Federal Court of Australia

Commonwealth Director of Public Prosecutions v The Country Care Group Pty Ltd (Ruling No 10) [2021] FCA 841

File number:

VID 224 of 2019

Ruling of:

BROMWICH J

Date of ruling:

5 May 2021

Catchwords:

EVIDENCE no case applications by the first and second accused in respect of charges 4 and 5 in the indictment respectively – Court obliged under s 23FH of the Federal Court of Australia Act 1976 (Cth) to enter a judgment of acquittal and discharge the accused in relation to the charge if the Court finds the accused has no case to answer in relation to the charge – whether the first and second accused had a case to answer in relation to charges 4 and 5 – held: applications dismissed.

Legislation:

Competition and Consumer Act 2010 (Cth) ss 44ZZRG, 44ZZRS, 45AG, 45AR, 47

Criminal Code (Cth) s 13.3(3), (6)

Federal Court of Australia Act 1976 (Cth) s 23FH

Cases cited:

Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375

Director of Public Prosecutions (Vic) v Iliopoulos (Ruling No 3) [2016] VSC 132

Doney v The Queen (1990) 171 CLR 207

R v A2 [2019] HCA 35; 93 ALJR 1106

Division:

General Division

Registry:

Victoria

National Practice Area:

Federal Crime and Related Proceedings

Number of paragraphs:

40

Date of hearing:

15 March 2021 - 1 June 2021

Date of submissions on this ruling:

3-4 May 2021

Counsel for the Prosecutor:

O Bigos QC, R Barry, A Muhlebach, S Tatas

Solicitor for the Prosecutor:

Commonwealth Director of Public Prosecutions

Counsel for the First Accused:

K Morgan SC, P Strickland

Counsel for the Second Accused:

D Jordan SC, S Keating

Solicitor for the First and Second Accused:

HWL Ebsworth Lawyers

Counsel for the Third Accused:

D Staehli SC, C Bannan

Solicitor for the Third Accused:

Mills Oakley

VID 224 of 2019

BETWEEN:

COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS

Prosecutor

AND:

THE COUNTRY CARE GROUP PTY LTD

First Accused

ROBERT MARTIN HOGAN

Second Accused

CAMERON JOHN WILLIAM HARRISON

Third Accused

REASONS FOR RULING

BROMWICH J:

1    The first two accused (The Country Care Group Pty Limited and Mr Robert Hogan) made a no case application by which they contended that the Court is obliged to enter a judgment of acquittal in relation to charges 4 and 5 in the indictment: see s 23FH, Federal Court of Australia Act 1976 (Cth). These are the reasons for my decision given on 5 May 2021 dismissing that application. Country Care and Mr Hogan will, for convenience and ease of reading, be referred to in these reasons simply as “the accused”, even though this application does not concern the third accused, Mr Harrison.

2    Charges 4 and 5 and the corresponding particulars for both are as follows:

Charge 4    The Prosecutor charges that on about 7 November 2014 at Mildura in the State of Victoria and elsewhere in Australia THE COUNTRY CARE GROUP PTY LTD gave effect to a cartel provision contained in an arrangement or understanding with Patient Handling Pty Ltd which to the knowledge or belief of The Country Care Group Pty Ltd contained a cartel provision.

Statement of Offence: Give effect to a cartel provision contained in a contract, arrangement or understanding, contrary to section 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth).

Charge 5    The Prosecutor charges that between about 11 July 2014 and about 7 November 2014 at Mildura in the State of Victoria and elsewhere in Australia ROBERT MARTIN HOGAN aided, abetted, counselled or procured The Country Care Group Pty Ltd to contravene a cartel offence provision namely section 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth) by giving effect to a cartel provision contained in an arrangement or understanding with Patient Handling Pty Ltd which to the knowledge or belief of The Country Care Group Pty Ltd and Robert Martin Hogan contained a cartel provision.

Statement of Offence: Aid, abet, counsel or procure a person to contravene a cartel offence provision contrary to section 44ZZRG( 1) of the Competition and Consumer Act 2010 (Cth) by virtue of section 79(1)(a) of that Act.

Particulars of cartel provision in charges 4 and 5

The Country Care Group Pty Ltd and Patient Handling Pty Ltd made an arrangement or arrived at an understanding that contained a provision that had the purpose of ensuring that in the event of a request for bids in relation to the supply of certain assistive technology goods pursuant to a HealthShare NSW 217B tender, The Country Care Group Pty Ltd would submit a bid to HealthShare but Patient Handling Pty Ltd would not.

3    In these reasons, as in the trial more generally, the New South Wales government tender for clinical furniture managed by HeathShare NSW may be referred to simply as the 217B tender.

4    A necessary characteristic of the charged arrangement or understanding is that there be more than a mere expectation, needing there to be a commitment to act in a certain way: Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 at [137]-[139] and [141], and the authorities there discussed. The particulars reproduced above assert that the arrangement or understanding was that Country Care would submit a 217B tender bid and Patient Handling Pty Ltd would not, constituting an allegation of a mutual commitment. That is in fact what transpired in that Country Care did in fact submit a 217B tender bid, and Patient Handling did not.

5    The asserted bases for triggering the obligation to enter an acquittal judgment were twofold and in the alternative. The first basis was that the prosecution could not exclude the inference that in a conversation with Mr Cuddihy of Patient Handling in mid-2014 about Country Care’s 217B tender submission, Mr Hogan was only referring to the then current business practice of including Patient Handling’s Molift products on their submissions, and was not seeking any commitment from Mr Cuddihy of the kind needed to establish the existence of an arrangement or understanding as charged. The accused submit that no evidence has been tendered which can exclude that innocent inference from being available.

6    Put another way, the reasonable explanation advanced by the accused was to the effect that putting the Molift products on the 217B submission was not to the exclusion of Mr Cuddihy doing anything, but rather was consistent with the business practice of Country Care of listing Patient Handling products, relevantly for present purposes, Molift products, on Country Care’s 217B tender submission.

