Australian Competition & Consumer Commission v ABB Power Transmission Pty Ltd

Australian Competition & Consumer Commission v ABB Power Transmission Pty Ltd - [2003] FCA 626 - FCA 2003 case summary — Zoe

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INTRODUCTION 1 ABB Power Transmission Pty Ltd is a respondent in two proceedings, and ABB Transmission and Distribution Ltd a respondent in one of the proceedings (together 'ABB'), brought in the Court by the Australian Competition and Consumer Commission ('the Commission'). In both proceedings, the Commission alleges that ABB and other parties entered into understandings or arrangements in contravention of Pt IV of the Trade Practices Act 1974 (Cth) ('the Act'). The allegations in proceeding V553 of 1999 ('the Power Proceeding') relate to the market for the supply of power transformers. Proceeding V868 of 2000 ('the Distribution Proceeding') alleges understandings or arrangements in contravention of the Act in relation to the market for distribution transformers. The participants, alleged by the Commission to be involved in a relevant understanding or arrangement, together with individuals employed by them, were joined as respondents in the proceeding relating to that understanding or arrangement. 2 Certain of the respondents, namely, Alstom Australia Limited ('Alstom'), Wilson Transformer Company Pty Ltd ('Wilson'), Schneider Electric (Australia) Pty Ltd ('Schneider') and A W Tyree Transformers Pty Ltd ('Tyree') (together referred to as 'the Admitting Respondents') admitted contraventions of Pt IV of the Act. Agreed statements of facts were submitted to the Court on the basis of which penalties were assessed by the Court (see ACCC v ABB Transmission and Distribution Ltd (2001) ATPR 41-815; ACCC v ABB Transmission and Distribution Ltd (2001) ATPR 41-839; ACCC v ABB Transmission & Distribution Ltd (No 2 - Power Transformers) (2002) ATPR 41-871; and Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2001) 190 ALR 169). That resolved each of the proceedings so far as the Admitting Respondents were concerned. 3 The Commission has continued to prosecute both proceedings as against ABB, which has put in issue certain of the contraventions of the Act alleged against it. In the course of the further conduct of the proceedings, the Commission discovered various documents passing between it and the Admitting Respondents, including draft statements by officers of the Admitting Respondents, drafts of the agreed statements of facts prepared by the Commission and comments on those drafts by the Admitting Respondents. 4 By notices of motion filed on 27 September 2002 in both proceedings, ABB sought to inspect the documents in question. However, the Commission claimed privilege against production for inspection on the basis of:

without prejudice privilege;
legal professional privilege;
public interest privilege. 5 ABB also caused subpoenas to be served on the Admitting Respondents requiring production of counterparts of the documents in their custody. The Admitting Respondents for the most part resisted the grant of access to documents referred to in the subpoenas on similar grounds of privilege. While the questions that arise in relation to the subpoenas are not identical to those that arise in relation to production for inspection following discovery, the issues are similar. For present purposes, however, it has been convenient to defer consideration of any separate questions arising in relation to the subpoenas. 6 The circumstances relating to each of the Admitting Respondents differ in some respects. It is convenient to deal first with the documents relating to Alstom. The legal questions raised in relation to the other Admitting Respondents are similar to those raised in relation to the Alstom documents.

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Should this undertaking of cooperation be given the Commission seeks the full report outlined above by no later than Tuesday 3 August 1999.' (First emphasis added; later emphasis original). 10 The letter relates only to the market for power transformers. It appears that Alstom's solicitors, Gilbert + Tobin, wrote to the Commission in response to the letter. However, their letter is not in evidence. In any event, on 15 July 1999, a telephone discussion took place between Ms Gina Cass-Gottlieb of Gilbert + Tobin and Mr Luke Woodward of the Commission in relation to the letter apparently written by Ms Cass-Gottlieb. A note of the discussion made by Mr Woodward records the following: 'In relation to the points in her letter I said:

the benefits seemed fairly obvious, but we were not proposing some settlement arrangement at this time, and I did not propose to particularise them.
I said that in short our leniency policy was that we would submit to the Court it should be more lenient in imposing penalties where the parties fully co-operated. I said that aspects of this were discussed in the Commission's Journal No.17 published in October 1998 and as also discussed in Goldberg's recent judgement in ACCC v Baker Bros. Gina said that her client was impressed with the seriousness of the matter. She said that they would be co-operating. She said that she did have some difficulty with the requirements in (b) in my letter, given that we were not talking about settlement. It transpired that her major concern was that her client's employees were exposed and that in the absence of knowing what might happen they may not want to agree to give evidence. She was not so concerned about being interviewed, although she asked if she could be there (I didn't respond to the question). I said that the Commission was putting on hold its investigation if they agreed and that it was somewhat exposed in relation to that. I said we were less concerned about that if we knew the individuals would cooperate in interviews and give evidence. I said that if they did not agree to that part of the arrangement it was a matter for them. As to whether that would reflect in Court penalties etc was a matter they could assess, but that I thought that they would primarily judged on what they did not on what they said they would do. However, I said that if they did not agree to that aspect we might withdraw our indication that we would not approach witnesses. Gina took that on board and indicated she would contact me tomorrow after she had an opportunity to discuss the matter with her client. I said that I would be available after 12 noon.' 11 On 16 July 1999, Ms Cass-Gottlieb responded to the Commission's letter in the following terms: 'I refer to your letter of 14 July 1999. ALSTOM Australia Limited (ALSTOM) has decided in principle to cooperate with the Commission's investigation in a truthful and open manner. ... ALSTOM has commenced a full investigation of the matters raised by the Commission and the background to them and will provide its report to the Commission by no later than Tuesday, 3 August 1999. After the Commission has considered the report ALSTOM will discuss with the Commission the subsequent appropriate steps to assist in the investigation. ... I acknowledge that ALSTOM and its officers, employees or representatives will not contact any of its competitors or their officers, employees or representatives in relation to this matter or discuss in any way the issues raised in this letter or the Commission's investigation with any such parties.' 12 It appears that Alstom provided a report to the Commission dated 4 August 1999. The report is not in evidence but no claim to privilege is made and a copy has been provided to ABB. I assume that it related to the power transformer markets in Australia and New Zealand. 13 It is clear enough that the report and any other material to be furnished by Alstom pursuant to the arrangement for cooperation were not intended to be privileged. To the contrary, it is clear that the report and any other material to be furnished to the Commission could be used by the Commission, if it saw fit, in its investigation of the alleged contraventions of Pt IV of the Act and in any proceeding that the Commission might thereafter commence in relation to such contraventions. While it might be inferred that the material was furnished on some basis of confidentiality, it was clearly not privileged in a sense that would prevent it from being used against Alstom.

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September Statements 14 On 14 September 1999, Mr Michael Kiley, the director of the Enforcement and Coordination Branch of the Commission, made a telephone request to Ms Gina Cass-Gottlieb to provide 'statements in draft' by certain employees of Alstom. A note of the telephone request, made by Ms Cass-Gottlieb, indicates that the statements were required by 'next Wednesday', being 22 September 1999. The note indicates that the Commission required the drafts as'part of their investigation'. 15 On 15 September 1999, the Commission sent a facsimile communication to Gilbert + Tobin headed 'ACCC Investigation of Transformer Markets'. After requesting Alstom to provide the Commission with certain documents, the communication said: 'The Commission also requires that statements be provided by Mr Elliott, Mr Johnson, Mr Grabham and Mr James by close of business 22 September 1999. While it would be preferrable [sic] if the statements were signed, the Commission would be willing to accept drafts.' 16 On 16 September 1999, a telephone conference took place. The participants on one side were Mr Kiley, Mr Woodward, Mr Allen Asher (a deputy chairman of the Commission), Mr Rami Greiss (of the Australian Government Solicitor ('AGS'), who were acting for the Commission) and other officers of the Commission and of the AGS. The participants for Alstom were Mr J S Hilton SC and solicitors from Gilbert + Tobin, including Ms Cass-Gottlieb and Ms Sarah Murphy. Mr Hilton and the Gilbert + Tobin representatives were located in Mr Hilton's chambers. 17 At the beginning of the telephone conference, Ms Cass-Gottleib said that the conference was to be 'a without prejudice discussion leading to agreed resolution of the matter'. There was no evidence as to the content of the discussion that then ensued on that subject. 18 However, at some stage there was also a discussion about 'other issues', including the proposed commencement of a proceeding by the Commission. Mr Hilton asked 'what is the timetable'. The response was that there was a proposal for filing something on 7 October 1999. Mr Hilton asked what was the reason for requiring draft statements by Wednesday. He observed that next Wednesday 'is a very short period' and that within that time 'we could give very preliminary drafts only'. Mr Woodward said: 'We need drafts in a form that could be signed, waiting to be finalised and signed'. Mr Hilton then responded that this was not 'possible by next Wednesday'. 19 Two contemporaneous file notes record Mr Hilton's further comments. A note prepared by Ms Murphy said: 'Next Wed - not possible - cob - 27/9 - Monday - OK w/o - prej - earlier drafts'. A note made by Mr Rami Greiss was as follows:

