) s 90 of the Evidence Act; (ii) s 135 of the Evidence Act? (b) is such prima facie admissible document by reason of s 138 of the Evidence Act not to be admitted as evidence in these proceedings? B. The costs of both parties of the hearing on 10 November 2008 be reserved.'

[2]

[3]

Relevant entities, "ABL" : "ACCC": "AGS" : "Alexander" : "Amcor" : "Beach" : "Caleo" : "Carroll" : "Cassidy" : "Craigie" "David Smith" : "Davidson": "Debney" : "Heathcote" : "Ian Smith" : "Jones" : "Jopling" : "Kay" : "McHugh" : "Pratt" : "Pryde" : "Samuel" : "the cartel "the DPP" : "the Evidence Act" : "the TPA" : "Visy" : "the Visy companies" : "Williams" : "Zwier" : agencies, individuals and statutes Arnold Bloch Leibler, the solicitors for the respondents in the cartel proceedings and for Pratt in the present proceedings; The prosecutor, Australian Competition and Consumer Commission; The Australian Government Solicitor, the solicitor for the ACCC in the cartel proceedings; Mr Robert Alexander, General Counsel within the ACCC; Amcor Ltd; Mr Jonathon Beach QC, Senior Counsel for the respondents in the cartel proceedings; Mr Christopher Caleo SC, Counsel for the ACCC in the cartel proceedings; Mr Rod Carroll, the sixth respondent in the cartel proceedings; Mr Brian Cassidy, Chief Executive Officer of the ACCC; Mr Christopher Craigie SC, Commonwealth Director of Public Prosecutions from 13 October 2007; Mr David Smith, a Commissioner of the ACCC who presided over the examination of Pratt pursuant to s 155 of the TPA on 26 July 2005; Mr Graeme Scott Davidson, Deputy Director, Commercial, International and Counter Terrorism Branch within the office of the DPP; Mr Harry Debney, the Chief Executive Officer of Visy and the fifth respondent in the cartel proceedings; Mr Robert Heathcote, a solicitor and partner in ABL; Mr Ian Smith, a public relations consultant who had acted in that capacity for the ACCC in matters unrelated to the present proceedings and who was acting as a public relations consultant for the Visy companies and Pratt in relation to the cartel proceedings; Mr Russell Jones, the former Managing Director and Chief Executive Officer of Amcor; Mr Peter Jopling QC, Senior Counsel for ACCC in the cartel proceedings; Mr Robbie Kay, General Counsel for the Visy companies; The Honourable Michael McHugh AC, QC, a former Justice of the High Court of Australia; Mr Richard Pratt, the defendant in these proceedings and the Chairman of Directors of the Visy group of companies; Ms Susan Pryde, a senior solicitor with AGS; Mr Graeme Samuel, the Chairman of the ACCC; proceedings" : The civil proceedings VID 1650 of 2005 instituted in this Court on 29 March 2005 between the ACCC as applicant and the Visy companies, Richard Pratt, Harry Debney and Rod Carroll as respondents; The Commonwealth Director of Public Prosecutions, the solicitor for the ACCC in the present proceedings; The Evidence Act 1995 (Cth); The Trade Practices Act 1974 (Cth); Visy Board Pty Limited, a company engaged in the manufacture of corrugated fibreboard packaging products, a member of the Visy companies and the third respondent in the cartel proceedings; Collectively, Visy Industries Holdings Pty Limited, Visy Industries Australia Pty Limited and Visy Board Pty Limited which were respectively the first, second and third respondents in the cartel proceedings; Mr Geoffrey Williams, Director of the New South Wales Regional Office of the ACCC; Mr Leon Zwier, a solicitor and partner in ABL.

[22]