7    Thus the issue advanced by the accused on the first basis, and answered by them in the negative, was whether the prosecution could exclude a reasonable explanation that the conversation did not entail Mr Hogan seeking a commitment, but that he was in fact doing no more than raising the same business practice that had existed for some time between Country Care and Patient Handling, which was that Country Care would take on the administrative and other burdens of the tender process and as part of that put Molift products that Patient Handling could supply on its 217B submission.

8    On this asserted reasonable explanation, unless able to be rationally excluded, the accused contended that Mr Hogan was saying no more than that Country Care would put Patient Handlings products on their tender so Patient Handling did not need to worry about doing their own tender submission. It was also submitted that Mr Hogan did not say that Patient Handling should not submit a 217B tender, and that Mr Hogan did not seek a commitment to that effect, but both of those arguments seemed to contemplate more than is necessarily required for an arrangement or understanding as explained in CC (NSW) in the passages cited above.

9    The alterative basis for the accused having no case to answer was that, even if the necessary meeting of the minds and commitment could be established, the prosecution could not exclude the reasonable possibility that the exception in s 44ZZRS(2) of the Competition and Consumer Act 2010 (Cth) (CCA) applies, by which the operation of s 44ZZRG does not apply in relation to giving effect to a cartel provision if the conduct relevantly contravenes s 47, or would do so but for the operation of s 47(10). (Section 44ZZRS has since been renumbered as s 45AR and s 44ZZRG has since been renumbered as s 45AG, but s 47 has retained the same numbering.)

10    The prosecutor contended that there was sufficient evidence for charges 4 and 5 to go to the jury, asserting that on all the relevant evidence the jury could rationally exclude the innocent explanation (that is to say, interpretation) advanced by the accused. As part of this contention, the prosecutor submitted that the jury could be satisfied that the exception in s 44ZZRS(2) did not apply.

Principles

11    In R v A2 [2019] HCA 35; 93 ALJR 1106, an aspect of the case before the High Court concerned whether there was sufficient evidence to order a new trial upon setting aside verdicts of acquittal that had been entered by the New South Wales Court of Criminal Appeal. Kiefel CJ and Keane J (with whom Nettle and Gordon JJ agreed) said the following on that topic (footnotes omitted, bold added, italics in original):

The test of sufficiency

[88]    The question of whether there is sufficient evidence to support a conviction is ordinarily to be determined in accordance with the test adopted in Doney v The Queen:

[I]f there is evidence (even if tenuous or inherently weak or vague) which can be taken into account by the jury in its deliberations and that evidence is capable of supporting a verdict of guilty, the matter must be left to the jury for its decision. Or, to put the matter in more usual terms, a verdict of not guilty may be directed only if there is a defect in the evidence such that, taken at its highest, it will not sustain a verdict of guilty.

[89]    The test in Doney stands in contrast to the test in M v The Queen that is applied in the determination of whether a verdict is unreasonable or unsafe and unsatisfactory:

Where, notwithstanding that as a matter of law there is evidence to sustain a verdict, a court of criminal appeal is asked to conclude that the verdict is unsafe or unsatisfactory, the question which the court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty. But in answering that question the court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses. On the contrary, the court must pay full regard to those considerations.

[90]    Although consideration of the “interests of justice” may accommodate or require the application of this more stringent standard of review, at the first stage of the analysis consideration of the sufficiency of the evidence invokes the lesser standard identified in Doney. Thus, in Peacock v The King, Barton J described the question as being whether the evidence is “capable of the inference of guilt, albeit some other inference or theory be possible [and, if so] it is for the jury … to say … whether the inference … overcomes all other inferences or hypotheses, as to leave no reasonable doubt of guilt in their minds”. In Director of Public Prosecutions (Nauru) v Fowler, Gibbs CJ, Murphy, Wilson, Dawson and Deane JJ posed the question in terms of whether “the admissible evidence given at the original trial was sufficiently cogent to justify a conviction”. In Spies v The Queen, Gaudron, McHugh, Gummow and Hayne JJ stated the test in terms of whether “there is evidence to support the charge”.

[91]    Application of the Doney test requires assessment of the sufficiency of the evidence taking the prosecution evidence (including the answers of prosecution witnesses to cross-examination) at its highest and drawing all inferences favourable to the prosecution case that are reasonably open. If the case is circumstantial, it is not to the point that the court may consider an hypothesis consistent with innocence to be reasonably open on the evidence. The question is whether a jury, taking the evidence at its highest and drawing all reasonably open inferences that are most favourable to the Crown, could rationally exclude that hypothesis. Subject to contrary statutory provision, the court does not need to consider evidence that contradicts, qualifies or explains the prosecution’s case or that supports the accused’s case. That requires consideration of the evidence.

12    Footnote 130 to the sentence in bold above, namely [t]he question is whether a jury, taking the evidence at its highest and drawing all reasonably open inferences that are most favourable to the Crown, could rationally exclude that hypothesis, cites Director of Public Prosecutions (Vic) v Iliopoulos (Ruling No 3) [2016] VSC 132 at [8]-[9], a ruling on a no case application by Kaye JA sitting as a trial judge in the Criminal Division. The second of those two paragraphs and the next paragraph are as follows (embedding footnotes):

[9]    Rather, in such a case, the test, that the trial judge must apply, is whether the jury could rationally conclude that any inference or hypothesis, consistent with innocence, is not reasonably open on the evidence. In applying that test, it is important to bear in mind that the drawing of inferences is essentially the function of the jury, as the sole judges of the facts in the trial. [R v Cengiz (1998) 3 VR 720, 721 (Ormiston JA), 735 (Harper AJA)]

[10]    Those principles were conveniently summarised by King CJ of the Court of Criminal Appeal of South Australia in a case stated by DPP (No 2) of 1993 [(1993) 70 A Crim R 323, 327] as follows:

If there is direct evidence which is capable of proving the charge, there is a case to answer no matter how weak or tenuous the judge might consider such evidence to be. If the case depends upon circumstantial evidence, and that evidence, if accepted, is capable of producing in a reasonable mind a conclusion of guilt beyond reasonable doubt and thus is capable of causing a reasonable mind to exclude any competing hypotheses as unreasonable, there is a case to answer. There is no case to answer only if the evidence is not capable in law of supporting a conviction. In a circumstantial case that implies that even if all the evidence for the prosecution were accepted and all inferences most favourable to the prosecution which are reasonably open were drawn, a reasonable mind could not reach a conclusion of guilt beyond reasonable doubt, or to put it another way, could not exclude all hypotheses consistent with innocence, as not reasonably open on the evidence.