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'Monday 27 September - Statements

W/O prejudice working drafts earlier.' Both Ms Murphy and Mr Kiley gave evidence as to their recollection of what was said at the conference on 16 September 1999. However, neither had any real independent recollection of the precise terms of the discussion recorded in their contemporaneous notes. 20 On 29 September 1999, Gilbert + Tobin sent draft statements to the Commission under cover of a letter of that date. The letter was not marked 'without prejudice'. After referring to the Commission's letter of 14 July 1999, the letter relevantly said: 'The statements we have provided are in draft form. We have used our best endeavours, but in some instances we have been unable to finalise the drafts into statements by today in a form that is satisfactory to us. We have interviewed Mr Ian Lynch but he has been unable to review his statement within the time available. ALSTOM is endeavouring to ensure that the statements provided are complete, accurate, truthful and open signed statements from each of the deponents. However, you will appreciate that we have been constrained by the extremely short time frame available to draft and finalise statements which meet these requirements, as well as by the imprecision of the allegations the Commission made in its letter dated 23 September 1999. ... We nevertheless hope to finalise the drafts of the statements and provide signed statements to the Commission on Friday 31 October 1999. As we have indicated in our previous correspondence to you, ALSTOM intends to continue to cooperate with the Commission's investigation into this matter. We would be very greatly assisted in our endeavours if you could provide details about what conduct is said by the Commission to constitute the attempts to engage in contravention of the Act in 1997 and 1998.' On the following day, 30 September 1999, Gilbert + Tobin forwarded a copy of a draft statement by Mr Lynch under cover of a letter of that date. That letter was not marked 'without prejudice'. No signed version of the statements have ever been provided to the Commission by Alstom. 21 The Commission commenced the Power Proceeding against ABB, Alstom and others on 1 October 1999, although the Distribution Proceeding was not commenced until 6 November 2000. Both ABB and Alstom were also joined as respondents in the Distribution Proceeding. 22 In a letter to Gilbert + Tobin of 15 October 1999, the Commission, after referring to Alstom's report of 4 August 1999, said: 'I understand from that report that the only Alstom employee involved in or with knowledge of the alleged conduct was and is Mr Paul Grabham. In light of this, the Commission requests a detailed statement from Mr Grabham in respect of the alleged conduct relating to the manufacture and supply of distribution transformers by no later than Friday 22 October 1999.' (Emphasis added). 23 That request appears to relate to distribution transformers whereas the original request of 14 July 1999 referred to markets for power transformers. It appears that the report of 4 August 1999 provided some details of alleged conduct in respect of the manufacture and supply of distribution transformers. Hence the request for a detailed statement relating to distribution transformers. No such statement by Mr Grabham has been furnished to the Commission. 24 On 26 November 1999, following a request made by the Commission on 23 November 1999, Gilbert + Tobin provided the September Statements to the Commission in electronic form.

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Without Prejudice Privilege 25 Public policy requires that there be a privilege that prevents tender against a party of an admission made by that party in the course of or for the purposes of negotiating a compromise of a dispute. The privilege would extend to preventing any person from tendering such material against the admitting party, including in circumstances where the party seeking to tender the material as an admission is not the party to whom the admission was made. 26 As a general rule, without prejudice privilege renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement. Further, admissions made to reach settlement with a different party within the same litigation are also inadmissible, whether or not settlement was reached with that party: Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280 at 1301D. 27 Clearly the party to whom an admission was made would have access to the material containing the admission. The question presently in issue is whether, assuming the privilege attaches to material containing such an admission, it extends to preventing third parties having access to such material. The Commission contends that the general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discoverable to third parties: see Rush & Tompkins (at 1305D). 28 The Commission also says that the privilege extends to prevent access by a third party because such a party who obtains discovery of without prejudice correspondence could make no use of it at trial and, therefore, it could be of only very limited value to him or her: see Rush & Tompkins (at 1305B). However, it would not be correct to say that ABB could not make any use of the September Statements at trial. For example, it may be used to challenge evidence given by an employee of Alstom who might be called to give evidence. If such a person were called by the Commission as a witness against ABB, a draft statement of the evidence of that person could be useful to ABB if the evidence given by the witness were inconsistent with the statement. 29 There is no suggestion that the September Statements would be used against any person who may be taken to have made an admission in them. The most that can be said is that the draft statements might be used to challenge evidence given on oath by the prospective maker of the statement. 30 It is by no means clear that without prejudice privilege attaches to the September Statements. By its letter of 14 July 1999, the Commission had requested Alstom to provide to it, in a comprehensive and open report, details of: (i) all meetings and communications relating to collusive arrangements and involving price fixing and market sharing agreements; (ii) the implementation of such arrangements; (iii) all officers and employees of Alstom who were involved in or had knowledge of the arrangements. 31 Alstom was being given the opportunity to cooperate with the Commission's investigation into alleged collusive arrangements in relation to the power transformer market. To that end, the Commission had also requested Alstom to provide officers to be interviewed as required and to provide evidence in any subsequent proceeding, including making witnesses available. 32 The Commission requested a full report by 3 August 1999. By its letter of 16 July 1999, Alstom told the Commission that it had decided in principle to cooperate with the Commission's investigation in a truthful and open manner. Alstom said that it would provide its report to the Commission by no later than 3 August 1999 and said that, after the Commission had considered the report, Alstom would discuss with the Commission the subsequent appropriate steps to assist in the investigation. The request for the statements in September 1999 was expressed to be made as part of the Commission's investigation. 33 The Commission's letter of 14 July 1999 required that the material that was to be provided should be 'complete, accurate, truthful and open'. However, the Commission said that it would not give any publicity to the matter until its consideration and assessment of the report provided by Alstom was complete. There is implicit in that statement the proposition that the Commission regarded itself as free to give publicity to the matter when it had assessed the report. The Commission said that, at the appropriate time, it would be prepared to discuss with Alstom possible settlement proposals and would discuss the further conduct of the matter after consideration of the report requested from Alstom. That indicates that, until that time, there would be no settlement discussion or negotiation. 34 There is nothing in the exchange of 14 July 1999 and 16 July 1999 to indicate that the report by Alstom, and the cooperation involving the provision of officers of Alstom for interview and evidence, were to be given on a without prejudice basis. There is no suggestion in the communications that took place on 14 September 1999 and 16 September 1999 that the draft statements were to be furnished to the Commission by way of the furtherance of any compromise or settlement negotiations or discussions. Neither of the letters enclosing draft statements was marked 'without prejudice'. 35 There was no evidence that, as at September 1999, either Alstom or the Commission had suggested any proposal for compromise. There was no evidence of any compromise or settlement proposal before November 1999. Indeed, the exchange of 14 July 1999 and 16 July 1999 indicates that there would be no settlement discussions until the Commission's investigation was complete and the request for statements initiated on 14 September 1999 was made in the context of a continuing investigation by the Commission. 36 I consider that the contemporaneous notes of the discussions on 14 July 1999 and 16 July 1999 suggest that Mr Hilton intimated that Alstom would provide drafts that could be signed by Monday, 27 September 1999 but that an effort would be made to produce working drafts earlier 'without prejudice'. The use of the term 'without prejudice' was not to signify that the drafts would be furnished as part of settlement negotiations. There were no settlement negotiations on foot at that stage. Rather, the expression was used to signify that, while every effort would be made to produce accurate statements, no guarantee could be given that statements produced earlier than 27 September 1999 would be 'complete, accurate, truthful and open'. That is borne out by the terms of the letter of 29 September 1999 under cover of which Gilbert + Tobin sent to the Commission the draft statements of Messrs Elliott, Grabham, James and Johnson. 37 I am not persuaded that the September Statements were furnished to the Commission as a part of a course of communications directed to compromise or settlement. They were provided to the Commission by Alstom in the spirit of cooperation in order to ensure leniency by the Court and to avoid formal interrogation under s 155 of the Act. Accordingly, whatever may be the extent of without prejudice privilege, it did not attach to the September Statements.

