FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Pratt (No 3) [2009] FCA 407

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

v RICHARD PRATT

VID 443 of 2008

RYAN J

29 April 2009

MELBOURNE

THE COURT ORDERS THAT:

1.         The questions ordered on 2 December 2008 to be tried and decided separately from any other question and before any trial in the proceedings be answered as follows:

Question 1:       No.

Question 2:       Unnecessary to answer.

Question 3:       Unnecessary to answer.

2.         There be a directions hearing herein at a date to be fixed.

3.         Liberty be reserved to either party to apply.

Note:       Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.  The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR RULING ON ADMISSIBILITY OF ALLEGED ADMISSIONS BY THE DEFENDANT

1                          On 2 December 2008, I made the following orders for questions to be tried and decided in these proceedings separately from any other question and before any trial in the proceedings;

A.         Pursuant to s 189 of the Evidence Act 1995 (Cth) (“the Evidence Act”) and O 29 of the Rules of this Court the following questions be decided after a hearing to commence on 8 December 2008 separately from any other question and before any trial in the proceedings herein;

(1)       Are any and which of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence admissible as evidence in these proceedings pursuant to any of ss 81, 82(b), 87 or 88 of the Evidence Act?

(2)       If yes to (1), in respect of any of the Revised Form of Proposed Order, the Penalty Statement, the relevant paragraphs of the Agreed Statement of Facts and the relevant paragraphs of the Further Amended Defence (which are hereinafter collectively called “the prima facie admissible documents”) are any and which of the prima facie admissible documents inadmissible in these proceedings by reason of;

(a)        s 85(2) of the Evidence Act;  or

(b)        s 137 of the Evidence Act?

(3)       If (2) be answered no in respect of any of the prima facie admissible documents;

(a)       will the Court refuse to admit such document as evidence in these proceedings in the exercise of the discretion conferred by;

(i)         s 90 of the Evidence Act;

(ii)        s 135 of the Evidence Act?

(b)       is such prima facie admissible document by reason of s 138 of the Evidence Act not to be admitted as evidence in these proceedings?

B.         The costs of both parties of the hearing on 10 November 2008 be reserved.’

2                          My reasons for those orders (Australian Competition and Consumer Commission v Pratt (No 2) [2008] FCA 1833) and my earlier reasons published in these proceedings (Australian Competition and Consumer Commission v Pratt (2008) 250 ALR 661; [2008] FCA 1373) should be read in conjunction with the present reasons.

3                          In the earlier reasons of 9 September 2008 ([2008] FCA 1373), I set out the four charges which the defendant, Pratt, was required to answer by the Summons issued out of this Court on 19 June 2008.  In the same reasons, it was noted that particulars were appended to each statement of the charges identifying extracts from the transcript of an examination of Pratt conducted pursuant to s 155 of the Trade Practices Act 1974 (Cth) (“the TPA”)  in which the alleged giving by Pratt of false or misleading evidence was said to have occurred.

4                          To permit an understanding of the circumstances attending the bringing into existence of the documents to which the questions set out at [1] above are directed, it is necessary to trace a complex history of events and negotiations involving a large number of entities, Government agencies and individuals against a background of various proceedings and statutory instruments.  It is therefore convenient to identify at the beginning of these reasons those entities, agencies and individuals and the relevant statutes and proceedings and the abbreviation or acronym to be used hereafter in referring to each of them.

Relevant entities, agencies, individuals and statutes

5                          In November 2004, an approach was made to the ACCC on behalf of Amcor Ltd (“Amcor”) for an immunity from prosecution for involvement in a price-fixing cartel with the Visy Group of companies in contravention of s 46 of the TPA.  By letter dated 23 December 2004 the ACCC granted conditional immunity to Amcor and its current and former officers and employees under Parts A and C of the ACCC’s leniency policy.  The letter contained the following stipulations;

‘1.        I refer to your facsimile to the Australian Competition and Consumer Commission (the Commission) dated 26 November 2004 in which you confirmed that you sought leniency on behalf of Amcor Limited and its related bodies corporate (Amcor) and Amcor's current and former officers and employees excluding Messrs Trevor Barnes, Ian Sangster, James Hodgson, Albert Mihelic and Christopher Bayley.

2.         I confirm that Amcor was the first applicant for leniency in this matter and that the Commission was unaware of the understanding you indicate "may have been reached between at least Amcor and Visy Board concerning the supply of corrugated fibre containers".

3.         Initial interviews by Commission staff with Messrs Russell Jones, Peter Brown, Peter Sutton, Darrell Roberts and Lou Lachal support the likely existence of such an understanding operating during the period 2000 to 2004 inclusive whereby existing market share volumes would be maintained and price increases would be coordinated.

4.         The Commission has decided to grant immunity to Amcor under Part A of the Commission's leniency policy subject to certain conditions. Similar conditional immunity is granted to Amcor's current and former officers and employees under Part C of the policy as set out in your letter of 26 November 2004. The Commission will, as you requested, not offer conditional immunity under Part C of the policy to those former employees specified in your letter.

5.         This letter details the terms and conditions upon which conditional immunity is granted. I have also written to Messrs Russell Jones, Peter Brown, Peter Sutton, Darrell Roberts and Lou Lachal advising them of the grant of conditional immunity in the terms set out in Attachment A.

6.         At the conclusion of the Commission's investigation, and any proceedings that may arise from the investigation, and providing that all conditions have been fulfilled, the Commission will confirm in writing, that neither Amcor nor the current and former officers or employees covered by the application, will be proceeded against by the Commission as a consequence of involvement in the alleged cartel.

Conditions of leniency

7.         Amcor must give full, frank and accurate disclosure and cooperate fully and expeditious on a continuing basis throughout the Commission's investigation and any ensuing proceedings. In particular Amcor must:

•           provide full details of all facts known to it relating to the cartel including when the cartel arrangements operated, who was involved, who had knowledge of the arrangements, how the arrangements began and how they were implemented (including details of meetings etc);

•           provide the Commission with all evidence and information in its possession, custody or power regarding the cartel;

•           use its best endeavours to comply with any timetables set down by the Commission for the provision of information and documents;

•           provide promptly, and without requirement of the Commission issuing section 155 notices or subpoenas, all documents or other items in its possession requested by the Commission, to the extent not previously provided;

•           use its best efforts to secure the ongoing, full and truthful cooperation of current and former directors, officers and employees which will include:

°    encouraging such persons voluntarily to provide the Commission with any information that may be relevant to the cartel;

°    facilitating the ability of such persons to appear for such interviews or testimony in connection with the cartel, as the Commission may require at the times and places designated by the Commission;

°    ensuring such persons respond completely, candidly and truthfully to all questions asked in interviews and court appearances and make no attempt to falsely protect or implicate any person or entity,

•           make all reasonable efforts, if requested by the Commission, to pay restitution to any person or entity injured as a result of the cartel.

8.         Amcor and its officers and employees and their respective legal representatives must not disclose without written consent from the ACCC to any other persons:

•           that the Commission has determined that Amcor qualifies for conditional leniency;

•           the evidence and information Amcor and/or its officers and employees has provided, or will be providing, to the Commission; and

•           information and/or evidence Amcor, it officers or employees obtain through its cooperation with the Commission.

9.         Amcor must acknowledge that the Commission's grant of immunity is conditional and that the ACCC may, in its absolute discretion, revoke this conditional grant of immunity if:

•           its investigation reveals that Amcor's participation in the cartel continues;

•           Amcor deliberately misleads the Commission, provides false evidence, deliberately withholds or destroys important evidence or otherwise fails to provide full, frank and accurate disclosure and to cooperate fully and expeditiously on a continuing basis;

•           the Commission considers Amcor's cooperation is not a genuine corporate act having regard to the extent and significance of the failure of one or more present directors, officers or employees of Amcor to give timely, full, frank and accurate disclosure of their involvement in the cartel or of all matters within their knowledge of the involvement of others (whether or not they are directors, officers or employees of Amcor).

10.       If the Commission revokes conditional immunity, the Commission may use against Amcor in proceedings for breach of the Act, any documentary or other information provided by Amcor, as well as any statements provided by any past or current director, officer, employee, servants or agents of Amcor, pursuant to this leniency arrangement.

11.       As indicated above, and subject to the specified exclusions requested, any current and former directors, officers or employees of Amcor who have admitted or in the future do admit their involvement in the cartel will also qualify for conditional immunity, under Part CC of the leniency policy provided their admission is timely. The directors, officers and employees must provide the Commission with full and frank disclosure of all evidence and information in her or his possession or available to her or him relating to the cartel in the form requested by the Commission and cooperate fully and expeditiously on a continuing basis throughout the Commission's investigation and ensuing proceedings. In the case of individuals full cooperation will involve, but not be limited to, the following elements:

•           providing all documents and records, including personal documents and records to the Commission which are relevant to the cartel;

•           making himself/herself available for interviews upon the request of the Commission;

•           respond fully and truthfully to all inquiries of the Commission in connection with the cartel, without falsely implicating any person or intentionally withholding any information.

12.       The Commission may require any current or former director, officer or employee of Amcor with immunity under Part C to separately undertake to comply with conditions of immunity, including full and on-going cooperation.

13.       In the event that a current or former director, officer or employee of Amcor with conditional immunity under Part C of the leniency policy fails to comply fully with his/her obligations as set out in paragraph 11, the Commission may revoke the leniency granted to such an individual. Any statements or information provided by such individual to the Commission, pursuant to this leniency arrangement, may be used against him/her in any subsequent Court proceedings.

14.       Please also note that Amcor will not have conditional immunity from proceedings or a pecuniary penalty in respect of cartels not disclosed by Amcor in its application for leniency.’

6                          As part of the co-operation which Amcor was required to give in return for the conditional immunity, Jones made statements to officers of the ACCC.  In a written witness statement prepared after those interviews and dated 23 May 2005, Jones gave an account of a meeting which he had held with Pratt at the All Nations Hotel in Richmond.  The part of the statement which recounted that meeting was in these terms;

‘14.      During the meeting with Mr Pratt, 1 said words the substance of which was:

I have been told by Peter Brown that there is an arrangement in place between Amcor and Visy in respect of our corrugated box businesses which involves the prevention of major market share shifts. I understand that this arrangement has been made by Peter Brown and Harry Debney. I would like to get your confirmation that the arrangement is something that you support, and that you will tell Harry to ensure that the arrangement is adhered to by your people. The arrangement can continue from our end if we receive an indication that you will stick to it. Peter tells me that he has agreed with Harry that Visy will take the Smith's and Inghams contracts which are up for renewal, to compensate for Amcor having taken the Lion Nathan contract. We have 2 other major accounts up for renewal this year, Nestle and Goodman Fielder, and these are accounts which we must retain. I need to know that Visy will honour the arrangement and that Visy will not try to take the Goodman Fielder and Nestle contracts away from Amcor.

15.       Mr Pratt said to me words, the substance of which was:

Yes, Visy will honour the arrangement.

He also said words, the substance of which was:

I am aware of the arrangement in place between Visy and Amcor and the contracts you mentioned We want to maintain stability in the marketplace. I will talk to Harry and confirm that the arrangement has my support and that the Nestle and Goodman Fielder contracts will stay with Amcor.

I told Mr Pratt that I would inform Mr Brown of the substance of our discussion.’

7                          Pursuant to s 155 of the TPA, a summons was issued to Pratt to attend for examination by David Smith. 

8                          Section 155 of the TPA has at all relevant times provided, so far as is relevant;

‘Power to obtain information, documents and evidence

(1)       Subject to subsection (2A), if the Commission, the Chairperson or a Deputy Chairperson has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act or Division 4A or 4B of Part 3.3 of the Radiocommunications Act 1992, or is relevant to a designated communications matter (as defined by subsection (9)) or a designated water matter (as defined by subsection (9A)) or is relevant to the making of a decision by the Commission under subsection 91B(4), 91C(4), 93(3) or (3A) or 93AC(1) or (2) or 95AS(7) or the making of an application under subsection 95AZM(6), a member of the Commission may, by notice in writing served on that person, require that person:

(a)       to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information;

(b)       to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or

(c)        to appear before the Commission, or before a member of the staff assisting the Commission who is an SES employee or an acting SES employee and who is specified in the notice, at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents.

(2A)     A member of the Commission may not give a notice under subsection (1) merely because:

(a)       a person has refused or failed to comply with a notice under subsection 95ZK(1) or (2) on the ground that complying with the notice would tend to incriminate the person, or to expose the person to a penalty; or

(b)       a person has refused or failed to answer a question that the person was required to answer by the person presiding at an inquiry under Part VIIA, on the ground that the answer would tend to incriminate the person, or to expose the person to a penalty; or

(c)        a person has refused or failed to produce a document referred to in a summons under subsection 95S(3), on the ground that production of the document would tend to incriminate the person, or to expose the person to a penalty.

