The No Case Submission
74 The ACCC accepted that there was no direct evidence of the arrangement pleaded in par 21 of the statement of claim, namely that Visy and Amcor had made an arrangement or arrived at an understanding which contained a provision that Amcor would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the Amcor Offer. It submitted that evidence of an arrangement or understanding is usually circumstantial and includes evidence of opportunity in parallel or complementary conduct from which appropriate inferences can be drawn. According to the ACCC, the present was such a case.
75 An arrangement or understanding for the purposes of s 45(2) of the TP Act is apt to describe something less than a binding contract or agreement: Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 (Aust Ind Ct, FC), at 290-291, per Smithers J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd (1980) 43 FLR 383 (Lockhart J), at 385; Ira Berk, at 291, per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email, at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (FC), at 230-231, per Lockhart J.
76 It follows from the Full Court decision in Rasomen that, in addressing a no case submission, the function of a judge sitting without a jury is no different from that which has to be performed by a judge who has heard all the evidence of the parties in the ordinary way and who has to give final judgment. In particular, where the moving party contends that the evidence does not give rise to the inferences of fact alleged by the opponent, it is appropriate for the trial judge to decide what inferences he or she would draw from the evidence and to act on those conclusions to determine finally the issues in the case: Rasomen, at 228.
77 The Full Court in Rasomen approved the observations of Young CJ (with whom Fullagar J agreed) in Protean (at 215):
"Where a trial judge entertains a submission that there is no case to answer without requiring an election, any one of three results may ensue. The judge may conclude that the evidence could sustain a finding against the party making the submission, in which case he would overrule the submission and allow the case to proceed. The second possible result is that the case is so finely balanced that the judge is not satisfied that even if the evidence could sustain a finding against the party making the submission he would be prepared to make the necessary finding himself. Where the case is being tried without a jury, a trial judge in such a position would no doubt allow the case to proceed….
The third possible result of a submission that there is no case to answer is that the judge is persuaded by it and decides to uphold it. In reaching such a conclusion a trial judge is entitled to draw all proper inferences from the evidence, but he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. Theoretically he then concludes that the evidence could not sustain a finding against the party making the submission. In such a case he upholds the submission. The consequence must then be that judgment must be entered for the party making the submission. His opponent has simply not discharged the burden which rested on him of establishing his case. Where this result ensues there is no room for a distinction between whether the evidence could sustain a finding against the party making the submission and whether the judge would make such a finding. Such a case is covered by the second possible result referred to above. The third possibility is where the proposition 'no case to answer' means 'would you, the Judge, on the evidence given, decide for the party against whom the submission is made': cf. Jones v Dunkel (1959) 101 CLR 298, at 330-1." (Emphasis added.)
78 Two other principles, neither of which was disputed, are relevant to the present case. The first is that in a case where in which the applicant seeks to recover pecuniary penalties under s 76 of the TP Act, the standard of proof to be applied is the civil, not criminal, standard. However, in determining what inferences should be drawn from the primary facts, it is necessary to have regard to the seriousness of the allegations made against the respondents and the gravity of the consequences of adverse findings against them: Briginshaw v Briginshaw (1938) 60 CLR 336, at 362, per Dixon J; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) (1979) 40 FLR 83 (Fisher J), at 105; Peter Williamson Pty Ltd v Capitol Motors Ltd (1982) 61 FLR 257 (Franki J), at 264.
79 The second is that, in civil proceedings where the applicant's case rests on inferences from primary facts, it is not enough for the circumstances to give rise to conflicting inferences of equal degrees of probability. The principle was stated by the High Court in Bradshaw v McEwans Pty Ltd (unreported, 27 April 1951) and adopted repeatedly since:
"Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture… But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as mere conjecture or surmise."
See Luxton v Vines (1952) 85 CLR 352, at 358, per Dixon, Fullagar and Kitto JJ; Nominal Defendant v Owens (1978) 22 ALR 128 (FC), at 132-133, per Muirhead J (with whom St John J agreed); Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 (CA), at 141, per Tadgell JA and cases cited there.
