FEDERAL COURT OF AUSTRALIA

Bray v F. Hoffman-La Roche Ltd [2002] FCA 243

TRADE PRACTICES – international price fixing and market allocation cartel - extra-territorial operation of the Trade Practices Act 1974 (Cth) –– whether Court has jurisdiction in respect of the making and giving effect to the cartel arrangement by foreign corporations – whether jurisdiction of the Court depends on whether foreign corporations carried on business in Australia by or through their Australian subsidiaries – whether foreign corporations gave effect to the cartel arrangement in Australia by communications from outside Australia which were received in Australia - whether officers of the Australian subsidiaries of the foreign corporations acted as their agents in implementing the cartel arrangement

COURTS – PRACTICE AND PROCEDURE – leave to serve out of the jurisdiction – whether Court has jurisdiction in the proceeding in respect of extra-territorial conduct – whether jurisdiction is to be determined by reference to the prima facie case established by the applicant - whether motion to set aside proceeding for want of jurisdiction is a final or interlocutory proceeding – whether the Court is under a duty to forthwith hear and determine a bona fide challenge to its jurisdiction – whether the Court has been conferred with jurisdiction to conclusively determine the facts upon which its jurisdiction depends

EVIDENCE – whether s 75 of the Evidence Act 1995 (Cth) applies to second-hand and more remote hearsay – circumstances in which the Court might dispense with compliance with the rules of evidence in respect of matters that are not bona fide in dispute

WORDS AND PHRASES – “carrying on business in Australia”

Trade Practices Act 1974 (Cth) s  5(1), 45(2), 75B, 86 and 163A

Evidence Act 1995 (Cth) s  75

Federal Court Rules O 8 r 2(2), O 9 r 7

O’Keefe Nominees Pty Limited v BP Australia Limited (1992) 38 FCR 85 – cited

Westpac Banking Corporation v Northern Metals Pty Ltd (1989) ATPR 50,407 – cited

Caterpillar Inc v John Deere Ltd (1999) 48 IPR 1 - applied

Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 - cited

Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31 - considered

Allstate Life Insurance Co v ANZ Banking Group Ltd (No 3) (1996) 64 FCR 55 - cited

Licul v Corney (1976) 180 CLR 213 – cited

Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 – cited

Victorian Broadcasting Network v Whitlam (1980) 31 ALR 184 – cited

Contender 1 Ltd v Lep International Pty Ltd (1988) 82 ALR 394 – considered

WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 – cited

Anderson and Co (A Firm) v GPA Group PLC (Unreported, Federal Court of Australia, Spender, Drummond and Sundberg JJ, 13 November 1998) - cited

Trade Practices Commission v Australian Iron and Steel Pty Limited & Ors (Unreported, Federal Court of Australia, Lockhart J, 29 September 1989) - cited

Weatherall v Satellite Receiving Symptoms (Australia) Pty Ltd (1999) 30 ACSR 698 – cited

Minogue v Williams (2000) 60 ALD 366 – cited

Yap Cheng See v Granich & Associates [2001] FCA 1735 - cited

Lloyd Werft Bremerhaven GmbH v Owners of Ship “Zoya Kosmodemyanskaya” (1997) 79 FCR 71 - cited

Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 177 ALR 329 - cited

R v Jameson [1896] 2 Q.B. 425 - cited

Meyer Heine Proprietary Limited v The China Navigation Company Limited (1966) 115 CLR 10 - considered

Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) 22 FCR 305 - cited

Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 – cited

Yorke v Ross Lucas Pty Ltd (1983) 46 ALR 319 - considered

Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 133 CLR 164 - cited

La Bourgogne [1899] AC 431 – cited

Okura & Co, Limited v Forsbacka Jernwerks Aktiebolag [1914] 1 KB 715 – cited

The “Theodohos” (1977) 2 Lloyd’s Rep 428 - cited

Saccharin Corporation Limited v Chemische Fabrick von Heyden Aktiengesellschaft [1911] 2 K.B. 516 - cited

Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 - cited

Pioneer Concrete Services Ltd v Galli [1985] VR 675 - cited

Adams v Cape (1990) 1 Ch 433 – applied

The Albazero [1977] AC 774 - cited

Saloman v Saloman [1897] AC 22 - cited

Inland Revenue Commissioners v Sansom [1921] 2 KB 492 - cited

Smith, Stone & Knight v Birmingham Corporation [1939] 4 All ER 116 – cited

Spreag v Paeson Pty Ltd (1990) 94 ALR 679 - cited

Vogel v Kohnstamm [1973] QB 133 - cited

Commonwealth Bank of Australia v White [1999] 2 VR 681 - cited

Wilson v Servier Canada Inc (2000) 50 O.R. (3d) 219 - cited

Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 - cited

Amalgamated Wireless (Australia) Ltd v McDonnell Douglas Corp (1987) 16 FCR 238 – considered

Industrial Equity v Blackburn (1977) 137 CLR 567 - cited

Pearce v Button (1986) 8 FCR 408 - cited

Multi Modal v Polakow (1987) 76 ALR 553 - cited

Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 – cited

Blatch v Archer (1774) 1 Cowp 63 (98 ER 969) – cited

Vetter v Lake Macquarie City Council (2001) 202 CLR 439 - cited

DP v Commonwealth Central Authority (2001) 180 ALR 402 – cited

Merpro Montassa Limited v Conoco Speciality Products Inc (1991) 28 FCR 387 - cited

Jones v Dunkel (1959) 101 CLR 298 - considered

Caboche v Southern Equities Corp Ltd [2001] SASC 55 – cited

Re Alan Bond; Ex parte: Robert Eastaugh Ramsay v Caboche (Unreported, Federal Court of Australia, Hill J, 11 June 1992) – cited

Pioneer Electronics Australia Pty Ltd v Woodlands Resources (Australia) Pty Ltd (2000) 49 IPR 299 – cited

Weissensteiner v The Queen (1993) 178 CLR 217 - cited

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 - cited

Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 – cited

Diamond v Bank of London and Montreal [1979] 1 QB 333 - cited

No 1 Raberem Pty Ltd v Monroe Schneider Associates (Inc) (Unreported, Federal Court of Australia, von Doussa J, 8 February 1991) - cited

Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 - cited

Dunlop v Woollhara Municipal Council (1975) 2 NSWLR 446 - cited

Tesco Supermarkets Ltd v Nattrass [1972] AC 153 - cited

Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 – cited

Tradestock Pty Ltd v TNT (Management) Pty Ltd (No. 2) (1978) 32 FLR 420 - cited

Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 – cited

Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 - cited

Yorke v Lucas (1985) 158 CLR 661 - cited

I Congreso del Partido [1978] 1 QB 500 –considered

The “Aventicum” [1978] 1 Lloyd’s Rep 184 - cited

The Owners of The Ship “Shin Kobe Maru” v Empire Shipping Company Inc. (1994) 181 CLR 404 - considered

The Queen v Gray; Ex parte Marsh (1985) 157 CLR 351 - considered

The Queen v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 - considered

Khatri v Price [1999] FCA 1289 - cited

Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136 - cited

Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 - cited

Harris v Caladine (1991) 172 CLR 84 - cited

DMW v CGW (1982) 151 CLR 491 - cited

The Queen v Commissioners for Special Purposes of the Income Tax (1888) 21 QBD 313- cited

Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620 - cited

Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 - cited

TRUDY BRAY v F. HOFFMAN-LA ROCHE LTD AND OTHERS

VG 359 OF 1999

JUDGE:          MERKEL J

DATE:            13 MARCH 2002

PLACE:          MELBOURNE

THE COURT ORDERS THAT:

1.      The motions of the first, fourth, sixth, eighth, ninth, tenth and thirteenth respondents be dismissed.

2.      Service of the Application on the twelfth respondent be set aside but otherwise the motion of the twelfth respondent be dismissed.

3.      The first, fourth, sixth, eighth, ninth, tenth and thirteenth respondents pay the applicant’s taxed costs of and incidental to their motions.

4.      As between the first, fourth, sixth, eighth, ninth, tenth and thirteenth respondents the costs payable to the applicant be apportioned 40% to the first and fourth respondents, 20% to the sixth, eighth and ninth respondents and 40% to the tenth and thirteenth respondents.

5.      The applicant is to pay the taxed costs separately incurred by the twelfth respondent in respect of or incidental to its motion.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     During the 1990’s certain companies in the Hoffman-La Roche, Aventis, and BASF groups of companies entered into and carried into effect an international price fixing and market sharing arrangement (“the cartel arrangement”) in respect of vitamin products manufactured and sold by them or their subsidiaries.  The cartel arrangement gave rise to prosecutions against companies in the three groups in the United States, Canada, Europe and Australia.  A number of the companies pleaded guilty to the charges.

2                     The applicant commenced a representative proceeding under Pt IVA of the Federal Court Act 1976 (Cth) claiming damages in respect of the cartel arrangement.  The proceeding was brought on behalf of group members, who were defined as:

“…persons who between 5 March 1992 and 5 July 1999 purchased in Australia all or some of vitamins A, B1, B2, B5 (Pantothenic Acid), B6, B9 (folic acid), B12, C, E, Beta Carotene, Canthaxanthin, Astaxanthin …, either directly or indirectly by way of the purchase of foods, beverages, vitamin pills or capsules or other products which contained one or more class vitamins supplied by one or more of the respondents…”

3                     The definition of the group members was amended to exclude any persons who are judges of the Federal Court of Australia or the High Court of Australia.

4                     The applicant claimed that, as a consequence of the cartel arrangement, the respondents contravened s 45 of the Trade Practices Act 1974 (Cth) (“the TPA”) by:

(a)                making contracts, arrangements, and arriving at understandings (that is, the cartel arrangement) that contained an exclusionary provision (as defined in s 4D) and other provisions which had the purpose, or would have or be likely to have the effect, of substantially lessening competition in a market in Australia (ss 45(2)(a) and 45A);

(b)               giving effect to such provisions (s 45(2)(b));

(c)                aiding, abetting, counselling, or procuring the contraventions, being directly or indirectly, knowingly concerned in, or party to, the contraventions and conspiring with others to effect the contraventions (s 75B).

5                     The applicant alleged that the cartel arrangement had the purpose and effect of:

·        fixing, controlling or maintaining the prices for the vitamins described above (“the class action vitamins”) in Australia;

·        allocating particular purchasers in Australia of class action vitamins to particular suppliers within the three groups;

·        preventing, restricting or limiting supply of the class action vitamins to purchasers in Australia.

6                     The applicant claimed declaratory relief, payment of damages to group members and injunctions in respect of the alleged contraventions.  The damages and injunctions, which are the main forms of relief claimed, are claimed under Pt VI of the TPA (ss 82 and 80).  The declarations are claimed under Pt XII of the TPA (s 163A).

7                     The first respondent (“HLR Europe”), the fourth respondent (“HLR Asia Pacific”), the sixth respondent (“A Europe”), the eighth respondent (“AAN Europe”), the ninth respondent (“AAN Asia Pacific”), the tenth respondent (“BASF Europe”), the twelfth respondent (“BASF South East Asia”) and the thirteenth respondent (“BASF East Asia”) are foreign corporations that could not be served with the originating process in the Commonwealth of Australia.  Accordingly, the applicant was required to obtain an order under O 8 r 2(2) of the Federal Court Rules giving leave to serve the Amended Application (“the application”) and the Amended Statement of Claim (“the statement of claim”) on the foreign respondents outside of the Commonwealth.  The foreign respondents were duly served outside of the Commonwealth pursuant to the leave given under O 8 r 2(2) on ex parte applications made by the applicant on 30 June 2000 and 20 July 2001.

8                     Several of the foreign respondents filed conditional appearances.  All of the foreign respondents have applied to the Court under O 9 r 7 to set aside service of the originating process upon them, alternatively to discharge the order giving leave to serve that process.  The orders have been sought on the ground that the requirements of O 8 r 2(2) have not been satisfied.  Relevantly, the rule provides that leave to serve originating process outside of the Commonwealth can be given

“…if the Court is satisfied that:

(a)       the Court has jurisdiction in the proceeding;

(b)       rule 1 applies to the proceeding;

(c)       the party seeking leave has a prima facie case for the relief sought by the party in the proceeding.”

9                     The applicant and the foreign respondents were in dispute as to whether:

·        the applicant had a “prima facie case for the relief sought” against the foreign respondents;

·        the Court “has jurisdiction in the proceeding” in respect of the claims against the foreign respondents.

10                  If sub-paras (a) and (c) of O 8 r 2(2) are satisfied little difficulty arises in respect of sub-para (b) as O 8 r 1 provides for originating process to be served outside of the Commonwealth, inter alia:

“(c)     where the proceeding is founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth;”

11                  The applicant’s proceeding is founded on a breach of s 45 of the TPA and is brought in respect of, and for the recovery of, damage suffered by the group members in the Commonwealth.

12                  HLR Europe, HLR Asia Pacific, BASF Europe, BASF South East Asia and BASF East Asia (“the HLR and the BASF foreign respondents”) have also applied under O 9 r 7 to set aside the originating process in so far as it relates to them.  The HLR and BASF foreign respondents claim that the proceeding should be struck out or dismissed under O 9 r 7 as the Court has no jurisdiction in the matter in so far as it concerns claims made under the TPA in relation to those respondents.

13                  The remaining respondents are Australian subsidiaries, within the three groups, which were involved in the sale and distribution of the class action vitamins in Australia.  The Australian subsidiaries, the second and third respondents (“HLR Australia”), the seventh respondent (“AAN Australia”) and the eleventh respondent (“BASF Australia”), have not yet made any application to the Court concerning the proceeding.  The applicant discontinued the proceeding against the Fifth respondent, Roche Australia Pty Ltd.

14                  The Australian Competition and Consumer Commission (“the ACCC”), which also has a proceeding pending in the Court in relation to the cartel arrangement, applied to be joined as an intervener pursuant to s 163A of the Act on the ground that the applicant sought a declaration pursuant to s 163A of the TPA that “the respondents have contravened s 45”.  In the alternative the ACCC applied to be added as a party to the proceeding pursuant to O 6 r 8.  The foreign respondents disputed the entitlement of the ACCC to intervene or be added as a party but did not oppose it making submissions of law in respect of the issues arising on the present application.  On that basis, I permitted the ACCC to make submissions on questions of law notwithstanding the divergence of views within the Court on the entitlement of the ACCC to intervene under s 163A in a proceeding such as the present (see for example O’Keefe Nominees Pty Limited v BP Australia Limited (1992) 38 FCR 85 at 88-93 in favour of a right of intervention cf Westpac Banking Corporation v Northern Metals Pty Ltd (1989) ATPR 50,407 at 50,417).  In these circumstances it is preferable to defer over to another occasion a decision that might resolve this issue.

15                  The main legal issue arising under the TPA concerned s 5(1), which provides that s 45 extends:

“to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia.”

16                  The foreign corporations contended that, as they were not incorporated in Australia and did not carry on business in Australia, the Court had no jurisdiction under the TPA in relation to the claims against them, and the applicant, necessarily, had failed to satisfy the Court that it had jurisdiction in the proceeding or that it has a prima facie case for the relief sought in respect of a contravention of s 45 of the TPA.

17                  The HLR and BASF foreign respondents also contended that the application to set aside the proceeding on the ground of absence of jurisdiction was required to be heard and determined by the Court forthwith as a final, rather than an interlocutory, application.  Accordingly, so it was argued, the extensive hearsay evidence relied upon by the applicant (which included statements of agreed facts in the United States, Canadian and Australian prosecutions) was inadmissible.  Numerous other objections were taken by the foreign respondents to the admissibility of the applicant’s evidence.  I propose to deal with those objections, to the extent they relate to the evidence upon which I propose to rely, in the course of these reasons for judgment.

18                  The applications of the foreign respondents raise a number of difficult issues concerning O 8 r 2(2), s 5(1) of the TPA, and the jurisdiction of the Court in relation to the claims against the foreign respondents.  No issues were raised concerning Pt IVA of the Federal Court of Australia Act 1976 (Cth) or as to whether any of the claims were precluded by any limitation of action provisions in the TPA.

The applicant’s claims

19                  The applicant’s claims under s 45(2)(a) of the Act are based upon an alleged market in Australia in which each of the respondents engaged in the conduct alleged against them in the course of the supply in Australia of the class action vitamins in competition with each other (paras 17, 18, 19 and 43 of the statement of claim).  The statement of claim alleges that each of the foreign respondents engaged in the supply of the class action vitamins in Australia by itself, or by the Australian subsidiaries and the other foreign respondents in its group acting as its agent (paras 20(f), 23, 25, 26(b), 27, 30(d), 32, 34, 36, 39, 41 and 41B).

20                  The supply by the foreign respondents of the class action vitamins in Australia and the control and direction they were alleged to have exercised over their Australian subsidiaries, were pleaded to have also had the consequence that the foreign respondents carried on business in Australia within the meaning of s 5(1) of the Act (para 42).

21                  The contravention of s 45(2)(a) (in respect of which reliance was placed on s 45A) was alleged to have arisen by reason of the making of the cartel arrangement to fix prices and allocate market shares throughout the world, including Australia, by HLR Europe, A Europe and BASF Europe (paras 45, 46 and 47).  The arrangement was alleged to contain an exclusionary provision (as defined in s 4D of the TPA) and other provisions that had the proscribed anti-competitive purpose and effect (paras 48, 49 and 50).

22                  The contravention of s 45(2)(b) (in respect of which reliance was also placed on s 45A) was alleged to have arisen by reason of each of the respondents giving effect to the contravening provisions by fixing prices and market allocations in the Australian market (para 51).

23                  The particulars given in respect of the communications forming part of the conduct relied on as constituting the making of, and giving effect to, the alleged contravening provisions of the cartel arrangement did not specify where the communications took place.

24                  In summary, the applicant alleges breaches of s 45(2)(a) and (b) by each of the respondents (para 52), alternatively breaches of s 45(2)(b) by the Australian subsidiaries giving effect to the cartel arrangement on the instructions of HLR Europe, A Europe, and BASF Europe (para 53 and 54).  An alternative cause of action pleaded against the Australian subsidiaries, in reliance on s 75B, is that they were involved in the contraventions of s 45(2) by HLR Europe, A Europe, and BASF Europe (paras 55, 56 and 57).  A claim is also made, in reliance on s 75B, that HLR Europe, A Europe, and BASF Europe were involved in the contraventions of s 45 by the Australian subsidiaries (paras 59, 60 and 61).

25                  The s 45 and s 75B claims against the foreign respondents relate to conduct allegedly engaged in within and outside of Australia between “at least 5 March 1992 and 5 July 1999”.  In so far as the claims are based upon conduct by the foreign respondents within Australia the issue of the extra-territorial operation of the TPA under s 5(1) does not arise.  However, in so far as the claims are based upon conduct by the foreign respondents outside of Australia an issue arises as to the operation of s 5(1) and, in particular, whether the foreign respondents carried on business in Australia and, as a consequence, were subject to the extra-territorial operation of Pt IV of the TPA.