(3)       If a notice under subsection (1) requires a person to appear before the Commission to give evidence, the Commission may require the evidence to be given on oath or affirmation. For that purpose, any member of the Commission may administer an oath or affirmation.

(3A)     If a notice under subsection (1) requires a person to appear before a member of the staff assisting the Commission to give evidence, the staff member may require the evidence to be given on oath or affirmation and may administer an oath or affirmation.

(5)       A person shall not:

(a)       refuse or fail to comply with a notice under this section;

(b)       in purported compliance with such a notice, knowingly furnish information or give evidence that is false or misleading.

(5A)     Paragraph (5)(a) does not apply to the extent that the person is not capable of complying with the notice.

Note:      A defendant bears an evidential burden in relation to the matters in subsection (5A), see subsection 13.3(3) of the Criminal Code.

(6A)     A person who contravenes subsection (5) is guilty of an offence punishable on conviction by a fine not exceeding 20 penalty units or imprisonment for 12 months.

Note 1:  Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:  Part IA of the Crimes Act 1914 contains provisions dealing with penalties.

(7)       A person is not excused from furnishing information or producing a document in pursuance of this section on the ground that the information or document may tend to incriminate the person, but the answer by a person to any question asked in a notice under this section or the furnishing by a person of any information in pursuance of such a notice, or any document produced in pursuance of such a notice, is not admissible in evidence against the person:

(a)       in the case of a person not being a body corporate—in any criminal proceedings other than proceedings under this section; or

(b)       in the case of a body corporate—in any criminal proceedings other than:

(i)        proceedings under this Act; or

(ii)       proceedings under section 113 of the Radiocommunications Act 1992 that relate to a condition set out in paragraph 109A(1)(ij) or 109C(1)(a), (b) or (c) of that Act.’

9                          The transcript of Pratt’s examination pursuant to s 155 records, amongst other things, the following exchange between Jopling as Counsel assisting the ACCC and Pratt;

10                        In November 2006, Williams spoke to Davidson of the DPP about the then prospective cartel proceedings and indicated to Davidson that the ACCC held the view that Pratt had lied on oath during his examination under s 155 of the TPA.

11                        Although the inconsistency of the respective accounts given by Jones and Pratt of their meeting at the All Nations Hotel was present to the minds of several senior officers of the ACCC with responsibility for investigating and prosecuting the alleged cartel conduct, a decision was taken within the ACCC to defer consideration of prosecuting Pratt for contravention of s 155 of the TPA.  That decision was explained as due to a desire to concentrate the resources of the ACCC on instituting and prosecuting the cartel proceedings which were regarded as a priority because of the danger that they might become statute-barred.

12                        Shortly before the cartel proceedings were instituted, Heathcote approached Williams and Alexander.  That approach was made with a view to exploring a possible compromise of the contemplated cartel proceedings.  In the course of his discussion with Williams and Alexander, Heathcote indicated that, provided any relief were confined to the Visy companies, the ACCC could recover massive pecuniary penalties without the risk of a trial.  As well, Heathcote acknowledged that the evidence in the ACCC’s possession raised a question to be tried in relation to Pratt.

13                        The matters raised by Heathcote were considered at a meeting of the ACCC Commissioners on 16 December 2005 when it was decided to institute the cartel proceedings against the Visy companies and three individual executives of those companies, Pratt, Debney and Carroll.  After that decision had been taken, it was communicated by Samuel, Cassidy and Alexander to Heathcote and Zwier of ABL.  Heathcote and Zwier reiterated that, if relief were only against the Visy companies, there could be a settlement for a record penalty but there could be no relief against the individuals, particularly Pratt.  Samuel acknowledged that the ACCC understood that stance but had decided to commence proceedings against both the Visy companies and the individuals.  According to Samuel, nothing that had been said at that meeting with the ABL representatives would alter that decision.

14                        The cartel proceedings were instituted in this Court on 21 December 2005.  Several interlocutory issues arose for resolution while those proceedings were pending.  One of the interlocutory steps taken in the cartel proceedings was the filing on 21 April 2006 of a Defence on behalf of Pratt which contained general denials of allegations of Visy’s participation in a cartel.

15                        After the cartel proceedings had been fixed for trial to commence on 1 October 2007, Heathcote of ABL telephoned Pryde of AGS as solicitor for the ACCC proposing a mediation of the cartel proceedings and suggesting that McHugh would be an appropriate mediator.  After an exchange of correspondence ending on 1 August 2007, it was arranged that a meeting on 6 August 2007 should occur at the offices of ABL between representatives of the ACCC and representatives of the Visy companies and Pratt.  On the same day, Williams sent an email to Alexander which included these sentences;

‘Also for your interests Messrs Pratt and Debney have an issue confronting them over giving false evidence during the examination  if they now agreed to plead how do you propose to deal with that.  I am sure Heathcote is aware of it and. will raise it.’

16                        On 2 August 2007, Williams spoke with Alexander about the forthcoming meeting with representatives of the Visy companies and Pratt and the possible proceedings against Pratt under s 155 of the TPA.  The latter possibility was raised because Alexander believed that Heathcote would be aware that Pratt was exposed to a possible criminal prosecution under s 155 and would seek an assurance that no such prosecution would occur.  It was therefore seen to be necessary to prepare a response to that matter which Williams and Alexander expected Heathcote to raise.  On 2 August 2007, Alexander discussed the likely need for such a response with Cassidy who suggested that Alexander should respond to the representatives of the Visy companies and Pratt by saying that any proposal they might make would be put to a formal meeting of the ACCC.  Alexander conveyed that suggested response to Williams with the addition that it was ultimately a decision for the DPP.  Alexander also told Williams that it was up to Beach or Heathcote to raise the issue and the ACCC representatives, themselves, should not raise it. 

17                        The meeting of 6 August 2007 occurred as arranged and occupied about two hours.  It was attended by Counsel for the ACCC together with Pryde, Alexander and Williams.  Pratt, Debney and the Visy companies were represented by Beach and Heathcote, who told the ACCC that there was a “political issue” involved in Pratt’s position because he, Pratt, had told the Prime Minister that he had not contravened the TPA.  Accordingly, Beach said that the respondents would only consent to a “weak” declaration in respect of Pratt’s involvement and a requirement that he undergo a compliance program.  It was indicated on behalf of the ACCC that it would be prepared to agree to any pecuniary penalty for Pratt to be “wrapped up” with that to be imposed on the Visy companies, but that it would insist on a declaration of Pratt’s knowing involvement in the cartel conduct.  At the same meeting, the suggestion was revived that McHugh might mediate or broker a settlement of the cartel proceeding.  The representatives of the Visy companies, Pratt and Debney, were asked to provide the ACCC with a written version of their proposals to settle the cartel proceedings.  There was no mention at that meeting of the possibility that charges might be laid against Pratt or Debney under s 155 of the TPA. 

18                        On 15 August 2007, ABL sent a letter to the AGS containing the terms of an offer on behalf of the Visy companies, Pratt and Debney to settle the cartel proceedings.  That letter contained the following paragraphs;

‘The settlement contemplated by the Visy respondents will involve:

1.         Visy Board Pty Limited (“Visy Board”) admitting 17 contraventions of the Trade Practices Act 1974 (Cth) (“TPA”) including:

(a)       making and giving effect to an Overarching Understanding;

(b)       making the 2000 price increase understanding;

(c)        making and giving effect to the 2001 price increase understanding;

(d)       making and giving effect to the 2002 price increase understanding;

(e)        making and giving effect to the 2003 price increase understanding; and

(f)        the making of some of the 13 specific customer arrangements (set out in Schedule 1 to this letter).

2.         Mr Debney admitting 5 contraventions of the TPA including:

(a)       making and giving effect to an Overarching Understanding;

(b)       making the 2000 price increase understanding;

(c)        making the Inghams understanding; and

(d)       making the 2003 price increase understanding.

3.         Mr Carroll: see below.

4.         Mr Pratt acknowledging that he failed to take steps to implement adequate controls and supervision to prevent the relevant (offending) conduct by Mr Debney and Mr Carroll and agreeing to the orders set out later.

5.         Visy Board paying a pecuniary penalty at the upper end of a range to $35 million.

6.         Mr Debney paying a pecuniary penalty at the upper end of a range of $750,000 - $1.25 million.

7.         Mr Carroll paying a pecuniary penalty to be agreed.

8.         Visy Board paying the Commission's reasonable costs of this proceeding on a party party basis.

General Observations

The purpose of this letter is to outline, in general terms, the admissions that my clients will be prepared to make to bring about the settlement of this proceeding. Obviously, any settlement that the parties may conclude is necessarily subject to the sanction of the Federal Court. However, If discussions progress to the point where agreement can be reached on all matters of substance and detail, we envisage the matter proceeding as a pecuniary penalty hearing only at which His Honour Justice Heerey will have the benefit of an Agreed Statement of Facts and written and oral submissions on behalf of all parries (the submissions may comprise both a joint submission and, where necessary, a separate submission on discrete issues). Furthermore, it may be that the Visy respondents will want to file additional evidence to support the proposed agreed position that will be put to the Court. I envisage that the Visy respondents will also be permitted at the pecuniary penalty hearing to adduce such evidence as they may be advised in relation to aspects of paragraph 22 of their Defence viz:

(a)       Visy Board not being the initiator or the ring-leader;

(b)       The objective market share positions from January 2000 to December 2004; and

(c)        The heterogeneous aspects of the product and the pricing.

In this letter I have attempted to set out a broad outline of the admissions that will be made although you will appreciate that detailed discussions will need to take place (between the parties' legal and other representatives) as to the precise form and conduct to be admitted by the Visy respondents.

Any settlement of this proceeding will necessarily require resolution of the 3 broad areas in contention, namely:

(a)       the alleged Over-arching Understanding;

(b)       the alleged price increase understandings;  and

(c)        the pleaded customer transactions.

As for the latter, Schedule 1 to this letter is a table entitled "Table of Proposed Admissions" ("Table"). It identifies the alleged understandings and the position that the Visy parties propose to offer, based on instructions and on the submitted evidence. At the time of writing this letter we are still preparing the response of the Visy respondents to the 13 pleaded customer transactions.

Parameters of Possible Settlement

We envisage that any settlement will involve pleas by Visy Board, Mr Debney, Mr Carroll and to a limited degree, Mr Pratt. As for Mr Carroll, we anticipate that if a compromise can be reached with the Visy respondents, Mr Carroll is likely to give instructions to compromise his position in a manner which would be acceptable to the Commission and consistent with the position of the Visy respondents in terms of agreed contraventions the subject of any settlement. The position of Visy Industries Holdings Pty Limited and Visy Industries Australia Pty Limited is separately addressed in Schedule 2 to this letter.

The Position of Visy Board:

In relation to the Over-arching Understanding, we ask you to assume the following (for the purpose of further settlement discussions):

Visy Board offers to plead to a contravention of the TPA concerning the making n the Over-arching Understanding (paragraph 19 of the SFASC. The content of the terms of the Over-arching Understanding will need to be discussed, but in essence it will involve an arrangement as between Visy Board and Amcor for:

(a)       sensible pricing;

(b)       as a corollary of (a), relative stability in the market;

(c)        as a corollary of (a) and/or (b), a maintenance of relative market share of each of Visy Board and Amcor incorporating a form of elements 19(a)-(d) of the SFASC;.

(d)       as a corollary of (a), some form of 19(g) of the SFASC; and

(e)        some form of elements 19(h) and (i) of the SFASC.

This will need to be discussed further.  But we accept that this will be the principal contravention justifying the highest penalty if a compromise is reached.

Mr Debney's version of events and state of mind may also need to be addressed in terms of any material put to the Court to justify any agreed penalty.

In relation to the giving effect to the Over-arching Understanding, we ask you to assume the following:

Visy Board offers to plead to contraventions of the TPA involving the giving effect to the Over-arching Understanding by reason of:

(a)       the making of the price increase arrangement for 2000;

(b)       the making of the price increase arrangement for 2001;

(c)        the making of the price increase arrangement for 2002;

(d)       the making of the price increase arrangement for 20D3;

(e)        the making of some of the 13 specific customer arrangements set out in the Table later in Schedule 1; and

(f)        the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the SFASC (the Pratt allegations are dealt with later in this letter); however, as to this conduct, we will need to discuss with you the precise terms thereof and how this is presented.

You will, of course, appreciate that some of this conduct is the subject of allegations of 2 or more contraventions and that recognition of this aspect will need to be made in terms of any joint presentation to the Court to substantiate the agreed penalty.

