FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2010] FCA 294
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Citation: |
Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2010] FCA 294 |
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Parties: |
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File number: |
QUD 295 of 2008 |
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Judge: |
DOWSETT J |
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Date of judgment: |
26 March 2010 |
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Corrigendum: |
1 April 2010 |
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Catchwords: |
COMPETITION LAW – meaning of “market” under ss 45, 46 and 47 of the Trade Practices Act 1974 (Cth)
COSTS – appropriate order where amendment of pleadings necessitates adjournment of trial
PRACTICE AND PROCEDURE – application to amend statement of claim on first day of trial – applicant surprised by defendants’ case – allowing application would necessitate vacation of trial dates – applicant primarily at fault – relevance and nature of public interest |
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Legislation: |
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Cases cited: |
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 considered |
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Dates of hearing: |
23-25 March 2010 |
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Place: |
Brisbane |
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Division: |
GENERAL DIVISION |
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Category: |
Catchwords |
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Number of paragraphs: |
37 |
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Counsel for the Applicant: |
Mr S Couper QC with Mr D Kelly SC and Mr M Hodge |
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Solicitor for the Applicant: |
Australian Government Solicitor |
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Counsel for the Respondents: |
Mr N Hutley SC with Ms S Brown and Dr R Higgins |
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Solicitor for the Respondents: |
Gilbert + Tobin |
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY |
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GENERAL DIVISION |
QUD 295 of 2008 |
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BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
CEMENT AUSTRALIA PTY LTD ACN 104 053 474 First Respondent
CEMENT AUSTRALIA HOLDINGS PTY LTD ACN 001 085 561 Second Respondent
CEMENT AUSTRALIA (QUEENSLAND) PTY LTD ACN 009 658 520 Third Respondent
POZZOLANIC ENTERPRISES PTY LTD ACN 010 367 898 Fourth Respondent
POZZOLANIC INDUSTRIES PTY LTD ACN 010 608 947 Fifth Respondent
CHRISTOPHER GUY LEON Sixth Respondent
CHRISTOPHER STEPHEN WHITE Seventh Respondent
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JUDGE: |
DOWSETT J |
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DATE OF ORDER: |
26 MARCH 2010 |
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WHERE MADE: |
BRISBANE |
CORRIGENDUM
1 In the Reasons for Judgment of Justice Dowsett delivered on 26 March 2010, at para 35, line 4, delete the words “would characterize such outcome as being” and insert the word “was” in lieu thereof.
2 On the orders page, in order 4, delete the text “24, 25 and 26” and insert “23, 24 and 25” in lieu thereof.
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I certify that the preceding two (2) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Dowsett. |
Associate:
Dated: 1 April 2010
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY |
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GENERAL DIVISION |
QUD 295 of 2008 |
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AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
CEMENT AUSTRALIA PTY LTD ACN 104 053 474 First Respondent
CEMENT AUSTRALIA HOLDINGS PTY LTD ACN 001 085 561 Second Respondent
CEMENT AUSTRALIA (QUEENSLAND) PTY LTD ACN 009 658 520 Third Respondent
POZZOLANIC ENTERPRISES PTY LTD ACN 010 367 898 Fourth Respondent
POZZOLANIC INDUSTRIES PTY LTD ACN 010 608 947 Fifth Respondent
CHRISTOPHER GUY LEON Sixth Respondent
CHRISTOPHER STEPHEN WHITE Seventh Respondent
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JUDGE: |
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DATE OF ORDER: |
26 MARCH 2010 |
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WHERE MADE: |
BRISBANE |
THE COURT ORDERS THAT:
1. The applicant have leave to file and serve a second further amended statement of claim on or before 1 April 2010;
2. The respondents have leave to amend their respective defences;
3. The trial be adjourned to 1 April 2010 for further directions;