(1) Subject to subsection (2A), if the Commission, the Chairperson or a Deputy Chairperson has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act or Division 4A or 4B of Part 3.3 of the Radiocommunications Act 1992, or is relevant to a designated communications matter (as defined by subsection (9)) or a designated water matter (as defined by subsection (9A)) or is relevant to the making of a decision by the Commission under subsection 91B(4), 91C(4), 93(3) or (3A) or 93AC(1) or (2) or 95AS(7) or the making of an application under subsection 95AZM(6), a member of the Commission may, by notice in writing served on that person, require that person: (a) to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information; (b) to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or (c) to appear before the Commission, or before a member of the staff assisting the Commission who is an SES employee or an acting SES employee and who is specified in the notice, at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents. (2A) A member of the Commission may not give a notice under subsection (1) merely because: (a) a person has refused or failed to comply with a notice under subsection 95ZK(1) or (2) on the ground that complying with the notice would tend to incriminate the person, or to expose the person to a penalty; or (b) a person has refused or failed to answer a question that the person was required to answer by the person presiding at an inquiry under Part VIIA, on the ground that the answer would tend to incriminate the person, or to expose the person to a penalty; or (c) a person has refused or failed to produce a document referred to in a summons under subsection 95S(3), on the ground that production of the document would tend to incriminate the person, or to expose the person to a penalty. (3) If a notice under subsection (1) requires a person to appear before the Commission to give evidence, the Commission may require the evidence to be given on oath or affirmation. For that purpose, any member of the Commission may administer an oath or affirmation. (3A) If a notice under subsection (1) requires a person to appear before a member of the staff assisting the Commission to give evidence, the staff member may require the evidence to be given on oath or affirmation and may administer an oath or affirmation. (5) A person shall not: (a) refuse or fail to comply with a notice under this section; (b) in purported compliance with such a notice, knowingly furnish information or give evidence that is false or misleading. (5A) Paragraph (5)(a) does not apply to the extent that the person is not capable of complying with the notice. Note: A defendant bears an evidential burden in relation to the matters in subsection (5A), see subsection 13.3(3) of the Criminal Code. (6A) A person who contravenes subsection (5) is guilty of an offence punishable on conviction by a fine not exceeding 20 penalty units or imprisonment for 12 months. Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. Note 2: Part IA of the Crimes Act 1914 contains provisions dealing with penalties. (7) A person is not excused from furnishing information or producing a document in pursuance of this section on the ground that the information or document may tend to incriminate the person, but the answer by a person to any question asked in a notice under this section or the furnishing by a person of any information in pursuance of such a notice, or any document produced in pursuance of such a notice, is not admissible in evidence against the person: (a) in the case of a person not being a body corporate - in any criminal proceedings other than proceedings under this section; or (b) in the case of a body corporate - in any criminal proceedings other than: (i) proceedings under this Act; or (ii) proceedings under section 113 of the Radiocommunications Act 1992 that relate to a condition set out in paragraph 109A(1)(ij) or 109C(1)(a), (b) or (c) of that Act.'

[24]

10 In November 2006, Williams spoke to Davidson of the DPP about the then prospective cartel proceedings and indicated to Davidson that the ACCC held the view that Pratt had lied on oath during his examination under s 155 of the TPA. 11 Although the inconsistency of the respective accounts given by Jones and Pratt of their meeting at the All Nations Hotel was present to the minds of several senior officers of the ACCC with responsibility for investigating and prosecuting the alleged cartel conduct, a decision was taken within the ACCC to defer consideration of prosecuting Pratt for contravention of s 155 of the TPA. That decision was explained as due to a desire to concentrate the resources of the ACCC on instituting and prosecuting the cartel proceedings which were regarded as a priority because of the danger that they might become statute-barred. 12 Shortly before the cartel proceedings were instituted, Heathcote approached Williams and Alexander. That approach was made with a view to exploring a possible compromise of the contemplated cartel proceedings. In the course of his discussion with Williams and Alexander, Heathcote indicated that, provided any relief were confined to the Visy companies, the ACCC could recover massive pecuniary penalties without the risk of a trial. As well, Heathcote acknowledged that the evidence in the ACCC's possession raised a question to be tried in relation to Pratt. 13 The matters raised by Heathcote were considered at a meeting of the ACCC Commissioners on 16 December 2005 when it was decided to institute the cartel proceedings against the Visy companies and three individual executives of those companies, Pratt, Debney and Carroll. After that decision had been taken, it was communicated by Samuel, Cassidy and Alexander to Heathcote and Zwier of ABL. Heathcote and Zwier reiterated that, if relief were only against the Visy companies, there could be a settlement for a record penalty but there could be no relief against the individuals, particularly Pratt. Samuel acknowledged that the ACCC understood that stance but had decided to commence proceedings against both the Visy companies and the individuals. According to Samuel, nothing that had been said at that meeting with the ABL representatives would alter that decision. 14 The cartel proceedings were instituted in this Court on 21 December 2005. Several interlocutory issues arose for resolution while those proceedings were pending. One of the interlocutory steps taken in the cartel proceedings was the filing on 21 April 2006 of a Defence on behalf of Pratt which contained general denials of allegations of Visy's participation in a cartel. 15 After the cartel proceedings had been fixed for trial to commence on 1 October 2007, Heathcote of ABL telephoned Pryde of AGS as solicitor for the ACCC proposing a mediation of the cartel proceedings and suggesting that McHugh would be an appropriate mediator. After an exchange of correspondence ending on 1 August 2007, it was arranged that a meeting on 6 August 2007 should occur at the offices of ABL between representatives of the ACCC and representatives of the Visy companies and Pratt. On the same day, Williams sent an email to Alexander which included these sentences; 'Also for your interests Messrs Pratt and Debney have an issue confronting them over giving false evidence during the examination if they now agreed to plead how do you propose to deal with that. I am sure Heathcote is aware of it and. will raise it.'