13    It was common ground between the parties that the interpretation of the conversation between Mr Cuddihy and Mr Hogan in mid-2014 calls for an exercise of interpretation by the jury and that the meaning to be derived is inferentially informed by other evidence in the trial. To that extent the interpretation was said to be based on circumstantial evidence, and thereby an inference-drawing exercise, so as to engage the principle from R v A2 identified above, which is an extension of the test in Doney v The Queen (1990) 171 CLR 207. In Doney the following was stated at 214-215:

It follows that, if there is evidence (even if tenuous or inherently weak or vague) which can be taken into account by the jury in its deliberations and that evidence is capable of supporting a verdict of guilty, the matter must be left to the jury for its decision. Or, to put the matter in more usual terms, a verdict of not guilty may be directed only if there is a defect in the evidence such that, taken at its highest, it will not sustain a verdict of guilty.

14    Upon reviewing the competing arguments, I was far from convinced that it is correct to characterise the assessment of the meaning of the conversation between Mr Hogan and Mr Cuddihy as resting on a circumstantial case, or part of a case. Rather the situation called for the jury to assess direct evidence, in the context of other evidence. However, as that was the way in which the application was argued, I decided the question upon the R v A2 basis more favourable to the accused, rather than upon the narrower and more difficult test to meet in Doney.

The Evidence

15    The jury were entitled to regard Mr Cuddihy as a generally sound and truthful witness. He was only really challenged in cross-examination collaterally. The jury were entitled to accept his evidence, but ultimately find in relation to these charges, in combination with other evidence, that it did not go far enough. I rejected, and still reject, the argument made that he had been thoroughly discredited in any real way.

16    Mr Cuddihy’s evidence in chief related to the topic of his conversation with Mr Hogan in mid-2014 was as follows:

(a)         Transcript page 1578, line 12 to page 1580, line 19 (key mid-214 conversation evidence marked in bold):

Can I ask you this: can you recall a 217B tender?---I can, yes.

And who was that with?---New South Wales Health.

Was that in 2014; can you recall?---Possibly, yes.

And what was it for?---So it was for the – the tender was called Clinical Furniture, so – which is a pretty broad brush, but for us, the important parts of that tender were slide sheets, walk belts, all of the Molift products that we imported as well, so it was an important one for us to be involved in and it was for the supply of all those products to New South Wales Health, which would mean all of the health facilities that came under New South Wales Health’s remit.

You mentioned some products. Were there any others that were – fell under the realm of this tender?---So there would – I think there would have been, like, you know, hospital, like, furniture, trolleys. I’m not exactly sure the majority of products that were on there, but the – the one – we were specifically interested in the – the manual handling equipment, the patient lifting equipment. Those were the two things that were important to us.

Had you been selling those sorts of products before this tender was announced?---Yes.

Selling them to what or to whom?---To aged care facilities, hospitals like the New South Wales Health hospitals and private hospitals and, you know, end users.

Had that been a large part of your business up to that point?---Yes.

Was that why you were interested in the tender?---Yes.

Had there been – had there been a similar tender prior to this one?---Yes, there had.

Were you intending – or did you make a decision as to whether you would tender for this – or put in a bid, rather, for this tender in 2014?---So the 217B.

Yes?---Yes.

The answer is yes, you were?---Yes, we did. We – we were intending to put in a tender for that.

Did you believe your business had the necessary expertise to do so?---Yes. We had been a supplier to New South Wales Health almost since our inception.

Yes. So would you – as the managing director of your business, would you have been keeping an eye out for various tenders that were announced by governments, for example?---Yes.

And how did you become aware of this particular tender?---So I’m not exactly sure. Maybe somebody sent me an email of the – of the specification for the tender. But I was also – and I still am – a recipient of emails that advertised New South Wales Health or – and a lot of other health institutions’ tenders. Whenever there’s a tender, you get an email with the details of it.

So did you see it on the website – New South Wales Government website?---I could have, yes.

When you became aware of it, apart from deciding to get involved in it or put in a bid, did you physically do anything in relation to it?---So we would have printed out a copy of the tender documents and started – like, so there’s – there’s a lot of information that goes with these tenders: all of the specifications, the TGA approval numbers. You know, the – the whole dataset that goes with the products is quite extensive, so we started putting that together. So we had also had that left over from other tenders that we had – we had put together as well.

Yes. Now, can you recall having a phone conversation with Mr Robert Hogan in mid-2014 about this particular tender?---Yes.

The 217B tender? Yes?---Yes.

Can you tell the jury, now, what you recall about that conversation?---I think, that I had sent through a copy of the tender by email to Mr Hogan.

Yes?---And had a conversation, like, with him about the tender. I said, “Well, you know, this had come out.” And he said, “You’re – you don’t need to worry about putting in a tender because we can tender on your behalf.” So I went, “Okay.” And I knew how much work was involved in putting in the tender and we were pretty limited on resources at that stage. So we decided against tendering and we, I agreed to let Rob put our products up for tender.

Yes. Was there any explanation by Mr Hogan about what “on your behalf” meant?---Not really. Not that I recall, no.

Yes. What did you believe the situation would be? How would it work?---I would imagine that it would have worked in the same way that the – that the DVA style arrangement works. So products would be put up on our behalf to be part of the tender offering and, then, it would – the – the orders would get processed through Country Care in a similar way as – as they would have done for the DVA. Not, of course, there wouldn’t have been therapists involved. But, you know, the – the hospitals would place orders on Country Care, and we would supply the goods.