4. The applicant pay the respondents’ costs of and incidental to the hearings on 24, 25, and 26 March 2010, and the costs otherwise thrown away by the amendments;
5. All other costs be reserved; and
6. Liberty 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 Federal Law Search on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY |
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GENERAL DIVISION |
QUD 295 of 2008 |
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BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
CEMENT AUSTRALIA PTY LTD ACN 104 053 474 First Respondent
CEMENT AUSTRALIA HOLDINGS PTY LTD ACN 001 085 561 Second Respondent
CEMENT AUSTRALIA (QUEENSLAND) PTY LTD ACN 009 658 520 Third Respondent
POZZOLANIC ENTERPRISES PTY LTD ACN 010 367 898 Fourth Respondent
POZZOLANIC INDUSTRIES PTY LTD ACN 010 608 947 Fifth Respondent
CHRISTOPHER GUY LEON Sixth Respondent
CHRISTOPHER STEPHEN WHITE Seventh Respondent
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JUDGE: |
DOWSETT J |
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DATE: |
26 MARCH 2010 |
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PLACE: |
BRISBANE |
REASONS FOR JUDGMENT
1 Most competition cases are complex. This case is no exception. It concerns the supply of flyash. Flyash is generated by power stations in burning coal. Some flyash is suitable for use in place of cement in the manufacture of concrete. The respondents are, in one way or another, engaged in acquiring flyash from power stations and supplying it to concrete manufacturers. Broadly speaking, the applicant asserts that the first to fifth respondents entered into contracts or other arrangements with power stations in south east Queensland to acquire flyash from them, and that the sixth and seventh respondents were knowingly concerned in such conduct. The applicant asserts that this conduct had the effect of excluding potential suppliers of flyash from competing with one or more of the respondents in supplying flyash in south east Queensland, involving breaches of ss 45, 46 and 47 of the Trade Practices Act 1974 (Cth) (the “Trade Practices Act”).
2 Not all flyash is suitable for use in concrete manufacture. Its suitability depends upon the size of its constituent particles. At para 26 of its further amended statement of claim the applicant pleads reliance on Australian Standard 3582.1 as follows:
AS3582.1 provides for four grades of flyash suitable for use as a cementitious material in concrete and mortar:
26.1 Fine Grade, possessing, among other qualities, 75% fineness minimum;
26.2 Medium Grade, possessing, among other qualities, 65-75% fineness;
26.3 Coarse Grade, possessing, among other qualities, 55-65% fineness;
26.4 Special Grade, possessing, among other qualities 75% fineness minimum and a relative strength exceeding 105%.
3 At para 27 the applicant pleads that such flyash is “concrete-grade flyash”. It seems, however, that evidence in the case (which has been exchanged) indicates that the flyash generally used in concrete manufacture is that described in the standard as “fine grade” or, perhaps, flyash which is even finer than fine grade flyash. I will use the term “fine grade flyash” to describe all flyash which satisfies para 26.1 of AS3582.1, whilst accepting that some evidence suggests that only finer material is generally used in concrete production. There are processes for separating the finer flyash particles from the coarser. This may occur by way of electro-static precipitation at the power station or by use of a classifier which separates the particles using centrifugal force. Classifiers are usually operated by purchasers of flyash from the power stations. Coarser particles may also be ground in order to reduce their size so as to satisfy the criteria for fine grade flyash. I should add that special grade flyash is not relevant for present purposes.
4 To these paragraphs the first to fifth respondents plead as follows (using the same paragraph numbering system as that used in the further amended statement of claim):
26. In answer to the allegations contained in paragraph 26 of the ASOC, the First to Fifth Respondents:
(a) rely on the full terms of AS3582.1 as if set out herein;
(b) otherwise do not admit the allegations contained in paragraph 26.
27. The First to Fifth Respondents do not admit the allegations contained in paragraph 27 of the ASOC and say further that concrete-grade flyash is flyash suitable for use in concrete for commercial applications (commercial concrete-grade flyash) and that the nature of commercial concrete-grade flyash will vary depending on the source from which it originates and the application to which it is intended to be put.