[25]

16 On 2 August 2007, Williams spoke with Alexander about the forthcoming meeting with representatives of the Visy companies and Pratt and the possible proceedings against Pratt under s 155 of the TPA. The latter possibility was raised because Alexander believed that Heathcote would be aware that Pratt was exposed to a possible criminal prosecution under s 155 and would seek an assurance that no such prosecution would occur. It was therefore seen to be necessary to prepare a response to that matter which Williams and Alexander expected Heathcote to raise. On 2 August 2007, Alexander discussed the likely need for such a response with Cassidy who suggested that Alexander should respond to the representatives of the Visy companies and Pratt by saying that any proposal they might make would be put to a formal meeting of the ACCC. Alexander conveyed that suggested response to Williams with the addition that it was ultimately a decision for the DPP. Alexander also told Williams that it was up to Beach or Heathcote to raise the issue and the ACCC representatives, themselves, should not raise it. 17 The meeting of 6 August 2007 occurred as arranged and occupied about two hours. It was attended by Counsel for the ACCC together with Pryde, Alexander and Williams. Pratt, Debney and the Visy companies were represented by Beach and Heathcote, who told the ACCC that there was a "political issue" involved in Pratt's position because he, Pratt, had told the Prime Minister that he had not contravened the TPA. Accordingly, Beach said that the respondents would only consent to a "weak" declaration in respect of Pratt's involvement and a requirement that he undergo a compliance program. It was indicated on behalf of the ACCC that it would be prepared to agree to any pecuniary penalty for Pratt to be "wrapped up" with that to be imposed on the Visy companies, but that it would insist on a declaration of Pratt's knowing involvement in the cartel conduct. At the same meeting, the suggestion was revived that McHugh might mediate or broker a settlement of the cartel proceeding. The representatives of the Visy companies, Pratt and Debney, were asked to provide the ACCC with a written version of their proposals to settle the cartel proceedings. There was no mention at that meeting of the possibility that charges might be laid against Pratt or Debney under s 155 of the TPA. 18 On 15 August 2007, ABL sent a letter to the AGS containing the terms of an offer on behalf of the Visy companies, Pratt and Debney to settle the cartel proceedings. That letter contained the following paragraphs; 'The settlement contemplated by the Visy respondents will involve:

[47]

(e) the making of some of the 13 specific customer arrangements set out in the Table later in Schedule 1; and (f) the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the SFASC (the Pratt allegations are dealt with later in this letter); however, as to this conduct, we will need to discuss with you the precise terms thereof and how this is presented. You will, of course, appreciate that some of this conduct is the subject of allegations of 2 or more contraventions and that recognition of this aspect will need to be made in terms of any joint presentation to the Court to substantiate the agreed penalty. In relation to the price increase arrangements, we ask you to assume the following: Visy Board offers to plead to the making of each of the 4 price increase arrangements and some limited giving effect thereto on the following generic factual foundation in each case, namely that: (a) prior to the making of each arrangement, both Visy Board and Amcor had each unilaterally decided to increase their prices for the particular year in any event; (b) the prior unilateral decisions referred to in (a) had an independent commercial rationale (e.g. an increase in costs) for each of Visy Board and Amcor; (c) each price increase notified by Visy Board and/or Amcor to their respective customer bases: (i) was a "headline" notification; (ii) was implemented differently in each State by each company; and (iii) within each State was implemented on a discretionary basis for each individual customer within the purview of the particular State Manager depending upon the particular idiosyncratic customer position; and (d) Visy Board would have increased its prices in any event irrespective of the alleged arrangements. The Position of Mr Pratt In relation to Mr Pratt's position we ask you to assume the following: Mr Pratt offers the following: (a) He will subject himself personally to orders that he implement across the Visy Group an appropriate TPA compliance program (audited); (b) He will acknowledge in a Statement of Agreed Facts that in his position as Executive Chairman of the Visy Group of companies, which includes Visy Board, he failed to implement adequate controls and supervision in respect of Messrs Debney and Carroll to prevent the offending conduct occurring; and (c) He will acknowledge in a Statement of Agreed Facts that any penalty imposed upon Visy Board will be borne by the Pratt family. Subject to (a)-(c), a pecuniary penalty will not be separately imposed upon him. The Position of Mr Debney In relation to Mr Debney's position, we ask you to assume the following: Mr Debney offers to plead to 5 separate contraventions of the TPA being knowingly involved in the contraventions by Visy Board which are set out in the Table in Schedule 1. The Position in relation to the 13 pleaded customers, We have also analysed the available evidence In relation to the pleaded customers which we have attempted to summarize in Schedule 1. Obviously detailed discussions will need to take place as to the precise behaviour to be admitted by the respondents identified in the Table on a case by case basis. Pecuniary Penalties Our clients and their legal representatives have given very careful consideration to the matters raised at the conference held at your offices on Monday 6 August last. We understand that the highest pecuniary penalty ever imposed against a corporate respondent for contraventions of Part IV of the TPA is $15 million (see ACCC v Roche Vitamins Australia Pty Ltd [2001] FCA 150). As we have said to you, in our opinion the likely range for a pecuniary penalty against Visy Board is $25-$35 million. If we can agree on all other matters, Visy Board would be prepared to agree to pay a pecuniary penalty at the upper end of a range to $35 million. We also understand that the highest pecuniary penalty ever imposed against an individual respondent for contraventions of Part IV of the TPA is $200,000.00. In our opinion the likely range for a pecuniary penalty against Mr Debney is $750,000 to $1.25 million. If we can agree on all other matters, Mr Debney would be prepared to agree to pay a pecuniary penalty at the upper end of that range. Mr Carroll's position has been separately addressed. You will observe that we have made no provision for a separate pecuniary penalty against Mr Pratt, the reasons for which are earlier stated. Similarly, we have made no provision for separate penalties against the Visy intermediate or ultimate holding companies for reasons previously stated. Costs If we can agree on all other matters, Visy Board would be prepared to submit to an order that it pay the Commission's costs of the proceeding as between party and party, to be taxed in the absence of agreement or, at the discretion of the ACCC, to be fixed by an independent costs expert, Conclusion We look forward to meeting with you at a time to be arranged this coming Friday, 17 August, to take our discussions to the next level. If in the meantime there is any aspect of this letter that you would like us to clarify please let me know.'