26                  It is in that context that the prima facie case and jurisdictional requirements of O 8 r 2(2) arise for consideration.

Order 8 Rule 2(2)

27                  The character of the inquiry required under O 8 r 2(2)(c) was described by the Full Court in Caterpillar Inc v John Deere Ltd (1999) 48 IPR 1 (“John Deere”) at 8-9 as follows:

“The requirement to show a ‘prima facie case for the relief sought’ was considered in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549.  The full court said:

In addition to bringing a case within one of the paragraphs of r 1, an applicant must show a ‘prima facie case for the relief which he seeks’.  In Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390, in a passage which has been cited with approval on many occasions, Heerey J said:

‘…the requirement of O 8, r 2(2)(c) has to be met at the outset of the proceedings.  It does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant’s case at trial … It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, among other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.’

In Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110, after setting out this passage, French J said that ‘a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed’.  In WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476 Beaumont J said:

‘Such a preliminary question [… whether a prima facie case exists] should not call for a substantial inquiry.  The kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue … [The] purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case.’”

28                  The Full Court, citing Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 (“Cell Tech”) at 373, also observed at 13-14 that it is sufficient if a prima facie case for relief is made out on one (and not necessarily all) of the causes of action relied upon; cf Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31 (“Tycoon Holdings”) at 35.  In Cell Tech (at 373-374) Lindgren J pointed out that although the statement of claim is useful as a statement of facts and causes of action relied upon, whether a prima facie case is made out on any of the causes of action is to be determined on the basis of the evidence.  Thus, a prima facie case for relief may be made out which does not strictly conform to the case pleaded.

29                  The prima facie case sought to be made out by the applicant was based primarily on hearsay evidence.  Hearsay evidence may be admissible if the motions of the foreign respondents are interlocutory proceedings: see s 75 of the Evidence Act 1995 (Cth) (“Evidence Act”).  See also O 33 r 3.  Further, a court may be more inclined to exercise its discretion to admit evidence that is not in dispute under O 33 r 3(a) in an interlocutory proceeding.

30                  Although the character of the inquiry under O 8 r 2(2) suggests it is interlocutory in nature, the nature of the applications of the respondents is to be determined by reference to the kind of relief they seek: see Allstate Life Insurance Co v ANZ Banking Group Ltd (No 3) (1996) 64 FCR 55 at 58.  The relief sought by all of the foreign respondents under O 9 r 7 is to set aside service.  The additional relief sought by the HLR and BASF foreign respondents is to set aside or dismiss the proceeding on the ground the Court has no jurisdiction in the matter the subject of the proceeding.

31                  An order in a proceeding that does not determine or finally dispose of the rights and liabilities in issue between the parties in the proceeding will usually be an interlocutory, rather than a final, order: see Licul v Corney (1976) 180 CLR 213 at 225 and Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 248.  An order setting aside service does not prevent the applicant from re-applying for leave to serve the originating process out of the jurisdiction under O 8, as no rights or liabilities in issue between the parties in the proceeding have been finally determined.  Thus, an application to set aside service out of the jurisdiction of an originating process is a proceeding that is interlocutory in character: see Victorian Broadcasting Network Ltd v Whitlam (1980) 31 ALR 184 at 185, Contender 1 Ltd v Lep International Pty Ltd (1988) 82 ALR 394 (“Contender 1”) at 397 per Wilson, Dawson, Toohey and Gaudron JJ, cf Brennan J at 399, WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 475-476 per Beaumont J and Anderson and Co (A Firm) v GPA Group PLC (Unreported, Federal Court of Australia, Spender, Drummond and Sundberg JJ, 13 November 1998).

32                  In Trade Practices Commission v Australian Iron and Steel Pty Limited & Ors (Unreported, Federal Court of Australia, Lockhart J, 29 September 1989) (“Australian Iron and Steel (1989)”) Lockhart J considered whether the requirements of O 8 r 2(2) had been met in respect of a claim under Pt IV of the TPA.  His Honour set aside service outside of the jurisdiction of an originating process on the ground that, on the “meagre” material before the Court, he was not positively satisfied the Court had jurisdiction against the foreign respondents.  His Honour said (at 3-4):

 “I am not satisfied that this proceeding is one in which the court has jurisdiction, as against the fourth and fifth respondents – which, in my opinion, is the relevant consideration.  The questions of law that are involved are of considerable importance and of some difficulty.  I do not say that I am positively satisfied that the Court does not have jurisdiction; I simply say I am not satisfied at this stage on the evidence presently adduced that the Court does have jurisdiction.

Though substantial argument has taken place, it does so in a proceeding which is in its early days and has, as I say, not even reached the stage of the completion of pleadings.  The evidence adduced by the applicant in support of its motion – I do not say this at all critically – is meagre and contributes to my state of not being satisfied of jurisdiction.

Whether it is possible for these questions of law to be argued prior to the final hearing by, for example, preliminary questions of law, or indeed, a stated case pursuant to order 29, is matter on which I need not say anything at this stage except that I think it is desirable that the questions of law going to the extra territorial operation of the relevant sections under the Trade Practices Act should be disposed of as early as possible and preferably before the final hearing.  The applicant would then know whether or not it is proper to involve the fourth and fifth respondents by obtaining leave to serve out of the jurisdiction.  If that leave were to be granted the case would then proceed to a final hearing which will involve lengthy and complicated evidence with those parties before the Court.”

33                  His Honour concluded (at 5):

“It is, of course, always open to the applicant to move again for an order obtaining leave to serve the process upon the fourth and fifth respondents with evidence that is of more probative value.  Accordingly, the Court declines to order that the service effected upon the fourth and fifth respondents in New Zealand be confirmed and sets aside that service.”

34                  In Contender 1 at 399 Brennan J (in his dissenting judgment) observed that the order in that case, made under the Rules of the New South Wales Supreme Court, granting leave to serve the originating process out of the jurisdiction “concluded against the appellant the question of its immunity from the jurisdiction of the Supreme Court of New South Wales”.  His Honour was referring to the Court’s assumption of jurisdiction over the appellant, rather than its jurisdiction in the proceeding.  Nonetheless the majority, after observing (at 397) that the decision whether to set aside orders granting leave is a decision on a matter of practice and procedure, referred to the statement of the Court of Appeal (as a reason for refusing leave to appeal) that the court will be in a better position to deal with any relevant legal principles where the facts have been fully heard at trial, and stated at 398:

“Returning to the statement made by the Court of Appeal when refusing leave, we do not believe that this Court should be zealous to discern a failure on the part of that court to fulfil its duty.  The task confronting an applicant for leave is well known.  Both parties were represented by counsel and a statement of the reasons why leave should be given had been filed.  It is inconceivable that in those circumstances the court was not fully apprised of all the material considerations.  If their Honours took the view, as we have demonstrated they may well have done, that there was no injustice to the appellant in allowing complex questions of disputed fact to go to trial, then in our opinion they were entitled in refusing leave to say that the court was not of the opinion that it was a matter suitable for leave. By adding the words that the court ‘believes it will be in a better position to deal with any relevant legal principles when the facts have been fully heard at the trial’, it is not to be assumed that the court was thereby abdicating its responsibility to determine the application for leave to appeal according to law.  Implicit in this statement is a recognition that at trial the evidence may not be limited to the evidence placed before Clarke J.  From what was said in this court by counsel for the respondent, it seems that there may be further evidence relating to the circumstances in which the charter was entered into, a consideration relevant to the position of the appellant under the charter-party.

As we have said, the real question is whether the appellant has shown error on the part of the Court of Appeal in dealing with the application for leave to appeal.  We do not think that the appellant has done so; we would therefore dismiss the appeal.”

35                  The passages in Australian Iron and Steel and in Contender 1, to which I have referred, reflect the interlocutory character of an application to set aside service out of the jurisdiction.  The fact that a refusal to set aside service will subject the foreign respondents to the exercise of the Court’s jurisdiction and the fact that one of the criteria for such service in respect of a proceeding in the Federal Court is that the Court is to be satisfied that it has jurisdiction in the proceeding, does not affect the interlocutory character of the application.

36                  An order striking out a statement of claim, or setting aside a proceeding on the ground that it does not disclose a reasonable cause of action, is also interlocutory rather than final: see Weatherall v Satellite Receiving Symptoms (Australia) Pty Ltd (1999) 30 ACSR 698, Minogue v Williams (2000) 60 ALD 366 at 371 and Yap Cheng See v Granich & Associates [2001] FCA 1735 at [5].

37                  Thus, in so far as the relief sought in the motions by the respondents under O 9 r 7 relates to whether the requirements in O 8 r 2(2) have been satisfied or whether the proceeding should be set aside as no reasonable cause of action is disclosed, the relief is interlocutory in character with the consequence that the notices of motion seeking that relief are interlocutory proceedings.  Accordingly, the hearsay rule does not apply to the evidence adduced in relation to the issues arising under O 8 r 2(2) if the party who adduces it also adduces evidence of its source: see s 75 of the Evidence Act.

38                  However, in so far as the HLR and the BASF foreign respondents are applying to set aside the proceeding on the ground that the Court does not have jurisdiction in the matter the subject of the proceeding, that aspect of their application is final, rather than interlocutory, in character: see Lloyd Werft Bremerhaven GmbH v Owners of Ship “Zoya Kosmodemyanskaya” (1997) 79 FCR 71 (“Bremerhaven”) at 93.  I will return to this aspect of the application later in these reasons.

39                  It follows from the foregoing that the issues arising under O 8 r 2(2)(a), (b) and (c) are to be determined in an interlocutory proceeding with the consequence that a finding that, for the purpose of the rule, the Court is, or is not, “satisfied” that there is a prima facie case for the relief sought or that the Court has jurisdiction in the proceeding to grant the relief sought on the basis of that prima facie case, is not a finding that finally determines any of the rights in issue in the proceeding, including the jurisdiction of the Court to grant the relief sought under the TPA.  The finding will be no more than that the Court on the evidence before it at this interlocutory stage is, or is not, satisfied that the requirements of O 8 r 2(2) have been met.

40                  On the proper construction of O 8 r 2(2), the questions raised by the present application are whether, on the evidence before it, the Court is satisfied that:

·        the applicant has made out a prima facie case for the relief sought on the basis of any of the causes of action relied upon by the applicant against each of the foreign respondents;

·        the Court has jurisdiction in the proceeding, in the sense that it has jurisdiction to grant any of the relief sought under the TPA in relation to the cause of action in respect of which a prima facie case has been made out.

41                  I have formulated the issue of jurisdiction by reference to the relief granted as, as I later explain, under s 86 of the TPA the claim for relief illuminates the scope of the controversy that constitutes a matter: see Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 177 ALR 329 (“Edensor”) at 348.

42                  It was contended on behalf of the HLR and BASF foreign respondents that the above approach to O 8 r 2(2) gives primacy to the prima facie case requirement over the jurisdictional requirement.  I do not agree.  In the context of O 8 r 2(2), which comes into operation on an ex parte application prior to service on a respondent, the jurisdictional requirement can only, relevantly, be considered in the context of and by reference to the “prima facie case” made out by the applicant.  Any other approach would involve the Court in considering the issue of jurisdiction on a hypothetical basis.

43                  I propose, in the first instance, to consider whether I am satisfied that the requirements of O 8 r 2(2) have been met and to consider, as a discrete matter, the application of the HLR and the BASF foreign respondents to have the proceeding set aside on the ground of want of jurisdiction.

A prima facie case

44                  The evidence clearly establishes a prima facie case of contravention of s 45 of the TPA.  The question, for present purposes, is whether I am satisfied that a prima facie case has been made out against any of the foreign respondents.  As I later explain, it appears that most, if not all, of the foreign respondents were involved in the making of, or giving effect to, the cartel arrangement that resulted, prima facie, in contraventions by their Australian subsidiaries of s 45 of the TPA in respect of the supply of the class vitamins in Australia.  The issues are whether the conduct constituting that involvement was engaged in:

·        outside of Australia, in which event the extra territorial operation of the TPA provided for in s 5(1) arises for consideration;

·        within Australia, in which event s 45 can apply without resort to s 5(1).

(a)               Section 5 – Conduct outside of Australia

45                  Section 45 of the TPA prescribes the relevant norm of conduct for the purposes of the present case, and other provisions of the TPA (ss 80, 82 and 163A) provide remedies for a contravention of s 45.  Section 45 is silent on whether the conduct proscribed by the section is limited to conduct within Australia.

46                  Section 5, however, expressly provides, subject to certain conditions, for extra-territorial operation of certain parts of the Act.  The section provides:

“(1)     Part IV, Part IVA, Part V (other than Division 1AA), Part VB extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia.

(1A)     In addition to the extended operation that section 46A has by virtue of subsection (1), that section extends to the engaging in conduct outside Australia by:

            (a)        New Zealand and New Zealand Crown corporations; or

            (b)        bodies corporate carrying on business within New Zealand; or

            (c)        persons ordinarily resident within New Zealand.

(2)       In addition to the extended operation that sections 47 and 48 have by virtue of subsection (1), those sections extend to the engaging in conduct outside Australia by any persons in relation to the supply by those persons of goods or services to persons within Australia.

(3)       Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

(4)       A person other than the Minister or the Commission is not entitled to make an application to the Court for an order under subsection 87(1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

(5)       The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister:

(a)       the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and

(b)       it is not in the national interest that the consent be given.”

47                  There is a general canon of construction that an enactment will not be construed as applying to foreigners in respect of acts done by them outside the dominions of the sovereign power enacting.  The canon, which is subject to a contrary intention appearing, was explained by Lord Russell CJ in R v Jameson [1896] 2 Q.B. 425 at 430 as:

“a rule based on international law by which one sovereign power is bound to respect the subjects and the rights of all other sovereign powers outside its own territory.”

48                  There is some dispute over the extent to which the canon applies to acts carried out outside the jurisdiction but intended to have, and actually having, adverse effects upon the country concerned: see Meyer Heine Proprietary Limited v The China Navigation Company Limited (1966) 115 CLR 10 (“Meyer Heine”) at 23 per Kitto J, at 31 per Taylor J and at 38-39 per Menzies J cf at 43 per Windeyer J.  In an era of e-commerce, electronic fund transfers, internet trading and information technology there may be much to be said for the view that, absent a contrary statutory intention, the time might have come to move to the “effects” doctrine of jurisdiction developed in the United States which was considered in Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) 22 FCR 305 (“Australian Iron Steel (1990)”) at 319.

49                  Meyer Heine concerned the extra-territorial operation of s 4(1) of the Australian Industries Preservation Act 1906-1950 (Cth) which created an offence if a person enters into a contract or engages in a combination to restrain trade or commerce, or destroys or injures by means of unfair competition any Australian industry.  The section, which was expressed in general terms, was silent on extra-territorial operation.  However s 9(b), which concerns conduct aiding or abetting a contravention of other sections of the Act, expressly provided for conduct outside of Australia to constitute aiding and abetting in certain circumstances.  Kitto J at 24 (with whom McTiernan J at 20 and Windeyer J, relevantly, at 43 agreed) stated that on the proper construction of the Act the presence of s 9(b) is to be “accounted for only on the basis that the Act as a whole, including s 9 itself, has been framed in reliance upon its being taken for granted by everyone that when conduct is made an offence it is only in Australia that is meant”: see also Taylor J at 31-33 cf Menzies J at 38-39.  As s 9(b) was found to evince an intention that, save as therein provided, the other provisions did not have extra-territorial operation there was no need to have resort to the cannon of construction: see Kitto J at 23.

50                  Whether a statutory provision has extra-territorial operation is a question of construction of the Act as a whole.  With the TPA, as in Meyer Heine, it is not necessary to rely on any canon of construction in respect of s 5 as s 5(1) has provided for extra-territorial operation of the provisions of Parts IV, IVA, V (other than Division 1AA), VB subject to certain conditions.  As with s 9(b) of the Australian Industries Preservation Act 1906-1950 (Cth), s 5 of the TPA is to be accounted for only on the basis that the Act as a whole, including s 5 itself, has been framed on the assumption that when conduct is made a contravention of the Act it is only conduct in Australia that is meant unless the conditions set out in s 5 apply.

51                  The view that s 5(1) is the repository of the extra-territorial operation of the Act is also supported by ss 5(1A), 5(2), (3), (4) and (5) which are concerned with, or lay down, particular requirements in relation to the extra-territorial operation of Pts IV, IVA, V and VB.  It is clear from those sub-sections that, unless expressly provided otherwise, the legislature intended that the Act is only to apply to extra-territorial conduct in the circumstances and subject to the conditions laid down in s 5.

52                  Further, there is nothing in the provisions of the TPA not mentioned in s 5(1) that implies that they are to operate extra-territorially, or that those parts mentioned in s 5(1) operate extraterritorially other than as provided in s 5.  This construction, that the extra-territorial operation of the TPA is only as provided for in s 5, accords with cl 87 of the Explanatory Memorandum of the Trade Practices Bill 1974 which stated “[t]he extent to which the legislation will operate extra-territorially is indicated in clause 5”.  The construction also accords with the case law on s 5(1): see Australian Iron and Steel (1990) at 319-320 per Lockhart J and Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 (“Australia Meat Holdings”) at 353-356 per Wilcox J.

53                  The applicant has also made claims, in reliance on s 75B of the TPA, that the foreign respondents were persons involved in the contraventions of s 45 by the Australian subsidiaries.  Section 75B is within Pt VI of the Act which is concerned with “Enforcement and Remedies”.  Section 75B(1) provides:

“(1)     A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB or V, or of section 75AU or 75AYA, shall be read as a reference to a person who:

(a)               has aided, abetted, counselled or procured the contravention;

(b)               has induced, whether by threats or promises or otherwise, the contravention;

(c)               has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)               has conspired with others to effect the contravention.”

54                  Part VI is not a Part of the TPA to which the extended application of the TPA provided for in s 5(1) applies.  Although the Court may make orders under ss 80 and 82 against persons contravening s 45, and against persons involved in the contravention as set out in s 75B, ss 45 and 75B are not to be regarded as equivalent ‘types’ of provision.  As was explained by Fisher J in Yorke v Ross Lucas Pty Ltd (1983) 46 ALR 319 at 321:

“…neither s 75B nor s 82 deem the accessor to have committed a contravention, but rather proceed on the basis that in one or other of the specified ways he was ‘involved’ in the commission of the primary offence.  Section 75B it can be said is procedural in the sense that it merely purports to indicate the various ways in which one person can be involved in the commission of a contravention by another to such an extent as to render it just that he contribute to recoupment of the loss suffered by others in consequence of the contravention.”

55                  Thus, a person involved in a contravention, although liable under Pt VI to pay damages (s 82) or to an injunction (s 80) does not contravene the Act.  In those circumstances, the extended operation of the Act under s 5(1) only relates to persons who have contravened or are bound by a provision of the Parts referred to in s 5(1).  Accordingly, as the extended application of the Act under s 5 does not apply to Pt VI, for the reasons set out above, s 75B is to be construed as only being applicable to conduct in Australia.  In Australia Meat Holdings at 355 Wilcox J arrived at a similar conclusion.

