FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Cabcharge Australia Ltd (No 2) [2010] FCA 837

THE COURT ORDERS THAT:

1.                  The respondent have leave to amend its defence in accordance with these reasons.

2.                  The respondent have leave, if leave be necessary, to file and rely upon any documents identified by the ACCC in its response to the s 157 notice, provided it gives notice to the ACCC within fourteen days of receiving the ACCC’s response that it intends to rely on those documents.

3.                  The respondent pay the applicant’s costs thrown away by reason of order 1, including the costs of this application and hearing.

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.

REASONS FOR JUDGMENT

1                     The trial of this action is due to commence on 4 October 2010.  It will be heard over several weeks.  At trial the applicant, the Australian Competition and Consumer Commission (ACCC), will contend that the respondent, Cabcharge Australia Ltd (Cabcharge), has contravened ss 45 and 46 of the Trade Practices Act 1974 (Cth).  To make out its case the ACCC proposes to call 52 witnesses.  Affidavits from those witnesses have been filed.  Most were filed before the end of 2009.  Now Cabcharge wishes to amend its defence to put in issue matters which, by its current defence, have been admitted.  The question in issue is whether it should be given leave to amend at this late stage.

2                     It is not necessary to discuss in detail the several claims made against Cabcharge.  It is sufficient to say that central to those claims is the allegation that Cabcharge is in a dominant position in the market or markets for the provision of manual and electronic processing systems applied to receive payment of cab fares from customers.  One of the principal allegations is that Cabcharge misused its power in the relevant markets to keep out competitors by withholding access to its processing systems. 

3                     Cabcharge’s current defence was settled by counsel, albeit not counsel presently retained in the case.  It may be assumed that what was pleaded accorded with counsel’s then instructions.  Only brief reasons are given to justify the withdrawal of several admissions in the defence.  Mr Fleming, Cabcharge’s solicitor both when the defence was filed and when this application was made, said no more than this:  “The form of the defence prior to the proposed amendments was prepared prior to full investigation of the relevant facts and was settled by Cabcharge’s then junior counsel … the further paragraphs that are sought to be amended were inadvertently in error and/or inconsistent with the facts as subsequently ascertained.”

4                     While the power to permit a party to withdraw an admission is, in terms, unqualified (see O 13 r 2 of the Federal Court Rules), it is generally accepted by the cases that some good reason must be shown:  see Optical 88 Ltd v Optical 88 Pty Ltd [2010] FCA 310, per Yates J citing Drabsch v Switzerland General Insurance Co Ltd (unreported, Supreme Court of New South Wales, 16 October 1996).  Nowadays, at least since the High Court handed down its decision in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, particularly strong reasons must be shown if the amendments would interfere with orderly trial preparation or would put the trial date in jeopardy.  Whether or not Mr Fleming’s explanation constitutes a good reason will be considered by reference to the particular allegations which Cabcharge now wishes to put in issue. 

5                     It is convenient to begin with para 23 of the amended statement of claim.  That paragraph reads:

23.               By reason of the matters in paragraph 22 above, at all relevant times until 27 June 2006 the practical effect of the authorisations [granted by the Trade Practices Commission and later the ACCC to Networks comprising the majority of taxi licences in Sydney permitting them to only offer one taxi hiring account or other credit system] referred in paragraph 21 included that drivers and Operators affiliated with the Networks subject to the authorisations were required to accept Cabcharge Instruments.

By its proposed amendment Cabcharge wishes to withdraw its admission to those allegations and plead that it:

(a)        admits that in revoking the authorisations alleged, the Australian Competition Tribunal found that the practical effect of the authorisations was to compel networks and drivers to install Cabcharge EFTPOS terminals;

(b)        says that the authorisations were non-exclusive so that any card issuer or EFTPOS provider could make their services available to taxi operators, and

(c)        otherwise does not admit the paragraph and says that the authorisations alleged did not concern Cabcharge Instruments as defined in this proceeding (and does not plead to the particulars thereto).