[49]

(a) the First Respondent ("Visy IH"); (b) the Second Respondent ("Visy IA"); (c) the Third Respondent ("Visy Board"), (individually and collectively referred to hereafter as "Visy", unless otherwise indicated) by making a contract or arrangement or arriving at an understanding with Amcor Limited ("Amcor") in approximately January to April 2000 containing provisions that: (i) Visy and Amcor would permit each other to maintain approximately their then current share of the market in Australia for the supply of corrugated fibreboard packaging ("CFP"); (ii) Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other's principal CFP customers; (iii) if, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the market in Australia for the supply of .CFP ("CFP Market") that Amcor had lost as a result of losing the supply contract to Visy; (iv) if, for one reason or another, Amcor did enter into a contract for the supply of CFP with a principal CFP customer of Visy, then Amcor would not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor; (v) Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels; (vi) Visy would appoint the Sixth Respondent ("Carroll") as its nominated contact person with Amcor for the purpose of effecting the implementation of the contract, arrangement of understanding; and (vii) Amcor would appoint Edward Laidlaw as its nominated contact person with Visy for the purpose of effecting the implementation of the contract, arrangement or understanding; and made a contract or arrangement or arrived at an understanding (the "Over-arching Understanding") which: (A) contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(1) of the TPA; and (B) contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA. 2. By engaging in each instance of: [the conduct alleged in various paragraphs of the Second Further Amended Statement of Claim]

[57]

Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants, agents, or otherwise howsoever, from: (a) making, or arriving at; (b) giving effect to; (c) inducing, or attempting to induce, any person to make or arrive at, or give effect to; or (d) being in any way knowing concerned in, or party to, the making or arriving at, or giving effect to, any contract, arrangement or understanding with Amcor, or any other supplier of CFP in Australia, which contains a provision that: (i) has the purpose of preventing, restricting or limiting the supply of CFP by a party to the said contract, arrangement or understanding to customers or potential customers of any of them; (ii) has the purpose, or has or is likely to have the effect of fixing, controlling or maintaining, of prices for CFP supplied by a party to its customers in Australia; or (iii) has the purpose, or has or is likely to have the effect, whether by itself or together with another provision or provisions of any contract, arrangement or understanding to which Visy IH, Visy IA or Visy Board is a party, of substantially lessening, preventing or hindering competition in the CFP Market. 44. Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants or agents or otherwise howsoever, from: (a) communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia; (b) requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or (c) requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP. 45. Each of Pratt, Debney and Carroll be permanently restrained, by themselves, their servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of Visy IH, Visy IA or Visy Board in: (a) communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia; (b) requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or (c) requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP. Other orders

[68]