5 The sixth and seventh respondents plead separately, but to the same effect.
6 The applicant pleads the relevant markets as follows:
SEQ Unprocessed Flyash Market
32. Flyash is produced by the following power stations in south-east Queensland:
32.1. Swanbank Power Station, which:
32.1.1. is located near Ipswich in south-east Queensland;
32.1.2. has produced flyash since the 1960s; and
32.1.3. has been owned and operated by CS Energy Ltd (“CS Energy”) since approximately 1997;
32.2. Tarong Power Station, which
32.2.1. is located approximately 180 kilometres north-west of Brisbane in south-east Queensland;
32.3.2. has produced flyash since in or about 1984; and
32.3.3. is and was at all material times owned and operated by Tarong Energy Corporation (“TEC”);
32.3. Millmerran Power Station, which:
32.3.1. is located approximately 206 kilometres west of Brisbane in south-east Queensland;
32.3.2. has produced flyash since in or about 2002; and
32.3.3. is and was at all material times owned and operated by a number of companies trading as Millmerran Power Partners (“MPP”).
32.4. Tarong North Power Station, which:
32.4.1. is located adjacent to Tarong Power Station, approximately 180 kilometres north-west of Brisbane in south-east Queensland;
32.4.2. has produced flyash since in or about 2003; and
32.4.3. is and was at all material times owned and operated jointly by TEC, Mitsui & Co Ltd, and Tokyo Electric Power Company.
33. At all material times:
33.1. power stations needed to dispose of flyash they produced, whether by sale to a purchaser, or as a waste product;
33.2. power stations needed to dispose of their flyash on an ongoing basis, in order for the power stations’ operations to be maintained;
33.3. flyash was classified as a regulated waste, and environmental standards govern the ways by which a power station could dispose of flyash;
33.4. disposing of flyash as a waste product:
33.4.1. was usually achieved by sending the flyash to an ash dam, which would normally have capacity constraints, or to fill an underground mine;
33.4.2. occurred at a cost to power stations.
34. At all material times there has been a demand, by suppliers of concrete-grade flyash operating in south-east Queensland and areas of north-east New South Wales adjacent to the Queensland border (“the SEQ region”), for supply of unprocessed flyash to produce concrete-grade flyash.
35. At all material times, by reason of the geographic distances and transport costs involved, unprocessed flyash produced or supplied in places other than the SEQ region was not economically substitutable for unprocessed flyash produced or supplied in the SEQ region.
36. In the premises, at all material times there was a market for the supply and acquisition of unprocessed flyash in the SEQ region (“the SEQ Unprocessed Flyash Market”).
SEQ Concrete-grade Flyash Market
37. Concrete-grade flyash may replace between approximately 20% to 30% of cement by weight in the manufacture of concrete, but is not otherwise substitutable for cement in the production of concrete.
38. Two products are functional substitutes for concrete-grade flyash in the production of concrete:
38.1. Granulated Blast Furnace Slag (“slag”) which is a silicate-based by-product of the manufacture of iron and steel which, when water-cooled, can be ground for use in blended cement and concrete; and
38.2. cement.
39. At all material times:
39.1. the availability of slag in Queensland was too limited for it to operate as an economic substitute for concrete-grade flyash in the production of concrete;
39.2. cement did not operate as an economic substitute for concrete-grade flyash in the production of concrete; and
39.3. there were no other products in Queensland that were substitutable for, or otherwise competitive with, concrete-grade flyash in the production of concrete.
40. At all material times there was a demand in the SEQ region for the supply of concrete-grade flyash to:
40.1. customers who used concrete-grade flyash in the production of pre-mix concrete and concrete products (“concrete producers”);
40.2. persons who on-sold concrete-grade flyash to concrete producers (“on-sellers”).