In relation to the price increase arrangements, we ask you to assume the following:

Visy Board offers to plead to the making of each of the 4 price increase arrangements and some limited giving effect thereto on the following generic factual foundation in each case, namely that:

(a)       prior to the making of each arrangement, both Visy Board and Amcor had each unilaterally decided to increase their prices for the particular year in any event;

(b)       the prior unilateral decisions referred to in (a) had an independent commercial rationale (e.g. an increase in costs) for each of Visy Board and Amcor;

(c)        each price increase notified by Visy Board and/or Amcor to their respective customer bases:

(i)        was a "headline" notification;

(ii)       was implemented differently in each State by each company; and

(iii)      within each State was implemented on a discretionary basis for each individual customer within the purview of the particular State Manager depending upon the particular idiosyncratic customer position; and

(d)       Visy Board would have increased its prices in any event irrespective of the alleged arrangements.

The Position of Mr Pratt

In relation to Mr Pratt's position we ask you to assume the following:

Mr Pratt offers the following:

(a)       He will subject himself personally to orders that he implement across the Visy Group an appropriate TPA compliance program (audited);

(b)       He will acknowledge in a Statement of Agreed Facts that in his position as Executive Chairman of the Visy Group of companies, which includes Visy Board, he failed to implement adequate controls and supervision in respect of Messrs Debney and Carroll to prevent the offending conduct occurring;  and

(c)        He will acknowledge in a Statement of Agreed Facts that any penalty imposed upon Visy Board will be borne by the Pratt family.

Subject to (a)-(c), a pecuniary penalty will not be separately imposed upon him.

The Position of Mr Debney

In relation to Mr Debney's position, we ask you to assume the following:

Mr Debney offers to plead to 5 separate contraventions of the TPA being knowingly involved in the contraventions by Visy Board which are set out in the Table in Schedule 1.

The Position in relation to the 13 pleaded customers,

We have also analysed the available evidence In relation to the pleaded customers which we have attempted to summarize in Schedule 1. Obviously detailed discussions will need to take place as to the precise behaviour to be admitted by the respondents identified in the Table on a case by case basis.

Pecuniary Penalties

Our clients and their legal representatives have given very careful consideration to the matters raised at the conference held at your offices on Monday 6 August last. We understand that the highest pecuniary penalty ever imposed against a corporate respondent for contraventions of Part IV of the TPA is $15 million (see ACCC v Roche Vitamins Australia Pty Ltd [2001] FCA 150). As we have said to you, in our opinion the likely range for a pecuniary penalty against Visy Board is $25-$35 million. If we can agree on all other matters, Visy Board would be prepared to agree to pay a pecuniary penalty at the upper end of a range to $35 million.

We also understand that the highest pecuniary penalty ever imposed against an individual respondent for contraventions of Part IV of the TPA is $200,000.00. In our opinion the likely range for a pecuniary penalty against Mr Debney is $750,000 to $1.25 million. If we can agree on all other matters, Mr Debney would be prepared to agree to pay a pecuniary penalty at the upper end of that range.

Mr Carroll's position has been separately addressed.

You will observe that we have made no provision for a separate pecuniary penalty against Mr Pratt, the reasons for which are earlier stated. Similarly, we have made no provision for separate penalties against the Visy intermediate or ultimate holding companies for reasons previously stated.

Costs

If we can agree on all other matters, Visy Board would be prepared to submit to an order that it pay the Commission's costs of the proceeding as between party and party, to be taxed in the absence of agreement or, at the discretion of the ACCC, to be fixed by an independent costs expert,

Conclusion

We look forward to meeting with you at a time to be arranged this coming Friday, 17 August, to take our discussions to the next level. If in the meantime there is any aspect of this letter that you would like us to clarify please let me know.’

19                        At a further meeting at the offices of the AGS on 17 August 2007, Alexander provided, by way of a counter-offer to that made in ABL’s letter of 15 August 2007, a draft of the orders to which the ACCC would require the Visy companies and the individual defendants to consent as a condition of the settlement of the cartel proceedings.  That draft proposed the making of, amongst others, the following orders;

‘Declarations

THE COURT DECLARES THAT:

1.         Each of:

(a)        the First Respondent ("Visy IH");

(b)        the Second Respondent ("Visy IA");

(c)        the Third Respondent ("Visy Board"),

(individually and collectively referred to hereafter as "Visy", unless otherwise indicated) by making a contract or arrangement or arriving at an understanding with Amcor Limited ("Amcor") in approximately January to April 2000 containing provisions that:

(i)         Visy and Amcor would permit each other to maintain approximately their then current share of the market in Australia for the supply of corrugated fibreboard packaging ("CFP");

(ii)        Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other's principal CFP customers;

(iii)       if, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the market in Australia for the supply of .CFP ("CFP Market") that Amcor had lost as a result of losing the supply contract to Visy;

(iv)       if, for one reason or another, Amcor did enter into a contract for the supply of CFP with a principal CFP customer of Visy, then Amcor would not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor;

(v)        Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;

(vi)       Visy would appoint the Sixth Respondent ("Carroll") as its nominated contact person with Amcor for the purpose of effecting the implementation of the contract, arrangement of understanding; and

(vii)      Amcor would appoint Edward Laidlaw as its nominated contact person with Visy for the purpose of effecting the implementation of the contract, arrangement or understanding;  and

made a contract or arrangement or arrived at an understanding (the "Over-arching Understanding") which:

(A)       contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(1) of the TPA; and

(B)       contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

2.         By engaging in each instance of:  [the conduct alleged in various paragraphs of the Second Further Amended Statement of Claim]

… … …

Visy gave effect to a provision of the Over-arching Understanding that:

(i)        was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

(ii)       was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

… … … … …

35.       The Fourth Respondent ("Pratt") was, directly or indirectly, knowingly concerned in, or party to, the contraventions of the TPA by Visy referred to in sub-paragraph (a) of paragraph 2 above, within the meaning of sections 76(i)(e) and 80(i)(e) of the TPA, by meeting and discussing with the CEO of Amcor the implementation by Visy and by Amcor of the Over-arching Understanding referred to in paragraph 1 above.

… … … …

Pecuniary Penalties

38.       An order that Visy IH pay a pecuniary penalty in the sum of $6million.

39.       An order that Visy IA pay a pecuniary penalty in the sum of $18million.

40.       An order that Visy Board pay a pecuniary penalty in the sum of $12million.

41.       An order that Debney pay a pecuniary penalty in the sum of $1,500,000.

42.       An order that Carroll pay a pecuniary penalty in the sum of $500,000.

Injunctive orders

43.       Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants, agents, or otherwise howsoever, from:

(a)       making, or arriving at;

(b)        giving effect to;

(c)        inducing, or attempting to induce, any person to make or arrive at, or give effect to; or

(d)       being in any way knowing concerned in, or party to, the making or arriving at, or giving effect to,

any contract, arrangement or understanding with Amcor, or any other supplier of CFP in Australia, which contains a provision that:

(i)        has the purpose of preventing, restricting or limiting the supply of CFP by a party to the said contract, arrangement or understanding to customers or potential customers of any of them;

(ii)       has the purpose, or has or is likely to have the effect of fixing, controlling or maintaining, of prices for CFP supplied by a party to its customers in Australia; or

(iii)      has the purpose, or has or is likely to have the effect, whether by itself or together with another provision or provisions of any contract, arrangement or understanding to which Visy IH, Visy IA or Visy Board is a party, of substantially lessening, preventing or hindering competition in the CFP Market.

44.       Each of Visy IH, Visy IA and Visy Board be permanently restrained, whether by their directors, servants or agents or otherwise howsoever, from:

(a)       communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia;

(b)       requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or

(c)        requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP.

45.       Each of Pratt, Debney and Carroll be permanently restrained, by themselves, their servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of Visy IH, Visy IA or Visy Board in:

(a)       communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia;

(b)       requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy; or

(c)        requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP.

Other orders

46.       Pratt and each of Visy IH, Visy IA and Visy Board shall implement and undertake, at Mr Pratt's expense, a trade practices compliance program that is in accordance with the Australian Standard for Compliance Programs AS-3806-1998 and provides for implementation of the program to be audited by an independent auditor, and is in a form agreed with the ACCC or approved by the Court, with regard to section 45 of the TPA.

47.       Visy IH, Visy IA and Visy Board shall pay the costs of the ACCC of and incidental to these proceedings.

20                        At the same meeting on 17 August 2007, Heathcote again adverted to the possibility of engaging McHugh as a mediator and suggested that a person of his eminence could be instrumental in “getting Pratt across the line”, which would assist in justifying to the public the proposed settlement. 

21                        On 21 August 2007, Heathcote of ABL sent a further letter to AGS which included these statements;

‘…… The declaration of a contravention by Mr Pratt (paragraph 35) is not something that we have instructions to agree to. We regard this issue as a substantial impediment to any overall settlement.

As you are aware, we had thought that a mediation (Court ordered or otherwise) before Michael McHugh QC might provide a forum in which settlement discussions could be progressed or at the very least the issues between the parties narrowed. It seems to us that this substantial impediment would be an appropriate matter to refer to Mr McHugh QC. He is available to meet with the parties and their legal representatives on Tuesday 28 August 2007.

If a mediation is to take place before Mr McHugh QC we believe it is important that the persons directly involved, including the decision makers, are present for some part of the mediation_ For our part we would undertake to have Mr Pratt and Mr Debney both present and we would expect that Mr Samuel would also attend.

We do not envisage that the process needs to be formalised beyond providing Mr McHugh QC with copies of the relevant material and a brief letter of instructions. The relevant material, in our view can be confined to the following.

1          The pleadings.

2          Our letter to you of 15 August 2007.

3          The draft orders tabled at our meeting on 17 August 2007.

4          Mr Pratt's Section 155 transcript.

5          The transcript of the 14 December 2004 interview of Mr Jones.

6          Mr Jones' Outline as filed by the ACCC.’

22                        The letter from ABL of 21 August 2007 was discussed by Samuel, Cassidy, Alexander and Williams.  Those officers of the ACCC decided to reject the suggested mediation and resolved that, for any settlement of the cartel proceedings to occur, Pratt would have to admit to having been knowingly involved in at least one contravention of the TPA.  They considered that nothing had changed since the cartel proceedings had been instituted to warrant releasing Pratt from liability for any contravention at all of the TPA. 

23                        On about 23 August 2007 and again a few days later, Ian Smith telephoned Samuel and told him that there was a division of opinion among the Visy advisers concerning Pratt and urged the ACCC to attend the proposed mediation under the chairmanship of McHugh.  Despite those overtures, AGS sent to ABL on 24 August 2007 a letter which recited;

‘ACCC v Visy Industries Holdings Pty Ltd & Ors

Federal Court Proceedings: VID 1650 of 2005                                                             

1.         We refer to your letter dated 21 August 2007 proposing a mediation before Mr Michael McHugh QC on Tuesday 28 August 2007..

2.         We are instructed that the ACCC is of the view that the proposed mediation is not an appropriate means to progress discussions between the parties as to possible resolution of the above proceedings.

3.         Nevertheless, the ACCC invites your clients' response to the draft orders tabled at our meeting on Friday 17 August 2007 and stands ready to discuss that response at a further meeting with you and other representatives of your clients should they so wish.

4.         We look forward to your response.’

24                        On 30 August 2007, a videoconference meeting of the ACCC Commissioners was addressed by Counsel retained by the ACCC in the cartel proceedings and it was resolved that the ACCC would participate in a meeting to be chaired by McHugh but that it would be a non-negotiable condition of any settlement of the cartel proceedings that Pratt should consent to a declaration that he had been knowingly concerned in a contravention of the TPA.  Accordingly, the minutes of that meeting recorded the following resolution;

‘The Commission decided:

-           to attend a meeting facilitated by Mr McHugh with Visy’s legal representatives and Mr Pratt next week.  The meeting is to deal specifically with Mr Pratt’s declaration of being knowingly concerned in a contravention of the Act by Visy.  The ACCC will be represented by Mr Brian Cassidy, Chief Executive Officer, Mr Bob Alexander, General Counsel, Mr Geoff Williams, Principal Investigator, and Counsel acting for the ACCC – Mr Peter Jopling and Mr Chris Caleo and lawyer Ms Susan Pryde, AGS.  Members of the Commission will not attend but will be available as the Commission to decide any settlement issue.

-           The Commission decided that its position in relation to Mr Pratt is unchanged and non negotiable in that Mr Pratt must accede to a declaration that he was knowingly concerned in contravening the Act by Visy.

-           Staff provide the terms of the engagement of Mr McHugh for the meeting for settling by the Commission.

The Commission directed staff to prepare a paper for next week’s Commission Meeting.  The paper is to examine the scope of penalties for the Visy Corporate and individual respondents.  The staff paper needs to address any precedent for allowing a penalty awarded against an individual to be rolled into the corporate penalty.’