25 Consistently with that resolution, Pryde of the AGS sent to ABL a letter dated 31 August 2007 which recited, amongst other things; '1. We refer to our letter of 24 August 2007 and in the telephone conversation between the writer, and Mr Heathcote and Mr Zwier yesterday evening We confirm we have taken further instructions as to the matters raised in your letter of 21 August 2007. 2. We now have instructions to agree to a meeting next Thursday, 6 September 2007, to be chaired by Mr McHugh QC, between the parties and their legal representatives. 3. The persons who will attend the meeting on behalf of the Applicant will be Mr Alexander, Mr Williams, Mr Cassidy (CEO of the ACCC Mr Jopling QC and Mr Caleo of Counsel, and the writer. 4. The attendees on behalf of the Applicant are not the decision makers of the Commission and they do not have authority to reach Final agreement on matters discussed at the meeting. The ultimate decision-maker, the Commission, comprises six Commissioners, and each of the six Commissioners will be available by telephone on 6 September 2007 if required. 5. So that we can progress this meeting, could you please provide us with a draft letter of instruction to Mr McHugh QC so that we can circulate this to all Commissioners as soon as possible. We consider that the letter of instruction to Mr McHugh QC should be a joint letter of instruction from ABL and AGS. 6. As we understand it, the only issue for discussion at the meeting is the terms of a declaration of contravention by Mr Pratt. Accordingly, we agree that Mr McHugh QC should be provided with a letter of instruction and the relevant material which is specific in your letter of 21 August 2007, namely: 1. the pleadings; 2. the ABL letter to AGS of 15 August 2007; 3 the draft orders tabled at the meeting on 17 August 2007; 4 the transcript of Mr Pratt's section 155 examination of 26 July 2005; 5. the transcript of Mr Jones' interview of 14 December 2004; and 6 the Proof of Evidence of Mr Jones filed by the Applicant on 2 July 2007. 7. We concur with your comments that time is short and we would appreciate your response - including the draft letter of instruction to Mr McHugh QC - at your earliest convenience.'

[89]

30 During the meeting, the ACCC representatives, Cassidy, Alexander, Williams, Pryde, Jopling and Caleo occupied one room ("the ACCC room") and the representatives of the Visy companies and Pratt including Heathcote and Beach were in another room ("the Pratt room"). McHugh moved between the two rooms and there was no direct communication of a relevant kind between any representative of the ACCC and any representative of the Visy companies and Pratt. A statement by McHugh which was received into evidence by consent in the present proceedings contained, amongst others, the following paragraphs; '10. At the initial meeting in the Pratt room, Mr Pratt's lawyers were saying that Mr Pratt would accede to orders directing him to ensure greater supervision of Visy's activities vis-ŕ-vis trade practices matters and to implement a trade practices compliance program, but that Mr Pratt was not prepared to admit to the conversation as alleged in the statement of claim as Mr Pratt denied those allegations. 11. I then proceeded to the ACCC room. During my first period in the ACCC room, I outlined for the ACCC that Mr Pratt denied what the ACCC alleged to have been said at his meeting with Mr Jones on 21 May 2001. I said that in a contested trial it would be one man's word against another and the ACCC would bear the onus of proving the Jones version of the conversation to the Briginshaw standard of proof. 12. Mr Alexander told me that the ACCC's position was that in order for the Civil Penalty Proceeding to settle, Mr Pratt had to admit to knowing the essential elements of the overarching understanding between Visy and Amcor. He said that I would know that better than anyone that this was necessary before he could be knowingly concerned in a contravention of the Act. That stuck in my mind, because Mr Alexander was assuming I was a party to the judgment in Yorke v Lucas, which was decided before I was appointed to the High Court. Neither the ACCC executives nor any of their legal advisers said to me at that time (or any time) that they had in mind an intention, or considered it a possibility that the ACCC might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice. 13. I then returned to the Visy room where Mr Pratt was present. During that period: (a) I told Mr Pratt that the ACCC was not willing to compromise the Civil Penalty Proceeding without him making an admission directed to the conduct alleged against him; (b) Mr Pratt said that he had not had a discussion with Mr Jones on 21 May 2001 as alleged by the ACCC in its statement of claim, or as eventually set out in the signed Proposed Order. (He did not resile from that position at any time in the "without prejudice" Meeting in my presence); (c) I told Mr Pratt that he had to factor into his thinking about whether or not to settle the civil Penalty Proceeding, or to go to trial, that there was a likelihood of an adverse finding being made against him personally; (d) I said, on the one hand, there was a high onus of proof in relation to Jones' evidence and that there was an inconsistency in Jones' first account (as set out in the Jones Examination) and as later set out in the Jones Proof, about what had occurred at the meeting on 21 May 2001. I said that as a result, Jones may not be believed. (e) I told Mr Pratt that, on the other hand, he had to face up to Mr Jones' evidence, and to the fact that a judge would ask why Mr Jones would make that evidence up and implicate himself in the cartel. I told Mr Pratt that he had to take into account that a Court may accept Mr Jones' account of the conversation. Mr Beach QC said that he may be able to move Mr Jones in cross-examination to come back to the version provided in the Jones Examination. I also told Mr Pratt that a judge might think, given his hands on role in the business and as a person who was on the factory floor at 6 a.m. in the morning, it was likely that he would have been aware of all the important matters for the business, and therefore that he must have known about the cartel even though Mr Pratt denied it to be so. I said that was among the things he had to weigh up if he wanted to resolve the Civil Penalty Proceeding. I told Mr Pratt that if he wanted to avoid six months of costly litigation and continued adverse publicity, he had to be prepared to make the concession sought by the ACCC because otherwise the Civil Penalty Proceeding could not be resolved. (f) Mr Pratt was told by others at the meeting that the damage to his reputation by acknowledging his participation in the cartel could be managed by those advising him in relation to media matters; (g) Mr Pratt was also told, and this was a matter of some concern to him, that any evidence led in the Civil Penalty Proceeding may be available to applicants in a class action against Visy for damages arising from the cartel. 14. Mr Pratt did not remain for the entire meeting, because he had to leave to attend a lunch in Sydney with the Prime Minister. I recall Mr Kaye speaking to him by telephone later in the meeting. I cannot recall what Mr Kaye told Mr Pratt. 15. Mr Pratt said very little during the time I was present in the Visy room. He mainly listed to what was said, and he said little or nothing in response to the above observations. He was also concerned by the effect of a finding that he had contravened the Trade Practices Act on his reputation. 16. During my time in the Pratt room, Mr Pratt was not engaged with the process. He did not act as I had expected that he would, given his status as a leading businessman, and he appeared distracted. 17. There was a lot of discussion at the meeting about some particular words in the draft declaration, and various drafts were produced. I went back and forth two or three times between the rooms while the specific words were debated. The Visy advisers, particular Robbie Kaye and one of the public relations people, were the driving forces, discussing how to manage the proposed concession and focusing on what they could make of the word "indirectly" in the proposed declaration. There was lots of discussion about "indirectly" and "communicating", and what exactly those words meant. At one point a dictionary was referred to. This was because it was sought to find a formulation by the Pratt side which did not involve admitting to the correctness of the Jones account. 18. At the conclusion of the meeting, a form of words was agreed. The proposed Order was signed in the ACCC room. I was asked to witness that document, and I signed and dated it. That was the end of my involvement in the matter. 19. The ACCC did not in my presence inform Mr Pratt or his legal advisers, or say to me, that it had in mind an intention, or considered it a possibility, that it might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice. Had the ACCC informed me of such risks or possibilities, I would have regarded that as a relevant matter to put to Mr Pratt in considering whether to compromise the civil Penalty Proceeding.'