What sort of goods?---So it would have – the products that we offered up would have been our slide sheets, walk belts, you know, soft sewn manual handling products, and the patient lifters.

And the what?---Patient lifters, the Molift products.

Yes. So did you respond to Mr Hogan after he put that proposal to you on the phone. Did you - - -?---We - - -

- - - respond to him on the phone whilst you were speaking to him?---Yes. Yeah.

What did you say to him?---Yeah. I said, “Yeah. Okay. We will do that.” Or, you know, words to that effect.

(b)    Transcript page 1580, line 40 to page 1581, line 37 (follow up conversation with Mr Tom Hogan marked in bold):

MR BARRY: All right. Well, what – how did you view your prospects of being successful in the tender?---We – if we would have put a tender in, we would have, been able to be, like, put in a tender that was worthier of being – worthy of being considered. I think, New South Wales Health wanted to have as broad a product set for people to choose from.

Yes?---So they would be more inclined to include you, rather than exclude you.

Now, after your conversation with Mr Robert Hogan, can you recall having a telephone conversation with Mr Tom Hogan?---Yes.

About that tender?---There was, yep, maybe other things discussed, as well. But, yep, the - - -

Do you - - -?---217B came up in that conversation.

Yes. And can you recall anything that he may have said, that is, Mr Tom Hogan, about that topic?---He asked me if we were putting in a tender for the 217B and I said no we’re not because we’re going to go with you guys. Or words to that effect. I – you know, it didn’t happen yesterday.

Well, what happened after that, Mr Cuddihy, in relation to that particular tender?---I believe that Country Care submitted the tender. We would have provided them information on all of our products to be included in their submission. And I believe that Country Care was successful in having those products, and successful in becoming a contractor on that contract. That being said, we didn’t receive one order through that channel.

Apart from Country Care bidding for the tender, did you become aware of others bidding for it?---I think pretty much everyone in the industry was – who was a supplier would have been putting in tenders for that. So there would have been businesses like Active Mobility, CareEquip. You know, Novas Healthcare. I could quote a broad spectrum of businesses. Like, for the various areas of expertise that they had they would have been putting in - - -

What was your response to that?---What was my response to - - -

Finding out - - -?--- - - - finding out that - - -

Yes?---I was a little bit disappointed that we hadn’t put in our own tender.

Why?---Because we had the capability to put it in and we would have had more control over the – well, we would have known the pricing that was submitted for our products to the tender and, yes, we would have just had more control over our own destiny.

(c)    Transcript page 1637, lines 37 to 47:

MR BARRY: Thank you. Now, yesterday you told the jury in relation to the 217B tender that you had had a conversation with Mr Tom Hogan, do you remember that?---Yes.

And your evidence was that he asked you if you were putting in a tender for the 217B tender and that you said no, you were not because, “We’re going to go with you guys.” Do you remember giving that evidence?---I do, yes.

Can I ask you this, did you tell Mr Tom Hogan why you were going to go with Country Care Group?---Yes. It was based on a conversation that I had had with Mr Robert Hogan, so – where he said that he – they would tender on our behalf.

17    Mr Cuddihy was not cross-examined directly about the conversation between himself and Mr Hogan in mid-2014 reproduced above at [16(a)]. However, he was cross-examined on the topic of the business model that the accused rely upon to support the interpretation of the conversation consistent with innocence. The relevant part of the cross-examination was conducted by reference to the portion of the 11 November 2014 email from Mr Cuddihy to his brother-in-law (reproduced immediately below at paragraph 20) under the heading “Country Care”, as follows:

Okay. Okay. Could you go back a page and look at the middle of the page there your comment about Country Care. You say:

We’ve become members of the Country Care Group. They hold a number of contracts with various health providers and are expanding their reach all the time.

?---Yes.

Continuing:

Rob Hogan is being very generous to Patient Handling. He was – has placed the Molift on the DVA and also Molift TA on the MAS scheme. He’s put in the Patient Handling products Molift, Stiegelmeyer and Airpod on the New South Wales clinic and furniture tender.

That’s the 217B, that’s correct?---Yes.

Continuing:

Which closes in a week. Country Care has also agreed to be Molift distributor for Victoria and have sway over potential distributors in Western Australia and South Australia and Tasmania.

Do you see that?---Yes.

So as at 1 November 2014 the business model that’s described there is Country Care Group operating as a contractor, that’s right?---Yes.

In relation to those contracts - - -?---Those contracts.

- - - ..... and you providing your goods as part of that contract, that right?---Yes.

And given the work and other administrative burdens in relation to trying to write a tender submission, let alone the reporting requirements should you be successful, it was a benefit to you to be part of a tender submission in 2014 on the New South Wales tender, is that right? As at 1 November 2014? That was your understanding – that was your belief?---Yes.

Thank you. And if the products had been – if Country Care had been successful on the 217B, then the way the contracts were working is Country Care would have the primary contractual relationship with the government and you would be providing in the nature of a subcontracting – in a – as a subcontractor similar to the DVA structure, is that right?---Yes. We would need to go into the hospitals and sell the products to the various departments or whatever. Or whichever – like, product class it was, and we would also be responsible for the servicing of those products.

18    An email chain in evidence commenced with an email sent by Mr Tom Hogan (one of Mr Robert Hogan’s sons) to Mr Cuddihy on 17 September 2014, requesting him to fill in what he could in an attached request for equipment. Mr Cuddihy forwarded that email to Mr Jan Deding at Etac, the Norwegian supplier of Molift products, the same day and included the following (verbatim):

The attached was forwarded to me by Tom Hogan from Country care , who you will be meeting in Dusseldorf , just now.

This is for the biggest transfer aids contract ever to be let in Australia. We need to have the full product offering in there.

This is a massive change for the NSW government. Previously purchases of these items have been on an ad hoc basis for each hospital.