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Legal Professional Privilege 38 The Commission contends that the dominant purpose for which the September Statements were brought into existence was the conduct of the Power Proceeding and the Distribution Proceeding. The use that was actually made of the draft statements may give rise to some inference as to the purpose for which they were brought into existence. However, that would not be decisive. In order to determine whether legal professional privilege was attracted, it is necessary to consider all the circumstances surrounding the bringing of the September Statements into existence and the furnishing of them to the Commission. 39 Clearly enough, Gilbert + Tobin prepared the statements because of the request made by Mr Kiley on behalf of the Commission. The note of Mr Kiley's telephone request of 14 September 1999 suggests that the Commission required the statements as part of its investigation into the alleged contraventions of Pt IV of the Act. The heading on the letter of 15 September 1999 confirms that the request was made in the context of the continuing investigation by the Commission of the transformer markets. 40 The inference is clearly open that the request was made pursuant to the arrangements for cooperation evidenced by the exchange of 14 July 1999 and 16 July 1999 and I would draw the inference that the draft statements were furnished pursuant to those arrangements. They were furnished in the expectation that, as a consequence, the Commission would support a lenient approach to penalty by the Court, in the event that contraventions of Pt IV by Alstom were established. 41 Mr Greiss, who participated in the telephone conference on 16 July 1999, was also involved in settling the correspondence by which the September Statements were requested by the Commission. Mr Greiss received copies of the draft statements. Mr Greiss said that his 'understanding' was that the statements were requested for the purpose of being used 'as part of the Commission's case in prosecuting the matter, in obtaining evidence to use in the proceedings'. Mr Greiss did not say who had the purpose of using the September Statements as part of the Commission's case. The evidence he gave did not suggest that it was his purpose, as the solicitor retained to act for the Commission. He did not request the statements. They were requested by an officer of the Commission as part of its investigation. 42 Mr Greiss also said that the draft statements were used by the Commission 'in assisting the framing of the pleading that the Commission filed'. He also said that the draft statements 'assisted in the draft statement of agreed fact process as well'. However, the question is not what use was actually made of the documents. The question is what was the dominant purpose for which the documents were brought into existence. The September Statements were produced by Gilbert + Tobin and provided to the Commission pursuant to the arrangements for cooperation made in July 1999. They were requested as part of the Commission's ongoing investigation into the alleged contravention of Pt IV of the Act. I am not satisfied that they were brought into existence, or provided to, or obtained by the Commission for the dominant purpose of conducting litigation so as to attract legal professional privilege.

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Public Interest Immunity 43 It may be that the public interest would be served by a principle that communications between the Commission and a party who has contravened the Act, which occur in an endeavour to make frank disclosure and give full cooperation to the Commission in its investigations, should have some protection in order to induce such frank disclosure and full cooperation. It may well be that there would be a reluctance to make frank disclosure and cooperate fully if communications that thereby resulted were then to be available for general publication. 44 However, it is always open to parties cooperating with the Commission to require confidentiality in their communications in that regard, as some of the Admitting Respondents did in express terms. Nevertheless, that confidentiality must be limited and could not, any more than is the case with any other confidential communication, be maintained to subvert the interests of justice. 45 On one view, such a public policy is not different from the well-established policy that supports without prejudice privilege. There is no reason to create a further privilege designed to induce frank disclosure and cooperation in circumstances where the communication would otherwise be protected by without prejudice privilege. If a communication is not protected by without prejudice privilege, it is hard to see any rationale for the existence of such an additional privilege, so long as confidentiality is maintained. 46 The question of maintaining confidentiality in relation to the material, however, is a different matter. Public policy may well require that the material not be disclosed except in the interests of the administration of justice. Even then, it may be appropriate to limit the extent of any disclosure. It may be appropriate for orders to be made in due course that evidence in relation to such material be given in confidence. Nevertheless, I do not consider that it would be contrary to public policy to permit ABB to have access to the September Statements, subject to appropriate undertakings as to confidentiality.

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Agreed Statements Of Facts 47 On 5 November 1999, Gilbert + Tobin wrote to the AGS requesting further particulars of an amended statement of claim that had been filed in the Power Proceeding on 1 November 1999. On 19 November 1999, the AGS replied to Gilbert + Tobin in connection with the Power Proceeding. In the letter the AGS relevantly said: 'As discussed, the Commission suggest the most efficient way to progress this matter with your clients would be by way of an agreed statement of fact. This will not only obviate the need for defences to be filed but will also ensure that the matter is dealt with in an expeditious and cost effective manner. I note that you will obtain instructions from your clients about this matter and I await your response.' The letter then went on to respond to the request for further particulars. The letter ended by saying that a letter would be written separately 'on a without prejudice basis' in relation to another matter. 48 In anticipation of a directions hearing in the Power Proceeding fixed for 17 December 1999, the AGS wrote to Gilbert + Tobin on 14 December 1999 saying: 'The Commission considers it appropriate, in light of its proposal to proceed by way of Agreed Statement of Facts, to have the matter adjourned until 5 February 2000. It is envisaged by this time we will be in a position to propose further orders.' The proceeding was subsequently stood over for further mention. 49 On 7 January 2000, the AGS wrote to Gilbert + Tobin enclosing a draft statement of facts 'for your consideration'. The letter, which was marked 'Without Prejudice', went on to say: 'As previously discussed, the Commission considers it appropriate to settle the question of liability with your clients by way of an Agreed Statement of Facts. You will note that this draft does not incorporate conduct by your clients in the Distribution Transformer industry however it is envisaged that a further Agreed Statement of Facts will be prepared to deal with distribution transformers.' 50 On 3 March 2000, as foreshadowed in the letter of 7 January 2000, Mr Kiley wrote to Ms Cass-Gottlieb enclosing a draft statement of facts in relation to the 'Distribution Transformer Market'. Mr Kiley said that he would like to have discussions about that document at the meeting that had been scheduled for 9 March 2000 in relation to the Power Proceeding. 51 On 28 March 2000, the AGS wrote again to Gilbert + Tobin, marked 'Without prejudice'. The letter relevantly said: '1. I refer to ... our meeting on 9 March 2000 to discuss the draft Statement of Agreed Facts ("draft statement"). At that meeting our clients expressed the view that it would be ideal to provide the Court with a settled Statement of Agreed Facts prior to the next directions hearing on 10 May 2000. ... 4. It was also agreed at our meeting referred to above that you would provide your general comments on the draft statement of facts in the form of a marked up copy. Could you please forward your proposed amendments to this document as soon as possible.' 52 On 21 November 2000, the AGS wrote again to Gilbert + Tobin marked 'Without prejudice'. After referring to a meeting of 16 November 2000, the letter furnished a response to 'the issues discussed'. The letter ended as follows: '2. As discussed at our meeting we confirm that Alstom will provide the Commission with additional factual material in respect of the compliance program referred to in paragraph 34 and the corporate history referred to in paragraphs 25 & 26 of the draft Agreed Statement of Facts. 3. We also confirm that your clients will provide a response to the Commission in respect of the 6 remaining tenders in contention and provide some comments and suggested amendments to certain paragraphs of the draft Agreed Statement of Facts.' 53 Gilbert + Tobin wrote to the AGS on 28 November 2000, marked 'Without Prejudice'. After referred to the meeting of 16 November 2000 and the AGS's letter of 21 November 2000, Gilbert + Tobin made comments '[i]n response to the issues raised in relation to the draft Agreed Statement of Facts'. On 29 November 2000, Gilbert + Tobin wrote again to the AGS attaching comments on 'the Commission's draft Agreed Statement of Facts dated 3 November 2000'. 54 On 19 December 2000, an agreed statement of facts was filed by Alstom in the Power Proceeding. On 28 March 2001, an agreed statement of facts was filed by Alstom in the Distribution Proceeding. A hearing on the question of penalty in relation to Alstom's conduct as disclosed in the two documents took place at the end of March 2001. On 5 April 2001, orders were made by the Court imposing penalties on Alstom under the Act in respect of contraventions disclosed in the agreed statements of facts. 55 The suggestion by the Commission in November 1999 that the matter proceed by way of an agreed statement of fact was directed to a compromise. While the Commission had made it clear up to that stage that it expected cooperation from Alstom in connection with its investigation, no settlement proposal had been suggested. However, the purpose for proceeding by way of an agreed statement of facts was to achieve a compromise of the whole proceeding, or at least a narrowing of the issues raised by the proceeding. 56 It is true that the possibility of compromise was foreshadowed in the Commission's letter of 14 July 1999. Further, there was reference to the arrangements for cooperation in connection with the discussions concerning the proposed agreed statements of facts. However, part of the correspondence after November 1999, which was for the most part expressed to be 'without prejudice', was directed to achieving a compromise between the Commission, on the one hand, and Alstom, on the other, of the Power Proceeding and, subsequently, the Distribution Proceeding. 57 I consider that the drafts of the agreed statement of facts prepared by the Commission were submitted to Alsom in order to reach a settlement with Alstom of the facts that would be put before the Court for the purposes of assessment of penalty. Alstom's comments were directed to achieving the same end. I am satisfied that the communications relating to the proposed agreed statement of facts from November 1999 were communications directed to the settlement of the proceedings. Accordingly, they are protected by without prejudice privilege.