[171]

69 I respectfully agree with the distinction that his Honour there draws between a finding as to whether a person has made an admission for the purpose of determining admissibility and the same finding in the course of ultimately determining whether the alleged admission contributes to the discharge by the party adducing it of an onus of proof which that party bears. However, in the present case, as I have earlier suggested, there is an anterior question. That is whether statements contained in the prima facie admissible documents, which were clearly brought into existence by or with the concurrence of Pratt's legal representatives acting with his authority, were admissions at all in the sense of being previous representations of fact. In my view, that question is one of mixed fact and law to be resolved independently of, and before, any final determination of whether the statements imputed to Pratt were actually made, or made with his authority. 70 I accept that the Evidence Act has been predicated on the view that admissions (or previous representations) contained in pleadings in earlier civil litigation may be admissible in subsequent proceedings against the party on whose behalf the pleadings were filed. That view derives support from this paragraph from the 1985 Interim Report on Evidence (Report No 26 Vol 1, Ch 34 p 421 para 755 of the Australian Law Reform Commission ("the ALRC") (Footnotes omitted); '…..In addition, the definition should not exclude admissions contained in pleadings. This is contrary to the orthodox view, which seems to be based on doubts about the reliability of such pleadings. They may be made for tactical reasons rather than as an assertion of truth. Contradictory pleadings may be filed. But more recent decision support the proposition that pleadings should not be placed in a special category - it should be a question of fact in the circumstances whether the particular statement constitutes an admission. This seems a preferable approach and is that proposed.' (emphasis added)

[173]

