case_text: making and giving effect to that arrangement, as at November 2002, had the likely effect of substantially lessening competition in each of the following markets: 44.1 Sydney terminal services market; 44.2 Melbourne terminal services market; and 44.3 Brisbane terminal services market within the meaning of sub-sections 45(2)(a)(ii) and 45(2)(b)(ii) of the Act. THE LEGAL PRINCIPLES APPLICABLE TO DETERMINATION OF PENALTY The Act places on the Court the responsibility to determine the "appropriate" penalty in each particular case, having regard to "all relevant matters", including those specified in s 76(1): NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134 ; (1996) 71 FCR 285 at 290. Four relevant matters are specified in s 76(1), but the Court is not confined to them. A checklist of six additional matters was identified by French J in Trade Practices Commission v CSR Limited (1991) ATPR p41-076 at 52,152 52,153, to which judges have frequently made reference: see NW Frozen Foods at 292. As French J said in Trade Practices Commission v CSR at 52,152, the principal, and probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and others. That is to say, the quantum is informed by considerations of specific and general deterrence: Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 363 ; (1984) 4 FCR 296 at 298. Much has been said in the authorities about the need to deter conduct which is antithetical to the promotion of competition and the seriousness of Parliament's intentions in that respect: NW Frozen Foods at 293 294; Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (2001) ATPR p41-815 at [13]; Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22]; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265 ; (2005) 215 ALR 301 at [39] . As Lindgren J observed in Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89 at [25], the principles governing the imposition of penalties for contravention of Part IV should be considered in light of the most recent Full Court pronouncement in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR p41-993. In that case, at [51], the Full Court listed six propositions that emerge from NW Frozen Foods . They were listed by Lindgren J in Qantas at [26] as follows:- (i) It is the responsibility of the court to determine the appropriate penalty; (ii) Determining the quantum of a penalty is not an exact science and the courts have acknowledged that within a permissible range, a particular figure cannot necessarily be said to be more appropriate than another; (iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy; (iv) The view of the regulator, as a specialist body, is relevant, but not determinative, and its views on matters within its expertise will usually be given greater weight than its views on more "subjective" matters; (v) The court examines all the circumstances of the case, and where the parties have advanced an agreed statement of facts, the court may act on it if it is appropriate to do so; and (vi) Where the parties have jointly proposed a penalty, it is not useful to investigate whether the court would have arrived at that precise figure; the figure will be appropriate if within the permissible range. The Full Court in Mobil Oil (2004) ATPR p41-993 also listed five further points which were usefully summarised by Lindgren J in Qantas at [27] as follows:- First, the rationale for giving weight to a joint submission on penalty is the saving in resources for the regulator and the court, which, in the case of the regulator, can be used to increase the likelihood that other contraveners will be detected and brought before the court. Second, the sixth proposition from NW Frozen Foods (see [26] above) does not mean that the court must commence its reasoning with the level of penalty proposed and limit itself to considering whether that penalty is within the permissible range: the court may, instead, address the question independently at the outset. Third, there was no suggestion in NW Frozen Foods that the admissions or statement of agreed facts had been "tailored or modified to reflect the difficulties faced by the [commission] in proving its case" (at [55]). Fourth, the regulator should always explain to the court the process of reasoning said to justify a discounted penalty (the court referred to Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2002) ATPR 41-851 ; [2001] FCA 1716 at [56] ). Fifth, there is nothing in NW Frozen Foods inconsistent with any of the following propositions: (i) The court may request the parties to provide additional evidence or information or to verify the information provided, in default of which the court may well not be satisfied that the proposed penalty is within the permissible range; (ii) If the absence of a contradictor inhibits the court in the performance of its duty under s 76 of the Act, it may seek the assistance of an amicus curiae or of an individual or body prepared to act or intervene under O 6 r 17 of the Federal Court Rules ; and (iii) If the court is disposed not to impose the agreed penalty, it may be appropriate for the parties or either of them to be given the opportunity to withdraw consent and for the matter to proceed as a contested hearing. THE COURT'S APPROACH TO AGREEMENT ON PENALTY The parties accept that the Court is not merely a "rubber stamp" for the agreement reached between them. It is for me to determine the appropriate penalties having regard to all the circumstances, and taking into account the propositions emerging from NW Frozen Foods , as further explained in Mobil Oil (2004) ATPR p41-993 . The summary of those