41. Until approximately 31 December 2006, the demand for the supply of concrete-grade flyash in the SEQ region was met as set out in paragraphs 42, 47, 53 and 54 below.
42. Between 2002 and 2006:
42.1. small quantities of concrete-grade flyash were acquired from Bayswater power station, located in the Hunter Valley in New South Wales, and transported by road for use in the SEQ region;
42.2. negligible quantities of concrete-grade flyash were imported into Queensland by sea for use in the SEQ region.
43. At all material times until approximately 31 December 2006, by reason of the geographic distances and transport costs involved, concrete-grade flyash produced or supplied in places other than the SEQ region was not an economic substitute for concrete-grade flyash produced or supplied in the SEQ region.
44. In the premises, at all material times there was a market for the supply of concrete-grade flyash in the SEQ region (“the SEQ Concrete-grade Flyash Market”).
7 In answer to the allegations contained in para 32 of the pleading, the respondents:
(a) in answer to subparagraph 32.1:
(i) admit the allegations contained in subparagraph 32.1.1;
(ii) in answer to subparagraph 32.1.2, admit that Swanbank Power Station has produced flyash from time to time since the 1960s;
(iii) otherwise do not admit the allegations contained in subparagraphs 32.1.2 and 32.1.3,
(b) in answer to subparagraph 32.2:
(i) admit the allegations contained in subparagraph 32.2.1;
(ii) in answer to subparagraph 32.2.2, admit that Tarong Power Station has produced flyash from time to time since 1984;
(iii) otherwise do not admit the allegations contained in subparagraph 32.2.2 and 32.2.3,
(c) in answer to subparagraph 32.3:
(i) admit the allegations contained in subparagraph 32.3.1;
(ii) in answer to subparagraph 32.3.2, admit that Millmerran Power Station has produced flyash from time to time since late 2002;
(iii) otherwise do not admit the allegations contained in subparagraphs 32.3.2 and 32.3.3,
(d) in answer to subparagraph 32.4:
(i) admit the allegations contained in subparagraph 32.4.1;
(ii) in answer to subparagraph 32.4.2, admit that Tarong North Power Station has produced flyash from time to time since early 2003;
(iii) otherwise do not admit the allegations contained in subparagraphs 32.4.2 and 32.4.3,
(e) otherwise do not admit the allegations contained in paragraph 32.
8 In answer to the allegations contained in para 33 of the pleading the respondents:
(a) say that flyash is a by-product of the production of electricity by coal fired power stations and has the potential to be used in concrete and other commercial applications;
(b) otherwise do not admit the allegations contained in subparagraphs 33.1 and 33.2;
(c) do not admit the allegations contained in subparagraph 33.3;
(d) in answer to subparagraph 33.4:
(i) say that in respect of Tarong Power Station and Tarong North Power Station, disposing of flyash that was not acquired by another party was usually achieved by transporting the flyash to an ash dam;
(ii) say that in respect of Swanbank Power Station, disposing of flyash that was not acquired by another party was usually achieved by transporting the flyash to an ash dam;
(iii) say that in respect of Millmerran Power Station, disposing of flyash that was not acquired by another party was usually achieved by transporting the flyash to fill an underground mine;
(iv) say that the disposal of flyash in the manner described in paragraphs 33(d)(i), 33(d)(ii) and 33(d)(iii) herein occurred at a cost to power stations;
(v) otherwise do not admit the allegations contained in subparagraph 33.4.
9 In answer to the allegations contained in para 34 the respondents:
(a) admit that from time to time there has been a demand for unprocessed flyash, including by suppliers of concrete-grade flyash operating in south-east Queensland and areas of north-east New South Wales adjacent the Queensland border (the SEQ region);
(b) otherwise do not admit the allegations contained in paragraph 34.