This will now tie all transfer products in to the contract so we need to get our story straight. It takes away the opportunity for week in week out salesmanship. If we are on the tender this is good. If not, very bad.

19    Mr Cuddihy was cross-examined on the above email from Mr Hogan that he had forwarded to Mr Deding on 17 September 2014 as follows:

Could I ask you to look at volume 4 of exhibit 1P, which are the white volumes. And if you could turn to tab 170.1. Now, starting at the back of the email chain, Mr Cuddihy, you will see the 17 September 2014 email from Mr Tom Hogan to yourself with the subject New South Wales tender. Do you see that?---Yes.

And Mr Hogan – Mr Tom Hogan has asked – has said:

Can you please see attached request for equipment and fill in what you can. Hoping to have this at your earliest convenience.

Do you see that?---Yes.

So that was consistent with a September 2014, your understanding of your Molift products – certain of your Molift products being included on the tender submission being made by Country Care, is that right?---Yes.

And you forward that to Jan Deding, J-a-n new word Deding, D-e-d-i-n-g, on 17 September 2014. Do you see that?---Yes.

I think you gave some evidence yesterday that Mr Deding was part of Molift, or by then it might be Etac, is that right?---That’s correct. Yes.

And he was your contact in Europe in relation to your distributor arrangement with that company?---Yes.

And so in September 2014 you’re forwarding him the information in relation to the 217B tender with New South Wales Health, is that right?---That’s correct.

And you – halfway down the page you say:

The attached was forwarded to me by Tom Hogan from Country Care who you will be meeting in Dusseldorf just now.

Do you see that?---Yes.

And then you say:

This is for the biggest transfer aids contract ever to be let in Australia. We need to have the full product offering in there.

Do you see that?---Yes.

And then:

This is a massive change for New South Wales government. Previously purchases of these items have been on an ad hoc basis for each hospital.

Do you see that?---Yes.

You explain this evidence – this – this concept yesterday. Although in your experience it hasn’t panned out this way, the expectation in September 2014 was that New South Wales Health would, in fact, regulate their purchase of equipment through the contracts that they entered into as a result of 217B tender, that’s correct?---Yes.

And then you go on to tell Mr Deding:

This will now tie all transfer products into the contract so we need to get our story straight. It takes away the opportunity for week in, week out salesmanship if we are on the tender. This is good. If not, very bad.

And that accurately reflected your thoughts said on – on or around 17 September 2014 of the necessity for your Molift products, and I think you’re referring here as well preferably to Nomad as well, is that right?---Yes.

To be on Country Care’s submission to New South Wales Health, is that right?--- Yes

20    An email Mr Cuddihy sent to his brother-in-law on 11 November 2014, offering him a role a Patient Handling (Exhibit 4A-1 tab 88) included the following (verbatim/errata in original, emphasis added):

Products:

We manufacture our own PH range of products. And Tripsafe. Tripsafe sales have been down as the direct mail campaigns have not been happening. Marketing dept issue.

We also manufacture custom products like bariatric gait training steps. We have an order for these at the moment but are having difficulty finding the right contractor to make them. We have made 4 sets in the past. They are $6k each. This needs to get sorted.

Import

Molift

TA power chairs

Stiegelmeyer hospital beds and furniture

Airpod air transfer mattresses

We also are talking to 2 companies with some interesting rehab technology. One Swedish company with an FES product and one swiss company with a large piece of capital equipment for rehabilitation. Both are good fits with our customers.

We buy a full range of mobility, daily living and related products via Peak Care which is a buying group we pay $5000/pa to be a member of and gives us access to very good pricing.

We also sell some of our products to Peak members as well.

Country Care.

We have become members of the country care group. They hold a number of contracts with various health providers (DVA, MASS, NSW healthshare, Vic govt) and are expanding their reach all the time.

Rob Hogan has been very generous to PH.

He has placed the Molift on the DVA contract and also Molift and TA on the MASS scheme in Qld. He is putting the PH products, Molift, Stiegelmeyer and Airpod on the NSW clinical furniture tender which closes in a week.

Country care have also agreed to be Molift distributor for Vic and have sway over potential distributors in WA & SA & Tas.

Distribution

Molift

We have 2 distributors in Victoria. Fisherlane in Melbourne CBD and Country care in regional vic. These are held up pending the outcome of the Nomad discussion with Molift. There are 2 orders held up with value of $100kEuro.

We have QLD rehab in Qld. They currently need to place a new order to cover the impending MASS contract which will start in Feb.

All three do direct shipments but placed thru us. We make between 15% and 25% on sales to these.

We have spoken with Maclean healthcare in TAS and AC mobility in WA. I am not going to get to these before xmas.

SA is currently Healthcare specialty products but they are a bit useless. We make 35% on sales to these.

TA

Qld Rehab are distributors in QLD

We need to set up other distributors in other states as it s too hard to service the whole country from Marrickville.

Stiegelmeyer

QLd Rehab & Country care in Vic.

The words “NSW clinical furniture tender” emphasised in bold above are a reference to the 217B tender.

21    In a part of a secret recording that Mr Cuddihy made of a conversation that he had with Mr Hogan at the Patient Handling premises on 6 August 2015, the following was relevantly recorded (text drawn from the aid memoir transcript of that recording furnished to the jury):

(a)    page 12, line 18 to page 14, line 8:

MR HOGAN: And that’s - and all different contracts when people, like, you - you all compete with us on 217A

MR CUDDIHY: Sure.

MR HOGAN: Yeah, ah, and that’s fine.

MR CUDDIHY: Yep.

MR HOGAN: And that’s and we’re happy with that. That’s fine to do that.

MR CUDDIHY: Yeah.

MR HOGAN: You will - you will put your own products forward, absolutely.

MR CUDDIHY: Mmm, well --

MR HOGAN: And you will - you will want to supply those, where you can --

MR CUDDIHY: -- your guys asked me not to put the Molift on the 217B.