56                  It is not readily apparent why the legislature has excluded extra-territorial conduct of a foreign corporation, that is intended to have and has anti-competitive consequences in Australia, from the ambit of s 75B even if the corporation carries on business in Australia.  The omission might have arisen from the fact that s 75B was enacted after s 5(1) and the legislature did not turn its mind to this issue.  Whatever might be the explanation the omission is a matter for the legislature rather than the Court.

57                  Accordingly, in so far as the claims against the foreign respondents in reliance on s 45 of the TPA are based on conduct outside of Australia, those claims are only maintainable if those respondents were “carrying on business within Australia”.  There is a question as to whether that requirement is to be satisfied at the date of the alleged contravention or when the proceeding is commenced.  In the context of s 5(1) of the TPA, which is not directly or indirectly concerned with the time of service but is, rather, concerned with extending the range of conduct that contravenes the TPA, the relevant date appears to be the date of the alleged contravention.

58                  There is an additional question as to whether the requirement that the foreign respondents carry on business in Australia is a matter upon which the Court’s jurisdiction depends or merely a matter that must be established for a contravention of s 45 to be found.  I have also not found it necessary to resolve that question for the purposes of determining the issues arising under O 8 r 2(2) as, if the applicant fails to satisfy me that she has a prima facie case that the foreign respondents carried on business in Australia, she must fail under O 8 r 2(2)(c) in so far as her case is based on extra-territorial conduct.  Conversely, if she satisfies me that the respondents have carried on business in Australia that element of the cause of action will have been made out by the applicant for the purposes of O 8 r 2(2)(c).  It will not add anything if, on the same findings, the applicant must also fail or succeed (as the case may be) under O 8 r 2(2)(a).  Of course, the question of whether the s 5(1) requirement of carrying on business is a jurisdictional requirement also arises on the application of HLR and BASF foreign respondents that the proceeding be dismissed or set aside on the ground of want of jurisdiction.  That issue is dealt with later in these reasons.

59                  I turn to consider whether the foreign respondents carried on business in Australia.  The applicant and the ACCC submitted that the expression “carrying on business in Australia” should be broadly interpreted so as to enable the TPA to apply to conduct that is intended to have, and has, an adverse effect on competition in Australia.  Such an approach, so it is said, gives effect to the object of the TPA to enhance the welfare of Australians, inter alia, through the promotion of competition and fair trading: see s 2.

60                  The expression “carrying on business” is not defined although s 4(1) defines “business” as including a business not carried on for profit.  As was pointed out by Gibbs J in Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 133 CLR 164 (“Luckins”) at 178 the expression “may have different meanings in different contexts”.  The present context is s 5(1), which gives effect to the legislature’s view that comity, for the purposes of the TPA, requires that a particular nexus with Australia exist (ie citizenship or residence by a person or incorporation or the carrying on of business in the case of a body corporate) if certain Parts of the TPA are to apply to conduct engaged in outside of Australia by those persons or bodies corporate.  As is clear from the judgments in Meyer Heine it was open to the legislature, as a matter of power and comity, to impose a lesser nexus requirement (eg intended and actual anti-competitive consequences in Australia) but it chose not to do so.  In that context the expression should be given its ordinary or usual meaning.

61                  The expression has often been considered in the context of service of process on, or enforcement of a foreign judgment against, a company which has a presence in or is carrying on business within the jurisdiction.  Understandably, in those contexts the courts have attached importance to the defendant’s presence, in the sense of a place of business (and therefore, a place for service), in the jurisdiction.  Thus, it has been stated that a foreign company can only be served if it is carrying on business at a place of business within the jurisdiction: see La Bourgogne [1899] AC 431, Okura & Co, Limited v Forsbacka Jernwerks Aktiebolag [1914] 1 KB 715 at 718 and The “Theodohos” (1977) 2 Lloyd’s Rep 428 at 431.  The foreign respondents relied on such cases to contend that in order to carry on business within the jurisdiction the foreign respondents must have a presence (ie place of business) within the jurisdiction.  It was then contended that as the foreign respondents have no such presence, in the sense of a place of business, in Australia they do not carry on business in Australia.

62                  Whether a corporation is carrying on business within Australia is very much a question of fact: see Luckins at 186 per Stephen J and Saccharin Corporation Limited v Chemische Fabrick von Heyden Aktiengesellschaft [1911] 2 K.B. 516 at 521, 524 and 526.  Carrying on business will usually involve “a series or repetition of acts”: see Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 at 350 per Dawson J.  The Full Court of the Supreme Court of Victoria in Pioneer Concrete Services Ltd v Galli [1985] VR 675 at 705 stated:

“The word ‘business’ frequently poses difficulties for the courts.  As Lord Diplock said in Town Investments Ltd. v. Department of the Environment [1978] A.C. 359, at p. 383: ‘The word ‘business’ is an etymological chameleon; it suits its meaning to the context in which it is found.  It is not a term of legal art and its dictionary meanings, as Lindley L.J. pointed out in Rolls v. Miller (1884) 27 Ch. D. 71, at p. 88 embrace ‘almost anything which is an occupation, as distinguished from a pleasure – anything which is an occupation or duty which requires attention is a business’.’

Recently Mason J.  attempted to define the word ‘business’ in its ordinary or popular meaning for the purpose of certain rating sections in the Local Government Act 1919 (N.S.W.).  In Hope v. Bathurst City Council (1980) 144 C.L.R. 1, at pp. 8-9; 29 A.L.R. 577, at pp. 582-3, in a judgment which was concurred in by Gibbs, Stephen and Aickin JJ., Mason J. accepted meaning No. 19 from the Shorter Oxford Dictionary: ‘A commercial enterprise as a going concern’, as the definition which came closest to the popular meaning, although he considered that: ‘it is the words ‘carrying on’ which imply the repetition of acts (Smith v. Anderson (1880) 15 Ch. D. 247, at pp. 277-8) and activities which possess something of a permanent character’.  Referring to the particular activities in question he said that the word ‘business’ denoted ‘activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis’.”

63                  While the purpose of profit is unnecessary in the present context (by reason of the definition of business in s 4(1)), the definition set out above can otherwise be adopted as sufficient for present purposes without adopting it as a definition which is necessarily applicable in all cases.  In the context of s 5(1) I see no reason, however, for importing the additional requirement that to carry on business in the jurisdiction the foreign company must also have a place of business in the jurisdiction.  A place of business is not a requirement of comity.  Further, importing such a requirement will impermissibly supplement the corporate requirement of carrying on business with the additional requirement of corporate presence or residence.  In any event it is clear that the requirement of a place of business in the jurisdiction relied upon by the foreign respondents does not apply where the contention is that the foreign corporation carried on business by an agent acting on its behalf.  In such cases it is of no significance that the foreign company has no fixed place of business in the jurisdiction provided the agent acting on its behalf carried on its business from some fixed place in the jurisdiction: see Adams v Cape (1990) 1 Ch 433 (“Adams v Cape”) at 525 and 529-531.

64                  Plainly, at all material times the Australian subsidiaries carried on business in Australia.  Thus, the question in the present case is not whether a business was carried on within the jurisdiction.  Rather, the question is whether that business was carried on by the Australian subsidiaries on their own account or on the account, or on behalf of, the European or the regional parent.

65                  In The Albazero [1977] AC 774 at 807 Roskill LJ observed:

“…each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate legal rights and liabilities so that the rights of one company in a group cannot be exercised by another company in that group even though the ultimate benefit of the exercise of those rights would enure beneficially to the same person or corporate body irrespective of the person or body in whom those rights were vested in law.  It is perhaps permissible under modern commercial conditions to regret the existence of these principles.  But it is impossible to deny, ignore or disobey them.”

66                  The applicant did not query the independent corporate personality of the subsidiaries in accordance with the principle in Saloman v Saloman [1897] AC 22 to which Roskill LJ was referring.  Rather, the applicant relied on the statement in Inland Revenue Commissioners v Sansom [1921] 2 KB 492 at 503 by Lord Sterndale that:

“There may,…be a position such that although there is a legal entity within the principle of Salomon v Salomon & Co, that legal entity may be acting as the agent of an individual and may really be doing his business and not its own at all.  Apart from the technical question of agency it is difficult to see how that could be, but it is conceivable.  Therefore the mere fact that the case is one which falls within Salomon v Salomon & Co is not of itself conclusive. It goes some considerable way, but it is not conclusive.”

67                  The above passage was quoted with approval by Atkinson J in Smith, Stone & Knight v Birmingham Corporation [1939] 4 All ER 116 (“Smith, Stone”) at 120-121 with the observation:

“It seems therefore be a question of fact in each case, and [the] cases indicate that the question is whether the subsidiary was carrying on the business as the company’s business or as its own.”

68                  In Smith, Stone the subsidiary was found to be operating not on its own behalf but on behalf of the parent.  In arriving at that conclusion (at 121-122) Atkinson J answered the following questions in favour of the parent company:

“The first point was: Were the profits treated as the profits of the [parent] company? – … secondly, were the persons conducting the business appointed by the parent company?  Thirdly was the company the head and the brain of the trading venture?  Fourthly, did the company govern the adventure, decide what should be done and what capital should be embarked on the venture?  Fifthly, did the company make the profits by its skill and direction?  Sixthly, was the company in effectual and constant control?”

See also Spreag v Paeson Pty Ltd (1990) 94 ALR 679 (“Spreag v Paeson”) at 711-712.

69                  Cases such as Smith, Stone and Spreag v Paeson can be explained on the basis that the subsidiary was not maintained as a distinct and separate entity because the parent had disregarded the corporate boundaries.

70                  In determining whether the Australian subsidiaries or the overseas parent companies are carrying on business in Australia the question might be asked: “is the person [or corporation] in question doing his business or doing the absent corporation’s business?  Conversely are they doing business through him or by him”: see Vogel v Kohnstamm [1973] QB 133 (“Vogel”) at 143 per Ashworth J.  In determining the answer to that question a court would be required to investigate the functions which the subsidiary has been performing and all aspects of the relationship between it and the overseas corporation: see Adams v Cape at 530.  Byrne J observed in Commonwealth Bank of Australia v White [1999] 2 VR 681 at 691 that the authorities establish that in resolving the question of whether the subsidiary is in truth carrying on the parent’s business the court must examine “the totality of the relationship between the principal and the agent in the light of the nature of the company’s business and that of the agent”.  In Wilson v Servier Canada Inc (2000) 50 O.R. (3d) 219 at 228 Cumming J stated that a “stringent test must be satisfied before one may pierce the corporate veil of a subsidiary corporation and impose liability upon a parent corporation on the basis of an asserted agency relationship”.

71                  In Adams v Cape at 530-531 a number of questions were considered to be likely to be relevant.  They include:

(a)                whether the fixed place of business from which the subsidiary operates was originally acquired for the overseas corporation;

(b)               what other contributions, if any, the overseas corporation makes to the financing of the subsidiary;

(c)                what degree of control the overseas corporation is entitled to exercise and does exercise over the running of the business conducted by the subsidiary;

(d)               whether the subsidiary reserves part of its premises or staff for the work of the overseas corporation;

(e)                whether the subsidiary displays the overseas corporation’s name at its premises or on its stationery in such a way as to indicate it represents the overseas corporation;

(f)                 what business the subsidiary transacts exclusively on its own behalf;

(g)                whether the subsidiary makes contracts with customers or other parties in the names of the overseas corporation or otherwise in such manner as to bind it;

(h)                if so, whether the representative requires specified authority in advance before binding the overseas corporation to contractual obligations.

72                  The applicant and the ACCC submitted that where a global enterprise exists comprising corporations located in many jurisdictions; that enterprise has established mechanisms by which it supplies its products in many jurisdictions; and the subsidiary carries on business in Australia in a manner which indicates that it is an integrated part of that global enterprise; then the subsidiary, which is subjected to the exercise of control or influence of its parent, should be viewed as carrying on business in Australia as agent of the parent.  The difficulty with the sweeping assertion that the Australian subsidiaries, being directed and controlled by an overseas parent as part of the parent’s global enterprise, carried on the business of the parent, is that that alone is not sufficient to pierce the corporate veil.  Factors of the kind adverted to in Smith, Stone and Adams v Cape would usually be considered before a conclusion is arrived at that the subsidiary’s business, assets and contracts are those of the parent.  In Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 577 Rogers A-JA observed that a proposition similar to that put forward by the applicant and the ACCC is “too simplistic”.

73                  The applicant and the ACCC relied upon the reasoning of Wilcox J in Amalgamated Wireless (Australia) Ltd v McDonnell Douglas Corp (1987) 16 FCR 238 (“Amalgamated Wireless”) and Tycoon Holdings to contend that the degree of control and its exercise are the critical criteria.  The decisions were criticised by the foreign respondents as adopting an incorrect approach to determining when the corporate veil between companies in a large international group may be lifted.

74                  In Amalgamated Wireless, Wilcox J, approaching the issue as one of degree, found that a United States company, which did not, “as such and in person, carry on business in Australia”, did carry on business in Australia through its agent, an Australian subsidiary.  In his Honour’s view (at 240-241):

“…the degree of involvement of the United States parent is so great that it is impossible to characterise this as being merely a case where a company purchases shares in another company and leaves that other company to carry on its own business on its own account.  McDonnell Douglas Corp is more than an investor in the Australian subsidiary; it is concerned to use the Australian subsidiary as part of a world-wide information systems enterprise.  The local company has apparently been set up to run its business as part of the world-wide McDonnell Douglas organisation; and ultimately on behalf of the parent company in America.”

75                  Subsequently, in Tycoon Holdings Wilcox J (at 39) referred to the question posed by Ashworth J as to whether a subsidiary was carrying on its own business or the absent corporation’s business.  His Honour said of his decision in Amalgamated Wireless:

“I think that one needs to look at the whole of the evidence and determine whether the relevant activities are those of the agent, even though the company benefits, or whether they are truly those of the company, though effected by a different legal person. The question will usually be one of degree, the answer depending upon the nature of the agent’s activities and the degree of domination of those activities by the company.  Where the agent’s only activities are related to the products or services of the company, this may indicate that the company is carrying on business by the agent.  If it should happen that the agent is owned or otherwise legally controlled by the company, that conclusion may be strengthened.”

76                  A difficulty with the approach of Wilcox J is that he may have conflated the Adams v Cape criteria for piercing the corporate veil (which include control and its exercise) with the separate Adams v Cape criteria for agency.  For example, his Honour did not appear to take into account the legal requirement that in this context agency connotes a relationship which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties: see Adams v Cape 529-530.  That conflation may have resulted in an inconsistency between his Honour’s finding in Amalgamated Wireless (at 240) that the subsidiary, rather than its US parent, was the contracting entity with third parties and his later conclusion as to the existence of agency.  While there may be some dispute as to whether Wilcox J arrived at the correct conclusion on the facts in Amalgamated Wireless I do not take his Honour to be stating principles that differ from those suggested in Smith, Stone or in Adams v Cape, the many cases that have cited those decisions, or the other decisions to which I have referred.  Rather, in Amalgamated Wireless his Honour made a finding of agency based on his view of the facts in the particular case.

77                  In the present matter the Australian subsidiaries, in conducting their business activities in Australia, held their assets (including bank accounts) in their own names and employed employees and purchased and sold products in their own names.  Their businesses were not confined to the class vitamins or to products supplied by other companies in the respective groups.  The accounts of each of the subsidiaries were included in the Consolidated group accounts but that is commonplace with subsidiaries and accords with established accounting and regulatory requirements: see for example Industrial Equity v Blackburn (1977) 137 CLR 567 at 577.  There may be some overlapping board appointments in respect of the subsidiaries and the regional or parent companies in the three groups but, for the most part, the subsidiaries had different boards to the European or regional parent.  The evidence does not suggest that the Australian subsidiaries were not maintained as distinct or separate entities or that the parents have disregarded corporate boundaries.

78                  The European and regional parents did not appear to hold assets in Australia save for intellectual property rights and shares in the Australian subsidiaries, had no premises, offices or employees in Australia and, in general, did not purport to engage in business activities in Australia.  Of course, as I later explain in some detail, the European or regional parents were extensively involved in the implementation of the cartel arrangement in Australia.  That involvement, however, related to the cartel arrangement and not to the manner in which the Australian subsidiaries generally carried on their businesses.  It follows that subject to the question of foreign direction and control, the applicant has little to point to in respect of the matters suggested in Adams v Cape or Smith, Stone in relation to piercing the corporate veil or agency that assist her s 5(1) case.

79                  For present purposes, I am prepared to accept that, directly or indirectly, the parent or regional parent companies in each group may have the ultimate legal entitlement, as shareholders, to elect the boards of the subsidiaries and therefore, in a practical and commercial sense, have a general capacity to direct and control their commercial operations.  The evidence, at this stage, is extremely vague and uncertain as to whether, and if so to what extent, that capacity was exercised other than in the course of implementing the cartel arrangement.  Of course, that implementation involved the parents, directly or indirectly, in supplying and fixing prices for the class vitamins.  However, putting to one side any alleged illegality attending the implementation of the cartel arrangement, the situation described above reflects a quite unexceptional commercial and legal relationship which commonly exists between overseas parent and regional companies and their Australian subsidiaries in a vertically integrated worldwide group of companies.

80                  In my view something more than the indirect legal and commercial capacity of the parent companies to control and direct the subsidiaries, plus the parent’s involvement in implementing the cartel arrangement, is required to lift the corporate veil between the subsidiaries and their parents or to find that each of the subsidiaries is carrying on its business as agent for the parent.  That is particularly so where it is contended (as it is in the present case) that the parent, rather than the subsidiary, is carrying on business in Australia or, put another way, the subsidiary is engaging in all of its commercial activities on behalf of, and therefore as agent for, the parent.

81                  At this stage, I am not satisfied that the evidence establishes that the foreign respondents carried on business in Australia through their subsidiaries or that those subsidiaries conducted their businesses as agents for their parents.  It may well be that after further investigation this matter may require reconsideration.  For example, the applicant might be able to establish that some of the foreign respondents engaged in sufficient business activity in Australia in their own right (eg by supplying group products to an Australian subsidiary) or that the parent’s involvement in the implementation of the cartel arrangement in Australia was sufficient to constitute carrying on business in Australia.  That, however, is of no assistance to the applicant at this stage.

82                  Accordingly, if the applicant is to uphold its service on the foreign respondents out of the jurisdiction it must be on the basis of conduct by those respondents within Australia.

(b)        Sections 45 and 75B – Conduct within Australia

83                  The alternative case of the applicant under ss 45 and 75B of the TPA is that the foreign respondents, by their own conduct and acting by their Australian subsidiaries, gave effect to or were persons involved in the cartel arrangement in Australia.  The evidence relied upon includes:

·        the plea agreements entered into by HLR Europe and BASF Europe with the United States of America (“the U.S. plea agreements”);

·        the Agreed Statements of Facts entered into between HLR Europe, BASF Europe and Rhone-Poulence S.A. (ie A Europe) and the Attorney-General of Canada (“the Canadian plea agreements”);

·        the Statement of Agreed Facts and Admissions of Contraventions by the Australian subsidiaries, the third respondent (“HLR Australia”), the seventh respondent (“AAN Australia”) and the eleventh respondent (“BASF Australia”) (“the Australian plea agreements”);

·        the Report of the New Zealand Commerce Commission in relation to its Vitamin Investigation (“the NZ Commission report”);

·        a press release of the European Commission concerning the imposition of fines under HLR Europe, BASF Europe and A Europe.