propositions and further points set out above make clear the public interest factors which underlie the non-litigious resolution of enforcement proceedings and the regard which the Court will have to the views of the regulators. The essential question is not whether I would have, without the assistance of the parties, reached the precise figures agreed between them. Rather, it is whether those amounts are "within the permissible range" in all the circumstances: NW Frozen Foods at 291. In answering that question, it is open to me to commence with the amount of the proposed penalties and then determine whether they fall within the permissible range. Alternatively, it would be permissible to address the appropriate range independently and then determine whether the proposed penalty falls within that range: Mobil Oil (2004) ATPR p41-993 at [54]. THE PARTIES' SUBMISSIONS ON MATTERS RELEVANT TO CONSIDERATION OF PENALTY It is convenient to set out in full the content of [55] [58] and [76] [106] of the Joint Submissions. As noted at paragraph 5 above, an important component of the proposed resolution of these proceedings is the lodgement by AAT of the authorisation application pursuant to s88 of the Act. This is the first occasion on which a court has been required to decide upon the appropriate penalty in such circumstances. In the unusual circumstances of this case, the Commission, Patrick and P&O jointly submit that the primary reason for imposition of the penalty sought in this case is, by way of general deterrence, to deter corporations from risking contraventions of the Act which may otherwise obtain the benefit of an authorisation from the Commission, whether with or without conditions. Patrick and P&O could have sought authorisation for the Arrangement during the relevant period. Patrick and P&O accept that they ought to have sought an authorisation from the Commission for the Arrangement so as to avoid risking contravention of the Act. On the other hand, the Commission accepts that, whilst the terms of the Arrangement were not provided to it for scrutiny in the context of an application for authorisation, it is relevant on the issue of penalty that the conduct did not result from a secret, collusive agreement. In these circumstances, general deterrence will be served by the penalty proposed to be imposed upon the Second and Seventh Respondents, who were directly involved in the conduct at the relevant time. It is submitted that no punitive element is warranted in the penalty awarded by the Court, as there has been no flagrant or wilful contravention of the Act by Patrick, P&O or any related body corporate. ... The conduct which is subject to penalty was engaged in by Patrick and P&O over a period of 14 months, approximately seven to eight years ago. It comprised an agreement between Patrick and P&O to rationalise automotive terminal infrastructure, including by the formation of a joint venture company to provide automotive terminal services in each of the three ports. The three ports constitute the main Australian destinations for importation of motor vehicles. Patrick and P&O intended to make the Arrangement, proceeded to do so and to give effect to it. The volume of commerce, measured by gross sales revenue over the relevant period in the markets affected by the conduct in question, cannot be accurately calculated by Patrick by reference to its audited accounts for the relevant period because Patrick compiled those accounts on an aggregated basis for its whole stevedoring business of which automotive stevedoring was a small proportion. On the basis of the aggregated information contained in its management accounts for the financial year 2001/2002 for its automotive, bulk and general stevedoring division, Patrick estimates that total gross revenue for automotive stevedoring services in the three ports did not exceed approximately $15 million for that financial year. Similarly P&O did not during the relevant period keep accounting records which adequately identified revenues from its automotive stevedoring businesses for each of the three ports. No accounts were kept separately for "automotive terminals" or "automotive stevedoring" businesses. For the years ended 31 December 2001 and 31 December 2002 P&O estimates that total revenues from its automotive terminal and stevedoring businesses for the three ports were $14 million and $15 million respectively. Whilst the conduct had the likely effect of substantially lessening competition in the relevant terminal services markets, the Commission accepts, for the purpose of these proceedings only, that the objectives of Patrick and P&O in entering the Arrangement were likely to have included increasing efficiencies by gaining access to scarce port land and the superior terminal in each port, and improving utilisation of that land. The increased capacity of the joint venture to invest in infrastructure, due to the increased volume of business, was also harnessed. In this respect, regard was had by Patrick and P&O to the desire of the Sydney Ports Corporation and the Port of Brisbane Corporation to have one automotive terminal only, with a view to achieving such efficiencies. The Commission's case was that the conduct of Patrick and P&O, including the creation of AAT, led to a substantial lessening of competition in terminal services markets in each of the three ports. On this issue, the Commission's position was (and remains) that whether the impugned conduct led to the gaining of efficiencies or other public benefits is irrelevant to whether or not there had been a substantial lessening of competition in relevant