25                        Consistently with that resolution, Pryde of the AGS sent to ABL a letter dated 31 August 2007 which recited, amongst other things;

‘1.        We refer to our letter of 24 August 2007 and in the telephone conversation between the writer, and Mr Heathcote and Mr Zwier yesterday evening We confirm we have taken further instructions as to the matters raised in your letter of 21 August 2007.

2.         We now have instructions to agree to a meeting next Thursday, 6 September 2007, to be chaired by Mr McHugh QC, between the parties and their legal representatives.

3.         The persons who will attend the meeting on behalf of the Applicant will be Mr Alexander, Mr Williams, Mr Cassidy (CEO of the ACCC Mr Jopling QC and Mr Caleo of Counsel, and the writer.

4.         The attendees on behalf of the Applicant are not the decision makers of the Commission and they do not have authority to reach Final agreement on matters discussed at the meeting.  The ultimate decision-maker, the Commission, comprises six Commissioners, and each of the six Commissioners will be available by telephone on 6 September 2007 if required.

5.         So that we can progress this meeting, could you please provide us with a draft letter of instruction to Mr McHugh QC so that we can circulate this to all Commissioners as soon as possible.  We consider that the letter of instruction to Mr McHugh QC should be a joint letter of instruction from ABL and AGS.

6.         As we understand it, the only issue for discussion at the meeting is the terms of a declaration of contravention by Mr Pratt.  Accordingly, we agree that Mr McHugh QC should be provided with a letter of instruction and the relevant material which is specific in your letter of 21 August 2007, namely:

1.         the pleadings;

2.         the ABL letter to AGS of 15 August 2007;

3          the draft orders tabled at the meeting on 17 August 2007;

4          the transcript of Mr Pratt's section 155 examination of 26 July 2005;

5.         the transcript of Mr Jones' interview of 14 December 2004; and

6          the Proof of Evidence of Mr Jones filed by the Applicant on 2 July 2007.

7.         We concur with your comments that time is short and we would appreciate your response - including the draft letter of instruction to Mr McHugh QC - at your earliest convenience.’

26                        A joint letter of instructions to McHugh was prepared and sent on 31 August 2007.  It said, in part;

‘We are pleased to confirm your availability to Chair a meeting to be conducted between the parties to the Proceeding (with the exception of Mr Carroll) and their legal representatives in Melbourne on Thursday 6 September 2007. The meeting will be conducted at the offices of Arnold Bloch Leibler, Level 21, 333 Collins Street, Melbourne commencing at 8:00 am. A maximum of 4 hours has been set aside for the meeting.

It is agreed that the meeting will be conducted on a without prejudice basis. The Australian Government Solicitor (Ms Susan Pryde) is the solicitor on the record for the Commission and Arnold Bloch Leibler (Robert Heathcote and Leon Zwier) are the solicitors on the record for all Respondents save for Mr Carroll.

The only issue for discussion at the meeting is the relief sought by the Commission against Mr Pratt as a Respondent to the Proceeding.

The following persons will attend the meeting on behalf of the Commission:

Mr Jopling QC, Mr Cateo SC, Ms Pryde, Mr Cassidy (CEO of the Commission), Mr Alexander (General Counsel of the Commission) and Mr Williams (the Commission's Director in New South Wales).

The attendees on behalf of the Applicant are not the decision makers of the Commission and they do not have authority to reach final agreement on matters discussed at the meeting. The ultimate decision-maker, the Commission, comprises six Commissioners, and each of the six Commissioners will be available by telephone on 6 September 2007 if required.

The following persons will attend the meeting on behalf of the Respondents:

Mr Pratt, Mr Beach QC, Mr Heathcote, Mr Zwier, Mr Kaye (Visy General Counsel) and Mr Webster (Visy consultant).

It is proposed that the meeting be conducted informally:  It is not a mediation.

We are enclosing copies of the following material for your information:

1          Pleadings

(a)        Second Further Amended Statement of Claim dated 30 November 2006;

(b)       Amended Defence of the First, Second and Third Respondents dated 22 December 2006;

(c)        Amended Defence of the Fourth Respondent (Richard Pratt) dated 22 December 2006; and

(d)       Amended Defence of the Fifth Respondent (Harry Debney) dated 22 December 2006.

2          Letter dated 15 August 2007 from Arnold Bloch Leibler to the Australian Government Solicitor (not including the enclosures to Schedule 2)..

3          Draft Orders prepared on behalf of the Commission (23 pages).

4          Transcript of Mr Pratt's s 155 examination of 26 July 2005.

5          Transcript of the Commission's interview of Russell Jones dated 14 December 2004.

6          Proof of Evidence of Russell Haydn Jones filed 2 July 2007 on behalf of the Commission.

We will contact your office this afternoon to arrange to courier to you over the weekend (as requested) hard copies of these documents if that would be of assistance.

We will also make travel and accommodation arrangements for you through your personal assistant

The Australian Government Solicitor and Arnold Bloch Leibler both undertake to pay your professional fees and disbursements (including travel and accommodation costs) each as to 50% upon receipt of an invoice.

As discussed, would you please forward your “pro forma” Confidentiality Agreement and Mediation Agreement, which we will modify for the purposes of the meeting

Any queries you may have in relation to the matter should be directed jointly to Ms Susan Pryde and Mr Robert Heathcote whose contact details appear below.’

27                        On 5 September 2007, McHugh provided the ACCC and ABL with a copy of his standard form mediation agreement.  Cassidy resolved not to sign it because he considered that the proposed meeting was not to be a mediation.  He intimated his view to Samuel who endorsed it.  Cassidy then told Alexander that he would only sign a letter of appointment for McHugh and an agreement to be responsible for the ACCC’s share of his fees. 

28                        Early on the morning of 6 September 2007, Cassidy and Alexander discussed the forthcoming meeting to be chaired by McHugh and agreed that, if the Visy representatives should raise the possibility of criminal proceedings against Pratt under s 155 of the TPA, the ACCC’s response should be that this issue was not “on the table” so far as the ACCC was concerned as the Commissioners had not considered it and were in no position to reach any settlement on it.

29                        The meeting chaired by McHugh took place at the offices of ABL on 6 September 2007.  After the ACCC representatives conveyed their refusal to sign the standard form mediation agreement, a short form agreement was executed on the same day.  It stipulated, in part, that;

‘THIS AGREEMENT is made the 6th day of September, 2007

BETWEEN:

AND:               Australian Competition and Consumer Commission ("ACCC") of 23 Marcus Clarke Street, Canberra, ACT 2601

AND:               Richard Pratt, Level 2, 533 Little Lonsdale Street, Melbourne, Victoria, 3000

(collectively "the Parties")

AND:               THE HON. MICHAEL HUDSON McHUGH AC, QC of 235 Macquarie Street, Sydney ("the Chairman")

RECITALS

A.        Disputes have arisen between the parties concerning the relief sought by ACCC against Mr. Pratt in proceeding no. VID 1650 of 2005 ("the Disputes"):

B.        The Chairman has agreed, on the terms and conditions of this agreement to assist the Parties to resolve, if possible, the Disputes.

AGREEMENT

Appointment of the Chairman

1.         The Parties appoint the Chairman, and the Chairman accepts the appointment, to chair a "without prejudice" meeting of the Parties to discuss the Disputes ("the Meeting")

2.         The Parties jointly and severally agree to pay the Chairman's fees and expenses. Such payments and other expenses of the Meeting such as room hire shall, as between themselves, be shared equally between the Parties. … … … …’

30                        During the meeting, the ACCC representatives, Cassidy, Alexander, Williams, Pryde, Jopling and Caleo occupied one room (“the ACCC room”) and the representatives of the Visy companies and Pratt including Heathcote and Beach were in another room (“the Pratt room”).  McHugh moved between the two rooms and there was no direct communication of a relevant kind between any representative of the ACCC and any representative of the Visy companies and Pratt.  A statement by McHugh which was received into evidence by consent in the present proceedings contained, amongst others, the following paragraphs;

‘10.      At the initial meeting in the Pratt room, Mr Pratt’s lawyers were saying that Mr Pratt would accede to orders directing him to ensure greater supervision of Visy’s activities vis-à-vis trade practices matters and to implement a trade practices compliance program, but that Mr Pratt was not prepared to admit to the conversation as alleged in the statement of claim as Mr Pratt denied those allegations.

11.       I then proceeded to the ACCC room.  During my first period in the ACCC room, I outlined for the ACCC that Mr Pratt denied what the ACCC alleged to have been said at his meeting with Mr Jones on 21 May 2001.  I said that in a contested trial it would be one man’s word against another and the ACCC would bear the onus of proving the Jones version of the conversation to the Briginshaw standard of proof.

12.       Mr Alexander told me that the ACCC’s position was that in order for the Civil Penalty Proceeding to settle, Mr Pratt had to admit to knowing the essential elements of the overarching understanding between Visy and Amcor.  He said that I would know that better than anyone that this was necessary before he could be knowingly concerned in a contravention of the Act.  That stuck in my mind, because Mr Alexander was assuming I was a party to the judgment in Yorke v Lucas, which was decided before I was appointed to the High Court.  Neither the ACCC executives nor any of their legal advisers said to me at that time (or any time) that they had in mind an intention, or considered it a possibility that the ACCC might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice.

13.       I then returned to the Visy room where Mr Pratt was present.  During that period:

(a)       I told Mr Pratt that the ACCC was not willing to compromise the Civil Penalty Proceeding without him making an admission directed to the conduct alleged against him;

(b)       Mr Pratt said that he had not had a discussion with Mr Jones on 21 May 2001 as alleged by the ACCC in its statement of claim, or as eventually set out in the signed Proposed Order.  (He did not resile from that position at any time in the “without prejudice” Meeting in my presence);

(c)        I told Mr Pratt that he had to factor into his thinking about whether or not to settle the civil Penalty Proceeding, or to go to trial, that there was a likelihood of an adverse finding being made against him personally;

(d)       I said, on the one hand, there was a high onus of proof in relation to Jones’ evidence and that there was an inconsistency in Jones’ first account (as set out in the Jones Examination) and as later set out in the Jones Proof, about what had occurred at the meeting on 21 May 2001.  I said that as a result, Jones may not be believed.

(e)        I told Mr Pratt that, on the other hand, he had to face up to Mr Jones’ evidence, and to the fact that a judge would ask why Mr Jones would make that evidence up and implicate himself in the cartel.  I told Mr Pratt that he had to take into account that a Court may accept Mr Jones’ account of the conversation.  Mr Beach QC said that he may be able to move Mr Jones in cross-examination to come back to the version provided in the Jones Examination.  I also told Mr Pratt that a judge might think, given his hands on role in the business and as a person who was on the factory floor at 6 a.m. in the morning, it was likely that he would have been aware of all the important matters for the business, and therefore that he must have known about the cartel even though Mr Pratt denied it to be so.  I said that was among the things he had to weigh up if he wanted to resolve the Civil Penalty Proceeding.  I told Mr Pratt that if he wanted to avoid six months of costly litigation and continued adverse publicity, he had to be prepared to make the concession sought by the ACCC because otherwise the Civil Penalty Proceeding could not be resolved.

(f)        Mr Pratt was told by others at the meeting that the damage to his reputation by acknowledging his participation in the cartel could be managed by those advising him in relation to media matters;

(g)       Mr Pratt was also told, and this was a matter of some concern to him, that any evidence led in the Civil Penalty Proceeding may be available to applicants in a class action against Visy for damages arising from the cartel.

14.       Mr Pratt did not remain for the entire meeting, because he had to leave to attend a lunch in Sydney with the Prime Minister.  I recall Mr Kaye speaking to him by telephone later in the meeting.  I cannot recall what Mr Kaye told Mr Pratt.

15.       Mr Pratt said very little during the time I was present in the Visy room.  He mainly listed to what was said, and he said little or nothing in response to the above observations.  He was also concerned by the effect of a finding that he had contravened the Trade Practices Act on his reputation.

16.       During my time in the Pratt room, Mr Pratt was not engaged with the process.  He did not act as I had expected that he would, given his status as a leading businessman, and he appeared distracted.

17.       There was a lot of discussion at the meeting about some particular words in the draft declaration, and various drafts were produced.  I went back and forth two or three times between the rooms while the specific words were debated.  The Visy advisers, particular Robbie Kaye and one of the public relations people, were the driving forces, discussing how to manage the proposed concession and focusing on what they could make of the word “indirectly” in the proposed declaration.  There was lots of discussion about “indirectly” and “communicating”, and what exactly those words meant.  At one point a dictionary was referred to.  This was because it was sought to find a formulation by the Pratt side which did not involve admitting to the correctness of the Jones account.