84                  By the HLR Europe U.S. plea agreement, HLR Europe pleaded guilty to:

“…participating in a conspiracy to suppress and eliminate competition by fixing, increasing, and maintaining the price and allocating the volume of certain vitamins sold in the United States and elsewhere, and allocating among corporate conspirators certain contracts for vitamin premixes for customers located throughout the United States through the submission of rigged and non-competitive bids for such contracts, beginning in part at least as early as January 1990 and continuing in part in February 1999, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.”

[Emphasis added]

85                  Section 1 of the Sherman Antitrust Act declares as illegal, inter alia, every contract, combination or conspiracy in restraint or trade or commerce among the States or with foreign nations.  The U.S. plea agreements specifically detail conduct of the accused in the United States.  Accordingly, the issue of the extra-territorial operation of §1 did not appear to arise as an issue.

86                  The plea was made on the basis of the following factual admissions:

“(a)  For purposes of this Plea Agreement, the ‘relevant period’ is that period beginning as early as January 1990 and continuing into February 1999.  Throughout the relevant period, Roche was a corporation organized and existing under the laws of Switzerland.  During the relevant period, Roche was a manufacturer of various vitamins used to enrich human food, pharmaceutical products, and animal feed in the United States and elsewhere.  During the relevant period, Roche was engaged in the sale of these vitamins to the United States and elsewhere.

(b)     During the relevant period, Roche, through several of its executives, officers, and employees, participated in a conspiracy with other vitamin manufacturers, the primary purpose of which was to fix, increase, and maintain the price and allocate the volume of, certain vitamins sold in the United States and elsewhere, and to allocate customers in the United States.  In furtherance of the conspiracy, Roche, through a number of its executives, officers and employees, engaged in conversations and attended meetings with representatives of other vitamin manufacturers.  During such meetings and conversations, agreements were reached as to the prices at which the conspirators could sell certain vitamins and the timing of price increases, and the volumes of certain vitamins they would sell in the United States and elsewhere.  Further, agreements were reached as to the submission of rigged bids for the award and performance of contracts to supply certain vitamin premixes to customers located throughout the United States.

(c)     During the relevant period, vitamins that were the subject of this conspiracy and sold by one or more of the conspirator firms, and equipment and supplies necessary to the production and distribution thereof, as well as payments therefor, travelled in interstate and foreign commerce.  The business activities of Roche and its co-conspirators, in connection with the production and sale of the vitamins affected by this conspiracy, were within the flow of, and substantially affected, interstate and foreign trade and commerce.”  [Emphasis added]

87                  Pursuant to the plea agreement HLR Europe agreed to pay a fine of US$500 million.  The BASF Europe U.S. plea agreement was, substantially in the same form, save that the agreed fine was US$225 million.

88                  The NZ Commission report explains the origin of the United States proceedings and the absence of charges against Rhone-Poulenc SA (A Europe) in the United States as follows:

“53.    The USDJ became aware of the conspiracy when [Rhone-Poulenc SA] turned state evidence as a result of a pending $US22 billion merger with another drug company, which would need approval from competition law authorities in the US and Europe.

54.       As a result of providing the information to the USDJ, [Rhone-Poulenc SA] escaped prosecution while Roche Swiss and BASF AG agreed to pay record criminal anti-trust fines of $US500 million and $US 225 million respectively.”

89                  Each of the Canadian plea agreements was, substantially, in the same form.  The agreements state that the Canadian subsidiaries of the parent companies in each of the three groups were not implicated in or charged with the offences to which the parent companies pleaded guilty.  HLR Europe agreed to being a party to a conspiracy involving a number of companies, including BASF Europe and A Europe.  The agreement was based upon certain facts, including:

“2.      Throughout the relevant time period, the accused was engaged in the manufacture abroad and the sale of bulk vitamins and related products (including vitamins A, B2, B5, C and E, as well as betacarotene and vitamin premixes, referred to, herein, as ‘bulk vitamins’) in Canada and elsewhere. …

…

12.             The bulk vitamins affected by these conspiracies that were sold in Canada and elsewhere are the following:

Vitamin A                                January 1990 to February 1999;

Vitamin E                                January 1990 to February 1999;

Vitamin B2 (Riboflavin)          July 1991 to the Fall 1995;

Vitamin B5 (Calpan)               January 1991 to December 1998;

Vitamin C                                January 1991 to the Fall 1995

Betacarotene                           Fall 1991 to December 1998;

Vitamin premixes                    1991 to December 1997.

As more fully described in paragraph 15, the above dates represent the duration of the agreement for each product that constitutes the offence.

13.             The producers identified above manufactured the substantial majority of the supply of the above listed products during the period of the offence.  Vitamin products were sold in Canada by the participants in the illegal agreements through wholly owned subsidiaries or through distributors, but no subsidiary or distributor of Roche is implicated in or charged with an offence herein.

14.             …

15.             For each of the vitamin products listed herein and during the time period stated above, senior executives and employees of Roche engaged in conversations and attended meetings with other senior executives and employees of the other major bulk vitamin producing companies named herein.  In these conversations and meetings, unlawful agreements were reached:  1) to allocate the market share or to set specific volumes of certain bulk vitamins that each company would supply for the world, by region, which included Canada; 2) to fix, increase and maintain prices and to coordinate the price increases for the world, by region, which included Canada, at which each company would sell bulk vitamins to customers.  The agreements for each specific product may be summarized as follows:

Vitamin A

(a)               The agreements on vitamin A involved Roche, BASF and Rhone-Poulenc and existed from January, 1990 to February, 1999.  At the outset, senior executives from each firm met and agreed to allocate market shares or volume of sales for the world, by region, which included Canada.  Over the period of the conspiracy, yearly meetings among senior executives were held to agree on a ‘budget’ for the following year, to agree on an estimate of future demand for the world, by region, which included Canada, based on sales information exchanged during quarterly meetings of lower level employees of each firm.  At the meetings, the participants also agreed to fix, increase and maintain the prices at which vitamin A would be sold for the world, by region, which included Canada.

Vitamin E

(b)               The parties to the conspiracy on vitamin E were Roche, BASF, Rhone-Poulenc and Eisai.  The agreement of vitamin E among the European producers operated from January, 1990 to February 1999, but the participation of Eisai was confirmed only in late 1990.  The nature of the agreement on vitamin E was essentially the same as vitamin A, as both products were discussed, at least among the European manufacturers, at the same meetings.  In late 1990, a senior executive of Eisai met separately with senior executives of BASF, Roche and Rhone-Poulenc and confirmed that it would participate in the vitamin E agreement.  Eisai representatives subsequently met bilaterally on a continuing basis, with Roche representatives to exchange information prior to or following the trilateral meetings of the European producers and to confirm its continuing agreement.”  [Emphasis added]

90                  HLR Europe agreed that analogous arrangements were made in respect of other vitamins, although the dates and details differ for each group of vitamins.

91                  The guilty plea was as follows:

“27.    Roche acknowledges that with respect to the agreements alleged in each count of the Indictment, all the constituent elements of an indictable offence under subsection 45(1)(c) of the Competition Act have been established.”

92                  Section 45(1)(c) of the Competition Act RSC 1985 c C-34 makes unlawful arrangements made in order to, inter alia, prevent or lessen, unduly, competition in the manufacture, purchase, sale or supply of a product.  The Canadian plea agreements specifically state that the “accused” were engaged in the sale of the relevant products “in Canada and elsewhere”.  Consequently, the issue of the extra-territorial operation of s 45(1)(c) did not appear to arise as an issue.

93                  The HLR Europe and the BASF Europe Canadian plea agreements stated that the parties to the agreements were HLR Europe, BASF Europe and A Europe.  The A Europe Canadian plea agreement contained substantially the same admission, save that it defined A Europe as A Europe and its “affiliates which manufacture and supply, for the purpose of animal feed, vitamins A and E around the world”. 

94                  The Australian plea agreement of Roche Vitamins Australia Pty Ltd summarised the contravening conduct as follows:

“1.      The anti-competitive conduct the subject of this proceeding affected the supply in Australia of vitamins A and E (and pre-mix containing such vitamins) for animal nutrition and health (‘ANH’) purposes by the Respondent, Roche Vitamins Australia Pty Limited (‘RVA’), and two other Australian companies, BASF Australia Ltd. (‘BASF Australia’) and Aventis Animal Nutrition Pty. Ltd. (formerly known as Rhone-Poulenc Animal Nutrition Pty. Ltd. (‘Aventis Australia’).  This conduct derived from arrangements entered into prior to 1994 by F. Hoffmann-La Roche Limited (‘FHLR’), a related corporation of the Respondent, BASF Aktiengesellschaft (‘BASF AG’), a related corporation of BASF Australia and Aventis Animal Nutrition SA (then called Rhone-Poulenc Animal Nutrition SA) (‘Aventis’), a related corporation of Aventis Australia, to share markets and fix prices for the supply of a range of vitamins including ANH vitamins A and E in various parts of the world.  The arrangements entered into between FHLR, BASF AG and Aventis continued, in part, in places outside Australia, until early 1999.  In accordance with these arrangements, ANH vitamins A and E and pre-mix containing those vitamins were supplied in Australia by RVA, BASF Australia and Aventis Australia from prior to 1994 until late 1996 and thereafter by RVA and BASF Australia until mid-1998 when the conduct ceased in Australia.

2.                  The relevant periods of contravening conduct for each of RVA, BASF Australia and Aventis Australia for the purposes of section 76 of the Trade Practices Act 1974 (‘the Act’) were as follows:

[Emphasis added]

95                  The relevant facts included a statement that HLR Europe has:

“8.      …responsibility for supervising and co-ordinating or procuring the supervision and co-ordination of the operations of corporate members of the Roche Group carrying on business in various parts of the world as manufacturers and suppliers of ANH vitamins and other nutritional additives for ANH pre-mix (which included ANH vitamins A and E and ANH pre-mix containing those vitamins) in such countries.”  [Emphasis added]

96                  The global price fixing arrangement was described as follows:

“13.    In or about 1990 senior executives of FHLR, BASF AG and Aventis (then Rhone-Poulenc), entered into an arrangement to fix and maintain prices of vitamins including ANH vitamins A and E and to allocate market shares of such vitamins in various parts of the world.

14.       It was part of those arrangements that each of FHLR, BASF AG and Aventis should implement them or procure their implementation through their respective affiliates or subsidiary companies in the relevant parts of the world.

15.       FHLR chose to do this for ANH vitamins A and E through the use of the policy of the Roche Group which required each corporate member of the Group to complete and submit a budget each year projecting its sales of vitamins and vitamin products for the forthcoming year and the revenue expected to be earned from those sales.

16.       Such budgets were required to be submitted for approval to the member of the Roche Group responsible for co-ordinating and supervising the performance of members of the Roche Group within the particular region for which the first mentioned member was responsible.  One of such members was Roche Vitamins Asia Pacific [Pty] Limited (‘RVAP’) based in Singapore whose regional responsibility included Australia.

17.              In accordance with the practice of the Roche Group, RVAP was also responsible for advising members of the Roche Group within its region, including RVA, of the prices at which they would be able to purchase vitamins from  members of the Roche Group and a range of prices within which such members would sell vitamins in order to achieve the budgeted revenue from budgeted sales.  Prices were so advised to RVA and they included prices for ANH vitamins A and E.

…

20.              RVA was not at any relevant time and is not a subsidiary of either FHLR or RVAP nor did either of those companies hold or own nor do they hold or own any shares in RVA.  Nevertheless, RVA operated the Vitamins and Fine Chemicals Division of the Roche Group in Australia and complied with the Group’s budgetary requirements.

Compliance by RVA

21.              In compliance with the Roche Group policy and practice, RVA compiled budgets from year to year which included its forecasts of sales and revenue from sales of ANH vitamins A and E sold as such in bulk or as part of ANH pre-mixes.  The budgets were provided to RVAP in draft for RVAP’s approval.

22.              RVA reported to RVAP quarterly on its sales performance against its budgets and in the event that RVA’s sales of ANH vitamins A and E achieved a level above or below what was necessary to maintain a particular share of the market for the sales of such vitamins in Australia, adjustments were made to RVA’s sales in the ensuing months after discussions with RVAP to ensure as far as was practicable that its market share for those vitamins over the year was as represented by the budget.

23.              In addition to supplying ANH vitamins A and E within the price ranges notified to it from time to time by RVAP and in order to achieve its budget sales of those vitamins, RVA supplied vitamins A and E in ANH pre-mixes.

…

26.              RVA competes and at all relevant times competed in Australia for the supply of ANH vitamins and ANH pre-mixes with a number of companies which include BASF Australia and Aventis Australia.

27.              Prior to 1994 senior executives of RVA entered into arrangements with senior executives of BASF Australia and Aventis Australia (then known as Rhone-Poulenc Animal Nutrition Pty. Ltd) the purpose of which was to ensure as far as practicable that sales of ANH vitamins A and E in Australia whether sold in bulk as such or in ANH pre-mixes would continue at levels which would maintain estimated market shares then prevailing which in aggregate were approximately 45% RVA, 28% BASF Australia and 18% Aventis Australia.  The arrangements extended to agreeing prices at which ANH pre-mixes containing ANH vitamins A and E would be supplied to certain major commercial customers.

28.              RVA gave effect to the arrangements with BASF Australia and Aventis Australia until 1996 and thereafter continued the arrangements with BASF Australia until the arrangements were terminated in 1998.

…

34.             RVA admits that its conduct in entering into the arrangements referred to in paragraphs 27 and 28 hereof and giving effect thereto during the relevant period:

(a)                constituted making and giving effect to arrangements containing exclusionary provisions in contravention of sub-paragraphs (2)(a)(i) and (b)(i) of Section 45 of the Act;

(b)                constituted making and giving effect to arrangements containing provisions:

(i)                 to which Section 45A of the Act applied; and

(ii)               which had the purpose or would have had or been likely to have had the effect of substantially lessening competition between RVA, BASF Australia and Aventis Australia in the supply of ANH vitamins A and E and ANH pre-mixes containing those vitamins in Australia;

in contravention of sub-paragraphs 2(a)(ii) and b(ii) of Section 45 of the Act;

(c)                constituted conduct of the kind referred to in Sections 76(1)(a) and 80(1)(a) of the Act.”  [Emphasis added]

97                  BASF Australia’s Australian plea agreement, which was substantially in the same form, states that:

·        BASF Europe manufactured and supplied animal vitamins A and E throughout the world;

·        BASF Australia purchased vitamins from BASF Europe, and other companies in the group, for sale in Australia;

·        HLR Europe, BASF Europe and A Europe competed with each other worldwide for the supply of animal vitamins in the various regions of the world which were stated to include “Asia Pacific, including Australia”.

98                  The BASF group’s “overseas arrangements” were described as follows:

“15.    For each of vitamins A and E during the period from January 1990 to February 1999, senior executives and employees of BASF AG, including regional marketing personnel, engaged in conversations and attended meetings with other senior executives and employees of AAN  and Roche.  In these conversations and meetings, agreements were reached to fix regional wholesale prices and allocate the market share or to set specific volumes of those vitamins that each company would supply in Australia and elsewhere (‘the Overseas Arrangements’).  The Overseas Arrangements for each specific product may be summarised as follows:

            Vitamin A

(a)                The agreement on vitamin A involved BASF, Roche and AAN.  At the outset senior executives from each firm met and agreed to fix regional wholesale prices and to allocate market shares or volume of sales for Australia and elsewhere.  Over the period of the arrangements, yearly meetings among senior executives were held to agree on a ‘budget’ for the following year, to agree on an estimate of future demand for Australia and elsewhere, based on sales information exchanged during quarterly meetings of lower level employees of each firm.

Vitamin E

(b)                The parties to the arrangement on vitamin E were BASF, Roche and AAN.  The nature of the agreement on vitamin E was essentially the same as vitamin A, as both products were discussed at the same meetings.

16.       The market sharing arrangements were given effect to in Australia by BAL, Roche Australia and AAN Australia.  Details of this are set out below.”  [Emphasis added]

99                  The details of how the Australian subsidiaries implemented the arrangements were then set out.  The Australian arrangements that were agreed to have contravened s 45 of the TPA were described as the “Australian Tripartite Arrangements” involving all three groups and the “Australian Bilateral Arrangements” involving only the Hoffman La Roche and BASF groups.  Save for some minor differences the relevant admissions concerning contravention of the Act by BASF Australia were substantially the same as HLR Australia’s admissions.  In the detail provided in respect of BASF Australia’s contraventions reference was made to meetings between identified representatives of companies in the three groups (who included Raymond Johnson, a senior executive officer of AAN Australia and Kevin Hall who was employed by AAN Europe and by AAN Asia Pacific).  The meetings and the follow up discussions allegedly implementing the cartel arrangement, in general, appeared to take place in Australia.

100               AAN Australia’s Australian plea agreement contained substantially the same admissions concerning contravention of s 45 of the TPA.  AAN Australia agreed that its anti-competitive conduct “derived from” the cartel arrangement which was entered into by AAN Europe “for the purpose of sharing the market and fixing prices for the supply of animal vitamins A and E [and pre-mix containing those vitamins], in various parts of the world, including Australia”.  The Australian subsidiaries were stated to have supplied those vitamins in Australia in accordance with “ancillary arrangements” made by the subsidiaries “to implement” the cartel arrangement.

101               The “initiation” of the cartel arrangement was described as follows:

“14.    In initiating the Overseas Arrangements, senior executives from each of Roche, BASF AG and AAN met and agreed to fix regional wholesale prices and to allocate market shares or volume of sales for Australia and elsewhere.  Over the period of the Overseas Arrangements, yearly meetings among senior executives were held to agree on a ‘budget’ for the following year (ie an estimate of future demand for regional areas, including South East Asia, including Australia), based on sales information exchanged during quarterly meetings of lower level employees of each of the companies or their respective affiliates.”

102               The role of the Australian subsidiaries was explained as follows:

“16.    Senior executives of AAN Australia, RVA and BAL implemented the Overseas Arrangements by engaging in telephone discussions and holding meetings at which they made arrangements and arrived at understandings as to:

(a)     the prices at which each of AAN Australia, RVA and BAL would sell animal vitamins A and E;

(b)     the volume of animal vitamins A and E to be sold by each of AAN Australia, RVA and BAL;

(c)                the prices at which each of the participants would sell pre-mix containing animal vitamins A and E to certain major customers;

(d)                the allocation amongst the participants of tenders for the supply of pre-mix containing animal vitamins A and E to certain major customers of such pre-mix.