terminal services markets for the purposes of s45 of the Act. Rather, those matters are only able to be brought to account in the context of an authorisation application made under Part VII of the Act. On the other hand, Patrick and P&O proposed to lead evidence that the relevant markets were no less competitive in future with the impugned conduct than without the impugned conduct, and argue that the operations of AAT resulted in increased efficiencies to customers, being shipping lines and importers, and stevedores (including potentially third party stevedores). Further, they contend that, to the extent such efficiencies could be established, they should be taken into account in the determination of whether or not there had been a substantial lessening of competition in the relevant terminal services markets. The resolution of the proceedings in the manner the Commission, Patrick and P&O propose leaves to the authorisation process currently underway the determination of the question of whether any lessening of competition arising from the operations of AAT (at least in the future) is outweighed by any public benefits able to be established (including any efficiencies). There is no dispute between the Commission, Patrick and P&O that these matters can properly be raised in the authorisation process. Patrick and P&O do not admit that the conduct in fact affected competition in contravention of the Act. Rather it has been admitted that the conduct had the likely effect of affecting competition substantially, as at November 2002. In the proposed resolution of these proceedings, the other allegations in the Second Further Amended Statement of Claim will be dismissed, and accordingly it is not necessary for the Court to consider the purpose or actual effect on competition in any market of the conduct, nor any conduct occurring after November 2002. The Amount of Loss or Damage Caused The Commission, Patrick and P&O jointly submit that it is not possible to determine whether any quantifiable loss or damage was caused by the impugned conduct. P&O and Patrick admit only that the Arrangement was likely to have the effect of substantially lessening competition in the terminal services market and do not admit that it had the effect of causing loss or damage. The Circumstances in which the Conduct took Place The conduct was not clandestine. It was openly conducted between the parties, and was known in the market to have occurred, by customers of Patrick and P&O, the relevant ports corporations, and competitors, such as Toll. Customers were informed of the Arrangement at the time the Arrangement was first contemplated by Patrick and P&O. Degree of power, market share and ease of entry into the terminal services markets Approximately 70% of motor vehicles sold in Australia were imported and 85% of those imported motor vehicles were delivered through the three ports. In the ports of Sydney and Brisbane, Patrick and P&O were the sole providers of automotive terminal services. In the port of Melbourne, Patrick and Toll were the main providers of automotive terminal services. As noted at paragraph 17 above, there were substantial barriers to entry into each of the terminal services markets. The size and financial circumstances of the Contraveners The Second Respondent is a subsidiary of Asciano, a publicly listed company of some size and repute. The Second Respondent has made a separate submission, which includes some confidential material, which relates to the financial circumstances of the corporate group of which the Second Respondent is a member. The Sixth to Eighth Respondents are each ultimate subsidiaries of DP World Ltd which is a substantial listed company in Dubai conducting a container terminal business worldwide. Participation of Senior Management The conduct admitted by Patrick and P&O was carried out by senior management employed at the relevant time. None of the individual executives involved in the conduct remain in the employ of Patrick, or any of the Asciano owned group of companies, or any of the P&O companies owned by DP World. None of the current directors of Asciano were directors of Patrick at the relevant time. Asciano's ownership of Patrick arose from a hostile public company take-over by Toll, and accordingly Toll was not in a position to perform due diligence on the target companies, the First to Fifth Respondents, or to satisfy itself about the compliance with the Act of any of the terms of any arrangements entered into by those companies. It is acknowledged that some shareholders in Asciano may have held shareholdings in the Respondents during the relevant period. For the most part however, the current shareholders in Asciano are public shareholders, whose investment in Asciano would be diminished by reason of the award of any substantial penalty against Patrick. The shareholders of P&O are now completely different to those at the relevant time as set out in paragraphs 11 to 13 above. Culture of Compliance with the Trade Practices Act Asciano retains specialist external legal counsel to conduct trade practices training with its staff on an annual basis and requires all relevant staff, including managers and directors, to attend such training. Training materials are supplied to staff which includes material relevant to compliance with Part IV of the Act generally, as well as in relation to the type of conduct the subject of these proceedings and the availability of authorisation under s88 of anti-competitive conduct on public interest grounds. The DP World group had no involvement in these alleged contraventions or knowledge about them prior