18.       At the conclusion of the meeting, a form of words was agreed.  The proposed Order was signed in the ACCC room.  I was asked to witness that document, and I signed and dated it.  That was the end of my involvement in the matter.

19.       The ACCC did not in my presence inform Mr Pratt or his legal advisers, or say to me, that it had in mind an intention, or considered it a possibility, that it might prosecute Mr Pratt under s 155 of the Trade Practices Act or refer that issue to the Commonwealth DPP for advice.  Had the ACCC informed me of such risks or possibilities, I would have regarded that as a relevant matter to put to Mr Pratt in considering whether to compromise the civil Penalty Proceeding.’

31                        The Proposed Order identified in paragraph 18 of McHugh’s statement was in the following terms;

‘REVISED FORM OF PROPOSED ORDER – PRATT

2          By engaging in each instance of:

(a)       the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the Second Further Amended Statement of Claim;

(ab)     the conduct constituted by the Fourth Respondent (“Pratt”) meeting with the CEO of Amcor, Mr Russell Jones (“Jones”) at his request on 21 May 2001 and communicating to Jones that Visy would adhere to an understanding that the Fifth Respondent (“Debney”) had reached with Mr Peter Brown of Amcor (“Brown”) being the Over-arching Understanding referred to in paragraph 1 above.

(b)        …

35.       Pratt was directly or indirectly, knowingly concerned in the contravention of the TPA by Visy referred to in sub-paragraph (ab) of paragraph 2 above, within the meaning of sections 76(1)(e) and 80(1)(e) of the TPA.’

32                        The Proposed Order was signed by Kay and Cassidy and witnessed by McHugh. 

33                        A further meeting between representatives of the ACCC and representatives of the Visy companies and Pratt occurred on 10 September 2007.  There was then discussion of the use of an Agreed Statement of Facts which the ACCC pointed out might not be available for use by customers of the Visy Corporation in any subsequent claim for damages against the Visy companies whereas findings after a contested hearing would be available to claimants.  At the same meeting, concerns were expressed on behalf of the ACCC that, although the Visy companies had agreed to pay substantial penalties, penalties of that magnitude could not be substantiated on the facts which the Visy companies were then prepared to admit.  The following email then passed from Alexander to Heathcote on 11 September 2007;

‘Geoff Williams and I reported the events of yesterday’s meeting to Mr Samuel and Mr Cassidy this afternoon.

I have been asked to contact you and convey that the ACCCV is most surprised at the position put by Visy at the meeting yesterday.  The ACCC had believed that the issue of a declaration in respect of Mr Pratt was the principal impediment to a resolution of the proceedings and that, if that impediment could be overcome, Visy would agree to a resolution of the proceedings substantially on the basis of the draft orders provided by me at our meeting on 17 August 2007.

The issue of the declaration in respect of Mr Pratt was determined last Thursday, but it now appears that Visy wishes to make substantial changes to the position as set out in the 17 August draft orders.  The ACCC regards the Visy position put at the meeting yesterday as bordering on a display of bad faith.

The matter has now been listed for consideration at a formal Commission meeting at 9.00am tomorrow (Wednesday) morning.  I have been asked to inform you that unless Visy is prepared to agree to a resolution of the proceedings substantially on the terms of the 17 August 2007 draft orders, the ACCC is expected to decide tomorrow that the matter will proceed to a contested hearing in the Court.

Would you please let me know Visy’s position on the draft orders as a matter of urgency.’

34                        That email elicited this response, also on 11 September 2007;

‘I refer to your email dated 11 September.2007, which was forwarded to me by Ms Pryde at 4.32 pm today.

It would appear that the substance of what Mr Beach QC said at yesterday afternoon's meeting has been misunderstood. It might be useful. if I were to briefly set out the events which led to that meeting.

As you are aware, we initially met on 6 August 2007. We subsequently outlined our clients' position in writing in our letter to Ms Pryde dated 15 August 2007. You responded to that letter at our second meeting on 17 August 2007 ("Second Meeting") At the Second Meeting, you rejected the letter of 15 August 2007 as a possible basis for settlement discussions and tabled the draft orders dated 17 August 2007("Draft Orders") for discussion. At that time we said that obviously we would need to study the document carefully and obtain instructions on what was proposed. However, specific mention was made of two issues. First, Mr Pratt's position. Secondly, the orders sought in relation to the alleged "gluing effect to the 13 pleaded customer transactions. It was agreed that the first matter was a substantial impediment to settlement and needed to be addressed before turning to the detail and complexity of the second issue.

We then met with the Hon. M McHugh AC QC on 6 September 2007. The only issue discussed at that meeting, as a result of your stipulation, was the issue of a declaration in relation to Mr Pratt. That issue has now been resolved.

A misunderstanding now appears to have arisen in relation to my clients' position. You will recall that at the Second Meeting, Mr Beach QC expressly raised our concerns about what I will refer to as the "giving effect to orders" contained in the Draft Orders, and said that we would like to address these in detail with you, but that you would first need the opportunity to read my clients' Outlines of Evidence. Those Outlines have been progressively filed and served, culminating in the service of Mr Peter Lloyd’s Outline of Evidence last night, with the appendices being delivered this afternoon.

So far as I am concerned, an agreement in principle has now been reached on all substantive matters in issue in the Proceeding, including:

(a)       the making of the Over-Arching Understanding;

(b)       the giving effect to the Over-Arching Understanding, including Mr Pratt's conduct described at paragraph 2(ab) of the draft orders dated September 2007;

(c)        the making of each of the 4 annual Price increase Understandings;

(d)       the giving effect to of each of the annual Price Increase. Understandings, save for the 2000 Price Increase Understanding;

(e)        the making of most of the "customer understandings";

(f)        the giving effect to - albeit in a limited form - of a number of the customer understandings;

(g)       an order that Visy Board pay a pecuniary penalty in the amount of $35.5 million;

(h)       an order that Mr Debney pay a pecuniary penalty in the amount of $1.5 million;

(i)        an order that Mr Carroll pay a pecuniary penalty in the amount of $500,000;

(j)        appropriate injunctive orders;  and

(k)       appropriate orders as to costs.

In these circumstances, l did not understand what Mr Beach QC submitted at yesterday afternoon's meeting to be a substantial departure from the position set out in the Draft Orders. We had put you on notice at the Second Meeting of our concern in relation to the “giving effect to orders”, which we said we wanted to address in detail when next we met, subject to you having the benefit of our clients' Outlines of Evidence. The point we were making was simply this - where you have filed direct evidence that supports the making of the “giving effect to orders” and that has gone unrebutted, my clients will consent to orders being made in appropriate terms. However, it is our position that in many cases, our clients' Outlines of Evidence provide direct evidence that is inconsistent with the Commission's pleaded case, in the absence of which the Commission would have been entitled to invite Justice Heerey to draw adverse inferences against our clients.

It remains my clients' desire to resolve this Proceeding substantially on the basis of the Draft Orders and to do so in accordance with the evidence.  There can always be room for legitimate debate about the effect of evidence and also about questions of law in a matter of this complexity. One such issue is the admissibility of admissions against interest made by Mr Carroll at his s 155 examination (“Carroll s 155 Admissions”) and, specifically, whether those admissions are admissible against his then employer, Visy Board Pty Ltd. You will recall that Mr Beach QC referred to the decision of Justice Merkel in Leahy Petroleum, saying that he expected Justice Heerey would follow that decision but thought that there were good prospects that a Full Court would decline to follow it. He said that on that basis, he had deleted from the Draft Orders the “giving effect to orders” that relied solely on the Carroll s.155 Admissions. Mr Jopling QC replied “… you won't get any comfort from us on this point”. It was understood that we would seek further instructions on this matter.

At yesterday's meeting Mr Beach QC also briefly addressed the evidence relating to the “giving effect to orders” sought in respect of the 13 pleaded customers. He made mention of the evidence of Mr Lloyd which you at that time had not had an opportunity to read.  Therefore, at the conclusion of the meeting, my understanding was that, subject to us filing and serving Mr Lloyd's Outline of Evidence last night:

(a)       you would discuss his evidence amongst yourselves and, taking it into account, formulate a position in relation to each of the “customer giving effect to” pleadings that remain in issue;  and

(b)       we would meet again at 2.00 pm tomorrow to continue our discussions and analysis of the evidence relevant to “the giving effect to” pleadings.

Having progressed so far, and having narrowed the matters in issue between us to what is in effect a single issue, I am disappointed that the Commission should regard the point of view expressed at yesterday’s meeting as “bordering on a display of bad faith”.  I can only surmise that that assessment is the result of a misunderstanding as to the true effect of what it is that we were submitting.  For our part we are still prepared to meet as arranged tomorrow and, hopefully, to bring these discussions to a successful conclusion.  Please let us know whether the meeting is to proceed or not.

Finally, since you have informed me that the matter has now been listed for consideration at a formal meeting of the Commission at 9.00 am tomorrow, I would be grateful if you would provide this letter to the Chairman and the Commissioners before they meet.

35                        There was another meeting on 12 September 2007 between ACCC representatives and representatives of the Visy companies and of Pratt.  During that meeting, Alexander said that he understood the Visy companies’ concerns about possible damages claims by Visy customers and offered to record in the proposed Agreed Statement of Facts words to the effect that it was not part of the ACCC’s case that the conduct of the Visy companies had impinged negatively on their customers.  The Visy representatives asked the ACCC not to waive legal professional privilege in respect of its proofs of evidence which had been prepared for the cartel proceedings.  Beach said that the ACCC should assume that the Proposed Orders would be consented to and that attention should turn to the amended Defences of the Visy companies and the individual respondents and to an Agreed Statement of Facts. 

36                        On 16 September 2007, Ian Smith on behalf of Pratt sent this email to Samuel;

‘I've spoken with the company and the following is as we discussed BUT with an additional point 2 which we did not talk about. See what you and Bob think.

Apparently there are a couple of minor issues which lawyers were talking about on top of this, but not related to this point (something re coca cola?). But I think this is the issue that concerns our side most.

Penalty Statement

The ACCC does not seek a separate pecuniary penalty against Mr Pratt, recognising:

•           the declaration of Mr Pratt's involvement involves a single contravention namely meeting with the CEO of Amcor, Mr Russell Jones ("Jones") at his request on 21 May 2001 and communicating to Jones that Visy would adhere to an understanding that the Fifth respondent ("Debney") had reached with Mr Peter Brown of Amcor, being the Over-arching Understanding referred to in the Second Further Amended Statement of Claim.

•           it is acknowledged that there is no evidence of any other involvement by Mr Pratt;

•           the penalty imposed on Visy Board will be funded by Mr Pratt;

•           the penalty that the Court might otherwise have imposed is incorporated in the penalty imposed on Visy Board;

•           the Orders reflect agreement between ACCC and Visy Board on the amount of the penalty.’

37                        Samuel, on the same day, sent an email to Alexander and Cassidy insisting, apparently in reference to Smith’s email, that;

‘We need to discuss point 2.’

38                        On 17 September 2007, at yet another meeting between ACCC representatives and representatives of the Visy companies, the ACCC representatives agreed not to waive legal professional privilege in respect of proofs of evidence which had been prepared for use in the cartel proceedings.  There were reported to the same meeting the negotiations between Samuel and Ian Smith in relation to the pecuniary penalty for Pratt being “wrapped up” in the penalty for the Visy companies. 

39                        In the course of that meeting, Pryde and Zwier signed a document headed “Orders” to which the parties were to consent in this Court.  That document reproduced orders 2(ab) and 35 of the Revised Form of Proposed Order set out at [31] above.  Pryde and Zwier also signed a “Penalty Statement” in the following terms:

‘The Orders reflect agreement between ACCC and Visy Board on the amount of the penalty.

It has also been agreed that the ACCC not seek a separate pecuniary penalty against Mr Pratt, on the basis that:

·           the declaration of Mr Pratt’s involvement involves a single contravention namely meeting with the CEO of Amcor, Mr Russell Jones (“Jones”) at his request on 21 May 2001 and communicating to Jones that Visy would adhere to an understanding that the Fifth respondent (“Debney”) had reached with Mr Peter Brown of Amcor, being the Over-arching Understanding referred to in the Second Further Amended Statement of Claim;

·           the penalty imposed on Visy Board will be funded by Mr Pratt;  and

·           the penalty that the Court might otherwise have imposed on Mr Pratt is incorporated in the penalty imposed on Visy Board.’

40                        A first draft of the Agreed Statement of Facts was supplied by AGS to ABL on 28 September 2007.  The Visy representatives made some amendments and additions to that document which were conveyed to Pryde on 1 October 2007 and discussed at a meeting on the same day between representatives of the ACCC and representatives of the Visy companies and of Pratt.  One of the additions was a new paragraph 394 which became paragraph 378 in the final version of the Agreed Statement of Facts and recited;

‘378.    The first to sixth respondents agree the facts contained herein pursuant to section 191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding only. This agreement is not to be taken as an admission to these facts outside that context.’