            (‘the Australian Arrangements’).

…

18.       AAN Australia, RVA and BAL gave effect to the Australian Arrangements by each of them supplying animal vitamins A and E and charging prices for the supply of pre-mix containing animal vitamins A and E in accordance with those Arrangements.”

103               No proceedings were issued in New Zealand in respect of the cartel arrangement.  The investigation of the NZ Commission in relation to the arrangement was set out in its report, the introduction of which states:

“1.      During late 1999, the Commission began an investigation into alleged anti-competitive behaviour by three multi-national pharmaceutical companies with operations in New Zealand.

2.         The investigation commenced as a result of a successful action taken by the United States Department of Justice (‘USDJ’) against the same three multi-national pharmaceutical companies in  May 1999.

3.         This report concludes that there is sufficient and compelling evidence to show that the New Zealand entities of these multi-national pharmaceutical companies had breached the provisions of the Commerce Act 1986 (‘the Act’) by entering into market sharing and price fixing agreements.

4.         Although there is such evidence, due to the expiration of the three year time limit for the Commission to take action and seek pecuniary penalties against any party, this report recommends that the companies be issued with a warning for their conduct, and advised that if not for the expiration of the time limit, the Commission would have instituted court proceedings.”

104               The NZ Commission report observes that New Zealand was treated as an adjunct of the Australian market.  The Australian investigation was described as follows:

“57.    The Australian Competition and Consumer Commission (‘the ACCC’) has recently completed its own investigation.  This investigation has resulted in the three vitamin companies, Roche Vitamins Australia Ltd (‘Roche Aust’); BASF Australia Limited (‘BASF Aust’); and Rhone-Poulenc Animal Nutrition Ltd (‘Rhone Aust’) admitting their part in both market sharing and price fixing agreements within Australia.

58.             The ACCC’s investigation has shown that in addition to the global meetings and agreements (both in Europe and Asia) the vitamin companies had further meetings within Australia where they reached various agreements.  The ACCC’s prosecution relates to those meetings and agreements that were made in Australia, and not the global agreements.

59.             The ACCC’s investigation has shown that price fixing and market sharing arrangements had existed between the three companies for the supply in Australia of animal vitamins A and E and of premix containing these vitamins in the period from mid-1994 until 1996, and then continued between Roche Aust and BASF Aust in the period 1997 to 1998.”

105               The Report stated that Baker and McKenzie, acting as solicitors for AAN Australia and the Aventis New Zealand subsidiary, provided the following information concerning the “International Arrangements”:

“92.     …It said that between 1990 and 1998, representatives of BASF AG, Roche Swiss and RPAN held meetings in Europe in which they:

·          Discussed their relevant market shares and whether they were satisfied with them;

·          Developed a common strategy, agreeing that each would increase its sales only in line with market growth, keeping their respective market shares at approximately the same levels; and

·          Determined that the market could bear a price increase if prices were also stabilised.

93.             As a consequence of these meetings, the same parties agreed to exchange sales volume numbers by region (Europe, North America, South America and Asia Pacific) on a quarterly basis.

94.             Once the exchange of sales volume data began, the three companies also held regular meetings involving the high level animal vitamin operations managers from BASF AG, Roche Swiss and RPAN.  The meetings were usually held at Roche Swiss’ premises in Basel, Switzerland.

95.             Following the meetings in Europe, BASF AG, Roche Swiss and RPAN also instituted regional meetings to discuss the regional markets  and sales in detail and to give the parties confidence that each region would meet or attain the market share that had been set at the European meetings.

96.             Regional meetings commenced in late 1992 or early 1993 and were usually held about four times a year.  The global market was broken into four regions including Asia Pacific which included New Zealand.

97.             Rhone Asia was established in Singapore in early 1992.  Prior to that time, all of Rhone Asia’s relevant business had been conducted out of RPAN’s headquarters in France.  In late 1993, the animal vitamins business unit for Rhone Asia was conducted out of Singapore.

98.             In late 1993 or early 1994 meetings were held in the Asia Pacific Region including in Japan, Hong Kong and Singapore in which business in the Asia Pacific region was discussed (‘Asia Region Meetings’).

99.             The Asia Pacific Region was divided into zones comprising Japan, China, Australia/New Zealand and the remainder of Asia.  The pre-determined price for particular vitamins and market share in the Asia Pacific Region for each of BASF Hong Kong, Roche Asia and Rhone Asia was sent from France quarterly for each zone in that region.

100.         Representatives from BASF Hong Kong, Roche Asia and Rhone Asia continued to meet two to four times a year from 1994 until the end of 1997 in Hong Kong and Singapore.  After each Asia Region Meeting, Rhone Asia’s representative reported back to RPAN in France.

101.         An outline of the form and nature of the Asia Region Meetings was provided to Commission staff and is summarised below:

·          The matters discussed were almost always the same, namely, prices and market shares;

·          Prior to the meetings, executives of RPAN in France would orally provide RPAN’s market share and sales volume numbers for the previous quarter to regional directors in Singapore and contemporaneously to Roche Swiss.  BASF AG also provided Roche Swiss with that information.  Roche Swiss would then assemble the figures in a summary sheet which was faxed to Rhone Asia.  The summary sheet included market share and sales by volume in each region;

·          Roche Asia representatives chaired the Asia Region Meetings.  The meetings began with a presentation relating to market trends and market shares;

·          Discussions at the meetings primarily concerned an analysis of the market by each of the major countries or zones within the region;

·          Because market share had been agreed among the parties (in Europe) at the global level, the parties at the Asia Region Meetings were concerned to ensure that the agreed market share was met in the region and within each zone within the region;

·          There were discussions of pricing trends and whether prices needed to be raised.  There were also discussions of local prices, devaluation of currencies, credit issues and credit terms.

102.         As part of the agreements between BASF AG, Roche Swiss and RPAN there was an understanding that where there was a deviation from the agreed market share in any region, appropriate and necessary set-offs and contras in other countries would be made to restore or maintain the agreed global equilibrium.

103.         The New Zealand market had always been very small in comparison to other markets and consequently was not the subject of any specific discussion at the Asia Region Meetings.  Because of this New Zealand was treated as an adjunct of the Australian market.

104.         The way in which the global effort between BASF AG, Roche Swiss and RPAN to set or fix market share and prices for animal vitamin products affected the prices in the countries comprising the Asia Pacific Region (including New Zealand) was as follows:

·        A meeting among representatives from BASF AG, Roch Swiss and RPAN would take place in Europe and agreement was reached on market share and price (in US dollars) at a global and regional level;

·        RPAN, from its headquarters in France, would then issue a price list and memorandum to each of its regional offices, the aim of which was to set the minimum sell price for the products;

·        Each regional office would then distribute that price list to the Business Managers of Managing Directors in the countries under their supervision or control.

105.         It follows from these arrangements that the price for direct sales of vitamins A and E to customers were pre-determined by the participants and some indirect control or influence on prices at which those products were sold in New Zealand may have occurred.”

[Emphasis added]

106               The European Commission also imposed substantial fines in respect of the making and implementation of the cartel arrangement in Europe.  HLR Europe was fined 462 million Euro dollars, BASF Europe 296.16 million Euro dollars and A Europe 5.04 million Euro dollars.  The Commission’s press release stated that each of the companies had co-operated with it in its investigation.  The Aventis fine was reduced considerably as A Europe had been granted full immunity in respect of certain products because it was the first company to co-operate with the Commission and had provided decisive evidence in respect of those products.  The Aventis press release in respect of the fines regretted the involvement of AAN Europe in “such illicit activities”.

107               The European Commission’s press release described the modus operandi of the cartels as follows:

“The participants in each of the cartels fixed prices for the different vitamin products, allocated sales quotas, agreed on and implemented price increases and issued price announcements in accordance with their agreements.  They also set up a machinery to monitor and enforce their agreements and participated in regular meetings to implement their plans.

The modus operandi of the different cartels was essentially the same if not identical (‘target’ and ‘minimum’ prices; maintenance of the status quo in market shares and compensation arrangements), in particular it included:

-                     the establishment of formal structure and hierarchy of different levels of management, often with overlapping membership at the most senior levels to ensure the functioning of the cartels;

-                     the exchange of sales values, volumes of sales and pricing information on a quarterly or monthly basis at regular meetings;

-                     in the case of the largest cartels, the preparation, agreement and implementation and monitoring of an annual ‘budget’ followed by the adjustment of actual sales achieved so as to comply with the quotas allocated;

The cartel arrangements generally followed this scheme, pioneered in vitamins A and E, with certain variants in other products.  Hoffmann-La Roche acted as the agent and representative of the European producers in the meetings and negotiations held in Japan and the Far East.

The simultaneous existence of the collusive arrangements in the various vitamins was not a spontaneous or haphazard development, but was conceived and directed by the same persons at the most senior levels of the undertakings concerned.”

108               The foreign respondents objected to the admissibility of the plea agreements, the NZ Commission report and the European Commission press release.  Although the parties are in dispute over the inferences to be drawn from the facts stated in those documents in relation to the role of the foreign respondents in giving effect to the cartel arrangement in Australia, subject to one minor exception, there is no bona fide dispute in relation to those facts.  The exception relates to the role of A Europe, it being contended on behalf of the Aventis foreign respondents that there is no evidence that A Europe, rather than AAN Europe, was involved in making and implementing the cartel arrangement.  Subject to that exception, for the reasons hereinafter set out, I have concluded that it is appropriate for the Court, under O 33 r 3(a), to dispense with compliance with the rules of evidence for proving the matters contained in the documents to which I have referred in these reasons.  Little may turn on that exception as the plea agreements entered into by A Europe are admissible as admissions by it and representations concerning it in other plea agreements are admissible under s 75 of the Evidence Act.

109               Order 33 r 3(a) confers power on the Court to dispense with compliance with the rules of evidence for proving any matter which is not bona fide in dispute.  The rule, which also applies to hearsay evidence, confers a wide discretionary power on the Court to allow proof of facts by some means not allowed by the rules of evidence, although care should be taken before reliance is placed on the rule where matters central to the case are involved or where there is a real dispute about matters that go to the heart of the case: see Pearce v Button (1986) 8 FCR 408 at 416, 422 and 423 and Multi Modal v Polakow (1987) 76 ALR 553 at 558.  Nonetheless, the power conferred by the rule may be exercised to prove a matter “which is not bona fide in dispute”.

110               In deciding to exercise my discretion under the rule for the purposes of the present applications in relation to O 8 r 2(2) I regard the following matters as favouring the exercise of the discretion:

·        the proceeding is interlocutory with the consequence that any findings I make will not finally determine the rights and liabilities of the parties;

·        the facts being proved are inherently facts that could not be expected to be known by the applicant but are known by the foreign respondents who have had ample opportunity to dispute those facts, but have not done so.

·        for present purposes the material relied upon appears to be reliable and accurate.  In particular, I infer that the various plea agreements were prepared only after legal representatives and senior executive officers of the relevant parties had carefully considered and agreed to their contents.  The relevant portion of the NZ Commission report was information provided by the solicitors for the Australian Aventis subsidiary.  Finally, the European Commission’s press release summarised information obtained by it with the co-operation of the relevant parties.

111               I would add that if I were in error in admitting the relevant portions of the plea agreements, the NZ Commission report and the European Commission press release under O 33 r 3(a), I would admit that evidence in any event under s 75 of the Evidence Act.  Section 75 provides:

“In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source.”

112               There was some dispute between the parties as to whether s 75 only made admissible in an interlocutory proceeding first hand hearsay, and not second hand or more remote hearsay.

113               Section 75 is to be construed in the context of Pt 3.2 of the Evidence Act.  The structure of Pt 3.2 is for Div 1 to set out the class of evidence excluded under the hearsay rule and for subsequent Divisions of the Part to set out exceptions to that exclusionary rule.  The Australian Law Reform Commission, on whose report (ALRC 25) the Evidence Act was based, explained the exceptions to the hearsay rule as being based on the premise that the best evidence available to a party should be received (ALRC 25, vol 1 para 678).

114               Division 1 of Part 3.2 defines the hearsay rule, the key provision of which is in s 59(1):

“Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that the person intended to assert by the representation.”

115               Divisions 2 and 3 of Pt 3.2 distinguish between first hand hearsay and secondhand and more remote hearsay.  Division 2 provides for certain exceptions to the hearsay rule in respect of “first hand hearsay” which is defined as a previous representation made by a person who has personal knowledge of an asserted fact.  Division 3 is entitled “Other exceptions to the hearsay rule”.  One of those “other” exceptions is provided for in s 75.

116               The distinction between the category of exception contained in Div 2 and the category of exception contained in Div 3 appears to be based on the view of the Australian Law Reform Commission (ALRC 26, vol 1, par 678) that second hand hearsay is generally so unreliable that it should be inadmissible except where some guarantees of reliability can be shown together with a need for its admissibility.  Division 3 creates exceptions to the hearsay rule in respect of a number of categories of second hand and more remote hearsay which fall within those criteria.

117               It is consistent with the meaning, structure, and purpose of Pt 3.2 to construe s 75 as creating a further exception to the hearsay rule in respect of hearsay evidence adduced in an interlocutory proceeding that is not admissible under Div 1 and not within an exception to the hearsay rule contained in Div 2.  In my view, there is no proper basis for importing a requirement that s 75 is limited to first hand hearsay as defined in s 62 for the purposes of Div 2.  The safeguard against reliance on hearsay evidence, where its prejudice outweighs its probative value, is s 135 which confers upon the Court a discretion to exclude such evidence.

118               The other main category of evidence relied upon by the applicant is the affidavit evidence of Raymond Johnson and Stuart G Dowel, much of which was objected to by the foreign respondents who did not seek to cross examine either deponent.

119               Johnson occupied senior managerial positions in Aventis Australia (then Rhone-Poulenc Animal Nutrition Pty Ltd) between 1991 and 1996, which included the position of Managing Director between 1993 and 1996.  In the course of his employment Johnson was personally involved in the implementation of the cartel arrangement in Australia.  His evidence concerning implementation accords generally with the facts set out in the Australian plea agreements.  Johnson explained how the world-wide and regional distribution systems developed for vitamins by the Aventis group appeared to be directly controlled from France prior to 1993, and by employees of AAN Europe located in Singapore between 1993 and 1995, with AAN Asia Pacific assuming responsibility after 1995 for the implementation of the cartel arrangement in Australia.  In the course of his duties Johnson was informed about the details of the arrangement by Kevin Hall, who was the Area Manager of AAN Europe for Vitamins and Amino Acids for the Asia Pacific Region between 1989-1995.  After 1995 Mr Hall was the Core Products Manager of AAN Asia Pacific.  Johnson stated:

“14.1  [Hall] regularly met with or spoke to persons he described as ‘the Rugby Team’, which he told me meant his regional counterparts (vitamins product mangers for the Asia Pacific region) at Roche and BASF to discuss and implement the vitamins price fixing cartel the subject of this affidavit in the Asia Pacific region including Australia.  Those meetings are referred to herein as ‘the Regional Meetings’.

15.2         At the Regional Meetings the regional representatives of the Rhone-Poulenc, Roche and BASF Groups pooled their data regarding exports to Australia and elsewhere and calculated the total size of the vitamins market in Australia and elsewhere and each participant Group’s market share.  As a result of regional data pooling Mr. Hall was able to, and did at least on a quarterly basis, provide me with information regarding the relative market shares of the Rhone-Poulenc, Roche and BASF Groups in the Asia Pacific region including Australia.  Mr Hall told me he provided me with that information so that the vitamins market could be allocated for the next quarter.

14.3     These data were used by the regional representatives of the Rhone-Poulenc, Roche and BASF Groups to ensure that an agreement reached by senior executives of each of the participant groups in Europe in respect of the allocation of relative market shares of vitamins sales were complied with in Asia, including Australia.

14.4     The regional representatives of each of the Rhone-Poulenc, Roche and BASF Groups were directed by officers of Rhone-Poulenc Animal Nutrition SA, F. Hoffmann-La Roche Ltd and BASF AG respectively in Europe.  In turn, the regional representatives gave directions to officers of each of Rhone-Poulenc Animal Nutrition Pty Ltd, Roche Products Pty Ltd and BASF Australia Ltd to implement the cartel in Australia.”

120               Johnson described how the cartel arrangement was implemented in Australia on the basis of directives provided by Hall and others on behalf of AAN Europe prior to 1995 and on behalf of AAN Asia Pacific from 1995:

“37.    I was directed by Mr. Kevin Hall as to the prices to quote to particular customers.  Mr Hall provided these directives at least on a quarterly basis.  Sometimes he would telephone me from France and later Singapore.  Alternatively I would telephone him in France and later in Singapore.  Mr Hall told me that the purpose of his directions was to either secure or forfeit business as necessary for Rhone-Poulenc Animal Nutrition SA to meet its globally allocated market share of vitamins sales in Australia.

38.       Prior to 1993 or thereabouts I met and had discussions with my local counterparts at Roche Products Pty Ltd and BASF Australia Ltd.  The purpose and the subject matter of those discussions and meetings was to monitor and implement the cartel in Australia.  After 1993 this was generally no longer necessary as the cartel was implemented in Australia by the regional heads in Asia of Rhone-Poulenc SA, F. Hoffmann-La Roche Ltd and BASF AG.

…

40.             From 1991 Mr. Hall directed the implementation of the cartel in Australia.  Mr Hall told me that he did so in accordance with directives issued by employees of Rhone-Poulenc Animal Nutrition SA, in particular, Mr Saunders and Mr Bourganel.  The directives were in respect of market share objectives in each country within South East Asia which in turn were aimed at meeting global market share objectives.

41.             When I became General Manager in 1992, Mr. Hall briefed me regarding my new responsibilities.  He provided details regarding the agreed respective market shares of the BASF, Roche and Rhone-Poulenc Groups for Australia and how the markets were allocated.  He gave me contact telephone numbers for my counterparts at Roche Products Pty Ltd and BASF Australia Ltd and suggested I arrange to meet with them.

42.             Prior to 1993 it was largely my responsibility to liaise with my counterparts at BASF Australia Ltd and Roche Products Pty Ltd regarding implementation of the global cartel in Australia.  From time to time I had discussions, in person or by telephone, with senior executives of those companies.  The purpose of those meetings and discussions was to arrange and monitor the operation of the cartel in Australia.”  [Emphasis added]

121               Johnson also explained that, when differences arose between representatives of the Australian subsidiaries as to the implementation of the cartel arrangement in Australia, the differences were resolved by the various groups’ regional officers.  Johnson stated:

“50.    If there was an argument between the officers of Roche Products Pty Ltd and Rhone-Poulenc Animal Nutrition Pty Ltd about vitamins sales, I would report it to Mr. Hall, who would contact his regional counterpart from the Roche Group, who would in turn contact Mr. Redman or later Mr. Partridge and attempt to resolve the dispute.  I know this because Mr Hall would tell me this was the procedure and the results.  Mr Hall would telephone me and tell me the outcome of his discussions with his regional counterparts.