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The letter contains requests for information in the following terms: 'I request that your client provide full details of the May 1992 meeting and the events surrounding it... . ... I also request that your client provide the Commission with full details, including any documentary and other evidence, of any communications in respect of a proposed rationalisation of the Australian transformer industry that Alstom has participated in with any competitors since 1992. ... I request that your client provide the Commission with an account of Mr James' recollections of each tender in [the period 1 January 1996 until at least 1 August 1996]. This should include a detailed account of any meetings, telephone conversations or other communications Mr James participated in during which the tenders in question were discussed pursuant to the power transformer arrangement. I would appreciate if you could summarise these details for each relevant tender in a form similar to that attached to this letter ... . ... I also request that your client provide full details of any communications between Colin James and RG Elliott or any other Alstom employee or other representative in respect of [the 1998 meeting at the Airport Sheraton]. ... This must include copies of any relevant documents prepared including any relevant e-mail or other correspondence passing between Mr James and Mr Elliott or between Mr James and any representative of a competitor of Alstom.' 60 It is clear that that letter was written as part of the investigative process undertaken by the Commission. There is no suggestion that the Commission was seeking a compromise in eliciting new information sought in the letter of 3 March 2000. That is so notwithstanding that the Commissioner had also commenced a process of negotiation directed to settlement of 'the question of liability' by means of an agreed statement of facts. 61 On 27 March 2000, Gilbert + Tobin wrote to the Commission referring to the letter of 3 March 2000. Gilbert + Tobin said that they were 'in the process of compiling information to answer your request'. 62 On 28 April 2000, Gilbert + Tobin wrote again to the Commission referring to the Commission's letter of 3 March 2000 and Gilbert + Tobin's letter of 27 March 2000. The letter was headed with reference to the Power Proceeding. By the letter, Gilbert + Tobin provided the additional information requested by the Commission and also enclosed draft statements by Messrs Grabham, Johnson and James. The letter was headed 'Without Prejudice' and indicated that Gilbert + Tobin were looking forward 'to hearing from the Commission as to its view'. 63 Clearly, the information set out in the letter of 28 April 2000 was provided in response to the request of 3 March 2000. As such, it was furnished pursuant to the arrangements for cooperation entered into between Alstom and the Commission in July 1999. The information was not furnished by way of an attempt to negotiate a compromise. The exchange summarised above did not attract without prejudice privilege.

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Draft Statements and Affidavits Obtained After the Penalty Hearing 64 On 23 July 2001, Deacons, solicitors, who act for the Commission in connection with the Distribution Proceeding, wrote to Gilbert + Tobin. After referring to the Commission's letter of 14 July 1999 and the fact that ABB and some of the former and current executives of ABB had indicated that they were likely to contest some of the allegations made by the Commission, the letter said: 'In light of these events, the Commission requests your clients' continued cooperation in preparing evidence in the Distribution Transformer proceedings, as anticipated in the Commission's letter of 14 July 1999, in relation to the issues in dispute with the ABB respondents. In this regard, the Commission requests signed statements from Mr Grabham and Mr James setting out their best recollections of all relevant events. In order to assist your clients we enclose draft statements of evidence, which we have prepared from the draft statements, records of interview and correspondence provided to the Commission during the investigation of this matter.' 65 There is no evidence as to the extent of communications in relation to the matter between July 2001 and August 2002. However, on 20 August 2002, Deacons wrote again to Gilbert + Tobin referring to previous communications relating to the provision 'of evidence in any contested hearing in these proceedings', in relation to the Distribution Proceeding. The letter went on to say: 'We advise that we have not been able to resolve all factual matters with the ABB Respondents and it is more likely than not that this matter will proceed to a contested hearing. Accordingly, we enclose for your review a draft affidavit for Mr Colin James. We advise that this draft has been modelled on a previous draft statement provided to the Commission and has been supplemented with additional material provided by Mr James in interviews with Commission staff. Could you please review this document and advise whether your client requires any amendments to its contents. You will note that in the text of the document, we have asked questions in relation to matters that we are not clear upon. We would be grateful for your client's clarification on these issues.' 66 On 28 August 2002, the AGS wrote to Gilbert + Tobin in connection with the Power Proceeding, referring to previous correspondence and 'to your client's agreement to assist the Commission with its case'. The letter enclosed 'for your consideration' a draft statement of Colin James. 67 On 12 March 2003, Ms Murphy sent an email to Deacons and the AGS saying: 'I have confirmed that Colin and Paul are available to review the proposed statements before 26 March, but only at limited times. Could you please let me know when you expect to be in a position to provide the draft statements. As very little time remains before the hearing date, it seems to me unlikely that we will be able to finalise them by the date you have requested.' Later on the same day, Deacons sent to Gilbert + Tobin copies of draft affidavits for Paul Grabham and Colin James. On the following day, 13 March 2003, the AGS forwarded to Gilbert + Tobin draft affidavits under cover of an email saying: 'Further to your email yesterday and previous discussions concerning the proposed evidence of your client Mr Grabham and Mr James we enclose draft affidavits for their consideration. Please note that we have drafted these affidavits based on interviews and other documents provided by your clients.' 68 It may be that in relation to the draft statements and affidavits prepared after the disposition of the proceedings as against Alstom, Alstom and its solicitors cooperated with the Commission pursuant to the arrangements of July 1999. That, however, is not decisive. It may be that the Commission secured the cooperation of Alstom by holding out to Alstom the prospect of a lenient approach by the Court. Nevertheless, the dominant purpose for the creation of the documents in dispute under this head is the continued conduct of the relevant proceedings as against ABB. They are therefore protected by legal professional privilege.

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Cooperation Arrangements with Wilson 70 On 13 July 1999, the Commission wrote to Wilson following a meeting that took place on 12 July 1999. By its letter, the Commission stated that it wished to give Wilson and its officers the opportunity to cooperate 'at an early stage' with the Commission's investigation into the markets for power and distribution transformers. The letter said that the investigation would proceed 'with or without cooperation'. The letter then set out the elements that full cooperation would comprise. The language is identical to that of the Commissioner's letter to Alstom of 14 July 1999. 71 Arthur Robinson and Hedderwicks, Wilson's solicitors, wrote to the Commission on 16 July 1999 saying that Wilson, and its principal, Mr Robert Wilson, were agreeable 'in principle' to the provision of cooperation to the Commission on the basis outlined in the letter of 13 July 1999. The letter of 16 July 1999 made clear that any report to be provided to the Commission was to be 'on a confidential basis'. The letter said: '... we understand that following the provision of the report it is proposed that the [Commission] will discuss with our clients any settlement proposal which may be put to the Court on an agreed basis in relation to the matters the subject of the investigation.' 72 Arthur Robinson and Hedderwicks wrote again on 30 July 1999, saying that their clients were preparing their report to be provided to the Commission as part of the cooperative process. The letter said: 'We propose that the report plus any additional documents (collectively the report) our clients will produce in accordance with the agreement to provide cooperation to the [Commission] will be provided on a confidential basis. Confidentiality in respect of the report means that [a Commission] official must not disclose any information provided in the report to any person except: (a) when the [Commission] official is performing duties or functions as [a Commission] official under the [Act] ...; or (b) when the [Commission] official or the [Commission] is required by law to disclose the information.' 73 The letter requested that, if any information provided in the report is to be disclosed, the source of the information not be disclosed other than to the Commission's legal advisors, without the prior written consent of Wilson. On 4 August 1999, the Commission indicated that, subject to the clarification of one matter, the confidentiality regime proposed was acceptable. 74 On 12 August 1999, Arthur Robinson and Hedderwicks sent to the Commission a draft report prepared by Wilson. The letter said that the report was provided 'to assist' the Commission 'in its investigation of allegations of price fixing and market sharing in the market for the sale of power and distribution transformers'. On 27 August 1999, Arthur Robinson Hedderwicks forwarded 'a confidential second report' prepared by Wilson for the same purpose. 75 On 7 September 1999, Mr Wilson was examined by officers of the Commission in the presence of representatives of Arthur Robinson and Hedderwicks. Following that examination, the Commission requested Arthur Robinson and Hedderwicks to provide certain further information and copies of documents. The documents requested were provided under cover of a letter from Arthur Robinson and Hedderwicks of 11 October 1999. In response to a letter from the Commission of 15 October 1999, Arthur Robinson and Hedderwicks wrote to the Commission on 20 October 1999 confirming the statement in their letter of 16 July 1999 that Wilson and Mr Wilson would use their best endeavours to cooperate with the investigation by the Commission 'in the context of [the Commission's] leniency guidelines'. 76 In the meantime, the Power Proceeding had been commenced on 1 October 1999. On 20 October 1999, Arthur Robinson and Hedderwicks wrote to the AGS in relation to that proceeding, furnishing 'clarification' of Mr Wilson's position in relation to certain allegations in the statement of claim as to a meeting that took place in Sydney in 1997 or 1998. 77 On 11 November 1999, Arthur Robinson Hedderwicks wrote to the AGS. The letter referred to an agreement reached at a meeting on 7 October 1999 that the question of the provision of any statement by Mr Wilson concerning power transformers would be addressed once pleadings had closed and documents had been disclosed by other parties to the proceeding. The letter ended by asking that the Commission supply any additional documents for information that it had that might assist Mr Wilson in the core events. 78 On 11 November 1999, a 'confidential third report' was provided by Wilson to the Commission. A further interview of Mr Wilson took place on 16 December 1999. On 16 February 2001, Arthur Robinson and Hedderwicks sent to Deacons a summary 'of the seven tenders discussed with Mr Wilson at our meeting on 6 February 2001 which relate to the commencement of the distribution arrangement'. The letter said that the information was provided on the same basis as Wilson's previous three reports to the Commission. 79 No privilege is claimed by the Commission in relation to any of the documents described above. Copies have been furnished to ABB.