10 The respondents deny the allegations contained in para 35.
11 The respondents deny the allegations contained in para 36.
12 In answer to the allegations contained in para 37, the respondents:
(a) admit that concrete-grade flyash may replace between approximately 20% to 30% of cement by weight in the manufacture of concrete;
(b) say further that the precise proportion of cement that may be replaced by concrete-grade flyash in the manufacture of concrete is dependent upon the quality and characteristics of the concrete-grade flyash and the quality and characteristics of the cement with which it is being mixed;
(c) otherwise do not admit the allegations contained in paragraph 37.
13 In answer to the allegations contained in para 38, the respondents:
(a) admit that ground granulated blast furnace slag (slag) is a functional substitute for concrete-grade flyash in the production of concrete;
(b) admit that cement is a functional substitute for concrete-grade flyash in the production of concrete;
(c) otherwise do not admit the allegations contained in paragraph 38.
14 In answer to the allegations contained in para 39, the respondents:
(a) deny the allegations contained in subparagraph 39.2;
(b) otherwise do not admit the allegations contained in paragraph 39.
15 In answer to the allegations contained in para 40, the respondents:
(a) admit that from time to time there was a demand for concrete-grade flyash, including by persons in the SEQ region who use concrete-grade flyash in the production of pre-mix concrete and concrete products (concrete producers);
(b) otherwise do not admit the allegations contained in paragraph 40.
16 The respondents deny the allegations contained in para 41.
17 In answer to the allegations contained in para 42, the respondents:
(a) admit that between 2002 and 2006 quantities of concrete-grade flyash were acquired from Bayswater power station, located in the Hunter Valley in New South Wales, and transported by road for use in Queensland, New South Wales and Victoria;
(b) admit that between 2002 and 2006 quantities of concrete-grade flyash were imported into Queensland by sea for use in Queensland;
(c) say further, that between 2002 and 2006 quantities of concrete-grade flyash were acquired from Eraring power station, located in New South Wales, and transported by road for use in Queensland and New South Wales;
(d) say further, that between 2002 and 2006 quantities of concrete-grade flyash were acquired from power stations in central Queensland and transported by road and rail for use in south-east Queensland;
(e) say further, that between 2002 and 2006 quantities of concrete-grade flyash were acquired in Queensland and transported to other places, including by road for use in New South Wales, and by sea for use in Victoria;
(f) otherwise do not admit the allegations contained in paragraph 42.
18 The respondents deny the allegations contained in para 43.
19 The respondents deny the allegations contained in para 44.
20 The case is set down for hearing for six weeks commencing from last Tuesday, 23 March 2010. When the case was called, the applicant sought leave to amend the amended statement of claim. The application was not opposed. The amended statement of claim was therefore replaced by the further amended statement of claim. The respondents did not amend their defences. In the course of addressing certain preliminary matters senior counsel for the respondents remarked that his case was, in part, that the market for supply of flyash to concrete manufacturers as pleaded by the applicant was too broad, including, as it does, flyash coarser than fine grade flyash. Counsel said that the respondents’ evidence would disclose that, in general, the market was for fine grade or finer flyash, and that coarser material was only used in exceptional circumstances, such as those attending the recent drought in Queensland. Senior counsel for the applicant immediately indicated that he was taken by surprise by this statement, and that he had not understood that the respondents intended to run such a case. He indicated that the applicant might have to apply for leave to plead an alternative market for the supply of fine grade flyash and subsequently applied accordingly. The respondents oppose the application.
21 The applicant submits that the proposed amendment simply recognizes the possibility that the Court might find a narrower market than that presently pleaded, and that there is no reason to believe that the case for either side will be significantly different as a result of the proposed amendment. It also submits that the respondents have not properly raised the relevant issue in their defences, namely that some concrete-grade flyash (as defined in the further amended statement of claim) is not generally used in the manufacture of concrete. The respondents submit that they have denied existence of the relevant market and have also said a good deal about the nature and use of fine grade flyash as opposed to the coarser material.