MR HOGAN: But you did put it on there.

MR CUDDIHY: No.

MR HOGAN: No.

MR CUDDIHY: Not at all.

MR HOGAN: No? Oh, well, if we did, we’ll pass that straight over to you.

MR CUDDIHY: Yeah, um --

MR HOGAN: Oh, we did.

MR CUDDIHY: Yeah, yeah, I know you did because I did all the --

MR HOGAN: We did.

MR CUDDIHY: -- all the spreadsheets and stuff.

MR HOGAN: We did. So with that product, we wouldn’t actually take that product in - in New South Wales itself --

MR CUDDIHY: Yeah.

MR HOGAN: -- we can help if you want us to.

MR CUDDIHY: Yeah.

MR HOGAN: But with - see, so with Molift, I don’t want to stop that, any of that relationship with you. I think this - this works. I don’t see that I really want to stuff that up.

MR CUDDIHY: Yeah, yeah.

MR HOGAN: Tom and Anthony and those guys want build that stuff in Victoria. Good, do what you need to do, lads.

MR CUDDIHY: Yeah.

MR HOGAN: They - that - I am removed from that, I’m - I will certainly admit, but I’m – I’m removed from the - the Molift stuff. I can’t be in absolutely everything.

(b)    page 18, line 17 to page 19, line 10:

MR CUDDIHY: Yeah, but there’s other things coming.

MR HOGAN: Yeah, things like the - your --

MR CUDDIHY: 217A.

MR HOGAN: -- and 217As. But how are we going to how do we scope out, like, 217A, I don’t know if there’s going to be much of us on that contract. It’s a – we’ve never really been successful on a bed contract. We could say we might be, but --

MR CUDDIHY: Or, sorry, B.

MR HOGAN: -- the --

MR CUDDIHY: The lifters, yeah.

MR HOGAN: The lifters.

MR CUDDIHY: Yeah.

MR HOGAN: So 217B, absolutely, absolutely, yeah, and I think that 217B’s important, and it’s important to your business.

MR CUDDIHY: Yeah, absolutely.

MR HOGAN: We get that Molift product on, um, we are very much going to go, hand them (indistinct) that, on that product range. It will definitely be a handball. So I think there’s value in that for you guys.

(c)    page 20, line 24 to page 21, line 10 (following a discussion on how prices are worked out):

MR CUDDIHY: So we sold a million dollars worth of that last year.

MR HOGAN: Yeah, so that’s the bulk of your business in New South Wales.

MR CUDDIHY: Yeah, yeah.

MR HOGAN: Yeah, it is.

MR CUDDIHY: Or not the bulk of it. It’s --

MR HOGAN: But it’s a large --

MR CUDDIHY: Yeah, it’s --

MR HOGAN: It’s a large component.

MR CUDDIHY: -- a significant proportion.

MR HOGAN: Yeah, yeah, yeah, and how – that’s what you want to - you can certainly see a big future of that on a 217B contract and being able to buy the whole bloody state.

(d)    page 21, line 26 to page 22, line 18:

MR HOGAN: So what when the when the 217B comes out they’re going to say, “If you’re not on 217B you’re out the backdoor.” So one of you’re contacts are going to say, “Hey, here you’re on” --

MR CUDDIHY: Yeah, like, yes --

MR HOGAN: -- “Yes, we’re on.”

MR CUDDIHY: You know, I probably quite a strategic error not doing it ourselves.

MR HOGAN: Yep, yep.

MR CUDDIHY: And but I did that, you know, at yours and Tom’s bidding. Like, you said--

MR HOGAN: Yep.

MR CUDDIHY: -- “Don’t put it on yours. We’ll do it.” And --

MR HOGAN: Yep, and we will put it on, and we did put it on.

MR CUDDIHY: Yeah, yeah, yeah --

MR HOGAN: And we will --

MR CUDDIHY: -- for sure.

MR HOGAN: -- absolutely handball it across.

The first no case argument

22    As the High Court pointed out in R v A2 at [91], the Court does not need to consider evidence that contradicts, qualifies or explains the prosecution case, or that supports the case for the accused. That is part and parcel of the obligation to take the evidence at its highest and draw all inferences that are favourable to the prosecution case.

23    The Court is required to consider the relevant evidence, as I did by carefully considering the evidentiary material set out above as a whole, in the context of the rest of the evidence in the trial to the point at which I made the ruling.

24    The key part of the mid-2014 conversation is that Mr Hogan said to Mr Cuddihy you dont need to worry about putting in a tender because we can tender on your behalf”, and Mr Cuddihy responded (per his evidence on the next page of the transcript) Yeah. Okay. We will do that.The evidence of Mr Cuddihy of that conversation was not challenged in any way, and in fact was ultimately argued to be relied upon by the accused. That conversation would enable the jury to conclude that Mr Hogan had both communicated and committed to make a bid including Patient Handling’s products in its 217B submission, and that Mr Cuddihy had communicated and committed not to make a bid. The Court was called upon to make an evaluative assessment as to whether the evidence was such as to enable the jury, should it choose to do so, rationally to reject the innocent explanation advanced by the accused as detailed above, namely that putting Patient Handlings products on the Country Care 217B submission was not to the exclusion of Mr Cuddihy doing anything, but rather was consistent with the business practice of Country Care of listing Patient Handling products on tenders.

25    I was not satisfied that the jury could not rationally reject the explanation advanced that what was said in the mid-2014 conversation was no more than Mr Hogan describing applying his existing business practice by placing Patient Handling products on Country Care’s 217B tender submission. Moreover, even if the jury accepted that Mr Hogan was describing applying his existing business practice in the context of talking about Country Care’s 217B tender submission, that was not inherently inconsistent with the alleged arrangement or understanding being brought into existence. Rather, it could rationally be viewed by the jury as part of the incentive provided for Patient Handling not to submit a bid, and thereby a formative part of the alleged arrangement or understanding, subsequently being given effect to by Country Care submitting a bid, and Patient Handling not doing so.