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Agreed Statements of Facts 80 On 24 January 2000, the AGS wrote to Arthur Robinson and Hedderwicks saying that the Commission considered it appropriate to progress the matter by way of an agreed statement of facts. A draft statement of facts was enclosed with the letter. Arthur Robinson and Hedderwicks responded on 28 January 2000, saying that they were seeking instructions. The letter also indicated that Arthur Robinson and Hedderwicks were expecting a draft version of an agreed statement of facts in relation to the 'distribution transformer investigation'. On 31 January 2000, the Commission sent to Arthur Robinson and Hedderwicks the draft statement of facts relating to the Commission's investigation of the distribution market. 81 On 2 May 2000, Arthur Robinson and Hedderwicks forwarded to the AGS a revised draft statement of agreed facts concerning the power transformer market together with a table setting out Wilson's reasons for making significant amendments to the Commission's draft. A revised version of the draft statement of facts concerning the distribution transformer market was sent by Arthur Robinson and Hedderwicks on 1 June 2000 together with a table comparing significant amendments between the versions. 82 On 21 June 2000, Arthur Robinson and Hedderwicks wrote to the Commission's solicitors confirming that they were to receive 'the evidence available' to the Commission that 'supports those allegations and factual issues in dispute in respect of the agreed statement of facts for power and distribution'. The letter also requested copies of advanced drafts of the agreed statement of facts between the Commission and other parties 'in relation to both the distribution and power matters'. 83 On 3 July 2000, the Commission forwarded to Arthur Robinson and Hedderwicks a table 'traversing each of your clients significant amendments'. Following further correspondence, Arthur Robinson and Hedderwicks wrote to the Commission on 16 August 2000 responding to the Commission's responses to Wilson's suggested changes to the draft statement of facts relating to the distribution transformer arrangement. On 3 November 2000, the AGS sent to Arthur Robinson and Hedderwicks a revised draft agreed statement of facts and suggested that the parties meet to determine 'whether any matters relevant to liability remain in contention'. 84 On 28 November 2000, Deacons, solicitors, who were acting for the Commission in relation to the Distribution Proceeding, wrote to Arthur Robinson and Hedderwicks enclosing 'a summary of the information which the Commission has that relates to the allegation that your clients were engaged in conduct in contravention of the [Act] prior to May 1995'. The summary contained information provided to the Commission by other parties and indicated that the Commission intended to disclose to another party a summary of some of the information contained in Wilson's third confidential report. 85 On 21 February 2001, Deacons wrote to Arthur Robinson and Hedderwicks requesting Wilson's response to the Commission's revised draft statement of agreed facts in relation to the Distribution Proceeding. 86 On 13 March 2001, Wilson filed an agreed statement of facts in the Power Proceeding. On 15 June 2001, Wilson filed an agreed statement of facts in the Distribution Proceeding. A hearing took place on 30 July 2001 concerning the penalties to be imposed in respect of the conduct of Wilson alleged in the Power Proceeding and the conduct of Wilson, Tyree and Schneider alleged in the Distribution Proceeding. On 3 May 2002, orders were made by the Court in respect of penalties to be imposed on Wilson.

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Cooperation Arrangement with Schneider 89 On 14 July 1999 the Commission wrote to Mr Russell Stocker, Zone Director-Pacific, of Schneider. The letter was headed 'Transformer Market Arrangements'. After referring to a meeting of 13 July 1999, the letter said: 'The Commission is aware that Schneider Electric (Schneider) and senior executives of Schneider have been involved in collusive arrangements involving price fixing and market sharing arrangements in the Australian and New Zealand markets for distribution transformers. ... The Commission wishes to give Schneider and its officers the opportunity to cooperate with its investigation at an early stage. The investigation will proceed with or without cooperation. The Commission and the Federal Court recognise the benefits to all parties of cooperation. The Commission has developed a leniency policy for corporations and individuals that provide full cooperation with it in an investigation.' The letter then went on to state what full cooperation would comprise, in terms identical to those contained in the letter of the same date to Alstom. 90 On 16 July 1999, Truman Hoyle, solicitors acting for Schneider, responded to the Commission's letter of 14 July 1999. The letter requested an extension of time, from 16 July 1999 to 19 July 1999, within which Schneider might agree in principle to the cooperation sought by the Commission. After a further exchange, Truman Hoyle wrote to the Commission on 20 July 1999 saying that Schneider 'in principle agrees to cooperate with the Commission on the basis outlined in your letter to Schneider dated 14 July, 1999'. 91 On 27 July 1999, Mr Ashley Smout, who had been an executive of Schneider, conferred with representatives of the Commission in New Zealand, when a letter of 22 July 1999 was handed to him. The letter to Mr Smout was in substantially identical terms to the letter to Mr Stocker of 14 July 1999. Mr Smout replied indicating that he had been contacted by Schneider and Truman Hoyle and had been informed that Schneider had agreed in principle to co-operate with the Commission. Mr Smout said that he would be providing to Schneider a detailed statement including the elements referred to in paragraph (a) of the letter. On 28 July 1999, an officer of the Commerce Commission of New South Wales informed the Commission that Mr Smout had said that he intends to cooperate fully with the Commission through Truman Hoyle. 92 On 13 August 1999, an interview was conducted of Mr Smout by Mr Kiley and others. On 23 August 1999, Truman Hoyle forwarded to the Commission a report by Schneider 'in relation to alleged transformer market arrangements'. The report included statements by Mr Stocker, Mr Smart and Ms Wendy Minne. 93 On 26 October 1999, Mr Kiley conducted interviews with Ms Minne and Mr Stocker. Copies of transcripts of the interviews and of Schneider's report to the Commission had been discovered to ABB. 94 No claim to privilege is made in respect of the report and statements just described or in respect of the transcript of the interview. ABB has been furnished with copies of those documents.