80 Mr Catterns relied on a number of factors to support the inference that Mr Guthridge, on behalf of Visy, and Mr Nott, on behalf of Amcor, made or arrived at the pleaded arrangement or understanding on or shortly after 25 July 1996. The factors were these:
· In mid-1996, Amcor and Visy were competitors for securing the supply of recyclable waste paper in the Illawarra area.
· Throughout the months preceding the relevant events, Visy had been increasingly concerned about Amcor's activities in winning suppliers and increasing prices, at a time when Visy itself considered it essential to reduce costs. According to Mr Catterns, the internal Visy memoranda demonstrated that Amcor was caught in a "pincer" (his expression), whereby it faced a loss of suppliers or the need to increase the prices paid for its supplies of recyclable waste paper.
· On 17 July 1996, Amcor made a commercially acceptable offer to Flagstaff to acquire the whole of its supplies of recyclable waste paper.
· At the meeting of 25 July 1996, between Visy representatives and Mr Peoples, Mr Guthridge had become agitated on seeing the terms of the Amcor Offer. His agitation derived from the fact that Amcor had been offering prices he considered too high, especially since he considered that Visy had to get prices down.
· Mr Guthridge spoke to Mr Nott during the course of the meeting on 25 July 1996 and during the conversation of about four minutes on the following day. Mr Guthridge also caused a copy of the Amcor Offer to be faxed to Mr Nott. This provided an opportunity for the pleaded arrangement or understanding to be made or entered into.
· Amcor made no further attempt to pursue the Amcor Offer, notwithstanding its need for reliable supplies of recyclable waste paper.
· On 1 August 1996, Mr Gerard of Visy made an informal offer to Mr Gandy of Flagstaff to take all of Flagstaff's waste paper and cardboard.
· Amcor withdrew the Amcor Offer by its letter of 9 August 1996. It gave no explanation for doing so.
81 In my opinion, the factors identified by Mr Catterns fall well short of giving rise to a reasonable and definite inference that Amcor and Visy, by means of communications between Mr Guthridge and Mr Nott, made an arrangement or arrived at an understanding which contained a provision that Amcor would cease attempting to make contracts with Flagstaff to acquire recyclable waste paper and would withdraw the Amcor Offer. Whether an arrangement or understanding to this effect was made or arrived at is, on the evidence, a mere matter of conjecture.
82 The evidence is consistent with alternative hypotheses which are at least as likely, if not more likely, than the pleaded arrangement or understanding. The most obvious (but not the only one) is that Mr Guthridge telephoned Mr Nott in order to confirm that the draft letter of agreement provided by Mr Peoples at the meeting of 25 July 1996 was a genuine and current offer from Amcor to Flagstaff. At the meeting, Mr Guthridge had demanded proof from Mr Peoples that Amcor was prepared to pay the prices reported by Mr Peoples (who was trying to persuade Visy to increase the prices it was prepared to pay Flagstaff). It was in that context that Mr Peoples produced a copy of the Amcor Offer and that an apparently agitated Mr Guthridge left the room in order to make what I infer was a brief telephone call to Mr Nott. These events, if anything, rather suggest that Mr Guthridge wished to contact Mr Nott to verify the accuracy of what Mr Peoples had told him. This is not the only possible interpretation of the events. For example, it is possible that Mr Guthridge simply wished to let Mr Nott know that Visy was aware of Amcor's activities in the marketplace. The point is that the facts do not give rise to a reasonable and definite inference of the arrangement or understanding pleaded by the ACCC.