The same view that "an admission may be made in pleadings" has been expressed by the learned author of Odgers, Uniform Evidence Law, 8th Edn, 2009, at 341. Whether pleadings may constitute admissions within the Evidence Act was left open by Mansfield J in ACCC v Grant [2000] FCA 567, at [18]. 72 I consider that, consistently with the view expressed by the ALRC in the passage quoted at [70] above to which I have added emphasis, the effect of the Evidence Act is that pleadings in previous civil proceedings are not necessarily excluded for the purposes of subsequent proceedings from what may be regarded as admissions within the meaning of s 81(1). Rather, it is a question of fact in the circumstances whether the particular statement in a pleading or analogous document constitutes an admission. The relevant circumstances will include the type of pleading or other document and the terms in which the alleged admission has been expressed. Thus, an assertion in a statement of claim in an action for damages for personal injuries that a plaintiff, X, was the driver of a motor car when it collided with another vehicle at a particular time and place will generally constitute an admission within the meaning of s 81(1) so as to be admissible against X in subsequent civil or criminal proceedings. That I consider to be consistent with the observations of Cockburn CJ in Richards v Morgan (1863) 4 B & S 641. In a passage, at 661, which has been cited with approval by Rares J in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314, at [34], his Lordship said; 'It cannot be doubted that a man's assertions are admissions, whether made in the course of a judicial proceeding or otherwise, and, in the former case, whether he was himself a party to such proceeding or not. It may be given in evidence against him in any suit or action in which the fact so asserted or admitted becomes material to the issue to be determined. And in principle, there can be no difference whether the assertion or admission be made by the party himself who is sought to be affected by it, or by someone employed, directed or invited by him to make the particular statement on his behalf. In like manner, a man who brings forward another for the purposes of asserting or proving some fact on his behalf, whether in a court of justice or elsewhere, must be taken himself to assert the fact that he thus seeks to establish.'

[175]

(a) The Revised Form of Proposed Order 75 The terms of this document have been reproduced at [31] above. It is clearly an agreement as to part of the order which the Court would be asked to make by consent in the event of agreement being reached as to other matters including the amount of the pecuniary penalty which the Court was to be invited to impose in the cartel proceedings. As indicated by its heading, the agreement brokered by McHugh specifically concerned Pratt and involved an acceptance by him that a declaration would be made that, by reason of his having communicated to Jones that Visy would adhere to an understanding that Debney had reached with Brown, he, Pratt, had directly or indirectly been knowingly concerned in a contravention of the TPA by Visy. 76 In light of the analysis undertaken at [58]-[69] above, the critical question to be answered in respect of the Revised Form of Proposed Order is whether it embodied a representation by Pratt that he, in fact, had made a communication to Jones to the effect set out in paragraph 2(ab) of the Proposed Order. One feature of the document is that it embodies an agreement and, as noted at [77] below, an agreement does not ordinarily constitute a representation by a contracting party. However, as the High Court pointed out in the passage from Lee v The Queen (supra) already quoted, a representation may induce the making of an agreement. Another significant feature of the Revised Form of Proposed Order is that it was signed by Kay and not purportedly on behalf of Pratt. That is not to say that the agreement was not made with Pratt's authority or was not intended to bind him to consent to a declaration in the terms proposed. The whole point of the meeting under the chairmanship of McHugh and Pratt's presence in person was, in Heathcote's words, to "get Pratt over the line." However, the feature to which I have drawn attention militates against a finding that the Revised Form of Proposed Order embodied a representation by Pratt that he had, in fact, made to Jones the communication described in it. The conclusion is at least equally open that Pratt's acceptance of the Proposed Form of Order was intended to be only a basis for its incorporation in a body of consent declarations to dispose of the cartel proceedings. That conclusion derives some support, perhaps slight, from McHugh's evidence that at the meeting at which the Proposed Order was signed Pratt continued to insist that he had not had a discussion with Jones on 21 May 2001 to the effect alleged by the ACCC; see par 13(b) of the extract from McHugh's statement set out at [30] above. The conclusion of fact which I prefer in relation to the Revised Form of Proposed Order entails that, in respect of it, Question 1 must be answered, "No".

[176]

(b) The Penalty Statement 77 This document has been reproduced at [39] of these Reasons. It embodies an agreement, as the introductory sentence indicates, between the ACCC and Visy on the amount of the penalty which those parties would jointly invite the Court to impose in the cartel proceedings. An agreement does not ordinarily constitute a representation by a contracting party. One reason for that is the difficulty in attributing a particular statement in the agreement to one party or the other. It is also notorious that parties to an agreement may elect to conduct their contractual relations and, if necessary, enforce the rights arising from them on a basis which is contrary to fact. That is not to say that no statement in an agreement or contractual document can ever constitute a representation in the sense used in the definition of "admission" in the Evidence Act. A recital to a deed or other written contract may, in its context, be so expressed as to warrant the conclusion that both contracting parties intended it to operate as an assertion of actual fact. In that event, the recital, in my view, would be admissible in later proceedings as an admission against either contracting party. 78 In the present case, the Penalty Statement records only an agreement by the ACCC not to seek the imposition on Pratt of a separate penalty over and above that which it had been agreed the Court would be invited to impose on Visy. The document advances three "bases" or reasons for the ACCC's agreement to that course. The most salient to these reasons is the first; that the declaration to be made by the Court of Pratt's involvement involved only a single contravention of the TPA. However, although the agreement embodied in the Penalty Statement enured to Pratt's benefit in the sense that it promised relief from the imposition on him personally of a separate pecuniary penalty, it did not, in my view, constitute an admission by him. The agreement was solely between the ACCC and Visy. It did not purport to be signed on behalf of Pratt as well as on behalf Visy. Thirdly, although, as already noted, the agreement conferred a benefit on Pratt, his participation in it was not necessary to give efficacy to the agreement. 79 I have thus been led to conclude that the Penalty Statement cannot be adduced by the ACCC as part of the affirmative proof of its case in the present proceedings. That is not to say that the Penalty Statement could not have been put to Pratt in cross-examination had he chosen to give evidence in his own defence. However, the facility for the ACCC to have used the document in that way does not bear on the present question. For these reasons, in respect of the Penalty Statement, Question 1 must be answered "No".