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Agreed Statement of Facts 95 On 2 February 2000, the Commission forwarded a facsimile transmission to Truman Hoyle under the heading 'ACCC Investigation of Transformer Distribution Market'. The communication said: 'As previously discussed the Commission considers it appropriate to progress this matter with your clients by way of an Agreed Statement of Facts. Accordingly I enclose a draft Statement of Facts prepared for your client in respect of this matter. The Commission would appreciate any comments you may have on this draft by Monday 21 February 2000.' On 14 March 2000, Truman Hoyle responded to the communication of 2 February 2000 enclosing a copy of the agreed statement of facts marked up with amendments, deletions and comments and a further version of the agreed statement of facts incorporating the amendments. The letter went on to say: 'We also refer to our letter 3 December, 1999 and in particular our client's preference for the matter proceeding by way of pleadings. We do invite you to reconsider approaching the matter on this basis.' The letter of 3 December 1999 is not in evidence. The letter of 14 March 2000 was marked 'Without Prejudice'. 96 On 4 April 2000, the Commission wrote to Truman Hoyle under the heading 'ACCC Distribution Transformer Market Investigation'. The letter confirmed that a meeting had been scheduled for 6 April 2000 with Mr Stocker. The letter went on to say: 'As advised previously, having reviewed your revisions to the Commission's statements of facts, I consider that we are in a position to now meet and discuss the issues which remain in dispute and arrive at an agreed position. For the purposes of progressing the discussions at that meeting, I have set out below a number of matters in relation to the substantive points of disagreement which I consider need to be resolved before this matter can proceed. I request that Mr Stocker consider these matters prior to the meeting. There are also a number of minor matters to be canvassed, however, I consider that those matters are best addressed in conference once the substantive issues have been dealt with. ....' The letter was signed by Mr Kiley. 97 A meeting took place on 6 April 2000 as arranged. A note of the meeting prepared by the Commission's solicitor, Mr Peter Toy, is as follows: 'Mike Kiley started the meeting by advising of the current status of the Commission's investigation. At this stage, the Commission would be looking to proceed with this matter on a date in May 2000. Mr Kiley advised that there is a directions hearing in the related Power Transformer matter on 10 May 2000 and that could be a date which the parties could aim to have all issues resolved by. I then took the parties to the Commission's letter dated 4 April 2000 and reiterated the opening comments of that letter that having reviewed Schneider's revisions to the Commission's statement of facts, the Commission considered that it was in a position to discuss finalising the document whilst five key points of disagreement had been disposed of in this meeting.' 98 It is significant that the letter of 4 April 2000 speaks in terms of 'the issues which remain in dispute'. While the Distribution Proceeding had not been commenced at this stage, the diary note of 6 April 2000 indicates that the parties had in mind that a proceeding would be commenced in the reasonably near future. Indeed, Truman Hoyle's letter of 14 March 2000 had expressed a preference that 'the matter proceed by way of pleadings'. At that stage, of course, there was no proceeding on foot. 99 On 30 May 2000, Truman Hoyle wrote, 'Without Prejudice', to the Commission making comments on 'version 2 of the draft Statement of Facts'. It is not clear when that document was brought into existence. The letter ended with the following comments: 'In relation to commencing proceedings in the Victorian District Registry and any referral to Justice Finklestein [sic], we have already expressed our misgivings about proceeding in this manner and at any further discussions on Penalty Amount, we will amplify our concerns. As well, we have to advise that Mr Stocker will take up a position with Schneider in China in August 2000. If at all possible, Schneider would like the proceedings filed and determined prior to his departure, for obvious practical reasons.' 100 The letter also contained a response to comments apparently made by the Commission concerning 'Penalty hearing' and 'Penalty submission'. The material to which the response was made is not in evidence. 101 On 30 January 2001, Truman Hoyle responded, 'Without Prejudice', to a letter from Mr Toy of 18 January 2001. The letter of 18 January 2001 is not in evidence but it apparently attached a revised draft statement of facts. The letter of 30 January 2001 commented on certain paragraphs in the draft. 102 On 9 February 2001, Mr Toy wrote to Truman Hoyle saying relevantly: 'We have corresponded with the solicitors for Ashley Smout in relation to the Draft Statement of Agreed Facts and the affected tenders that remain in dispute between our respective clients regarding the period in which Mr Smout was the General Manager, Medium Voltage Division. In that correspondence we have, on a confidential basis, provided Mr Smout and his solicitors with a summary of information obtained from the [Commission's] investigation to date that relates to the involvement by Mr Smout in conduct in relation to those tenders. This summary of information was provided to Mr Smout to assist him to further recollect details of the events surrounding these tenders. Mr Smout has requested the [Commission's] consent in disclosing to your clients the information provided relating to [various tenders] for the purposes of assisting him in obtaining all information relevant to these matters so that he can respond to the [Commission's] allegations. Mr Smout has also requested the [Commission's] consent to permit him and his solicitors to confer with you and your clients in relation to these allegations. The [Commission] is agreeable to these steps being undertaken for these purposes.' The letter enclosed a copy of 'the summary of information provided earlier to Mr Smout' and said that the information and documents provided 'are to be used only for the purposes of resolving these issues of contention between the [Commission] and your clients'. 103 On 6 March 2001, Mr Toy forwarded a further revised draft statement of agreed facts to Truman Hoyle. Mr Toy drew specific amendments to Truman Hoyle's attention. The letter contained the following: 'The [Commission] requests your client's urgent consideration of this material. If these allegations are correct, significant amendments will need to be made to the Draft Statement of Agreed Facts. The [Commission] will also need to seek leave to amend its pleadings. So as to assist your clients in considering this material, we are instructed to disclose the following additional material. This material may assist Mr Stocker's recollection of events which took place in mid 1994.' The additional material consisted of information obtained from Mr Wilson. 104 On 27 March 2001, Mr Toy wrote again to Truman Hoyle requesting Schneider's urgent cooperation in providing information in relation to the alleged involvement of Alstom in the arrangements that are the subject of the Distribution Proceedings. The letter set out additional evidence that had been provided to the Commission by Mr Graham Jones and requested Truman Hoyle to take urgent instructions as to whether Mr Stocker has any recollections of matters that were then set out in the letter. 105 On 15 May 2001, Truman Hoyle wrote to Mr Toy 'Without Prejudice' setting out their instructions on matters that had been discussed earlier on that day. 106 On 22 June 2001, Truman Hoyle responded 'Without Prejudice' to a version of the statement of agreed facts that had been forwarded on 15 June 2001. 107 On 23 July 2001, Schneider filed an agreed statement of facts in the Distribution Proceedings. The hearing on the question of penalty in that proceeding was fixed for hearing on 30 July 2001 and 31 July 2001. On 24 July 2001, Mr Toy sent to Truman Hoyle draft short minutes of final orders and short minutes of confidentiality orders that the Commission intended to seek from Finkelstein J at the hearing. The hearing took place at the time fixed, although judgment was not given till 3 May 2002.

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Further Draft Statements and Affidavits 108 In his letter of 24 July 2001, Mr Toy drew attention to the fact that the Commission was agreeable to exercising its discretion in favour of Ms Minne not to seek a pecuniary penalty. However, that decision was said to be conditional upon 'your client's continuing cooperation in relation to any further hearing in this matter'. The letter then went on to say: 'Consistent with the approach outlined in the Commission's initial letter dated 14 July 1999, continuing cooperation may require your clients to: (a) provide an affidavit for use in any further hearings in this matter; and (b) attend conferences with the Commission and its legal representatives in relation to the provision of this evidence. To assist in this process, we enclose an amended short statement of Ms Minne's evidence. This document has been based on Ms Minne's previous signed statement and supplemented by evidence provided to the Commission during her record of interview. As a condition of the Commission's decision not to seek a penalty against Ms Minne, the Commission requests that Ms Minne review and sign this statement and have it returned to us as soon as possible, but no later than the commencement of the penalty hearing in relation to the Schneider Respondents. In relation to Mr Stocker, we have been unable to finalise a revised statement based on the material provided to the Commission to date. We will be seeking to address the provision of such a statement by Mr Stocker as soon as possible after the hearing next week.' 109 On 17 October 2001, Mr Toy wrote to Truman Hoyle referring to the Distribution Proceeding and correspondence 'in relation to the issue of the continuing cooperation of your clients'. The letter also referred to the confirmation in the letter of 24 July 2001 that the Commission will be seeking Mr Stocker's continuing cooperation in relation to the provision of a revised statement of evidence. The letter of 17 October 2001 set out material to which a response was requested by 24 October 2001. On 25 October 2001, Truman Hoyle responded to Mr Toy's letter of 17 October 2001, enclosing a memorandum from Mr Stocker dated 23 October 2001. 110 On 22 January 2002, Mr Toy wrote again to Truman Hoyle, referring to the letters of 17 October 2001 and 25 October 2001. Mr Toy enclosed an amended statement incorporating Mr Stocker's additional information into the text of his original statement of 20 August 1999. The statement was also amended to remove any information that was not relevant to the issues remaining in dispute with ABB. On 11 June 2002, Truman Hoyle sent to Mr Toy a statement signed by Mr Stocker. 111 On 23 March 2003, Mr Toy wrote to Truman Hoyle, referring to 'the agreement between our client, the Commission, and your client Ms Wendy Minne, to cooperate with the Commission in this matter'. The letter enclosed a draft affidavit for Ms Minne that had been prepared primarily on the basis of her prior written statement to the Commission and her subsequent record of interview. The letter also said that a draft affidavit was then forwarded to Mr Smout in New Zealand for review. The letter ended by saying that Mr Toy was still in the process of assessing whether the Commission needed to request Mr Stocker to assist with an affidavit.