51.             Between 1991 and 1993, customer allocation was hotly debated in Australia.  For example, Uncle Bens’ contract for vitamin E was considered very large.  If one of either Rhone-Poulenc Animal Nutrition Pty Ltd, BASF Australia Ltd or Roche Products Pty Ltd secured the entire contact, it would probably exceed its allocation for vitamin E sales.  Accordingly, I would advise Uncle Bens that I could only supply it with, for example, 50 tonnes of its requirements.  As a new employee at Rhone-Poulenc Animal Nutrition Pty Ltd I was eager to increase the company’s market share.  Historically, it had been at 15%, and I was aiming for 20%.  To this end, I secured one of Uncle Ben’s yearly contracts.  This put Rhone-Poulenc Animal Nutrition Pty Ltd over its target sales volume.  This was the cause of my falling out with Mr Hartley.  He complained to his regional manager that I was taking too much market share, and the regional managers met to discuss my conduct.  I know this because Mr Hall telephoned me from Singapore and told me that I had upset the regional management and they required a meeting in Australia.  Myself and Messrs Hall, Hartley, Redman, and a regional representative from BASF attended the meeting, which was held in Sydney.  At that meeting I was castigated for exceeding market share.  It was agreed that market allocation would be adhered to in the future and my conduct would not be repeated.

52.             From 1993 onwards, Mr Hall did not require me to discuss vitamins sales with Mr Partridge or Mr Hartley.  Mr Hall told me this was because the cartel was implemented almost entirely at the regional level through the Asian headquarters of Rhone-Poulenc Animal Nutrition SA, BASF AG and F. Hoffman-La Roche Ltd.  However I did continue to discuss vitamins prices and sales volume with Mr Partridge (see paragraph 54).

53.             From 1993 onwards market intelligence at the regional level was so sophisticated, and the customer base so well known to the regional managers, that all sales were organised at the regional level and directions given from the regional level to personnel in Australia for implementation in Australia.

54.             BASF and Roche’s respective regional managers communicated the cartel agreements at the regional level to Mr Partridge at Roche Products Pty Ltd, or Mr. Hartley at BASF Australia Ltd, in the same way as the agreements were communicated to me.  I knew this because from time to time I spoke with Mr Partridge by telephone to confirm, for example, that a certain price would win or lose particular business.  Mr Partridge was able to confirm whether particular prices offered by Rhone-Poulenc Animal Nutrition Pty Ltd would be higher or lower than those offered to a particular customer by Roche Products Australia Pty Ltd or BASF Australia Ltd.

55.             Mr Hall told me not to keep notes of my conversations and meetings with him or with Mr Redman, Mr Partridge or Mr Hartley.  Until about 1993 it was necessary however to take some notes in respect of prices and market share.  I kept these in my business diaries, which I have since discarded.  After 1993 there was less need for keeping notes, as I was told by Mr Hall what price to quote to customers for vitamins sales to achieve Rhone-Poulenc Animal Nutrition Pty Ltd’s market share.”  [Emphasis added]

122               Excesses of market shares acquired by one of the participants in one area resulted in offsets in other areas.  In that regard Johnson stated:

“58.    Mr Hall told me that the respective market shares of vitamins sales in Australia by BASF Australia Ltd, Rhone-Poulenc Animal Nutrition Pty Ltd and Roche Products Pty Ltd were offset against market share in other countries.  From time to time I was directed by Mr. Hall to take a larger share of the Australian market in a particular quarter.  I would be given discretion to quote a lower price than normal.  I was told by Mr. Hall that I was being given this unusually large discretion on price to increase Rhone-Poulenc Animal Nutrition Pty Ltd’s market share and offset a decline in market share elsewhere in the  Asia region.”  [Emphasis added]

123               There is no bona fide dispute concerning the content of Johnson’s evidence to which I have referred.  For much the same reasons as I admitted the plea agreements and the NZ Commission report, I consider that I should also exercise my discretion to admit that evidence under O 33 r 3(a).  Further, the role of Johnson and Hall and the events recounted by Johnson are not only, in general, consistent with the facts stated in AAN Australia’s plea agreement but they are also consistent with the facts stated in BASF Australia’s plea agreement, which refers specifically to meetings in Australia (attended by, inter alia, Johnson and Hall) to implement the cartel arrangement.  In any event, most of the evidence to which I have referred is admissible as evidence by Johnson of matters (eg instructions and directions received by him in the course of his duties) which are within his own knowledge.  The information provided by Hall, which he recounted to Johnson, is also admissible under s 75 of the Evidence Act.

124               Dowel’s evidence stands in a different category.  He was employed by BASF Australia between 1993 and 1999, primarily as the Business Group Manager for the Plastic Business Unit.  Accordingly, he had little relevant knowledge concerning the supply in Australia of the class vitamins.  However, Dowel provides some detail as to the manner in which BASF’s worldwide distribution of its products was conducted through regional headquarters.  In that context he stated the organisation charts of BASF disclosed, and he was informed by senior BASF officers, that the Managing Director of the BASF Australia was “directed and supervised by the Regional President”.

125               Finally, the Hoffman La Roche, BASF and Aventis Consolidated Group Accounts and Annual Reports tendered in evidence also justify an inference as to the devolution of responsibility for control of the business activities of the subsidiaries in a particular area from the European parent to the regional group company responsible for the region.  For convenience I refer to those companies as the European or the regional “parent” notwithstanding that the company may not, strictly, be a parent company in the legal sense.

126               The parties were in dispute as to the inferences that might reasonably be drawn in relation to whether the foreign respondents engaged in any conduct in Australia in relation to the class vitamins.  In substance, the foreign respondents relied on the evidence adduced by them to the effect that they did not carry on business in Australia.  In that context it is particularly apt to refer to the observations of Wilcox J in Australia Meat Holdings at 356, that it does not follow that if a case does not fall within s 5(1) all conduct outside of Australia must be ignored.  His Honour said:

“In a case where there is relevant conduct in Australia, it is a misuse of language to speak of the statute being given extra-territorial effect.  The statute applies because of that conduct.  It attaches to conduct within Australia.  But in assessing that conduct, in relation both to its nature and to its quality, the court is required to take into account the whole of the available evidence.  Evidence of events outside Australia may, for example, establish or negative the necessary knowledge.  There is nothing unusual about that course.  Australian courts commonly receive evidence of overseas events which bear upon conduct affected by Australian law.”

127               In determining the inferences that are open as to conduct of the foreign respondents in Australia which, if translated into findings of fact, would support the relief claimed by the applicant (see Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110) I propose to adopt the approach set out in John Deere at 8-9 (see [27] above).

128               The applicant contended, in reliance upon Blatch v Archer (1774) 1 Cowp 63 at 65 (98 ER 969 at 970), Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454 and DP v Commonwealth Central Authority (2001) 180 ALR 402 at 446 that, as all evidence is to be weighed according to the proof which it is in the power of one party to have produced and the power of the other to have contradicted, a “very light burden” should be imposed upon it as the relevant facts are inherently not within the personal knowledge of the applicant and are inherently within the knowledge of the foreign respondents.  Reference was also made to the observation of Heerey J in Merpro Montassa Limited v Conoco Speciality Products Inc (1991) 28 FCR 387 at 390 that a court might draw inferences more readily in favour of an applicant bearing in mind “amongst other things” the applicant’s absence of access to the interlocutory procedural aids that enable the applicant to make out a prima facie case at trial.  In that context the “other things” to which a court might have regard are that the relevant facts are inherently not within the knowledge of the applicant and are inherently within the knowledge of the respondent.  The applicant also relied upon Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”) at 308 to contend that, although the foreign respondents unexplained failure to call evidence in relation to the implementation of the cartel arrangement in Australia does not provide positive evidence in relation to that matter, it may leave the Court in a position where it can more confidently draw inferences adverse to the respondents.  Although the foreign respondents queried the utility of Jones v Dunkel in an interlocutory context I can see no reason why Jones v Dunkel cannot be applied in an interlocutory proceeding in which facts are required to be found: see Caboche v Southern Equities Corp Ltd [2001] SASC 55 at [25] per Williams J, Re Alan Bond; Ex parte: Robert Eastaugh Ramsay v Caboche (Unreported, Federal Court of Australia, Hill J, 11 June 1992) at 13-14 and Pioneer Electronics Australia Pty Ltd v Woodlands Resources (Australia) Pty Ltd (2000) 49 IPR 299 at 301 per Heerey J.

129               The view might reasonably be open that the onus is imposed on an applicant to satisfy the requirements of O 8 r 2(2) and a respondent ought not to be expected to call evidence at that stage on the issues arising under the rule.  However, in the present matter each of the foreign respondents has elected to move under O 9 r 7 to set aside service and to call substantial evidence in an endeavour to establish that the requirements of O 8 r 2(2)(a) and (c) have not been satisfied.  The foreign respondents, having elected to call witnesses to contest certain factual issues arising under sub-paras (a) and (c) of the rule, might reasonably be expected to call witnesses who would be expected to shed light on any other related, and critical, factual issue arising under the same sub-paragraphs of the rule.  However, the foreign respondents, without explanation, called no evidence on that issue, namely whether they or their agents engaged in any conduct in Australia in order to implement the cartel arrangement.  I would add that I do not regard the evidence adduced by the foreign respondents as addressing or dealing with the discrete issue of whether any of the foreign respondents gave effect to the cartel arrangement in Australia.  None of the relevant deponents purported to give evidence as to the making of, or giving effect to, that arrangement nor did any of the them state that they had any personal knowledge of those matters.  Thus, in so far as general statements were made to the effect that the Australian subsidiaries conducted their business operations independently of, and not under the direction or control of, the regional or parent companies in the respective groups I do not regard that evidence as dealing with the direction, control or influence exercised by the European or regional parent companies in implementing the cartel arrangement through their Australian subsidiaries.

130               If, contrary to my view, that subject matter was dealt with by the deponents, albeit indirectly, I would give that evidence little weight.  My reasons for doing so is that the deponents do not state they have any knowledge of, or involvement in, the making and implementation of the cartel arrangement and, on that topic, I prefer to rely upon the evidence that addresses and deals with the cartel arrangement.

131               In the circumstances Jones v Dunkel can be applied to the inferences that are reasonably open on the evidence as to the implementation in Australia of the cartel arrangement by the foreign respondents.  An analogous approach, which is helpful in the present context, is that expressed by Mason CJ, Deane and Dawson JJ in Weissensteiner v The Queen (1993) 178 CLR 217 at 227:

“…it has never really been doubted that when a party to litigation fails to accept an opportunity to place before the court evidence of facts within his or her knowledge which, if they exist at all, would explain or contradict the evidence against that party, the court may more readily accept that evidence.  It is not just because uncontradicted evidence is easier or safer to accept than contradicted evidence.  That is almost a truism.  It is because doubts about the reliability of witnesses or about the inferences to be drawn from the evidence may be more readily discounted in the absence of contradictory evidence from a party who might be expected to give or call it.”

132               In that context I turn to consider the inferences to be drawn from the evidence.  In the course of these reasons I have given emphasis to certain passages in the evidence that I have admitted.  The evidence generally (but in particular the emphasised passages) establishes that the cartel arrangement referred to in the US plea agreements was arrived at:

“…to suppress and eliminate competition by fixing, increasing, and maintaining the price and allocating the volume of certain vitamins sold in the United States and elsewhere,…”

133               Pursuant to the cartel agreement made by the European parent companies, HLR Europe, BASF Europe and A Europe (or AAN Europe) were obliged:

·        to agree on the market shares each was to hold worldwide and by region, which included Australia, or to set specific volumes of certain bulk vitamins that each company would supply for the world by region, which included Australia;

·        to fix, increase or maintain prices and to coordinate price increases throughout the world, by region, which included Australia, at which each company would sell bulk vitamins to customers;

·        to implement or procure implementation of the cartel arrangement through the “respective affiliates or subsidiary companies in the relevant parts of the world” with each parent being responsible “for supervising and co-ordinating or procuring the supervision and co-ordination of the operations of corporate members” of each group to ensure compliance with the cartel arrangement;

·        in respect of each region, to ensure the regional group company responsible for implementation of the cartel arrangement in the region advised members of the group in the region of the prices, or the range of prices, at or within which such members would sell vitamins in order to achieve the revenue and sales budgeted, in accordance with the cartel arrangement, for the region and the individual countries in the region.

134               In order to implement the cartel arrangement, senior executives of the three groups met on a regular basis in Europe and, inter alia, in each of the regions (including the Asia Pacific) to fix regional wholesale prices and to allocate market shares or volume of sales for regions and the countries in each region, including Australia.  Those meetings ensured that the worldwide arrangement agreed to by the European parents was implemented on the basis that responsibility for regional implementation devolved upon the regional parent in each group.  The group subsidiaries in each region, including the Australian subsidiaries, were required to implement, and implemented, the arrangements made at the regional level in accordance with the direction and advice proffered by the regional parent.  In some instances, prior to responsibility devolving on a regional parent, the European parent was directly involved in implementation by a subsidiary.

135               During the various regional meetings amongst senior executives of each group at the regional level, budgets were agreed to on the basis of sales information exchanged during lower level employee meetings.  Implementation at the national level in Australia was described in the AAN Australian plea agreement as follows:

“16.    Senior executives of AAN Australia, RVA and BAL implemented the Overseas Arrangements by engaging in telephone discussions and holding meetings at which they made arrangements and arrived at understandings as to:

(a)     the prices at which each of AAN Australia, RVA and BAL would sell animal vitamins A and E;

(b)     the volume of animal vitamins A and E to be sold by each of AAN Australia, RVA and BAL;

(c)     the prices at which each of the participants would sell pre-mix containing animal vitamins A and E to certain major customers;

(d)     the allocation amongst the participants of tenders for the supply of pre-mix containing animal vitamins A and E to certain major customers of such pre-mix.

…

18.       AAN Australia, RVA and BAL gave effect to the Australian Arrangements by each of them supplying animal vitamins A and E and charging prices for the supply of pre-mix containing animal vitamins A and E in accordance with those Arrangements.”

136               Similar descriptions appeared in the other Australian plea agreements.

137               Although the Australian plea agreements were only concerned with certain products, the evidence, at this preliminary stage, does not suggest that the implementation of the cartel arrangement differed in any significant respect between products.  Further, the evidence does not suggest that the method of implementation differed in any significant respect between the three groups.

138               Regional meetings were designed to ensure that the agreed market share was met in the region and within each zone within the region.  Implementation, including supervision and monitoring, of the cartel arrangement in Australia required the distribution on an ongoing basis of price lists by the European or regional parent to the Australian subsidiary, as well as ongoing directives and advice to the subsidiary as to customers, volumes, and prices for the class vitamins.

139               Johnson stated:

“53.    From 1993 onwards market intelligence at the regional level was so sophisticated, and the customer base so well known to the regional managers, that all sales were organised at the regional level and directions given from the regional level to personnel in Australia for implementation in Australia.”

140               Where there was a deviation from the agreed market share in any region or country, “appropriate and necessary set-offs” would be made to restore or maintain the agreed outcomes.  Those set-offs maintained the required “equilibrium” either globally, regionally or nationally.  Johnson explained the working of that aspect of the cartel arrangements as follows:

“58.    Mr Hall told me that the respective market shares of vitamins sales in Australia by BASF Australia Ltd, Rhone-Poulenc Animal Nutrition Pty Ltd and Roche Products Pty Ltd were offset against market share in other countries.  From time to time I was directed by Mr. Hall to take a larger share of the Australian market in a particular quarter.  I would be given discretion to quote a lower price than normal.  I was told by Mr. Hall that I was being given this unusually large discretion on price to increase Rhone-Poulenc Animal Nutrition Pty Ltd’s market share and offset a decline in market share elsewhere in the Asia region.”

141               The supervision by the regional parent required its executives to communicate regularly with senior executives of its subsidiaries, by attendance at meetings, or by other forms of communication.  The supervision also required the regional parent to discipline subsidiaries or call upon the other cartel members to discipline their subsidiaries in the event that the minimum price, volume, or customer allocation agreed to was breached.

142               I infer, from the facts established by the evidence, that the implementation of the cartel arrangement in Australia was controlled and directed, directly or indirectly, in all relevant aspects by European and regional parent companies in each of the three groups involved in making and implementing the cartel arrangement.  The control and direction arose in part as a result of the power, directly or indirectly, of those parent companies (or their subsidiaries) to exercise legal control over the composition of the boards of the Australian subsidiaries.  Some parent companies may not have had the requisite direct or indirect shareholding to enable them to exercise legal control but in such cases little turns on that distinction as the companies were all within the same corporate group acting in the same corporate interest.  In that situation I infer that the corporate hierarchy, rather than shareholding as such, was sufficient to confer the requisite power of control and direction.  However, the control and direction also arose more directly from the fact that the European or regional parent supplied, or controlled the supply of, the class vitamins within each of the respective groups and was therefore able to control the quantity and price of the class vitamins supplied in each area, including Australia.  Johnson stated:

“84.    I was directed by Mr Hall to vary Rhone-Poulenc Animal Nutrition Pty Ltd’s prices for vitamins and vitamin pre-mix to accord with the agreement to fix prices and ensure that Rhone-Poulenc Animal Nutrition Pty Ltd maintained its allocated proportion of market share.

85.       Mr Hall directed me as to the price to quote for sales of Rhone-Poulenc vitamins in Australia.  Typically he did this by sending me a fax, from France and later Singapore, which contained vitamin prices.  I played no part in the process by which the prices for vitamins to be supplied in Australia by Rhone-Poulenc Animal Nutrition SA were determined.”

143               The inherent nature of the cartel arrangement required that its implementation at the national level be substantially as Johnson described it.  Importantly, for present purposes, I infer that the on-going implementation, including supervision and monitoring, of the cartel arrangement in Australia required officers of the regional parent (or in its absence, of the European parent) who were responsible for making or implementing the arrangement to regularly direct, instruct, and advise senior executive officers of the Australian subsidiary as to prices and volumes in respect of the purchase of the class vitamins and as to the prices, volumes, and customers in respect of the sale of the class vitamins.

144               I infer that, for the most part, the directions, instructions, and advice implementing the cartel arrangement in Australia were communicated at meetings both inside and outside of Australia and by facsimile, e-mail, letter, telephonic, telex or other communications by officers of the European or regional parent (as the case may be) to officers in Australia of the Australian subsidiary.  I accept that in some instances meetings and communications occurred at the overseas headquarters of the European or regional parent.  However, the nature, extent and detail of the implementation of the cartel arrangement in Australia was such that it is likely that, substantially, implementation on a regular basis required detailed communications on an ongoing basis by officers of the relevant overseas parent to officers in Australia regarding the matters agreed to or budgeted for at regional meetings held outside of Australia.

145               In a different context, Mason CJ, Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 observed at 567-568:

“In some cases an act passes across space or time before it is completed.  Communicating by letter, telephone, telex and the like provide examples.”