The second no case argument

26    As noted at [9] above, the alterative argument for the accused is that, even if the necessary meeting of the minds and commitment could be established, the prosecution could not exclude the reasonable possibility that the exception in s 44ZZRS(2) of the CCA applied, by which the operation of s 44ZZRG did not apply in relation to giving effect to a cartel provision if the conduct relevantly contravened s 47, or would do so but for the operation of s 47(10).

27    The relevant provisions of the CCA are as follows:

(a)    Section 44ZZRS is an anti-overlap provision whereby cartel provisions such as s 44ZZRG do not apply to conduct that either would contravene s 47, which proscribes exclusive dealing, or would contravene s 47 but for specific requirements, such as substantial lessening of competition, being taken not to have been met.

(b)    Specifically, s 44ZZRS(2)(a) provides that s 44ZZRG does not apply in relation to the giving effect to a cartel provision by way of engaging in conduct that contravenes s 47, or would contravene s 47 but for, eg, the need to prove a purpose, effect or likely effect of substantially lessening competition.

(c)    Section 47(4)(a) provides that a corporation engages in the practice of exclusive dealing if it acquires, or offers to acquire, goods or services on the condition that the person from whom the corporation acquires or offers to acquire the goods or services (extending to a related body corporate if the person is a body corporate) will not supply goods or services, or goods or services of a particular kind or description, to any person, or will not, or will not except to a limited extent, supply goods or services, or goods or services of a particular kind or description:

(i)    to particular persons or classes of persons or to persons other than particular persons or classes of persons; or

(ii)    in particular places or classes of places or in places other than particular places or classes of places.

(d)    Section 47(13) provides that a reference to a “condition” in s 47 is to be read as a reference to any condition, whether direct or indirect, whether or not it has legal or equitable force and including a condition of which the existence or nature is ascertainable only by inference from conduct or other relevant circumstances.

(e)    Section 4(2)(d) provides that in the CCA, a reference to a person offering to do an act, or to do an act on a particular condition includes a reference to that person making it known that they will accept applications, offers or proposals for them to do that act, or to do that act on that condition.

28    On the basis that the first no case argument set out above failed, as it did, the accused contend in the alternative that there is a reasonable possibility that s 44ZZRS(2)(a) and thereby s 47(4)(a) apply in respect of the conduct the subject of charges 4 and 5, and that the prosecution cannot exclude the reasonable possibility that this was so because:

(a)    Mr Hogan offered to put Molift products on its 217B tender submission.

(b)    This could be put into effect by either of two methods:

(i)    Country Care acquiring goods from Patient Handing for supply under a contract in the future with or via HeathShare NSW; or,

(ii)    Country Care acquiring the services of Patient Handling to supply goods on Country Care’s behalf to the New South Wales government under a contract in the future with or via HeathShare NSW.

(c)    As a result of the mid-2014 conversation between Mr Hogan and Mr Cuddihy, Patient Handling had committed not to submit a response to the 217B tender, and there would be a reasonable possibility that this was a condition of Country Care offering to acquire from Patient Handling the goods or services described in the preceding subparagraph for the purpose of the tender.

(d)    By Country Care making the 217B tender submission with Patient Handling’s Molift products on it, Country Care was also engaging in exclusive dealing under s 47(4), because Country Care’s offer to supply those products, or have Patient Handling provide the service of supplying those products on its behalf, was a necessary part of acquiring those goods or services on that condition.

(e)    The condition on which Patient Handling was not to submit a bid was that Country Care would use Patient Handling, which is said to be the “very basis of the prosecution case”, which engages s 47(4). As the following full paragraph indicates, I am unable to understand how the existence of such a condition, going beyond the particularised understanding or arrangement, can be said to be essential for the prosecution case.

(f)    The application of s 47(4) has to be done at the time of the alleged arrangement or understanding, such that the Court should not be considering whether or not there was true exclusivity in fact. I have difficulty in accepting this submission, because I do not understand why s 47(4) should operate otherwise than in accordance with its terms.

29    The prosecutor countered by submitting:

(a)    Mr Cuddihy’s evidence was that it was envisaged that by tendering on behalf of Patient Handling, Country Care would become a contractor so as to enable Patient Handling to make supplies under the 217B tender to hospitals. Thus Country Care would not be a corporation that acquired or offered to acquire any goods from Patient Handling, for the purposes of s 47(4), ruling out the first of the two alternatives relied upon: see [28(b)(i)] above.

(b)    At the time of the conversation in mid-2014, there was no acquisition or offer to acquire goods or services because the conversation was about the submission of a bid on the 217B tender. Any bid by Country Care was only an attempt to win business. That bid, if it was successful, might, in future, result in Country Care acquiring or offering to acquire services from Patient Handling. That topic was therefore remote from that conversation, and would not have occurred until after the following steps had taken place:

(i)    a successful bid and the award of a contract to Country Care by HealthShare NSW;

(ii)    the placing of an order by a hospital with Country Care for a particular product which Patient Handling was able to supply; and

(iii)    such an order being allocated to Patient Handling.

It may be noted that this characterisation of remoteness is supported by the fact that no such orders were ever given to Patient Handling following Country Care’s bid being successful.

(c)    Section 47(4) entails an acquisition or offer to acquire, not merely a preliminary step towards winning business that might in future result in a potential acquisition or offer to acquire. This was submitted to be so even allowing for the operation of the extended definition of “act” in s 4(2)(d). I note that while the accused referred to s 4(2)(d), there was no real suggestion as to how it had any application on the facts or evidence in this case.

(d)    There is no evidence of there being present the second “condition” element of s 47(4). Although Mr Hogan said that Patient Handling did not need to worry about putting in a tender because Country Care could tender on its behalf, those statements were not, and are not otherwise described in the evidence as being, framed as a condition. Mr Hogan did not say that Country Care would include Patient Handling’s products on its bid only if Patient Handling did not submit its own bid. Indeed, there is no evidence to suggest that such an approach would have been logical or likely. There was only an arrangement or understanding that this would not happen, which falls short of a condition.