41                        During the following days further drafts of the Agreed Statement of Facts were exchanged and a final version was signed on 5 October 2007.  It included this paragraph;

’96       On 21 May 2001, Pratt met with Jones at Jones’ request at the All Nations Hotel in Lennox Street, Richmond, Victoria.  At the meeting, Pratt communicated to Jones that Visy would adhere to an understanding that Debney had reached with Brown, being the Over-arching Understanding referred to in paragraph 72 above.’

42                        Paragraph 72, in turn, recited;

‘72.      In the period from January 2000 to approximately April 2000, Visy and Amcor arrived at an understanding (the “Over-arching Understanding”) containing the following provisions:

(a)       Visy and Amcor would permit each other to maintain approximately their then current share of the CFP Market;

(b)       Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other’s principal CFP customers;

(c)       if, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the CFP Market that it had lost as a result of losing the supply contract to Visy;

(d)       if, for one reason or another, Amcor did enter into a contract for the supply of CFP with a principal CFP customer of Visy, then Amcor would not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that it had lost as a result of losing the supply contract to Amcor;

(e)       Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;

(f)        Visy would appoint Carroll as its nominated contact person with Amcor for the purpose of effecting the implementation of the Over-arching Understanding; and

(g)       Amcor would appoint Laidlaw as its nominated contact person with Visy for the purpose of effecting the implementation of the Over-arching Understanding.’

43                        Versions of the proposed amended Defence on behalf of Pratt and the amended Defences to be filed on behalf of the other respondents in the cartel proceedings were provided by ABL to AGS on 5 October 2007.  The amended Defences were finalised on 9 October 2007 and filed in this Court on 16 October 2007.  By paragraph 19 of Pratt’s amended Defence it was pleaded;

‘19.      He denies the allegations in paragraph 10.  As to paragraph 19, he:

(a)       admits that in the period from January 2000 to approximately April 2000, Visy Board and Amcor arrived at an understanding containing the provisions set out in subparagraphs (a) to (d) and (g) to (i) (“Over-arching Understanding”);

(b)       otherwise denies the allegations.’

44                        The same pleading also contained this prefatory recital;

‘To the Second Further Amended Statement of Claim dated 30 November 2006 and for the purposes of this proceeding only, the Fourth Respondent ("Pratt") says as follows (subject to paragraph 35 herein).’

Paragraph 35, in turn, was in these terms;

‘The parties have agreed a statement of facts pursuant to s.191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding which has been filed contemporaneously with this amended defence.  To the extent that any admission or statement made herein differs from the facts agreed in that statement, the admission herein is to be read subject to that statement and modified to that extent.’

45                        On 8 October 2007, Pratt issued a circular letter under the letterhead “VISY – Packaging and Recycling for a Better World”.  That letter was distributed to staff and customers of the Visy companies and was in the following terms;

‘Visy Board (Visy) and the Australian Competition and Consumer Commission (ACCC) have reached an agreed settlement of the legal action taken by the ACCC against Visy in December 2005.

Details of the settlement agreement must remain confidential until it is submitted to the Federal Court for consideration. However for the purposes of settlement, Visy Board, Visy group CEO Harry Debney and former Visy Board General Manager Rod Carroll have accepted responsibility for many of the matters put against them. I have accepted responsibility for comments made by me to the then Amcor CEO Russell Jones when he invited me to lunch.

At the time the ACCC commenced the action, Visy said that if the evidence showed there had been breaches of the Trade Practices Act (TPA), we would face the consequences. The company has now examined the evidence and we have a better understanding of what occurred. It is now apparent to us that Visy executives erred when they had discussions with Amcor and sought to out-manoeuvre them as part of Visy's pursuit of market share gains.

Visy takes its obligations under the TPA very seriously. The company deeply regrets what happened and its poor appreciation of the complexities and applications of the various provisions. We understand the situation may cause concerns among our customers, staff, suppliers and other key stakeholders. We apologise to all those concerned by these events.

Even before the ACCC launched its action, Visy was taking steps to ensure that there would be much greater understanding of the Trade Practices Act and our compliance obligations across the entire Visy business. I have insisted that we remain vigilant to ensure this commitment is maintained. Early last year I appointed former ACCC Chairman Professor Allan Fels to chair our Trade Practices Compliance Committee and Professor Fels continues to oversee our ongoing TPA compliance and training programs with the involvement of senior management.

The company has acted on every one of the Committee's recommendations. Every relevant Visy employee has now undergone Trade Practice Compliance Training and TPA education programs will continue under the guidance of legal firm Blake Dawson Waldron. In this and future years, Visy will report on its ongoing TPA compliance activities as part of our annual public stakeholder report.

Visy's actions were motivated by a desire to take advantage of our competitor.

By contrast, nothing is more important to Visy than the relationships with our customers. We believe that actual market outcomes demonstrate that our behaviour did not disadvantage our customers. But if any customer has concerns we will investigate them.’

46                        Also on 8 October 2007 in the issue of “The Australian” newspaper for that day an article by Cameron Stewart appeared under the heading “Price-fix deal not my idea, says Pratt.”  That article included the following passages;

‘BILLIONAIRE Richard Pratt will authorise a formal apology from his company Visy for breaking the law in the nation's biggest cartel case, but says he was not the architect of the illegal price-fixing scheme and did not know the details.

A settlement agreement is likely to be reached this week between Mr Pratt, Visy and the Australian Competition and Consumer Commission following Mr Pratt's confession, revealed exclusively in The Weekend Australian on Saturday, that he and Visy had broken the laws in relation to price-fixing and market-sharing in the $2 billion cardboard box market between 2000 and 2004.

The admission of guilt will expose Mr Pratt's business empire to a record corporate fine, likely to be about $30 million to $40 million, more than double the previous record of $15 million for a cartel. It may also trigger new multi-million-dollar compensation claims from customers of the privately owned paper and packaging giant Visy.

Australia's third-richest man said he would plead guilty to sanctioning the illegal conduct. But he distanced himself personally from the deal, saying it was initiated by rival box maker Amcor and that he knew little about it.

“I was not involved in any of the detail of this supposed deal,” Mr Pratt told The Australian. He said he was caught unwittingly in the case by approving the actions of his senior executives without knowing details of the price-fixing and market-sharing deal they had agreed with Amcor.

The case against Mr Pratt is that he sanctioned the illegal cartel arrangement during a meeting with then Amcor chief executive Russell Jones in an inner-Melbourne hotel in May 2001. The cartel deal itself had been previously set up by senior executives of Visy and Amcor.

Mr Pratt said Mr Jones had initiated the meeting and that the allegedly incriminating part of their conversation lasted for only one minute of a 90-minute lunch and involved an ambiguous reference to an arrangement or understanding between the two companies.

“If he (Mr Jones) asked me whether I would stick with the understanding, I would have said anything my CEO has agreed to is fine by me,”  Mr Pratt said.

… … …

Visy executives have begun the process of informally apologising to customers, and Mr Pratt plans to authorise a formal apology once the case is settled.’

47                        On 11 October 2007, Williams telephoned Davidson of the DPP and reminded him of their earlier conversation in November 2006 which is described at [10] above.  Williams then went on to tell Davidson that the ACCC might wish to refer to the DPP material suggesting that Pratt and Debney had “perjured themselves” when giving evidence under s 155 of the TPA.  Williams also advised Davidson that the Visy companies were going to settle the cartel proceedings and that the matter was highly confidential and that after orders had been made in the cartel proceedings he, Williams, would like to “have a chat” with Davidson.  Davidson then asked Williams whether in the course of the settlement negotiations anything had been said to Pratt’s lawyers about potential criminal proceedings for contravening s 155 of the TPA.  Williams replied that he did not want to jeopardise the settlement of the cartel proceedings.  During the same conversation Williams referred to the preparation of an Agreed Statement of Facts and referred to s 191 of the Evidence Act.  In that context, Williams ventured the opinion that such an Agreed Statement of Facts would not be admissible outside the cartel proceedings.  That prompted Davidson to speculate about seeking the leave of this Court to use the Agreed Statement of Facts in other proceedings.

48                        A hearing occurred in this Court on 16 October 2007 when Beach referred to the letter set out at [45] above and said;

‘Your Honour should accept my submissions and what I’ve said to your Honour, the statement of Mr Pratt’s on 8 October is for that reason largely irrelevant.  But can I say this, your Honour, if I need to explain that statement of 8 October, that again is a further indication by Mr Pratt and Visy of contrition outside the court environment.’

49                        Williams regarded the newspaper article described at [46] above and the Visy letter of 8 October 2007 as “public admissions” which contradicted the account of his conversation with Jones which had been given by Pratt in the course of his examination under s 155 of the TPA.  Accordingly, on 11 October 2007 Williams telephoned Davidson of the DPP and indicated to him his (Williams’) view that Pratt had lied on oath during his examination under s 155. 

50                        On 16 October 2007 the parties jointly furnished to this Court the Agreed Statement of Facts and filed written submissions as to penalty.  The submissions on behalf of the respondents included these paragraphs;

‘13.      Mr Pratt and Mr Debney, on behalf of themselves and on behalf of Visy Board, sincerely regret that they engaged in conduct that constituted a serious contravention of the TPA.

… … …

16.       Each of Visy Board, Mr Pratt and Mr Debney consent to the orders jointly proposed to the Court, recognising that such orders are appropriate to mark the community’s disapproval of the contraventions of the law that have occurred, and as a deterrent against future contraventions by the respondents and others.’

51                        Those submissions were amplified by oral submission made by Beach on behalf of the respondents.  Those submissions, as recorded in the transcript of the hearing of 16 October 2007 included the following;

‘Your Honour, the Visy parties have acknowledged liability.  They have accepted responsibility for their conduct and they have made corresponding admissions.  They have been contrite in, not only accepting that they have contravened the Trade Practices Act, but also in accepting the serious nature of the contraventions, and that those contraventions warrant a very substantial penalty.  They apologise for their conduct.  They regret the circumstances which have occurred, and they repent their contraventions.’

………………….

‘Your Honour, can I come to Mr Pratt’s position?  Undoubtedly, Mr Pratt takes responsibility for, and regrets the failure of management generally, in relation to this matter, but also his conduct specifically.  But your Honour will appreciate from the statement of agreed facts that there is only one matter agreed to in relation to Mr Pratt’s conduct.  And that is his participation at a lunch at the All Nations Hotel in Richmond in May 2001 – paragraph 96.  It seems clear that that conduct was over 12 months after the inception of the overarching arrangement.  That is not to excuse it, of course.  It is to explain it.  It also seems clear from paragraph 96 of the statement of agreed facts that it wasn’t Mr Pratt that initiated the meeting.  It was, in fact, Mr Jones, the CEO of Amcor.

Now, that is, of course, not to excuse what Mr Pratt did but, in part, to explain that what was brought about was a meeting not at his behest, but at Amcor’s behest.’

52                        On 17 October 2007, a meeting within the ACCC was conducted by videoconference in which Samuel, Cassidy and Alexander participated.  In the course of that meeting there was discussion about responses which might be made by Samuel to media enquiries after judgment had been given in the cartel proceedings.  At the end of that meeting Samuel asked what was being done about Pratt and Debney having perjured themselves during their examination under s 155 of the TPA.  Williams replied that he had spoken about the matter to Davidson from the DPP.  At about the same time, Williams asked Mark Lewis, an employee of the ACCC, to check the accuracy of the transcript of Pratt’s examination under s 155 of the TPA in case the ACCC should wish to consider criminal proceedings against Pratt.  Lewis carried out that task on 19 October 2007. 

53                        On 2 November 2007 Heerey J gave judgment in the cartel proceedings.  Among the declarations made on that day were the following;

‘2.        By engaging in each instance of:

(a)       the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the Second Further Amended Statement of Claim;

(ab)     the conduct constituted by the Fourth Respondent (“Pratt”) meeting with the CEO of Amcor, Mr Russell Jones (“Jones”) at his request on 21 May 2001 and communicating to Jones that Visy would adhere to an understanding that the Fifth Respondent (“Debney”) had reached with Mr Peter Brown of Amcor (“Brown”) being the Over-arching Understanding referred to in paragraph 1 above;

… … …

Visy gave effect to a provision of the Over-arching Understanding that:

(i)        was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA;  and

(ii)       was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

… … …

35.       Pratt was directly or indirectly, knowingly concerned in the contravention of the TPA by Visy referred to in sub-paragraph (ab) of paragraph 2 above, within the meaning of sections 76(1)(e) and 80(1)(e) of the TPA.’