22 The respondents also refer to various aspects of the evidence supplied in advance of trial by both sides. It seems that numerous witnesses on both sides have addressed the suitability of flyash other than fine grade flyash for use in concrete. The thrust of the evidence is that the vast bulk of flyash used in the manufacture of concrete is fine grade flyash. The applicant points out that its economist has addressed the question and concluded that there is one market for the supply of concrete-grade flyash, including both fine grade and coarser flyash. The respondents’ economist was not asked to address the question of market identification. The respondents say that they propose to challenge the applicant’s market definition on the facts, and not by way of disputing the economist’s opinion concerning alleged facts.
23 The respondents submit that the proposed amendments may have a far-reaching effect on the case. In particular, they may wish to seek detailed identification by the applicant of the basis of its allegations of anti-competitive effect or likely effect. Counsel concedes that the respondents did not pursue an earlier request for such particulars on the pleading as it stands, apparently for reasons of perceived forensic advantage. However, if the proposed amendments are allowed, they will seek such particulars in connection with the amendments.
24 Such a late application for amendment, where it is likely to result in the adjournment of a potentially lengthy trial, may cause serious injustice to other parties. The respondents also point out that the applicant’s investigation of the matter commenced some years ago. However the proceedings themselves were only commenced in September 2008. Nonetheless the trial dates have been known since 31 October 2008. As the High Court pointed out in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, the injustice and inconvenience inherent in allowing a late amendment cannot always be adequately remedied by an order for costs. Further, the Court’s duty to do justice as between the parties will not necessarily compel it to allow a proposed amendment simply in order to ensure that the party in question has an opportunity to ventilate all issues which it wishes to raise. Where there has been ongoing case management the Court should not lightly accede to applications for amendment to raise matters which ought to have been identified in the course of such management. On the other hand, there is substantial community benefit in ensuring that the processes of the Court effectively quell the whole of the dispute between the parties. It will generally be unsatisfactory if an aspect is left unresolved. A doubt may hang over the conduct of a particular party, which doubt cannot be either confirmed or dissolved by appropriate judicial proceedings. This is particularly true where the matter is of significant public interest.
25 The applicant is charged with the enforcement of the Trade Practices Act. It should therefore be able to bring substantial expertise to bear in connection with its investigations and any subsequent court proceedings. In many cases such expertise will be much greater than that available to other parties to such proceedings. In seeking to enforce the Act it is, of course, performing an important public function. The proceedings may be distinguished from proceedings between private parties. However that does not mean that the applicant is a favoured litigant, or that its shortcomings should be ignored.
26 I readily concede that there is potential unfairness to the respondents in adjourning the trial in order to allow them to respond to the applicant’s proposed amendment. It seems that such an adjournment will be inevitable in the event that I allow the amendment. I approach the question of leave to amend on that basis.
27 An important consideration, in deciding whether or not to allow the amendment, is the reason for the late application. In the end, it seems that counsel failed to understand the nature of the respondents’ challenge to the applicant’s pleaded market. Traditionally, a market is said to have four dimensions, the product, the temporal dimension, the geographical dimension and the functional dimension. Identification of the product is fundamental to any definition of a relevant market. Notwithstanding the fact that in para 44 the respondents deny existence of the alleged market, the applicant seems to have thought that in establishing that market it would not have to address identification of the relevant product. It seems not to have realized that it might have to deal with an argument that there was no relevant market for the supply of the product identified in its pleading as concrete-grade flyash, and that if it established only that there was a market for fine grade flyash, its case might fail.