30    There is no evidentiary foundation for the submission by the accused that Country Care’s offer to supply Patient Handling products, or have Patient Handling provide the service of supplying those products on its behalf, was conditional on Patient Handling not submitting a bid.

31    I consider that the aspect of the second argument referred to above at [28(e)] was not just in the alternative to the first argument. It entailed not just embracing the prosecution case as to an arrangement or understanding existing as particularised. It further entailed taking the conduct of the accused beyond what is necessary for the prosecution case to succeed, by asserting that the arrangement or understanding contained, in addition to the alleged arrangement or understanding, an additional term of a condition that the Patient Handling goods would not be put on the Country Care 217B tender submission unless Patient Handling complied with that commitment and did not in fact make a bid. As the prosecutor submitted in response to this argument, by way of an analogy:

There was no condition of any type that would fall within 47(3)(a) [scil 47(4)(a)], and I think my friend said that a quid pro quo necessarily means that there’s a condition, but that’s not the case, and one could think of a simple example: a person saying to another person, “Let’s meet at the movies.” The other person says yes. There’s a meeting of the minds, there’s a commitment, but there’s no condition. A condition would be, “If you go to the movies, I will come, too.” That’s very different to saying, “Let’s go to the movies,” “Yes”. So there’s a meeting of the minds, or a commitment, or a quid pro quo, but that doesn’t mean that there’s a condition. “Condition” is a strong word.

32    The submissions for the accused did not include any suggestion that there was any evidence this asserted condition was sought to be enforced or that compliance with such a condition was checked upon, or even that the existence of such a condition was overtly referred to except by way of the inference sought to be drawn from the mid-2014 conversation itself. The inquiry by Mr Tom Hogan sometime after the mid-2014 conversation between Mr Hogan and Mr Cuddihy, and prior to Country Care’s 217B tender submission later that year, reproduced at [16(b)] above, and the further evidence about that conversation reproduced at [16(c)] above, does not go that far. On the contrary, it rather suggests an open-ended inquiry as to whether or not Patient Handling would be making a bid, in terms that could readily be understood as being contrary to any condition existing, at least to Mr Tom Hogan’s knowledge.

33    The conclusion I reached did not require me to distil the competing submissions beyond what I have set out above. Although I generally found the prosecutor’s submissions as summarised above more compelling, I do not need to resolve each and every dispute outlined in the submissions in order to reach a determinative conclusion on this alternative argument. It is sufficient to focus on the condition aspect of s 47(4).

34    The evidentiary onus imposed upon the accused in relation to the application of s 44ZZRS(2)(a) and thereby s 47(4) is to at least point to evidence that supports each part of the application of the latter: see s 13.3(3) and (6), Criminal Code (Cth). The problem for the accused was that the basis for the existence of the condition that they identified, namely that Country Care would only put Patient Handling on its 217B tender submission if Patient Handing did not submit a bid, was not identified with any specificity. It was asserted to be a “reasonable possibility” based on the conversation between Mr Hogan and Mr Cuddihy, and on what is asserted to be evidence of the “business practice” of Country Care and Patient Handling, but the foundation for the inference was not specifically identified beyond these points. The argument did not rise higher than a submission that might be made to a jury, rather than to a judge.

35    I accept the submission by the accused that the definition of condition in s 47(13) is broad, but it still requires that an inference be drawn from the conduct of persons or other relevant circumstances. The bare assertion of a “reasonable possibility” of an inference being drawn is not sufficient to create a solid basis for such a condition existing, so as to be something that the jury could not rationally exclude. However, for more abundant caution I will consider the basis for drawing the inference going well beyond the submissions that were made.

36    It would seem that the asserted possibility of the existence of such a condition was drawn by inference from the fact that Mr Hogan said You dont need to worry about putting in a tender because we can tender on your behalf”, and Mr Cuddihy responded Yeah. Okay. We will do that.” That seemed to entail reading into the phrase “we can tender on your behalf” an implication that Country Care would only do so on the condition that Patient Handling did not submit a bid. There were several problems with this or similar reasoning.

37    The first problem was that it appeared to run counter what was said by the High Court in R v A2 at [91] about taking the prosecution’s evidence at its highest, drawing all reasonably open inferences that are most favourable to the prosecution and not needing to consider evidence that contradicts, qualifies or explains the prosecution case or that supports the case for the accused. I considered the evidence which contradicted this reasoning in addressing the first argument. See also R v A2 at [107].

38    Independently of that concern, the inference that an exclusivity clause existed upon the basis of the conversations relied upon is a weak inference to draw, such that finding the capacity of the jury not to accept it is more easily met. That is especially so when regard is had to the fact that Patient Handling had exclusive distribution rights in New South Wales for Molift products (apart from the Nomad). It could be difficult for the jury to accept that, had Mr Cuddihy said that Patient Handling would proceed with making a bid, Mr Hogan would have capriciously hurt Country Care’s interests in securing sales of Molift products by leaving them off Country Care’s 217B tender submission, even while Mr Cuddihy may have been tendering in tandem. Evidence was clearly adduced that Country Care made bids on tenders for which other organisations who supplied products for them were also tendering, such as the 217A tender where Human Care was also bidding. This evidence even further weakened the inference the accused say is made out.

39    For the foregoing reasons, I was not satisfied that the jury could not rationally reject the explanation consistent with innocence, namely that the operation of s 44ZZRG does not apply by reason of the operation of s 44ZZRS(2)(a). The path of reasoning that could rationally be accepted by the jury is that there was no condition in place so as to engage s 47(4).

Conclusion

40    For the reasons above, I did not find that either accused do not have a case to answer on, respectively, charges 4 and 5 in the indictment, such that s 23FH did not apply, and there was accordingly no power or obligation to enter a judgment of acquittal.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Ruling of the Honourable Justice Bromwich.

Associate:

Dated:    23 July 2021