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Cooperation Arrangement with Tyree 112 On 15 October 1999, the Commission wrote to Raymond Boyce, the managing director of Tyree, saying that the Commission was aware that Tyree and senior executives of Tyree, including Mr Boyce, had been involved in collusive arrangements involving price fixing and market sharing agreements 'in the Australian and New Zealand markets for distribution transformers'. The letter went on to say: 'The Commission wishes to give Tyree and its officers the opportunity to cooperate with its investigation at an early stage. The investigation will proceed with or without cooperation. The Commission and the Federal Court recognise the benefits to all parties of cooperation. The Commission has developed a leniency policy for corporations and individuals that provide full cooperation with it in an investigation.' As with the other letters of July 1999, the letter then set out what cooperation would comprise in identical terms to the letter from the Commission to Alstom of 14 July 1999. 113 Mr Boyce responded on 18 October 1999 saying: 'We do not believe that executives of [Tyree], including the undersigned, have been involved in collusive arrangements, as detailed in your above letter. However, we provide an in principle agreement to cooperate fully with you in your investigations concerning the above. ... With our undertaking of cooperation and your seeking of a full report by November 5, 1999, as outlined in your letter, we may request some personal contact with you to assist us in answering as completely, fully and openly as possible given our belief of non involvement.' 114 Mr Boyce wrote to Mr Kiley again on 4 November 1999 saying: 'Further to your letter of October 15 1999. At the outset we felt that we had, as you know, taken care not to contravene the Act in any way. We have now given further consideration to its content and having read material pertinent to the Trade Practices Act we feel there may have been situations where the Act may have unwittingly been contravened, although it is not clear in our mind, perhaps you could help us. In considering events there may have been occurrences over the past five to seven years that may give rise to an interpretation of market distribution or division generally on geographic lines.' (Emphasis original). The letter went on to refer to a number of incidents in the relevant market. 115 Mr Kiley responded on 5 November 1999 saying: 'As stated in my letter of 15 October 1999, the Commission is aware that [Tyree] and senior executives of Tyree, including yourself, were involved in price fixing and market sharing arrangements in the market for distribution transformers. The evidence available to the Commission suggests that the conduct is clearly more serious than what you suggested in your letter. The Commission's letter dated 15 October 1999 provided you with an opportunity to cooperate with the Commission in its investigation and set out the elements which, in the Commission's view, comprise cooperation. I am concerned that your response does not reflect a willingness to cooperate in any meaningful way. Further, seeking information from the Commission before providing details of the conduct, is not consistent with providing full and frank disclosure. Consequently I now request that you attend the Commission's Canberra office for a formal interview in relation to this matter in the week commencing 15 November 1999.' 116 On 8 November 1999, Mr Boyce responded to Mr Kiley's communication of 5 November 1999 expressing surprise that Mr Kiley did not see Mr Boyce's response 'as an expression of our desire to cooperate in a meaningful and helpful manner'. Mr Boyce accepted the request to attend at a meeting in Canberra and arrangements were subsequently made for Mr Boyce to meet Mr Kiley on 22 November 1999. On that day, an interview took place and part of a transcription of the interview has been made available to ABB. 117 On 29 November 1999, Mr Kiley sent to Mr Boyce a copy of the transcript of the interview. The letter went on to say: '... when submitting to the Court penalties that the Commission recommends should be awarded against companies and any individual respondents, the cooperation of those companies and individuals will be taken into account into the level of penalty recommended. As such, the Commission would like to give you this opportunity to go over the transcript of interview and contact us with any further information that you are able to provide by 10 December 1999.' On 8 December 1999, Mr Tyree responded, making comments on the transcript, by way of furnishing additional information. 118 On 22 February 2000, Mr Kiley wrote to Mr Boyce again requesting further assistance with the provision of a written statement from him detailing the level of participation by Tyree in the arrangements, including Mr Boyce's personal involvement. After reciting the communications summarised above, the letter went on to say: 'Cooperation of Tyree The Commission wishes to proceed with this matter on a cooperative basis with Tyree with a view to finalising this matter at the earliest possible time. However, the Commission will not proceed on this basis unless it is of the view that Tyree is providing full and frank disclosure. The Commission has been unable to reach any conclusions in this regard because of the limited disclosure provided by Tyree to date. Cooperation by other parties We draw your attention that, at this stage, all other corporate parties involved have been assisting the Commission with full cooperation. This cooperation has taken the form of comprehensive reports from the companies involved in the arrangements that set out the contents of various meetings between competitors in the distribution transformer industry and the individual tenders that were the subject of the arrangements. Detailed statements from individual executives involved in the arrangements have also been provided. The assistance provided by these companies has obviated the need for the Commission to use its statutory powers under section 155 of the [Act] to compel parties to provide information and documents or to attend interview on oath. The full disclosure by the other parties involved in the arrangements has meant that the Commission and the other parties have been able to agree on steps to rapidly advance towards a resolution in the matter. This has included agreement with the other parties involved to progress the matter by way of Agreed Statements of Facts instead of formal pleadings. The cooperation provided by these companies may also result in the Commission seeking reduced penalties from the companies, and individuals involved in the arrangements, under the Commission's leniency policy. Next step So as to progress this matter, the Commission requests that you provide a written statement detailing the level of participation by Tyree in the arrangements in the distribution transformer market, including your personal involvement. The Commission would then propose that discussion start on the preparation of an agreed statement of facts based on that statement.' 119 On 17 April 2000, Mr Kiley wrote to Mr Boyce again, referring to a letter from Mr Boyce of 29 February 2000 that is not in evidence. The letter went on to say: 'You advised that you would provide a written statement detailing the level of participation by Tyree in the arrangements in the distribution transformer industry, including your personal involvement. ... May I kindly have your written statement as promised without further delay. I advise that if your statement is not received by close of business on 21 April 2000 the Commission will consider exercising its formal powers under section 155 of the Act. In that event, you will be compelled to provide to the Commission information and documents in relation to the matters under investigation as well as attend before the Commission on a date to be fixed to provide evidence under oath.' The letter was headed 'ACCC Distribution Transformer Market Investigation'. 120 On 20 July 2000, the Commission wrote to Allen Allen & Hemsley, solicitors acting for Tyree, 'Without Prejudice'. The letter was also headed 'ACCC Distribution Transformer Market Investigation' and referred to previous correspondence in relation to Tyree and Mr Boyce. The letter went on to say: 'For the purpose of exploring every possibility of resolving this matter without the need for lengthy and expensive contested litigation, I have accepted your suggestion to disclose to you some of the Commission's evidence collected to date on the basis that it may assist in securing your client's full and frank disclosure of the extent of their involvement in this matter. Accordingly, please find attached a summary of the Commission's current evidence on three select issues relevant to your clients' involvement in the conduct under investigation. The information contained in this summary is confidential. It is sourced from evidence the Commission has obtained from its investigation, which includes information provided on a voluntary basis by other parties involved in the investigation. I would note that staff of the Commission have assessed this evidence and believe it is truthful and reliable. ... Would you kindly provide a copy of this document to your clients and revert to me as soon as possible as to whether your clients will provide a written statement requested in my previous letter dated 22 February 2000.' 121 It is clear enough that at this stage, the Commission was still engaged in investigation so far as Tyree was concerned. As the Commission made clear, Tyree had not provided the level of cooperation that the Commission believed that it obtained from other corporate parties. The Commission was threatening to exercise its formal powers under s 155 of the Act. The furnishing of information to Allen Allen & Hemsley was in order to elicit information from Tyree and Mr Boyce by way of the 'full and frank disclosure' that had been sought in the letter of 15 October 1999. 122 On 15 August 2000, Allen Allen & Hemsley sent to the Commission a draft statement of Mr Boyce 'in relation to the [Commission's] present investigations into the distribution transformation market as discussed'. The letter suggested that the draft would be sufficient to enable the Commission to provide a draft statement of facts prior to a meeting to be held on 21 August 2000. 123 The foreshadowed meeting apparently took place and, on 24 August 2000, Mr Kiley wrote to Allen Allen & Hemsley saying: 'I am not yet satisfied that the draft statement of Mr Boyce, provided under cover of your letter of 16 August 2000, constitutes full and frank disclosure of Mr Boyce's knowledge of the arrangements or understandings the subject of this investigation. There are a number of matters that I am concerned have not been dealt with in the statement or dealt with in sufficient detail. The statement is also not drafted in clear and unambiguous terms. On occasions, it is difficult to dissect what Mr Boyce admits that he did or said from his reasons for what he did or said. I confirm the steps we agreed to progress the Commission's investigation, namely: 1. [the Commission] will request and Tyree will provide further documents relevant to the investigation. 2. Tyree will provide further financial information... . 3. Tyree will make Mr Boyce available for a further interview.' The letter also enclosed a schedule of issues arising from the draft statement of Mr Boyce that required further clarification or amplification. The schedule also indicated documents that were to be produced. 124 On 4 September 2000, Allen Allen & Hemsley responded, 'Without Prejudice', attaching:

a response to the Commission's summary of select points of evidence provided on 20 July 2000;
a response to the Commission's schedule of issues provided on 24 August 2000; and
an index of documents being sent to the Commission. The letter went on to say: 'We have provided these responses so as to address your specific requests for clarification. In our view, it would be more appropriate for the contents of these documents and the draft statements provided to you on 15 August 2000 to be consolidated, either in the form of an amended draft statement or in an agreed statement of facts. Please advise as to the [Commission's] intentions in this regard.'