[181]

81 The Agreed Statement of Facts was signed by Heathcote as "Solicitor for the 1st to 5th Respondents", by Pryde as Solicitor for the ACCC and by a solicitor on behalf of the sixth respondent, Carroll. 82 I consider that several features of the Agreed Statement of Facts combine to require a conclusion, on balance, that the relevant paragraphs do not contain a representation by Pratt of a fact material to the present criminal proceedings. In no particular order of importance, those features include the terms of s 191 of the Evidence Act, the agreement recited in paragraph 378 of the Agreed Statement and the terms in which paragraph 96 of the Agreed Statement was expressed. 83 The definition of "agreed fact" in s 191 of the Evidence Act, because of its terms, is not limited to a fact which is true or which the parties believe to be true. It includes a matter capable of being the subject of a finding by a court or tribunal which the parties agree, for the purposes of the proceeding, is not to be disputed. It follows that the inclusion of a statement in an agreed statement pursuant to s 191 is not a representation of fact for all purposes. It is no more than a representation by each party to the proceeding that he, she or it will not dispute the asserted fact in that proceeding. In other words, the only representation in the sense used in the definition of "admission" in the Evidence Act is as to the intention or state of mind of the parties to the Agreed Statement. 84 I also consider that it was not intended by the legislature that a fact in an agreed statement pursuant to s 191 could also be used as an admission as contemplated by s 81 or a representation as that expression is used in s 59. Had it been intended that a fact in an agreed statement could be used in either of those ways, express provision to that effect could easily have been made in s 191 itself. 85 I accept the submission by Counsel for the ACCC that it would be surprising if it were possible "for a person making an admission to limit its subsequent use (particularly where the limitation is sought to be applied after the admission was made as in this case)." However, that submission begs what I have identified as the anterior question in this case, which is whether the alleged representation constitutes an admission at all. In relation to the Agreed Statement of Facts, the limitation was not imposed after the document was brought into existence. It was expressly incorporated in the Agreed Statement itself by the stipulation in paragraph 378 that the agreement of the facts contained in the Statement was "for the purposes of this proceeding only." As well, paragraph 378, in terms, invokes s 191 of the Evidence Act which I consider confines, by implication, the use of an "agreed fact" to the proceeding in which the agreement is made. 86 This examination reveals that the words used in a statement later sought to be relied on as an admission can be influential in determining the underlying question of whether the statement, when made, was a representation of fact. In my view, the language of paragraph 378 tells strongly against a finding that "the facts contained herein" were represented to be true for all purposes so as to be available to the whole world thereafter to adduce them in evidence against any of the respondents, including Pratt. In particular, the express recitation in paragraph 378 that the facts have been agreed pursuant to s 191 of the Evidence Act militates against that conclusion. As explained at [83] above, the only representation that can be imputed to the respondents to the cartel proceedings as having been made in the Agreed Statement of Facts is one of intention or state of mind, namely that the respondents would not dispute in those proceedings any of the asserted facts. 87 It is also significant, as already noted, in relation to the Revised Form of Proposed Order, that paragraph 96 of the Agreed Statement does not represent the actual words used by Pratt in his communication with Jones. The first part of the second sentence of that paragraph, it is true, purports to represent the effect of the communication. However, the descriptive words used to identify the understanding "being the Over-arching Understanding referred to in paragraph 72 above" are clearly a lawyer's ellipsis and it is improbable in the extreme that they would ever have actually been used in a communication between businessmen at the All Nations Hotel. 88 This combination of features has led me, again on balance, to conclude that the relevant paragraphs of the Agreed Statement of Facts do not contain a representation in the sense necessary for its reception into evidence as an admission. As with the Penalty Statement, this conclusion would not have denied to the ACCC the right to use the Agreed Statement in cross-examination of Pratt should the occasion have arisen. For the reasons which I have endeavoured to explain, in respect of the Agreed Statement of Facts, Question 1 should again be answered, "No".

Australian Competition and Consumer Commission v Pratt

At a glance

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Judgment (191 paragraphs)

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Legislation Cited (2)

Cases Cited (8)

Cited By (12)