28 The problem arises from paras 26 to 31 of the further amended statement of claim and the respondents’ pleadings concerning those paragraphs. Following its pleading of AS3582.1, the applicant, in para 27, defined the term “concrete-grade flyash” as “flyash that meets the requirements of AS 3582.1”. I again point out that special grade flyash is not relevant for present purposes. The applicant then pleads various matters concerning the production of flyash at power stations (“unprocessed flyash”). It then deals with the classification process which produces some flyash which is finer than unprocessed flyash (“processed flyash”) and other flyash which is coarser than unprocessed flyash (“reject flyash”). Unprocessed flyash which is not concrete-grade flyash may be turned into concrete-grade flyash by the classification process. The statement of claim then proceeds to define two markets, a market in south east Queensland for unprocessed flyash and a market in south east Queensland for concrete-grade flyash.
29 The respondents’ pleading to para 27 of the further amended statement of claim appears to qualify the definition of the term “concrete-grade flyash”, at least to the extent of asserting that the quality of flyash suitable for use in the manufacture of concrete may vary according to source and application.
30 However, it is at para 37 of the further amended statement of claim that the case goes awry. The respondents’ pleading in response to para 37 seems to admit that concrete-grade flyash may be used in concrete manufacture, but only if it is of sufficiently high quality. As I have said the evidence apparently suggests that only fine grade (or finer) flyash will generally be suitable. The matter is further complicated at para 40 of the further amended statement of claim. The respondents admit only a demand for concrete-grade flyash “from time to time”. The words “from time to time” and the earlier qualification upon the suitability of concrete-grade flyash (as defined in the further amended statement of claim) significantly limit the extent of any admission otherwise inherent in para 40 of the defence.
31 Finally, the respondents deny the allegations contained in paras 43 and 44. The plea to para 43 is of some significance. It seems that the applicant’s case depends to some extent upon the proposition that concrete-grade flyash sourced from outside of south east Queensland is not an economic substitute for flyash produced in that area. The respondents suggest that the effective cost of transporting fine grade flyash is less than that of coarser grades. Common sense suggests that this is correct. I understand that there is evidence to the same effect. Thus the geographical dimension of the relevant market for fine grade flyash may be larger than that for concrete-grade flyash. It is also important that the respondents deny existence of the market alleged in para 44 of the further amended statement of claim.
32 Counsel for the applicant assert that the respondents’ pleadings do not raise a case based on the distinction between fine grade flyash and concrete-grade flyash. It is more accurate to say that the respondents have been careful to limit the extent to which their pleadings raise new factual assertions. Both sides have indicated that they will be leading evidence which seems to suggest that fine grade flyash is widely, perhaps generally, used in the manufacture of concrete, and that coarser grades are much less frequently used. It is difficult to understand the relevance of that evidence if it is not as to identification of the relevant product for the purpose of market identification. Counsel for the applicant seem to accept that this is the primary purpose of the evidence but maintain that they did not realize that the applicant might have to face a finding that its market as pleaded had not been made out because the relevant market was for fine grade or finer flyash rather than concrete-grade flyash. They submit that the applicant could not be expected to have understood the respondents’ case in that way simply because such an outcome would inevitably be less favourable to the respondents than a finding that the market was as pleaded. I do not necessarily accept that assertion. As I have previously observed, fine grade flyash may be produced by electro-static precipitators at the power stations or by sorting, using a classifier. It is also possible that fine grade flyash might be produced by grinding coarser material. There is, I am told, evidence as to the length of time necessary to establish a classifier. These matters may affect both product identification and the temporal dimension of the relevant market. As I have already observed, it might be that fine grade flyash can be brought into south east Queensland from other regions at a cost which makes it an economic substitute for the local product. This might affect product description and/or the geographical dimension of the market. These are all matters that arise routinely in competition cases.
33 At this stage in the case I find it difficult to assess the significance of the proposed amendment with any degree of confidence. It seems to me, however, that the applicant ought to have recognized, in advance of the trial, the possibility that it would have to meet a case based upon the proposition that the relevant product was fine grade flyash, given that it was, on the evidence, by far the dominant product supplied to concrete producers. Quite apart from that matter, the respondents’ denial of the alleged market for concrete-grade flyash means that all aspects of the applicant’s market definition are in issue. The question, then, is whether, accepting that the applicant failed timeously to raise a significant issue in its pleading, it should now be allowed to amend to deal with that matter, notwithstanding the fact that such amendment will result in loss of the trial dates and significant inconvenience and/or expense to all concerned, including some public expense.