146               However, after also observing that generally the tort of negligent misstatement is committed where the statement is received and acted upon their Honours pointed out that the statement may be received in one place and acted upon in another.  They stated:

“If a statement is directed from one place to another place where it is known or even anticipated that it will be received by the plaintiff, there is no difficulty in saying that the statement was, in substance, made at the place to which it was directed, whether or not it is there acted upon.”

See also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 547-548 and Diamond v Bank of London and Montreal [1979] 1 QB 333 at 345-346.  This principle has been applied to conduct found to contravene Pt V of the TPA: see No 1 Raberem Pty Ltd v Monroe Schneider Associates Inc (Unreported, Federal Court of Australia, von Doussa J, 8 February 1991).

147               In the present case the facsimile, e-mail, letter, telephonic, telex, or other communications from overseas parents to officers of the Australian subsidiaries, although they were likely, for the most part, to have been initiated outside of Australia, were directed to and were expected to be, and were, received in Australia.  In my view such conduct can, for the purposes of s 45 of the TPA, be regarded as taking place in Australia.

148               Conduct of a European or regional parent company may also be said to be conduct that has taken place in Australia where the particular conduct is engaged in by the subsidiary, or by its officers, on behalf of the parent.  In substance, the evidence indicates that the cartel arrangement was made between the European parents who were obliged to implement the arrangement.  Primarily, the European parents implemented the arrangement through the regional parent which, in turn, implemented the arrangement through national subsidiaries.  Although in one sense it is accurate to state, for the purposes of s 45, that the cartel arrangement was made on an ongoing basis at each of the worldwide, regional and national levels it is probably more accurate to state that it was made at the European level and then implemented respectively at the regional and national levels by the regional parent and the national subsidiary respectively.  Thus, rather than view the Australian subsidiaries as making the cartel arrangement, which at the micro level they plainly admitted to doing, it may be more accurate to describe their conduct as implementing the cartel arrangement of the European parent as directed by the European and regional parent.  In so doing the subsidiary, or more accurately its officers, was performing the obligations undertaken under the cartel agreement made by the European (or regional) parent, rather than carrying out a separate and independent obligation undertaken by it.  Indeed, the evidence suggests that the Australian subsidiaries exercised little or no discretion in relation to the implementation of the cartel arrangement in Australia.

149               Put another way, when the subsidiary is determining volume, price, and customers for the class vitamins for the purposes of its purchase and sale of those vitamins, it is doing so in performance of the European parent’s obligations under the cartel arrangement.  The parent, in turn, agreed to and could only carry out its obligations by its servants and agents.  The “agents” for that purpose are its officers and the relevant officers of the regional parent, or of its subsidiaries at the national level.  This analysis is supported by the U.S., Canadian and European plea agreements in which the European parents (HLR Europe, BASF Europe and A Europe) pleaded guilty to the offences with which they were charged.  The factual basis for the U.S. and Canadian pleas appeared to include admissions that the corporations charged committed the anti-competitive offences with which they were charged in the United States and Canada respectively, and elsewhere.  The evidence establishes that the “elsewhere” included Australia.  Indeed, for the reasons set out above, I regard it as probable that the European parents, acting through officers of the regional parent and the national subsidiary, were actively involved in implementing the cartel agreement in Australia.

150               There is some uncertainty in relation to the involvement of A Europe.  The evidence filed on behalf of the Aventis foreign respondents on the motions is to the effect that A Europe is only a holding company and that the business of manufacturing and supplying the relevant vitamins was conducted by AAN Europe, rather than A Europe.  Aventis’ Australian plea agreement treats the cartel party as AAN Europe.  Rhone Poulenc Europe (ie A Europe) was not a party to a US plea agreement but was a party to the Canadian and European plea agreements that resulted in its conviction and the imposition of fines.  The 1998 Rhone Poulenc Europe Annual Report states that Rhone Poulenc Animal Nutrition is under investigation by the US Department of Justice and that Rhone Poulenc and Rhone Poulenc Animal Nutrition have “co-operated fully and voluntarily with the investigation”.  While the evidence is that the Aventis parent directly involved in the worldwide implementation of the cartel arrangement was AAN Europe I am not satisfied that that has the consequence that A Europe, which held all of the issued capital in AAN Europe, had no involvement.  Rather, the fact that A Europe has pleaded guilty to charges in Canada and Europe warrants the inference that it was also involved in making and implementing the cartel agreement, albeit by agents that included AAN Europe and its servants and agents.

151               In the circumstances, prima facie, the evidence justifies the inference that the cartel agreement was implemented by A Europe, AAN Europe, the AAN regional parent (AAN Asia Pacific) and AAN Australia by officers of each of those companies acting as agent for the company next up in the chain of companies (other than A Europe, which is at the top of the chain).

152               My conclusions are reinforced by the statements in the Canadian plea agreements that the Canadian subsidiaries were not involved in the contraventions.  On the probabilities, the only basis upon which that would have occurred was that the contraventions in Canada were by agents of the European companies.  The Australian plea agreements were made on the basis that the Australian subsidiaries made and gave effect to the arrangements that contravened s 45 of the TPA.  As explained above I accept that that is so at the micro or national level but I do not regard those agreements as addressing the role of the European or regional parents.  Put another way, the admissions of contravention by the Australian subsidiaries are not inconsistent with the conclusions I have reached concerning the role of the European or regional parents.

153               It is also open to infer from the evidence, with much the same outcome at the national level, that the cartel arrangement was also made at the regional level and implemented by officers of the regional parent and of the subsidiary at the national level (on the instruction and at the direction of the regional parent).

154               In a different context, in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 (“Krakowski”) at 583 Brennan, Deane, Gaudron and McHugh JJ pointed out that a division of function amongst officers within a corporation responsible for different aspects of the one transaction does not relieve the corporation from responsibility determined by reference to the knowledge of each of them.  Their Honours cited Dunlop v Woollahra Municipal Council (1975) 2 NSWLR 446 at 485 where Wootten J observed:

“Corporations must be held responsible through those who act on their behalf, whether an act is performed by one person or by a number.  Doubtless there may be problems of mixed motives as between individuals, as indeed there often are within an individual, but it is better for the courts to grapple with the true facts, however difficult this may be, than to shut out the realities of corporate action by arbitrary rules of evidence.”

155               In Krakowski their Honours also cited Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170 where Lord Reid stated that as a company must act through living persons, although not always one or the same person, “[it] must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company’s servant or agent”.

156               In Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 at 507 Lord Hoffman, delivering the advice of the Privy Council, stated that, in a statutory context, the question of whose act is that of the company is one of interpretation.  He said the question arises as to “[w]hose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company”.

157               The above passages are helpful in the present context.  In considering the cartel arrangement, in the context of s 45, as involving a division of function with different officers or agents of the European or regional parent companies responsible for its implementation, an inference is reasonably open that implementation by those servants and agents was in that capacity rather than in some independent capacity.  Accordingly, when officers of the Australian subsidiaries were carrying out their functions in respect of the arrangement, vis-a-vis the other subsidiaries and their regional or European parent, they may be inferred as doing so in fulfilment of the relevant European or regional parent’s obligations and therefore as an agent of the parent.  Put another way, the relevant officers, when implementing the cartel arrangement, were authorised to do so and did so for and on behalf of the parent whose obligations they were performing.  Thus, the implementation by the agent was implementation by the parent which, subject to the illegality, was bound by its agent’s implementation cf Adams v Cape at 529.  I am here referring to the internal corporate steps implementing the cartel arrangement (eg purchases within the group, budgets, sales plans, meetings with members of the other two groups etc), and not the external corporate steps (eg contracts of sale by the subsidiary to customers which were made by the subsidiary, rather than by the European or regional parent).  In respect of the internal steps an inference is reasonably open on a prima facie case basis that the officers of the Australian subsidiaries, when engaging in conduct in Australia that implemented the cartel, were acting as agents of and therefore for and on behalf of the relevant parent, rather than independently as officers of the subsidiary.  It may be added that that role derives in part from the role of the subsidiary in implementing the cartel arrangement as agent for and on behalf of the relevant parent.  In reaching these conclusions I am not piercing the corporate veil; rather, I am seeking to “grapple with the true facts”, albeit at this stage on an interlocutory basis.  Further, the absence of contradictory evidence from the foreign respondents enables me to more readily draw the inferences I have drawn and more readily discount any doubts as to alternative hypotheses that might have been open that supported the case of the foreign respondents.

158               The combination of the conduct constituting communications by the relevant parent to officers of the subsidiaries in Australia (ie directions, instruction etc) and internal implementation of the cartel arrangement by officers of the subsidiaries in Australia on a regular and ongoing basis over a significant period constitutes, in my view, conduct by way of implementation of the cartel arrangement in Australia that, for the purposes of s 45(2)(b), can be inferred to be conduct of the foreign parent in Australia.

159               The question arises as to whether that conduct is giving effect to the cartel arrangement for the purposes of s 45(2)(b) of the TPA.  Section 4(1) provides that “give effect to”:

“in relation to a provision of a contract, arrangement or understanding, includes do an act or thing in pursuance of or in accordance with or enforce or purport to enforce;”

160               In Tradestock Pty Ltd v TNT (Management) Pty Ltd (No. 2) (1978) 32 FLR 420 at 432 Smithers J stated that an act done in implementation of a contract, arrangement or understanding would necessarily be done “in pursuance thereof”.  He added that the words “or in accordance with” may have extended the ambit of the phrase to cover situations where a decision is made “in accordance with” an arrangement or understanding although it may not have been actuated by the arrangement or understanding.  This interpretation was endorsed by Franki J in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 68.  In Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 at 133 Lockhart J observed that parties, in making a decision independently of each other may give effect to an allegedly offending arrangement notwithstanding that they were not acting in concert.

161               The conduct which I have referred to as conduct in Australia implementing the cartel arrangement, is sufficient to constitute “giv[ing] effect to” the arrangement in Australia within the meaning of that term as defined in s 4(1).

162               Section 75B of the TPA sets out the categories of conduct that define when a person is “involved in” a contravention of, inter alia, Pt IV.  The categories, which are derived from concepts well known to the criminal law, were found to require that the person involved in the contravention intended to be involved in the sense that the person must have knowledge of the essential matters which make up the contravention, whether or not he or she knows that those matters amount to a contravention: see Yorke v Lucas (1985) 158 CLR 661 at 667.

163               In my view the evidence justifies the inference of the requisite intent, in the Yorke v Lucas sense, in relation to the conduct of senior officers of the parent and subsidiary companies involved in the internal implementation of the cartel arrangement in Australia.  Mr Johnson’s evidence supports that conclusion.  Further, the nature, detail and manner of the implementation of the cartel arrangement necessitated secrecy and confinement of relevant information to senior officers on a “need to know” basis.  The inference is reasonably open that in such circumstances the relevant officers appreciated and intended that secrecy was necessary as the arrangement involved anti-competitive collusion by the three corporate groups.  Thus, the evidence justifies an inference that, to the extent that the conduct implementing the arrangement is not “giving effect to” it, the conduct will amount to involvement under s 75B, at least on a prima facie case basis.

164               Finally, I turn to consider the role of each of the foreign respondents.  I have already explained why I am satisfied that a prima facie case has been made out in respect of each of the European parent companies (including A Europe and AAN Europe) and each of the regional parents responsible for the implementation of the cartel arrangement in Australia.  In the case of the HLR and Aventis groups the relevant regional parent was HLR Asia Pacific and A Asia Pacific.  Accordingly, I am satisfied that a prima facie case of giving effect to, or involvement in, the cartel arrangement in Australia has been made out against HLR Europe, HLR Asia Pacific, A Europe, AAN Europe, AAN Asia Pacific and BASF Europe.  The remaining issue is whether BASF South East Asia, BASF East Asia, or both companies, gave effect to or were involved in the cartel arrangement in Australia.

165               The BASF Australian plea agreement (at [15]) states:

“For each of vitamins A and E during the period from January 1990 to February 1999, senior executives and employees of BASF AG, including regional marketing personnel, engaged in conversations and attended meetings with other senior executives and employees of AAN and Roche.”  [Emphasis added]

166               The BASF affidavits acknowledge that regional marketing for vitamins sold in Australia was the responsibility of BASF East Asia, which was based in Hong Kong.  The NZ Commission report (at [98]-[100]) confirms the part played by BASF East Asia in implementing the cartel arrangement in the region.  The details of the role of BASF East Asia set out in [122]-[124] and [127]-[134] of the report are based on information provided by Managers of BASF New Zealand to the Commission.  The relevant information is admissible on the same basis as I have admitted other parts of the Report.

167               The evidence of any role played by BASF South East Asia, which is based in Singapore, in relation to the cartel arrangement is sparse.  While there were some references in the material to BASF South East Asia receiving price lists, and selling and supplying vitamins to Australia, it appears that its primary role was as a service centre.  Significantly, there is no evidence that BASF South East Asia or its officers had any active or ongoing involvement in implementing the cartel arrangement in Australia.  Rather, the evidence indicates that the role of “regional parent” in respect of implementation was carried out by BASF East Asia and its officers.  In the circumstances I am satisfied that the regional BASF parent likely to have been involved in the implementation of the cartel arrangement in Australia was BASF East Asia, rather than BASF South East Asia.  It follows that, on the evidence presently before me, I am not satisfied a prima facie case has been made out against BASF South East Asia but that otherwise the prima facie case and jurisdictional requirements of O 8 r 2(2) have been made out against all of the other foreign respondents.

Jurisdiction

168               The HLR and BASF foreign respondents contended that the Court should forthwith determine that it has no jurisdiction in respect of the s 45 claims against them under the TPA as:

·        any conduct on their part in making and giving effect to the cartel arrangement was engaged in by them outside of Australia;

·        the exercise of jurisdiction by the Court under the TPA in the present proceeding depends upon the condition laid down in s 5(1), that they carry on business in Australia, being established;

·        they do not carry on, and have not carried on, business in Australia;

·        accordingly, the Court has no jurisdiction to hear and determine the s 45 claims;

·        the issue of a purported invocation of its jurisdiction having been raised, the Court is under a duty to hear and determine that issue on a final basis, forthwith.

169               The applicant disputed each of the contentions.  The applicant acknowledged, however, that the material upon which she was relying to establish the prima facie case and jurisdictional requirements of O 8 r 2(2)(a) and (c) was prepared on the basis that the application was an interlocutory proceeding.  Accordingly, it was contended that, if the Court proposed to deal with jurisdiction on the basis contended for by the HLR and BASF foreign respondents, she would require an adjournment to prepare her material on the basis that the proceeding was a final, rather than an interlocutory, determination of the question of jurisdiction.

170               On the current state of the authorities an order of the Court to set aside an originating process on the ground of lack of jurisdiction is a final order with the consequence that an application for relief on that ground is a final proceeding, albeit on a preliminary question of jurisdiction: see Bremerhaven at 80, 93.  In Bremerhaven the Full Court, in explaining why an application for a writ commencing an Admiralty proceeding in rem to be set aside for want of jurisdiction, was a final proceeding, stated (at 80):

“The reality, in our view, is that, when considered in context, the orders made finally disposed of the whole of the proceedings for want of jurisdiction.  It is true that the wording of the orders may not be the same as the language used in some of the authorities.  But it appears clearly enough that his Honour held, as in Partido at 543 that Lloyd was ‘not…entitled to invoke the Admiralty jurisdiction of the…Court by an action in rem against [the ship]’.”

and at 93:

“It must follow, in our view, that the adjectival rules to be applied at the hearing were those appropriate to a final hearing, so that the Court’s power to dispense with the rules of evidence, which is available on an interlocutory hearing, was not available.”

171               A finding on the present application that the requirements of the rules of evidence as to the form of evidence that may be received, subject to relevance, had to be observed might have significant consequences, as one of the reasons why significant portions of the evidence objected to by the HLR and BASF foreign respondents was admitted for the purposes of determining the issues arising in relation to O 8 r 2(2) is that the proceeding is interlocutory.

172               The questions arising on the “jurisdiction” application are:

Ÿ                Is the Court under a duty to forthwith hear and determine the “jurisdictional” issue raised by those respondents?

Ÿ                Is the issue raised by those respondents a “jurisdictional” issue?

173               Plainly, there are significant difficulties in dealing with the so-called jurisdictional issue at this stage.  The facts relevant to whether the HLR and BASF foreign respondents engaged in contravening conduct in Australia, or were carrying on business in Australia, are inherently within their knowledge and not within the applicant’s knowledge.  In a practical sense the applicant would not be able, properly, to contest those factual issues on a final basis without resort to the Court’s discovery procedures.  At this stage resort to those procedures is premature as the issue of whether the relevant respondents have been duly served and are to remain parties to the proceeding, and are therefore subject to the Court’s jurisdiction in respect of those procedures, is awaiting determination on the same motions that raise the jurisdictional issues.

174               Further, the issues that are material to the jurisdictional issues include whether the HLR and BASF foreign respondents contravened s 45(2)(b) by giving effect to the cartel arrangement by conduct in Australia, whether by servants of those respondents or by officers of the Australian subsidiaries as agents of those respondents.  Thus, evidence as to the nature and extent of the involvement of the foreign respondents in the implementation of the cartel arrangement in Australia between 1992-1999 will bear upon both “contravention” and “jurisdiction”.  Thus, to the extent that the Court has a discretion as to when the “jurisdictional” issues are to be heard and determined, albeit as preliminary issues on a final basis, I am in no doubt that in the present case it is inappropriate to do so at this stage.

175               The HLR and the BASF foreign respondents contend, however, that I have no discretion as to when I hear the jurisdictional issues.  They do not dispute that the applicant may be entitled to interlocutory procedures to assist her in contesting the issue but they say that the applicant has elected to contest the application without resort to those procedures and it is now too late for her to resile from that position.

176               In support of their submission the HLR and BASF foreign respondents rely, primarily, upon I Congresso del Partido [1978] 1 QB 500 (“Congresso del Partido”) which concerned a challenge to the High Court’s in rem jurisdiction in Admiralty actions.  Relevantly, under s 3(4) of the Administration of Justice Act 1956 (UK) the Admiralty jurisdiction of the High Court (UK) may be invoked by an action in rem against a ship where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner of the ship.  A defendant (“Mambisa”) to the action claimed it was not the beneficial owner of the ship that had been arrested, and moved for the writ and all subsequent proceedings to be set aside on the ground that the actions did not fall within s 3(4), pursuant to which they were brought.  The plaintiffs submitted that on the evidence before the Court they had a reasonably arguable case that Mambisa was the owner and that, in those circumstances, it would be wrong for the Court to decide the matter on the present affidavit evidence without affording the plaintiff the opportunity of having the issue tried on oral evidence with cross-examination of witnesses.  Rather, so it was said, the proper course was for the action to be allowed to proceed to trial with the question of Mambisa’s title to be tried as an issue in the action.