6                     Proposed para (a) raises an issue that is irrelevant.  What is contended in para (b) is not controversial.  In any event, whether or not the authorisations were non-exclusive is, in part, a matter of law to be determined by the trial judge whatever the parties may contend.  Proposed para (c) was partially concerned with a dispute over the meaning of “Cabcharge Instruments”, although this dispute is immaterial to the resolution of the present application.  The primary object of (c) is to put the ACCC to its proof of the allegation that the practical effect of the authorisations was that drivers and operators were required to accept Cabcharge instruments. 

7                     A traverse by non-admission casts upon the plaintiff the burden of proving the allegation not admitted.  Speaking generally, there is no difference in effect between denying and not admitting an allegation:  Worrell v London & North-Western Railway Co (1877) 35 LT 848; Warner v Sampson [1959] 1 QB 297, 319.  By custom a party denies any matter which, if it had occurred, would have been within his/her knowledge and refuses to admit matters which are not within his/her knowledge.  Also by custom, where a party does not admit an allegation which is within his/her knowledge he/she does not tender evidence to contradict any evidence that is led by a plaintiff.  That is, the usual object is simply to burden the plaintiff with the proof of his/her case.  That is what Cabcharge seeks to do here.

8                     To this point, the ACCC has filed little evidence to establish what it alleges in para 23.  In view of the admission, evidence of the matter is inadmissible:  Evidence Act 1995 (Cth), s 55.  If Cabcharge is permitted to withdraw its admission more evidence will be required.  The practical consequence may be to put the trial date in jeopardy.  This I am not prepared to countenance.  It would be contrary to the interests of justice to allow this trial to go off simply because Cabcharge wants the ACCC to prove an issue which Cabcharge does not deny in the case. 

9                     Paragraph 42 of the amended statement of claim reads:

42.               At all relevant times:

(a)                Cabcharge had the largest market share of all persons competing in the:

(i)                  Electronic Processing Market by a substantial margin;

(ii)                further or alternatively, in the Combined Manual and Electronic Processing Market by a substantial margin. 

Cabcharge seeks to withdraw its admission to this paragraph and plead that it:

(i)                  does not admit that there is an Electronic Processing Market or a Combined Manual and Electronic Processing Market; but

(ii)                if there are such markets, admits that during the period from 2002 to 2008 Cabcharge had the largest market share in the Electronic Processing Market further or alternatively in the Combined Manual and Electronic Processing Market;

(iii)               otherwise does not admit the paragraph (and does not plead to the particulars thereto);

10                  There is no dispute concerning Cabcharge’s entitlement to plead para (i):  Cabcharge has put the existence of these markets into dispute in other parts of its defence.  Para (ii) is not in issue.  With respect to para (iii), once again Cabcharge does not contend that the facts alleged in para 42 are untrue.  It merely wishes to have the ACCC prove those facts.  That also will require further evidence.  I do not propose to risk the trial date to permit that to happen. 

11                  Paragraph 45 of the amended statement of claim reads:

45.       At all relevant times, no competitor of Cabcharge in the Electronic Processing Market, further or alternatively in the Combined Manual and Electronic Processing Market, was permitted by Cabcharge to supply Electronic Processing Services for Cabcharge Instruments.

Cabcharge wishes to withdraw its admission to that paragraph and plead that it:

(a)                does not admit that there is an Electronic Processing Market or a Combined Manual and Electronic Processing Market, and

(b)                otherwise does not admit that paragraph and says that no competitor as alleged was capable of supplying Electronic Processing Services for Cabcharge Instruments at all material times.

12                  This proposed plea raises different issues.  I do not propose to permit Cabcharge to withdraw its admission that competitors of Cabcharge were not permitted by Cabcharge to supply electronic processing services.  Cabcharge does not deny that permission was required for a competitor to supply electronic processing services on its instruments.  However, the real point of the proposed amendment is to contend (ie confess and avoid) that no competitor was capable of supplying electronic processing services for Cabcharge instruments.  This raises a technical point about the equipment itself.  It is a point about which the ACCC has had some notice.

13                  In para 97(b) of its defence, Cabcharge has alleged that “its conduct in relation to each of the alleged refusals to deal was conduct designed to achieve, and appropriate to achieve, a legitimate business objective, and did not involve it taking advantage of any market power in any of the alleged markets (to the extent that they are found to exist).”