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If you are agreeable, I would suggest that the next step in the process of resolving this matter is to discuss the preparation of the statement of fact for use in any penalty hearing. No formal decision has been made by the Commission to commence proceedings, however, I anticipate being in a position to recommend that proceedings be instituted shortly after the Olympics period. I am only prepared to commence these discussions with you and your clients when we have received Mr Boyce's completed statement.' A further schedule of issues for consideration by Mr Boyce was enclosed. 126 It is clear enough that, at this stage, the Commission was still engaged in its investigation, seeking the full and frank disclosure that it had sought from Tyree in its letter of 15 October 1999. Mr Kiley's letter of 14 September 2000 made clear that there would be no discussions concerning preparation of a statement of facts for use in any penalty hearing until the Commission had received Mr Boyce's completed statement. 127 On 22 September 2000, Allen Allen & Hemsley responded to Mr Kiley's letter of 14 September 2000 and said that they were in the process of preparing a consolidated statement for Mr Boyce which they hoped to have to Mr Kiley in the week commencing 2 October 2000. On 11 October 2000, Allen Allen & Hemsley sent to the Commission a draft consolidated statement of Mr Boyce and requested that arrangements be made to meet to discuss the position. 128 On 16 October 2000, Mr Kiley wrote to Allen Allen & Hemsley saying that '[w]ith the exception of the number of small matters', he was satisfied with the draft consolidated statement and was 'happy to proceed to meet with you and your client to discuss a process to resolve this matter'. A schedule of comments regarding the draft consolidated statement was enclosed. 129 A meeting took place on 18 October 2000 when a revised draft statement of Mr Boyce was provided by Allen Allen & Hemsley. In the course of the meeting, a number of further amendments to the draft statement were agreed upon. The amendments were confirmed by a letter from Mr Kiley to Allen Allen & Hemsley of 26 October 2000. 130 The Distribution Proceeding was commenced on 6 November 2000. On 29 November 2000, Allen Allen & Hemsley wrote to Mr Toy, who was then acting for the Commission in connection with the Distribution Proceeding. The letter attached 'a discussion document which addresses a number of matters in your client's statement of claim which have not been raised by you previously and are not matters which have been addressed in Mr Boyce's draft statement'. 131 The letter then said: 'You have indicated that you will not commence discussions on penalty issues and will not provide a draft agreed statement of facts until our client signs the draft statement. We had understood that the matters addressed in Mr Boyce's statement were all of the matters in which the [Commission's] investigations had implicated him in, however, it is clear from the form of the statement of claim that this is not the case. We do not feel that it is possible for Mr Boyce to sign his draft statement while the additional allegations have not yet been put to our clients and these are not addressed in some way in Mr Boyce's statement.

[49]

Further Draft Statements and Affidavits 135 On 20 February 2001, Allen Allen & Hemsley wrote to Mr Toy, referring to a telephone conversation between Mr Writer of Allen Allen & Hemsley and Mr Toy on 16 February 2001. The letter records that in the conversation, Mr Toy asked a number of specific questions about Tyree's involvement in a meeting in early 1999 at the Airport Sheraton Hotel. Mr Toy indicated that that information did not go to the liability of Tyree but to that of other parties. Mr Toy also observed that the assistance requested related to 'the level of Tyree's and Mr Boyce's cooperation'. The letter went on to respond to specific questions asked by Mr Toy. 136 An inference should be drawn that that information was sought in connection with the conduct of the Distribution Proceeding as against parties other than Tyree. There is no basis for concluding that the information was sought as part of an investigation. It is protected by legal professional privilege. 137 On 3 July 2001, Mr Toy wrote to Allens Arthur Robinson, referring to the Commission's letter of 15 October 1999 and Tyree's agreement 'to cooperate with the Commission's investigation and in any subsequent court proceedings'. The letter requested a signed statement from Mr Boyce setting out his best recollection of all relevant events and attaching all relevant documentation. The letter said that that material was required because the ABB corporate respondents and some of the former and current executives of the ABB corporate respondents were likely to contest some of the allegations made by the Commission in the Power Proceeding and the Distribution Proceeding. The letter said that the statement that the Commission required needed to address the issues in dispute with the ABB respondents. Mr Toy said that, therefore, the Commission would prefer to prepare the first draft of Mr Boyce's statement. 138 On 20 July 2001, Mr Toy sent to Allens Arthur Robinson a draft statement by Mr Boyce. 139 On 25 March 2003, Mr Toy sent to Allens Arthur Robinson a further letter referring to 'the agreement between our client, the Commission, and your client, Mr Ray Boyce, to cooperate with the Commission in this matter'. After referring to the fact that the ABB respondents were contesting particular issues in dispute in the proceedings, the letter enclosed a draft affidavit for Mr Boyce said to have been prepared 'primarily on the basis of his statements to the Commission'. 140 Clearly, the draft statements and affidavits prepared by Mr Toy were prepared for the purpose of the conduct of the Distribution Proceeding as against ABB. While cooperation may have been forthcoming from Tyree and Mr Boyce pursuant to the cooperation arrangements purportedly entered into as a result of the Commission's letter of 15 October 1999, the purpose for the preparation of the drafts indicates that they are protected by legal professional privilege. 141 While Tyree purported to accept the proposal by the Commission for cooperation in relation to its investigation, the Commission was not satisfied that it was receiving cooperation from Tyree and Mr Raymond C. Boyce, its managing director. As late as 29 November 2000, Allen Allen & Hemsley wrote on behalf of Tyree and Mr Boyce saying that their clients wished 'to progress to negotiating penalty issues as soon as possible'. Thus, at that stage, it could not be said that Tyree and Mr Boyce, on the one hand, and the Commission, on the other, had embarked on a course of negotiation directed towards compromise. All of the communications up to that time relating to the proposed statement by Mr Boyce were pursuant to the arrangement for cooperation. 142 Tyree was not involved in the Power Proceeding. On 16 June 2001, Tyree filed an agreed statement of facts in the Distribution Proceeding. The hearing in relation to penalty concerning Tyree took place on 30 July 2001 and, as indicated above, judgment was delivered on 3 May 2002. Discussions that took place between Allen Allen & Hemsley on behalf of Tyree and Mr Boyce, on the one hand, and the Commission, on the other, concerning statements were in the context of the continuation of the proceeding against ABB. That is apparent from the letter of 3 July 2001 from Deacons to Allens Arthur Robinson saying that the statement that the Commission then required from Mr Boyce was to address the issues in dispute with ABB.

[50]

Alstom 143 The September Statements were furnished as an element of the cooperation agreed to by Alstom following the exchange of 14 July 1999 and 16 July 1999. There was no settlement negotiation or discussion on foot at the time. The documents were not subject to without prejudice privilege. They were furnished to the Commission so that the Commission could use them in the course of its investigation and in the course of proceedings against, inter alia, Alstom and its officers. While they may have been prepared when litigation was commenced, they were not prepared for the purposes of the litigation with a view to obtaining evidence to be used in the Power Proceeding or the Distribution Proceeding. Nor are they subject to any public interest privilege in the circumstances. There is no privilege against production to ABB for inspection. 144 The draft statements of facts were prepared by the Commission and its solicitors and commented on by Alstom's solicitors by way of endeavour to compromise the proceedings against Alstom. The compromise was to make admissions in terms of agreed statements of facts with a view to avoiding the costs of litigation and the consequences of the possible unsuccessful defence of the allegations, resulting in what might have been a higher penalty. They are subject to without prejudice privilege. 145 The response to the Commission's letter of 3 March 2000 concerning the power transformer market is not privileged. 146 The statements furnished following the disposition of the proceedings as against Alstom were obtained by the Commission for the purposes of the litigation with a view to obtaining evidence to be used in the litigation as against ABB. They are subject to legal professional privilege. Wilson 147 Consistently with the conclusions reached in relation to draft statements of facts and subsequent witness statements of Alstom, the communications passing between the Commission and Allens Arthur Robinson concerning proposed agreed statements of facts and draft witness statements and affidavits would attract without prejudice privilege and legal professional privilege respectively. Schneider 148 The correspondence between Mr Kiley and Mr Toy, on the one hand, and Truman Hoyle, on the other concerning a proposed statement of agreed facts occurred in the context of foreshadowed commencement and subsequent commencement of the Distribution Proceeding. While the correspondence was headed by reference to 'ACCC Investigation of Transformer Distribution Market', I consider that it is fair to categorise the communications as negotiations directed towards a resolution of a dispute between the Commission, on the one hand, and Schneider and its executives, on the other, as to the penalty that should be imposed as a consequence of alleged contraventions of Pt IV of the Act. Where the Commission or its solicitor furnished additional information to Truman Hoyle, it did so in order to endeavour to resolve a dispute as to the facts upon which the Court should be invited to assess penalties in respect of contraventions made out on the basis of those facts. I consider that the communications described above in relation to agreed statements of facts and the successive drafts of the agreed statements of facts are subject to without prejudice privilege. 149 Following agreement as to the statement of facts to be submitted to the Court, the communications thereafter between Mr Toy, on the one hand, and Truman Hoyle, on the other, were directed to obtaining evidence for the further prosecution of the Distribution Proceeding against ABB. It is true that the prospective witnesses cooperated with the Commission pursuant to the arrangements that had been made in July 1999. The reason why Schneider, Messrs Smart and Stocker and Ms Minne cooperated was because of the submissions that the Commission had made at the hearing on 30 July 2001 and 31 July 2001 in support of leniency. 150 Nevertheless, the dominant purpose that the Commission and Mr Toy had in preparing draft affidavits and statements after the hearing of 30 July 2001 and 31 July 2001 was the further prosecution of the distribution proceeding against ABB. I consider that the successive drafts and the communications relating to the drafts of affidavits by Mr Smout, Mr Stocker and Ms Minne are protected by legal professional privilege.

At a glance

Court

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Before

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Judgment (68 paragraphs)

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Legislation Cited (1)

Cases Cited (1)

Cited By (4)