177               Goff J (at 535-536), in not acceding to the defendant’s submission, stated:

“The question raised by Mambisa’s motions is one of jurisdiction.  Jurisdiction in Admiralty actions is statutory, and is defined by the Administration of Justice Act 1956.  Section 3 of the Act lays down the circumstances in which an action in rem may be brought; if the case is not within the section then the court has no jurisdiction in respect of an action in rem, and the writ and all subsequent proceedings should be set aside.  It follows that if a defendant wishes to have the writ and all subsequent proceedings set aside he must apply to do so before entering an unconditional appearance.  Any question of irregularity in the issue of the writ cannot be pleaded as a defence; indeed, by entering an unconditional appearance, a defendant will waive any irregularity in the issue of the writ: see R.S.C., Ord. 2, r. 2(1) and Ord. 12, r. 8.

It follows as a matter of principle that any question of jurisdiction, such as the question in the present motions, must be dealt with on the motions and cannot be dealt with as an issue in the actions.  Of course, on the hearing of such a motion, evidence will be admitted.  Usually that evidence will be in the form of affidavits, though in theory oral evidence, for example, by cross-examination of deponents of affidavits, might be allowed.  There has, however, been no application in the present case for any such oral evidence to be admitted.  On the evidence so admitted, which in the present case is purely affidavit evidence, the question of jurisdiction has to be decided, and it cannot be right for the decision on that question to be allowed to depend on the decision of some issue to be tried in the actions.  If there is no jurisdiction as against Mambisa they should not be troubled with the actions at all; indeed, it cannot be decided whether the actions can be allowed to proceed until the question of jurisdiction has been determined.”

178               In The “Aventicum” [1978] 1 Lloyd’s Rep 184 at 186 Slynn J agreed with the approach of Goff J in I Congreso del Partido [1978] 1 QB 500, stating that the conditions set out in s 3(4) for the invoking of the courts in rem jurisdiction “have to be established before this jurisdiction can properly be exercised”.

179               In The Owners of The Ship “Shin Kobe Maru” v Empire Shipping Company Inc. (1994) 181 CLR 404 (“Shin Kobe Maru”) at 426 in the joint judgment of all members of the court, which considered the Australian counterpart to s 3(4) their Honours stated:

“The effect of the decisions in [Congresso del Partido] and in The ‘Aventicum’ was that jurisdiction had to be determined as a preliminary issue and on the balance of probabilities.

Where jurisdiction depends on particular facts or a particular state of affairs, a challenge to jurisdiction can only be resisted by establishing the facts on which it depends.  And, of course, they must be established on the balance of probabilities in the light of all the evidence advanced in the proceedings held to determine whether there is jurisdiction.”

180               In the Admiralty cases relied upon by the HLR and the BASF foreign respondents the invocation of the in rem jurisdiction of the court was subject to a statutory pre-condition that the person in respect of whom the claim was brought, and who would be liable on the claim in an action in personam, was the owner of the ship.  In that context it is not surprising that the view was taken that if it is claimed that there was no basis for the in rem proceeding to be brought, the court should determine if it was entitled to exercise jurisdiction as a preliminary, rather than a trial, issue.  In the Admiralty cases the invocation of the court’s jurisdiction was subject to a condition that it was found must be satisfied before the court was entitled to exercise its jurisdiction to proceed to hear and determine the plaintiff’s claims at the trial of the in rem proceeding.

181               An analogous jurisdictional question arose in The Queen v Gray; Ex parte Marsh (1985) 157 CLR 351 (“Gray”) which was concerned with s 159(1) of the Conciliation and Arbitration Act 1904 (Cth) which provided that, if there has been a claim by a member of a union of an “irregularity” in connection with a union election the member may apply for an inquiry into the matter by the Court.  The High Court, by a statutory majority, granted prohibition against a judge of the Court from proceeding with an inquiry under s 159(1) on the basis that there was not a claim that there was in law an “irregularity”.  Thus, a pre-condition to the exercise of the Court’s jurisdiction to inquire was found not to exist: see Gibbs J at 371-372, Wilson J at 378-379 and Brennan J at 381-382.

182               The minority (Mason J at 377, Deane J at 391-392 and Dawson J at 394-395) dissented in the result on the basis that, contrary to the view of the majority, on the proper construction of the relevant statutory provisions the Court had the power to determine conclusively the matter on which its jurisdiction under s 159(1) depended, with the consequence that prohibition was not available even if the Court decided that issue erroneously.

183               Gray was not concerned with the time at which a jurisdictional issue must be decided.  However, it is an example of a case where prohibition issued because, upon the majority view, the facts upon which the Court’s jurisdiction to inquire depended, did not exist.

184               In The Queen v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 (“Adamson”) some members of the court, in considering whether prohibition should issue before the Federal Court determined whether it had jurisdiction, made observations that are not consistent with the contention that the Court is under a duty to decide the jurisdictional issue forthwith.  Barwick CJ stated at 206-207 that it may be appropriate for prohibition to be deferred until the conclusion of the proceedings in the Federal Court.  Gibbs J observed at 215 that a court should decide whether a condition of its jurisdiction is satisfied and whether it has jurisdiction to proceed, but he did not suggest that a court was obliged to do so forthwith.  In the context of prohibition (at 216) Gibbs J accepted that the hearing of an application for prohibition in the High Court may be deferred until, inter alia, the issue of jurisdiction is determined by the relevant tribunal.

185               Shin Kobe Maru, Gray and Adamson are not authority for the proposition that the Court is under a duty to determine its jurisdiction as soon as that matter is raised, irrespective of any inconvenience or inappropriateness attendant on doing so at that stage.

186               The timing issue was considered by Katz J in Khatri v Price [1999] FCA 1289 at [14] where his Honour observed:

“Because any Australian court is a court of limited jurisdiction, its ‘first duty’, when there has been a purported invocation of its jurisdiction, is to satisfy itself that it has the jurisdiction purportedly invoked: Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 at 415 (Griffith CJ).  (In making his well-known statement, Griffith CJ gave, as a reason for the existence of such a ‘first’ duty, ‘if only to avoid putting the parties to unnecessary risk and expense’.  That reason appears to imply that the duty is one which must be fulfilled ‘first’ in the sense that the court concerned must determine the question of its jurisdiction before hearing any evidence or argument on issues which would arise in the proceeding if it did have the jurisdiction purportedly invoked.  However, in spite of that reason’s having been given by Griffith CJ, the duty has not been generally understood to be ‘first’ in that sense.  The duty has been generally understood instead as permitting the court concerned to exercise a discretion (subject, obviously (if the court is not the High Court), to appellate or supervisory review, whichever is appropriate) to postpone determining the question of its jurisdiction until after it has heard the whole case, provided, however, that having done so, it then ‘first’ determines that question.”

187               In my view the Court is not under a duty to forthwith determine if it has jurisdiction to proceed with the hearing of the present proceeding as soon as that was raised as a bona fide issue.  In the usual course a court must satisfy itself that it has jurisdiction in the proceeding but the time at which it does so is a matter for the court.  In many cases it may be desirable for the court to deal with the jurisdictional issue as a preliminary issue but it is not under an unqualified duty to do so.  Ultimately, it is for the court to determine, in interests of the justice, the time at which and the manner in which a jurisdictional issue is to be determined.

188               A possible exception to that principle, that has arisen in the Admiralty cases and arose in Gray, is where a statutory precondition to the invocation of the Court’s jurisdiction is required to exist before the proceeding can be commenced or the Court’s jurisdiction can be invoked.  Those cases are examples of where a properly constituted court may lack jurisdiction because a condition precedent to its entering upon the inquiry has not been fulfilled: see Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136 at 1151.  The Admiralty cases are authority for the principle that in such cases the Court has to determine the facts upon which its jurisdiction depends as a preliminary issue: see Shin Kobe Maru at 426.  As with any preliminary issue the determination is to be at the time and in the manner that accords with the requirements of justice in the particular case.

189               I need not pursue this aspect of the matter further.  It is not a statutory precondition to the invocation of the Court’s jurisdiction under the TPA that the foreign respondents have carried on business in Australia.  Rather, under s 86 jurisdiction is conferred on the Court “in any matter arising under this Act in respect of which a civil proceeding has…been instituted under [Part VI]”.  In so far as the proceeding claims damages and injunctive relief it is instituted under Pt VI of the TPA.  As was pointed out in Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 162:

“Section 86 is not a self-contained grant of jurisdiction; it operates by reference to proceedings for which provision is made elsewhere in Pt VI, proceedings which are described in terms of the particular relief which the court is empowered to grant.”

190               Jurisdiction is the authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred: see Harris v Caladine (1991) 172 CLR 84 at 136 and Edensor at 348.  As was pointed out in Edensor at 348:

“The claims for relief illuminate the scope of a controversy which constitutes a matter and once the Federal Court has jurisdiction to determine a controversy it has power in the exercise of that jurisdiction to give the remedies sought.”

191               For the purposes of the present proceeding, s 45 of the TPA prescribes the norm of conduct and other provisions, such as ss 80 and 82, provide remedies while s 86 confers jurisdiction to administer them: cf Edensor at 348.  In the present case there is a justiciable controversy as to whether the applicant (and group members) are entitled to damages and injunctions by reason of the alleged contravention of s 45, as extended by s 5(1), by the foreign respondents.  The applicability of s 5(1) might turn out to be a critical element of the cause of action against the foreign respondents, but the applicability of s 5(1) is not a condition precedent to the Court entering upon the “inquiry” or to the invocation of the Court’s jurisdiction to proceed.  Accordingly, I do not accept that the Admiralty cases are decisive of the Court’s duties, as is contended by the HLR and BASF foreign respondents.   In any event even if, contrary to my view, the Court’s jurisdiction is required to be determined as a preliminary issue, for the reasons set out earlier it is inappropriate to do so at this stage.

192               There is a further difficulty confronting the contentions of the HLR and BASF foreign respondents.  They contended that the requirement under s 5(1) that the foreign respondents carry on business in Australia is a fact upon which the Court’s jurisdiction depends and, as such, cannot be conclusively determined by the Court which cannot, by erroneously determining a “jurisdictional” fact, confer jurisdiction on itself.  Of course, the Court has jurisdiction to determine the existence of the facts upon which its jurisdiction depends.  In DMW v CGW (1982) 151 CLR 491 at 507 Mason, Murphy, Wilson, Brennan and Deane JJ observed:

“…the grant of jurisdiction must carry with it the power to determine the existence or otherwise of facts upon which its jurisdiction depends.  If the Court wrongly decides such a question then that decision will be subject to the prerogative writs or the decision will be subject to appeal.  It cannot simply be ignored.”

193               It is, however, a question of statutory construction as to whether the legislature has conferred jurisdiction on the Court to conclusively determine the facts upon which its jurisdiction depends.  Lord Esher, in The Queen v Commissioners for Special Purposes of the Income Tax (1888) 21 QBD 313 at 319-320 (in a passage which was cited with approval in Adamson by Gibbs CJ at 214) explained the difference between a court or tribunal that is, or is not, conferred with jurisdiction to conclusively determine the facts upon which its jurisdiction depends:

“When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the legislature has to consider what powers it will give that tribunal or body.  It may in effect say that, if a certain state of facts exists and is shewn to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise.  There it is not for them conclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction.  But there is another state of things which may exist.  The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do something more.  When the legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none.  In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legislature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their jurisdiction.”

194               The HLR and BASF foreign respondents relied on Adamson to contend that, just as the court’s jurisdiction in that case depended on whether the respondents were trading corporations, jurisdiction in respect of extra-territorial conduct in the present case depended on whether the foreign respondents carry on business in Australia.  However, in Adamson jurisdiction depended on whether there was legislative power under the Constitution to confer it.  As was stated by Barwick CJ in Adamson (at 202):

“In matters which do not involve constitutional competence there is often a question whether the statute which gives jurisdiction has also given the court or tribunal jurisdiction conclusively to determine the existence of any fact or situation upon the existence of which the statutory jurisdiction depends: e.g. Parisienne Basket Shoes Pty. Ltd. v. Whyte (1938) 59 C.L.R. 369.  But such a question cannot arise if the jurisdiction depends on constitutional legislative power to create it.  Where constitutional competence to create the jurisdiction depends on the actual existence of some specific fact or situation the court or tribunal, though it may form a view as to whether the fact or situation exists, is not competent to decide that in truth either does exist: only this Court may conclusively determine the actual existence of the fact or situation which grounds the constitutional power.”

195               Although the argument of the HLR and BASF foreign respondents has a superficial analogy with the requirement in Adamson that the Court’s jurisdiction under the TPA can only be invoked against a constitutional corporation, in that case a trading corporation, that was not just a statutory requirement; it was also a constitutional requirement arising from s 51(xx) of the Constitution.  Thus, in Adamson the legislature’s power to confer jurisdiction on the Federal Court depended on the respondents being trading corporations.  In that context all members of the Court, other than Mason J and Jacobs J, were of the view that prohibition could issue if the respondent corporation was not a ‘trading corporation’, as the Federal Court did not have jurisdiction to conclusively determine the constitutional question upon which its jurisdiction depended: see Barwick CJ, with whom on this point Stephen J agreed, at 202-204 and 207, Gibbs J at 213-216, Murphy J at 238 and Aickin J at 240-241.  See also Re McJannet; Ex parte Minister for Employment Training and Industrial Relations (Qld) (1995) 184 CLR 620 at 644.  In the present context it is clear from Meyer Heine that lack of constitutional power is not an issue.

196               Whether the foreign respondents carry on business in Australia is plainly a matter that must be established if the applicant is to succeed in her cause of action against the foreign respondents in respect of conduct alleged to have been engaged in by them outside of Australia.  Jurisdiction is conferred on the Court to determine that question under ss 86, 45, 80, 82 and 163A of the TPA.  As was observed by Dixon J in Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 391:

“It cannot be denied that, if the legislature see fit to do it, any event or fact or circumstance whatever may be made a condition upon the occurrence or existence of which the jurisdiction of a court shall depend.  But, if the legislature does make the jurisdiction of a court contingent upon the actual existence of a state of facts, as distinguished from the court’s opinion or determination that the facts do exist, then the validity of the proceedings and orders must always remain an outstanding question until some other court or tribunal, possessing power to determine that question, decides that the requisite state of facts in truth existed and the proceedings of the court were valid.  Conceding the abstract possibility of the legislature adopting such a course, nevertheless it produces so inconvenient a result that no enactment dealing with proceedings in any of the ordinary courts of justice should receive such an interpretation unless the intention is clearly expressed.”

197               There is nothing in the sections to which I have referred, or in s 5(1), that suggest an intention that the Court is not to have the power to conclusively determine any facts on which its jurisdiction depends.  Prima facie, on the proper construction of the provisions to which I have referred, they appear to confer jurisdiction on the Court to conclusively determine each of the elements that are required to be established in the applicant’s cause of action for the relief she claims.  In that context, in so far as extra-territorial conduct of the foreign respondents is relied upon, s 45 is only applicable if the requirements of s 5(1) are satisfied.  It is not to the point that the Court’s jurisdiction to grant relief in respect of extra-territorial conduct arises only if the conditions laid down in s 5(1) are satisfied.  Thus, s 5(1) appears to stand in a quite different category to the jurisdictional requirements considered in Gray and Adamson where the prevailing view was that the Court did not have power to conclusively determine the facts upon which its jurisdiction depended.  The time and manner in which a court is to conclusively determine a matter within its jurisdiction to determine is a matter for the court.  Thus, it may not matter whether s 5(1) is characterised as conferring jurisdiction on the Court in respect of extra-territorial conduct (as is contended by the foreign respondents) or as merely extending the range of conduct which can contravene provisions of, inter alia, Pt IV of the TPA (as is contended by the applicant and the ACCC).  The reason for that is that if a court is conferred with jurisdiction to conclusively determine the facts upon which its jurisdiction depends it has jurisdiction in the matter even if it wrongly determines those facts.  In Gray at 394 Dawson J observed:

“If, however, the facts upon which a federal court’s jurisdiction depends do not mark the limits of the power of Parliament to confer jurisdiction upon it, Parliament may entrust the finding of those facts to the federal court itself.  In that event the court will not be acting outside jurisdiction in finding those facts and, even if it finds them wrongly, prohibition will not lie because prohibition is a remedy against a wrongful assumption of jurisdiction and not a remedy against an erroneous decision made by a court in the exercise of a jurisdiction which it possesses;”

198               In my view his Honour’s observations are applicable to the Court’s jurisdiction in the present case.  Accordingly, the s 5(1) issues sought to be raised are not “jurisdictional” issues in the sense contended for by the foreign respondents.  Of course, it does not follow that the s 5(1) questions cannot be determined as a preliminary issue.  That, however, is a matter of discretion for the Court.

199               There is one additional matter.  I have concluded, for the purposes of O 8 r 2(2)(a), that the Court has jurisdiction in the proceeding on the basis of conduct engaged in by the foreign respondents in Australia.  Thus, the premise upon which the HLR and BASF foreign respondents have proceeded (ie there was no evidence of such conduct) has not been made out.  Of course, my conclusions have been arrived at after an interlocutory hearing and the position might be found to be otherwise after further evidence is adduced or if the rules of evidence to be applied are on the basis of a final hearing.  However, as explained above that is a matter to be considered after the O 8 r 2(2) issues are resolved.  When that occurs and appearances have been entered and the Court has had an opportunity to consider any questions concerning the pleadings; any limitations issues; any directions in respect of interlocutory issues; questions arising under Pt IVA of the Federal Court of Australia Act 1976 (Cth); and any other matters the parties may wish to raise for determination as preliminary issues, the HLR and BASF foreign respondents will be at liberty to apply again for the s 5(1) issue they wish to raise to be determined as a preliminary issue.  My decision on the basis of the evidence presented at this stage is not intended to foreclose or necessarily pre-empt any such application.

200               In summary, in relation to the “jurisdiction” application I have concluded that:

·        I am not under a duty to hear and determine on a final basis the s 5(1) issue raised by the HLR and BASF respondents at this stage;

·        I have a discretion to determine the time at which and the manner in which that issue is to be determined;

·        for the reasons given earlier it is not appropriate to hear that issue at this stage.

Conclusions

201               For the reasons set out above I am satisfied that the matters the applicant is required to establish under O 8 r 2(2) have been made out against the foreign respondents save for BASF South East Asia.  There being no discretionary reason why the service on those respondents should be set aside it must follow that the motions of the foreign respondents, other than that of BASF South East Asia, should be dismissed.  The motion, however, of BASF South East Asia to set aside service of the Application upon it is to be granted.

Costs

202               Although the applicant has not succeeded on all of the issues argued by her I have concluded that costs should follow the event.  Accordingly, the applicant is entitled to an order that the foreign respondents, other than BASF South East Asia, pay her taxed costs of and incidental to their motions under O 9 r 7.  As between the foreign respondents the applicant’s costs should be apportioned 40% to the HLR foreign respondents, 40% to the BASF respondents (other than BASF South East Asia) and 20% to the Aventis respondents.  The lower apportionment to the Aventis respondents is on the basis that they did not join in, but rather opposed, the “jurisdiction” application of the other foreign respondents and that application occupied a significant part of the hearing.  The applicant, however, should pay the costs separately incurred by BASF South East Asia.  Finally, it is appropriate to make no costs orders concerning the ACCC’s “intervention”.

Associate:

Dated:              13 March 2002