His Honour also ordered that Visy, Debney and Carroll each pay a pecuniary penalty in the sum, respectively, of $36 million, $1,500,000 and $500,000.  As well, he made injunctive orders against Pratt, Debney and Carroll substantially corresponding with par 45 of the order which had been proposed by Alexander as set out at [19] above and an order requiring Pratt and the Visy companies to implement a compliance program as stipulated in par 46 of Alexander’s proposed order.

54                        Also on 2 November 2007 after the orders referred to at [53] above had been made, Samuel asked Alexander to consider possible criminal proceedings against Pratt and Debney.  Williams then told Samuel that he (Williams), was already working on it. 

55                        On Sunday 4 November 2007, Samuel sent Cassidy an email which said;

‘Subject:  Next steps

Brian

…  Now that Friday is over, we need to examine the S. 155 issue with some priority. Any chance of us getting an oral brief on this on Wed before we see the DPP? We should also indicate to the DPP how we intend to assess the Visy evidence against the Criminal Bill. It would be useful if his people can work with us on that.

What was the other matter that we said last week we would run past him? I think we raised this with Mark or David.’

56                        Samuel and Cassidy had earlier arranged to have, on 7 November 2007, a first meeting with Craigie, who had recently been appointed as the new DPP.  On the next day, 5 November 2007, Cassidy forwarded to Alexander and Williams, Samuel’s email of 4 November 2007 with a request “for a quick chat on the outstanding Visy issue” on 7 November 2007 at 1.30 pm.  Samuel later asked to be given “beforehand just a copy of the relevant extract from the 155 transcripts of Re P [Pratt] and D [Debney]”.  The meeting between Samuel, Cassidy and the DPP was held, as arranged, on 7 November 2007 and, in the course of it, Samuel mentioned that the ACCC would be raising with DPP officers the possible institution of proceedings against Pratt for contravening s 155 of the TPA. 

57                        On 13 November 2007, during a Corporate Governance meeting of the ACCC Commissioners, Samuel informed the Commissioners that it was proposed to pursue with the DPP the “inconsistency” in the testimony which Pratt had given under s 155.  The Commissioners agreed with this course and, on the same day, Alexander, Williams and other ACCC officers met with officers of the DPP (including Davidson) and discussed the possible institution of criminal proceedings against Pratt and Debney.  Later, the ACCC forwarded to the DPP a volume of documents from the cartel proceedings and thereafter advice was furnished by the DPP and by Counsel retained by the DPP about the contemplated criminal proceedings.  Eventually, on 17 June 2008, Samuel, Alexander and Commissioner Court of the ACCC met the DPP and Davidson of the DPP’s office and, on 18 June 2008 a decision was taken by the ACCC Commissioners to institute the present proceedings which were filed in this Court on 19 June 2008.

Question 1

58                        To resolve the first of the four questions ordered to be determined as preliminary questions in this proceeding requires an examination of the nature of an admission in the context of the Evidence Act and an evaluation of each of the prima facie admissible documents to determine whether it constitutes an admission in that sense.  Each of the prima facie admissible documents is said by the ACCC to be admissible in evidence against Pratt as an admission made by him or on his behalf which is not excluded by s 81(1) of the Evidence Act.  That sub-section provides;

‘(1)      The hearsay rule and opinion rule do not apply to evidence of an admission.’

59                        “Admission” is defined in the Dictionary to the Evidence Act as follows;

‘admission means a previous representation that is:

(a)       made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding);  and

(b)       adverse to the person’s interest in the outcome of the proceeding.’

60                        Pratt is clearly a party to the present application as a defendant in a criminal proceeding.  I am also prepared to assume, for present purposes, that each of the four prima facie admissible documents contains a statement or material adverse to Pratt’s interest in the outcome of the present proceeding.  However, an anterior question arises in relation to each of the prima facie admissible documents as to whether it contains a “previous representation” by or on behalf of Pratt.  “Previous representation” which is used in the definition of “admission” quoted at [59] above is also defined in the Dictionary to the Evidence Act.  That definition is in these terms;

‘previous representation means a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced.’

61                        It may be accepted that, to the extent that each of the prima facie admissible documents contains a representation, it was a previous representation in that it had been made otherwise than in the course of giving evidence in the present criminal proceedings in which it is sought to adduce the document in evidence.  However, “representation” is not exhaustively defined in the Dictionary to the Evidence Act.  The relevant provision is in these terms;

‘representation includes:

(a)       an express or implied representation (whether oral or in writing);  or

(b)       a representation to be inferred from conduct;  or

(c)        a representation not intended by its maker to be communicated to or seen by another person;  or

(d)       a representation that for any reason is not communicated.’

62                        That indication of what is included in the concept of a “representation” allows recourse to extrinsic definitions as an aid in establishing the full connotation of the expression.  Thus, in the Oxford English Dictionary, 2^nd Edn, the most pertinent definition of “representation” is;

‘4.a      The action of placing a fact etc before another or others by means of discourse or account esp. one intended to convey a particular view or impression of a matter in order to influence opinion or action.’

63                        The corresponding definition in the Macquarie Dictionary, 3^rd Edn, p 1806 is;

‘14       a description or statement of things true or alleged.’

64                        Section 59 of the Evidence Act casts some light on the expedient which the High Court in Lee v The Queen (1998) 195 CLR 594, referring to the importation of “representation”, regarded as resorting to “an unusual word to use in this context”.  The High Court there said, at 599 [21];

‘"Representation" is often used in the law to refer to words that are intended to induce action or inaction by the person who hears or reads them. It may, therefore, seem to be an unusual word to use in this context. But it is clear from the Interim Report of the Law Reform Commission on evidence [Australia, The Law Reform Commission, Evidence, Report No 26 Interim (1985)] that, in the proposals that were later formulated in the Act, the term "representation" was used to apply to statements and to conduct and was used to encompass all that those statements or that conduct would convey to the observer. …’

65                        Section 59 of the Evidence Act provides;

‘59       The hearsay rule—exclusion of hearsay evidence

(1)        Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation.

(2)        Such a fact is in this Part referred to as an asserted fact.

(2A)     For the purposes of determining under subsection (1) whether it can reasonably be supposed that the person intended to assert a particular fact by the representation, the court may have regard to the circumstances in which the representation was made.

(3)        Subsection (1) does not apply to evidence of a representation contained in a certificate or other document given or made under regulations made under an Act other than this Act to the extent to which the regulations provide that the certificate or other document has evidentiary effect.’

66                        The fact which the ACCC seeks in the present case to prove is that Pratt, at the meeting with Jones at the All Nations Hotel, made a statement or communication which was sufficiently different from what he claimed during his s 155 examination to permit the conclusion that his evidence to the ACCC was false.  The admissibility of each of the prima facie admissible documents therefore turns on whether it contains a previous representation by or on behalf of Pratt of a fact tending to establish what the ACCC is seeking to prove in these criminal proceedings.

67                        Counsel for the ACCC in support of the admissibility of all of the prima facie admissible documents invoked s 88 of the Evidence Act which provides;

‘Proof of admissions

For the purpose of determining whether evidence of an admission is admissible, the court is to find that a particular person made the admission if it is reasonably open to find that he or she made the admission.’

68                        In that context, reference was made to the observations of Whealy J in R v Lodhi (2006) 163 A Crim R 526 [23];  (2006) 199 FLR 342, at 347, where his Honour pointed out that;

‘the “finding” that a person made an admission where it is reasonably open to do so is not a finding that is made for all purposes.  Rather it is only for “the purpose of determining whether evidence of an admission is admissible.”  If it is admitted, the question for the tribunal of fact will remain:  was it made?  If it was not made, it will be disregarded.’

69                        I respectfully agree with the distinction that his Honour there draws between a finding as to whether a person has made an admission for the purpose of determining admissibility and the same finding in the course of ultimately determining whether the alleged admission contributes to the discharge by the party adducing it of an onus of proof which that party bears.  However, in the present case, as I have earlier suggested, there is an anterior question.  That is whether statements contained in the prima facie admissible documents, which were clearly brought into existence by or with the concurrence of Pratt’s legal representatives acting with his authority, were admissions at all in the sense of being previous representations of fact.  In my view, that question is one of mixed fact and law to be resolved independently of, and before, any final determination of whether the statements imputed to Pratt were actually made, or made with his authority. 

70                        I accept that the Evidence Act has been predicated on the view that admissions (or previous representations) contained in pleadings in earlier civil litigation may be admissible in subsequent proceedings against the party on whose behalf the pleadings were filed.  That view derives support from this paragraph from the 1985 Interim Report on Evidence (Report No 26 Vol 1, Ch 34 p 421 para 755 of the Australian Law Reform Commission (“the ALRC”) (Footnotes omitted);

‘…..In addition, the definition should not exclude admissions contained in pleadings.  This is contrary to the orthodox view, which seems to be based on doubts about the reliability of such pleadings.  They may be made for tactical reasons rather than as an assertion of truth.  Contradictory pleadings may be filed.  But more recent decision support the proposition that pleadings should not be placed in a special category – it should be a question of fact in the circumstances whether the particular statement constitutes an admission.  This seems a preferable approach and is that proposed.’  (emphasis added)

71                        See also ALRC Report 102 Uniform Evidence Law p 323, para 10.2 where it is acknowledged that “The definition of ‘admission’ in the uniform Evidence Acts covers admissions in both civil and criminal proceedings.”  The footnote to that acknowledgment is in these terms;

‘It was the ALRC’s intention that the definition include admissions contained in civil pleadings:  Australian Law Reform Commission, Evidence, ALRC 26 (Interim) Vol 1 (1985), [755].  See also J Gans and A Palmer, Australian Principles of Evidence (2^nd ed, 2004), 215.’

The same view that “an admission may be made in pleadings” has been expressed by the learned author of Odgers, Uniform Evidence Law, 8^th Edn, 2009, at 341.  Whether pleadings may constitute admissions within the Evidence Act was left open by Mansfield J in ACCC v Grant [2000] FCA 567, at [18]. 

72                        I consider that, consistently with the view expressed by the ALRC in the passage quoted at [70] above to which I have added emphasis, the effect of the Evidence Act is that pleadings in previous civil proceedings are not necessarily excluded for the purposes of subsequent proceedings from what may be regarded as admissions within the meaning of s 81(1).  Rather, it is a question of fact in the circumstances whether the particular statement in a pleading or analogous document constitutes an admission.  The relevant circumstances will include the type of pleading or other document and the terms in which the alleged admission has been expressed.  Thus, an assertion in a statement of claim in an action for damages for personal injuries that a plaintiff, X, was the driver of a motor car when it collided with another vehicle at a particular time and place will generally constitute an admission within the meaning of s 81(1) so as to be admissible against X in subsequent civil or criminal proceedings.  That I consider to be consistent with the observations of Cockburn CJ in Richards v Morgan (1863) 4 B & S 641.  In a passage, at 661, which has been cited with approval by Rares J in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314, at [34], his Lordship said;

‘It cannot be doubted that a man's assertions are admissions, whether made in the course of a judicial proceeding or otherwise, and, in the former case, whether he was himself a party to such proceeding or not. It may be given in evidence against him in any suit or action in which the fact so asserted or admitted becomes material to the issue to be determined. And in principle, there can be no difference whether the assertion or admission be made by the party himself who is sought to be affected by it, or by someone employed, directed or invited by him to make the particular statement on his behalf. In like manner, a man who brings forward another for the purposes of asserting or proving some fact on his behalf, whether in a court of justice or elsewhere, must be taken himself to assert the fact that he thus seeks to establish.’

73                        I regard that passage as an early recognition that, to be admissible as an admission in the evidentiary sense, the statement in the pleading must, on balance, amount to a positive assertion or acknowledgement of a material fact.  A statement in a defence or subsequent pleading that a party “admits” an allegation in a particular paragraph of a statement of claim or subsequent pleading may not always constitute such a positive assertion or acknowledgement.  It may, in its context and other relevant circumstances, signify no more than that the party admitting the allegation is content for the litigation in which it is made to be resolved on the basis that the allegation is true or has been proved.  That election may be made for a variety of forensic reasons, including a desire to avoid the costs of contesting the allegation in question or a belief that the party making the admission can succeed on some other issue without disputing the particular allegation.  A fortiori, a statement in a defence or subsequent pleading that a party “does not admit” an allegation in an earlier pleading will rarely, if ever, constitute an admission in the relevant sense.  It indicates no more than that the party on whose behalf the “non-admission” is made intends to put the opposing party to proof at trial of the alleged fact. 

74                        These reflections have led me to conclude that it is a question of fact whether a pleading or analogous statement in previous proceedings constitutes an admission available to be adduced in later civil or criminal proceedings against the party on whose behalf the pleading was filed or the statement was made.  Against the background of this necessarily brief examination of the nature of an admission in the relevant sense and in the context of the Evidence Act, I turn now to examine in turn each of the prima facie admissible documents.