14                  The ACCC requested particulars of this paragraph.  In particular the ACCC asked Cabcharge to give full and precise particulars of the “legitimate business objective” therein referred to.  It also asked for the material facts for Cabcharge’s allegation that its conduct was designed to achieve and was appropriate to achieve a legitimate business objective.

15                  Further and better particulars were provided on 9 October 2009.  In those particulars Cabcharge described its “legitimate business objective” as being “to ensure the integrity and security of its operation and reputation.”  It particularised the facts supporting its allegation, including, in respect of one particular competitor who sought access:  “a reasonable belief in respect of [that competitor] that its system for processing payments was easily compromised and vulnerable to manipulation, that it did not meet the functional criteria appropriate for the operation of the Cabcharge business and that the terms suggested by [that competitor] and the context of its offer to deal were not appropriate for genuine commercial negotiations.” 

16                  The material facts Cabcharge asserted in respect of the other refusals did not allege that the competitors’ systems did not meet the functional criteria appropriate for the operation of Cabcharge’s business.  This notwithstanding, Cabcharge filed an affidavit by Mr D’Arcy, Cabcharge’s Group General Manager, which, in some detail, explains why each competitor’s system did not meet the functional criteria appropriate for the operation of the Cabcharge business.  In brief, Mr D’Arcy says that the competitors lacked the capacity to deal with Cabcharge in a manner which would have been in compliance with relevant standards and would have been acceptable to it and others, particularly in terms of Cabcharge’s security and commercial requirements.

17                  It was, to say the least, inappropriate for Cabcharge to have filed evidence which goes far beyond its pleaded case.  On the other hand, the issues raised by Mr D’Arcy are of some importance and, if his evidence is accepted, may be an answer to the refusal to deal allegations.

18                  Not without some hesitation I have come to the view that Cabcharge should be permitted to amend its defence to plead that Cabcharge competitors were not capable of supplying electronic processing services for Cabcharge instruments.  It is in the interests of justice for this issue to be resolved on true facts. 

19                  The consequence of permitting the amendment is that the ACCC will be required to answer the evidence of Mr D’Arcy as well as that of Mr Stuckey who gives evidence along similar lines.  It will take some time for it to do so.  I propose to allow the ACCC until 6 September 2010 to file affidavits that answer that evidence.

20                  The next proposed amendments relate to paras 77 and 78 of the amended statement of claim.  By those paragraphs the ACCC alleges that:

77.       In or around July 2007, Mpos requested Cabcharge to agree, on commercial terms, to allow Cabcharge Instruments to be processed by Mpos’ electronic system for the processing Non-Cash Taxi Instruments in Australia.

78.       In or around July 2007, Cabcharge refused Travel Tab’s request alleged in paragraph 77 above (2007 Mpos Refusal).

21                  Cabcharge wishes to put those allegations in issue.  They arise out of a conversation between Mr Kelso, the representative of Mpos and Travel Talk, and Ms Doyle, in-house counsel and company secretary of Cabcharge.  The ACCC has filed an affidavit from Mr Kelso in which he sets out what he said in the conversation and Cabcharge has filed a responding affidavit from Ms Doyle.  If the amendment is allowed, no further evidence is required. 

22                  I note that the ACCC has appreciated from the earliest of times that Mr Kelso’s account of the conversation with Ms Doyle is disputed.  This was evident from what Ms Doyle said in her s 155 examination. 

23                  In the circumstances it is appropriate to give Cabcharge leave to amend its defence to deny the allegations in paragraphs 77 and 78. 

24                  Cabcharge will be required to pay the ACCC its costs thrown away by reason of the amendments, together with the costs of this application.

25                  I should also mention another matter raised by Cabcharge.  On 18 May 2010 it served on the ACCC a notice under s 157 seeking the production of certain documents.  To date the ACCC has not responded to this notice, but has indicated that it will do so as soon as it has completed filing its reply affidavits.  It may be that Cabcharge will wish to tender documents identified by the ACCC in its response to the notice.  The orders made on 28 May 2010 limiting the time within which Cabcharge was to file its evidence will, as a matter of caution, be extended to enable it to tender documents which it may receive in the ACCC’s response.  I will reserve for further consideration, if the matter arises, whether Cabcharge should, in addition to the tender of documents, also be permitted to file additional evidence in respect of the contents of those documents.

Associate:

Dated:         9 August 2010