34 Counsel for the respondents point out that the applicant has offered no sworn evidence demonstrating that the applicant, by its staff, had not previously considered the possibility that its product definition was too broad. However the applicant’s legal representatives say that they had not previously identified the problem. I accept that assertion. That was an error of judgment of the type contemplated by the High Court in Aon at [77] and [109]. The fact that a late amendment is prompted by a realization that there has been an earlier error of judgment does not, of itself, lead to the conclusion that the amendment should be allowed. On the other hand there is a substantial public interest in having a matter of this kind resolved on its merits, and not on the basis of what may, in the end, appear to be a mere technicality. Further, although I am not persuaded that the respondents were obliged to go further than they did in pleading their case, it may have been more helpful had they clearly asserted that not all flyash satisfying the Australian Standard is generally used in manufacturing cement. It may be that that they were anxious to avoid asserting the existence of a particular market. Fairly clearly, they were careful to challenge the factual assertions in dispute, but they did so in a way which was a little opaque. Had they been somewhat more transparent in their pleadings, the present situation may not have arisen. Nonetheless the present problem is primarily attributable to the applicant’s failure to accept the full consequences of the respondents’ denial of the market as pleaded and to respond accordingly. Perhaps it was a case of seeing what it wanted to see.
35 Notwithstanding my conclusion that primary responsibility for the present difficulty lies with the applicant, I fear that an informed lay person, observing these proceedings, would conclude that any outcome which did not involve consideration of the proposed amended case, and was unfavourable to the applicant, would characterize such outcome as being based on a “technicality”. Such a perception would not enhance respect for the administration of justice. For that reason, and because the applicant’s failure to raise the amendment at an earlier time appears to have been the result of an error of judgment which might have been avoided had the respondents been a little less opaque in their pleadings, I will allow the proposed amendment. The substantial public interest in the enforcement of the Trade Practices Act is also relevant in this regard. I accept that the necessary consequence of allowing the amendment is that the trial will be adjourned, raising the question of costs.
36 As counsel for the respondents point out, where an adjournment occurs because of a late amendment, the party seeking the amendment is generally ordered to pay the costs of the other parties thrown away as a result of the amendment. At one stage in the course of argument I indicated that I was inclined to make an order rather more favourable to the applicant, namely that it pay the respondents’ costs of the first day of the trial, and that the costs otherwise be reserved, including costs thrown away as a result of the amendment. However, in offering that tentative view I was, I think, motivated by a perception that the problem had been brought about to some extent by the way in which the respondents had dealt with para 27 of the statement of claim. I had it in mind that the qualified non-admission in that paragraph related to the applicant’s pleading of the market definition. In fact, that matter is dealt with in para 44. The allegations in that paragraph are denied. I also expressed some preference for deferring the question of costs thrown away until after the trial, in the expectation that I would be better able, at that time, to identify the respective responsibilities of the parties for what has happened. However that preference was, I think, also influenced by my being preoccupied with para 27 of the statement of claim. As I have said, I consider that the respondents might have been somewhat more forthcoming in their pleadings than they were. Nonetheless, once it is accepted that the primary cause of the late application to amend is the applicant’s failure to recognize the effect on its case of the respondents’ pleadings, it follows that the respondents are entitled to the costs thrown away. There is no real risk that the applicant will be unable to meet any order as to costs. The respondents face no risk in that regard.
37 I order that the applicant pay the respondents’ costs of, and incidental to, the hearings on 23, 24 and 25 March and the costs otherwise thrown away as a result of the amendment. I vacate the balance of the trial dates.
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I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. |
Associate:
Dated: 26 March 2010