83 The ACCC's contentions do not gain any strength from the evidence that Mr Guthridge sent a facsimile to Mr Nott and had a four minute conversation with him on 26 July 1996. The Amcor Offer had been made to Flagstaff by Mr Roach, Amcor's New South Wales Manager. There is nothing to suggest that Mr Nott was personally aware of the terms of the Amcor Offer prior to 25 July 1996 or that his approval was needed before Mr Roach could make the offer to Flagstaff. The faxing of the Amcor Offer to Mr Nott by Mr Guthridge is consistent, for example, with the latter wishing to draw Mr Nott's attention to the terms of the offer so that he could verify its currency. Similarly, the four minute conversation on 26 July 1996 (the first having lasted only forty-two seconds) is consistent with Mr Nott having responded to Mr Guthridge's inquiry, perhaps by confirming that the offer was genuine and current or in some other, less helpful, manner.
84 The ACCC relied on what is characterised as Amcor's "unexplained" withdrawal of the Amcor Offer on 9 August 1996. But the withdrawal did not take place soon after the only two conversations (so far as the evidence reveals) that took place between Mr Guthridge and Mr Nott. The Amcor Offer remained open for some two weeks after the second of those conversations, during which time Flagstaff could have accepted it. It is true that during this period Amcor did not pursue Flagstaff. It is equally true that Flagstaff felt no need to communicate with Amcor. It is difficult to see why the withdrawal of the Amcor Offer two weeks after the conversations should give rise to a reasonable and definite inference that the withdrawal was prompted by an arrangement or understanding in the terms pleaded by the ACCC. Other inferences are at least equally plausible. Amcor might well have withdrawn the offer, for example, because it concluded (whether correctly or not) that Flagstaff was merely using the offer to obtain better terms from Visy and had no intention of accepting. There was no commercial or legal obligation on Amcor to give a reason to Flagstaff for withdrawing its offer.
85 The obstacles confronting the ACCC's circumstantial case become even more apparent when regard is had to the terms of the withdrawal of the Amcor Offer and Amcor's subsequent dealings with Flagstaff. It is important to remember that the pleaded arrangement or understanding between Visy and Amcor was to the effect that Amcor would not merely withdraw the Amcor offer but that it would also "cease attempting to make contracts with Flagstaff to acquire recyclable waste paper". Amcor's letter of 9 August 1996 asserted that it wished to continue its trading relationship with Flagstaff. The fact is that it did continue the trading relationship, since Flagstaff continued to supply Amcor with Shoalhaven grade recyclable paper until Flagstaff's supplier of that category of waste paper ceased business in Wollongong. It is true that Flagstaff supplied the waste paper, and Amcor received it, pursuant to the 1995 written agreement between them. But there is no evidence that Amcor attempted to dissuade Flagstaff from supplying Shoalhaven grade recyclable paper or to take any other steps to terminate the relationship. While this state of affairs is not necessarily inconsistent with the pleaded arrangement or understanding, it tends to reinforce the view that the inferences the ACCC seeks to draw from the evidence are no more than matters of mere conjecture.
86 Mr Catterns sought to gain comfort from the internal Visy memoranda. They clearly demonstrate that Visy was concerned about Amcor's incursions into Visy's sources of supply and about Amcor's willingness to pay higher prices to suppliers. But there is nothing in the documents which suggested that Mr Guthridge decided that an appropriate response to the competitive threat was to make an arrangement or arrive at an understanding with Amcor in contravention of the TP Act. The internal Visy documents demonstrate that Visy faced an aggressive competitor in the marketplace and that it had to develop a commercial response. Doubtless they also support the suggestion that Mr Guthridge was irritated by Amcor's activities. But the evidence does not support an inference that Mr Guthridge chose to meet the threat by persuading Mr Nott to make or enter into the pleaded arrangement or understanding. Nor does the evidence address, let alone explain, why Mr Nott of Amcor would have chosen to respond favourably to any such approach by Mr Guthridge.
87 In my opinion, the evidence adduced by the ACCC, assessed as a whole, falls well short of establishing to the required standard that Visy and Amcor made or entered into the pleaded arrangement or understanding. The respondents' no case submission must be upheld.
Conclusion
88 Since the respondents' no case submission has been upheld, the application against all four remaining respondents must be dismissed. I shall give the parties an opportunity to make submissions on costs.