(a)        The Revised Form of Proposed Order

75                        The terms of this document have been reproduced at [31] above.  It is clearly an agreement as to part of the order which the Court would be asked to make by consent in the event of agreement being reached as to other matters including the amount of the pecuniary penalty which the Court was to be invited to impose in the cartel proceedings.  As indicated by its heading, the agreement brokered by McHugh specifically concerned Pratt and involved an acceptance by him that a declaration would be made that, by reason of his having communicated to Jones that Visy would adhere to an understanding that Debney had reached with Brown, he, Pratt, had directly or indirectly been knowingly concerned in a contravention of the TPA by Visy.

76                        In light of the analysis undertaken at [58]-[69] above, the critical question to be answered in respect of the Revised Form of Proposed Order is whether it embodied a representation by Pratt that he, in fact, had made a communication to Jones to the effect set out in paragraph 2(ab) of the Proposed Order.  One feature of the document is that it embodies an agreement and, as noted at [77] below, an agreement does not ordinarily constitute a representation by a contracting party.  However, as the High Court pointed out in the passage from Lee v The Queen (supra) already quoted, a representation may induce the making of an agreement.  Another significant feature of the Revised Form of Proposed Order is that it was signed by Kay and not purportedly on behalf of Pratt.  That is not to say that the agreement was not made with Pratt’s authority or was not intended to bind him to consent to a declaration in the terms proposed.  The whole point of the meeting under the chairmanship of McHugh and Pratt’s presence in person was, in Heathcote’s words, to “get Pratt over the line.”  However, the feature to which I have drawn attention militates against a finding that the Revised Form of Proposed Order embodied a representation by Pratt that he had, in fact, made to Jones the communication described in it.  The conclusion is at least equally open that Pratt’s acceptance of the Proposed Form of Order was intended to be only a basis for its incorporation in a body of consent declarations to dispose of the cartel proceedings.  That conclusion derives some support, perhaps slight, from McHugh’s evidence that at the meeting at which the Proposed Order was signed Pratt continued to insist that he had not had a discussion with Jones on 21 May 2001 to the effect alleged by the ACCC;  see par 13(b) of the extract from McHugh’s statement set out at [30] above.  The conclusion of fact which I prefer in relation to the Revised Form of Proposed Order entails that, in respect of it, Question 1 must be answered, “No”.

(b)        The Penalty Statement

77                        This document has been reproduced at [39] of these Reasons.  It embodies an agreement, as the introductory sentence indicates, between the ACCC and Visy on the amount of the penalty which those parties would jointly invite the Court to impose in the cartel proceedings.  An agreement does not ordinarily constitute a representation by a contracting party.  One reason for that is the difficulty in attributing a particular statement in the agreement to one party or the other.  It is also notorious that parties to an agreement may elect to conduct their contractual relations and, if necessary, enforce the rights arising from them on a basis which is contrary to fact.  That is not to say that no statement in an agreement or contractual document can ever constitute a representation in the sense used in the definition of “admission” in the Evidence Act.  A recital to a deed or other written contract may, in its context, be so expressed as to warrant the conclusion that both contracting parties intended it to operate as an assertion of actual fact.  In that event, the recital, in my view, would be admissible in later proceedings as an admission against either contracting party. 

78                        In the present case, the Penalty Statement records only an agreement by the ACCC not to seek the imposition on Pratt of a separate penalty over and above that which it had been agreed the Court would be invited to impose on Visy.  The document advances three “bases” or reasons for the ACCC’s agreement to that course.  The most salient to these reasons is the first;  that the declaration to be made by the Court of Pratt’s involvement involved only a single contravention of the TPA.  However, although the agreement embodied in the Penalty Statement enured to Pratt’s benefit in the sense that it promised relief from the imposition on him personally of a separate pecuniary penalty, it did not, in my view, constitute an admission by him.  The agreement was solely between the ACCC and Visy.  It did not purport to be signed on behalf of Pratt as well as on behalf Visy.  Thirdly, although, as already noted, the agreement conferred a benefit on Pratt, his participation in it was not necessary to give efficacy to the agreement. 

79                        I have thus been led to conclude that the Penalty Statement cannot be adduced by the ACCC as part of the affirmative proof of its case in the present proceedings.  That is not to say that the Penalty Statement could not have been put to Pratt in cross-examination had he chosen to give evidence in his own defence.  However, the facility for the ACCC to have used the document in that way does not bear on the present question.  For these reasons, in respect of the Penalty Statement, Question 1 must be answered “No”.

(c)        The Agreed Statement of Facts

80                        The relevant paragraphs of this document have been reproduced at [40], [41] and [42] above.  The critical question for present purposes is whether paragraph 96 of the Agreed Statement constitutes an admission in the sense of a representation by Pratt that he had, in fact, “communicated to Jones that Visy would adhere to an understanding that Debney had reached with Brown.”  It will be recalled that paragraph 378 of the Agreed Statement recited that it had been made pursuant to s 191 of the Evidence Act.  That section provides;

‘(1)      In this section:

agreed fact means a fact that the parties to a proceeding have agreed is not, for the purposes of the proceeding, to be disputed.

(2)       In a proceeding:

(a)        evidence is not required to prove the existence of an agreed fact;  and

(b)        evidence may not be adduced to contradict or qualify an agreed fact;

unless the court gives leave.

(3)       Subsection (2) does not apply unless the agreed fact:

(a)       is stated in an agreement in writing signed by the parties or by Australian legal practitioners, legal counsel or prosecutors representing the parties and adduced in evidence in the proceeding;  or

(b)       with the leave of the court, is stated by a party before the court with the agreement of all other parties.’

81                        The Agreed Statement of Facts was signed by Heathcote as “Solicitor for the 1^st to 5^th Respondents”, by Pryde as Solicitor for the ACCC and by a solicitor on behalf of the sixth respondent, Carroll. 

82                        I consider that several features of the Agreed Statement of Facts combine to require a conclusion, on balance, that the relevant paragraphs do not contain a representation by Pratt of a fact material to the present criminal proceedings.  In no particular order of importance, those features include the terms of s 191 of the Evidence Act, the agreement recited in paragraph 378 of the Agreed Statement and the terms in which paragraph 96 of the Agreed Statement was expressed. 

83                        The definition of “agreed fact” in s 191 of the Evidence Act, because of its terms, is not limited to a fact which is true or which the parties believe to be true.  It includes a matter capable of being the subject of a finding by a court or tribunal which the parties agree, for the purposes of the proceeding, is not to be disputed.  It follows that the inclusion of a statement in an agreed statement pursuant to s 191 is not a representation of fact for all purposes.  It is no more than a representation by each party to the proceeding that he, she or it will not dispute the asserted fact in that proceeding.  In other words, the only representation in the sense used in the definition of “admission” in the Evidence Act is as to the intention or state of mind of the parties to the Agreed Statement. 

84                        I also consider that it was not intended by the legislature that a fact in an agreed statement pursuant to s 191 could also be used as an admission as contemplated by s 81 or a representation as that expression is used in s 59.  Had it been intended that a fact in an agreed statement could be used in either of those ways, express provision to that effect could easily have been made in s 191 itself. 

85                        I accept the submission by Counsel for the ACCC that it would be surprising if it were possible “for a person making an admission to limit its subsequent use (particularly where the limitation is sought to be applied after the admission was made as in this case).”  However, that submission begs what I have identified as the anterior question in this case, which is whether the alleged representation constitutes an admission at all.  In relation to the Agreed Statement of Facts, the limitation was not imposed after the document was brought into existence.  It was expressly incorporated in the Agreed Statement itself by the stipulation in paragraph 378 that the agreement of the facts contained in the Statement was “for the purposes of this proceeding only.”  As well, paragraph 378, in terms, invokes s 191 of the Evidence Act which I consider confines, by implication, the use of an “agreed fact” to the proceeding in which the agreement is made. 

86                        This examination reveals that the words used in a statement later sought to be relied on as an admission can be influential in determining the underlying question of whether the statement, when made, was a representation of fact.  In my view, the language of paragraph 378 tells strongly against a finding that “the facts contained herein” were represented to be true for all purposes so as to be available to the whole world thereafter to adduce them in evidence against any of the respondents, including Pratt.  In particular, the express recitation in paragraph 378 that the facts have been agreed pursuant to s 191 of the Evidence Act militates against that conclusion.  As explained at [83] above, the only representation that can be imputed to the respondents to the cartel proceedings as having been made in the Agreed Statement of Facts is one of intention or state of mind, namely that the respondents would not dispute in those proceedings any of the asserted facts.

87                        It is also significant, as already noted, in relation to the Revised Form of Proposed Order, that paragraph 96 of the Agreed Statement does not represent the actual words used by Pratt in his communication with Jones.  The first part of the second sentence of that paragraph, it is true, purports to represent the effect of the communication.  However, the descriptive words used to identify the understanding “being the Over-arching Understanding referred to in paragraph 72 above” are clearly a lawyer’s ellipsis and it is improbable in the extreme that they would ever have actually been used in a communication between businessmen at the All Nations Hotel. 

88                        This combination of features has led me, again on balance, to conclude that the relevant paragraphs of the Agreed Statement of Facts do not contain a representation in the sense necessary for its reception into evidence as an admission.  As with the Penalty Statement, this conclusion would not have denied to the ACCC the right to use the Agreed Statement in cross-examination of Pratt should the occasion have arisen.  For the reasons which I have endeavoured to explain, in respect of the Agreed Statement of Facts, Question 1 should again be answered, “No”.

(d)        The Further Amended Defence

89                        In paragraph 23 of this document, the full text of which is set out at [43] above, it is pleaded on behalf of Pratt that he;

‘(a)      admits that he met with Russell Jones (“Jones”) at Mr Jones’ request on 21 May 2001 and communicated to Mr Jones that Visy Board would adhere to an understanding that Debney had reached with Peter Brown (“Brown”) being the understanding admitted in paragraph 19 herein;’

90                        In light of my examination at [70]-[74] above of the circumstances in which a pleading in a previous proceeding may constitute a representation in the sense of an admission available in later civil or criminal proceedings, I have concluded that the relevant paragraphs of the Further Amended Defence do not, as a matter of fact, embody an admission for present purposes.  I have been persuaded to that finding, first, by the fact that the relevant paragraphs have been prefaced by the expression that Pratt “admits” the matters then set out.  There is no unqualified assertion of any of those matters as a fact for any purpose beyond that of the proceeding in which the Further Amended Defence was filed. 

91                        The consideration to which I have just referred is reinforced by the prefatory words to Further Amended Defence which is set out at [44] of these reasons.

92                        As well, the pleader of the Further Amended Defence has incorporated by reference some of the expressions of limitation contained in s 191 of the Evidence Act and the relevant provisions of the Agreed Statement of Facts.  That was done by pleading paragraph 35 of the Further Amended Defence which I have also reproduced at [44] above.  That drafting technique has, I consider, operated to make available, as rendering inadmissible the Further Amended Defence, some of the matters outlined at [83]-[86] above in relation to the Agreed Statement of Facts.

93                        I am also reinforced, although only slightly, in my conclusion in relation to the Further Amended Defence by the language in which the relevant paragraphs have been cast.  Like the statements in the Revised Form of Proposed Order and the Agreed Statement of Facts, the elliptical references to the “Over-arching Understanding” make it difficult to impute to Pratt personally any representation of fact about the terms or effect of his alleged communication to Jones.

94                        In the result, in respect of the Further Amended Defence, Question 1 must also be answered, “No”.

Conclusion

95                        I have reached the conclusions explained above with some diffidence and have been persuaded to make the orders pronounced on 27 April only because last Friday Mr Zwier, the solicitor for Pratt, requested of the Court an “indulgence” in the form of an announcement of the orders before publication of the reasons explaining them.  That request was based on a claim, supported by medical opinion, that Pratt was suffering from a terminal illness and was unlikely to survive the taking of any further step in this litigation.  The request was not opposed by Mr Dean SC who appeared with Dr Donaghue for the ACCC.

96                        In these circumstances, I formulated the orders pronounced on 27 April 2009 and prepared these abbreviated reasons for those orders.  I had intended, if the exigencies to which I have just referred had not intervened, to indicate my views on the remaining questions including those going to the exercise of discretion in the event that one or more of the prima facie admissible documents should have been held to be admissible.  It is regrettable that circumstances have conspired to prevent any elaboration of the reasons in that way.  Such further consideration might have confirmed or refined my analysis of Question 1 which would have benefited from further research and reflection about the issues, some of which are novel and have not been the subject of authoritative judicial exposition. 

Associate:

Dated:         29 April 2009