to the Commission commencing its investigation of the matter. The DP World corporate respondents, and the DP World Group generally, have taken considerable steps to co-operate with the Commission and have sought to deal with the Commission in an open manner. For example, DP World proactively approached the Commission to bring to a close the long standing Section 155 investigation regarding the container terminal landside interface. DP World has since made considerable efforts to advise the Commission of developments in the container terminal landside interface bearing in mind the various State Government and Port Authority initiatives. The DP World respondents have a corporate culture conducive to compliance with the Act. This is evidenced by DP World providing training to both senior management and compliance training at each of its terminals in 2008 for all personnel likely to be involved in those areas considered appropriate (especially the landside interface). DP World's senior management and its worldwide legal counsel have made it clear to DP World in Australia they wish DP World to engage with the Commission to improve the level of communication. Co-operation and Contrition These admissions have been made well before hearing of the matter, and accordingly will result in a significant saving in court time, and costs and expense to the Commission in continuing to pursue the matter through the courts. Patrick and P&O, as shareholders in AAT, support AAT pursuing its application for authorisation of AAT pursuant to section 88 of the Act, and will incur further costs during that process. The Commission accepts that the decision of Patrick and P&O to agree to resolve these proceedings in this way has saved considerable Court time and Commission resources. Similar Conduct in the Past The Court has not previously found that any of Patrick, Asciano, P&O or DP World have contravened the Act. CONSIDERATION As the authorities make clear, the determination of the amount of a penalty cannot be an exact science: NW Frozen Foods at 290; Mobil Oil (2004) ATPR p41-993 at [51]. The determination of the amount is not done by the application of a formula and the courts have recognised that, within a certain range, one figure "cannot be incontestably said to be preferable to another": Trade Practices Commission v TNT Australia Pty Limited (1994)] ATPR p41-375 at 40,165. The principle of parity of penalty for similar offences is an important one, but as Burchett and Kiefel JJ observed in NW Frozen Foods at 295, things are rarely equal where contraventions of the Act are concerned. Their Honours went on to say that the quantum of penalties imposed in other cases can seldom be of much direct assistance. Here, the question of quantification of the penalty falls to be considered in light of the fact that the conduct in question is admitted to be likely to have had the effect of substantially lessening competition, but no admission is made that this was the purpose, or that it actually had that effect. It is also to be borne in mind that the Commission accepts, for the purpose of these proceedings, that the objectives of Patrick and P&O in entering into the arrangement were likely to include increased efficiencies, as stated in [80] of the Joint Submissions. The Commission's position is that the suggested increased efficiencies are irrelevant to the question of whether there was a substantial lessening of competition. Patrick and P&O dispute that proposition. But the fact that they do so is, no doubt, one that would have informed the negotiation process. So too is the fact that the parties were still in dispute as to whether the impugned conduct had the proscribed purpose or actual effect on competition. What seems to me to be of particular importance is that the parties have agreed that the effect on competition of any continuing conduct by AAT at the terminals in Melbourne, Brisbane and Port Kembla, and any public benefit said to arise from such conduct, will be dealt with pursuant to the Commission's power to grant an authorisation under s 88 of the Act. An application for authorisation has now been made, so that the question of public benefit will be considered by the Commission under s 90 of the Act. Section 90(6) provides that the Commission shall not grant authorisation unless it is satisfied in all the circumstances that the proposed conduct would result, or be likely to result, in a benefit to the public that would outweigh the detriment constituted by the lessening of competition; see also s 90(8). Other important factors are the 14-month duration of the contravening arrangement, which was comparatively short, and the estimated revenue from the automotive terminal and stevedoring businesses at the ports in question. Whilst the total annual value of retail motor vehicle sales in Australia is approximately $25 billion, of which a substantial percentage constitutes vehicles imported through the ports of Brisbane, Sydney and Melbourne, the estimates of gross revenue for stevedoring services is quite small. Patrick estimates that its total gross revenue from stevedoring services in the three ports did not exceed about $15m for the financial year 2001 to 2002. P&O estimates total revenues not exceeding $15m in each of the years in question. Another important factor is that the conduct was not clandestine. It was known in the market and customers were informed of the arrangement when it was first contemplated. It is common ground that Patrick and P&O's customers were large shipping lines which have contractual and other commercial relations with large global motor vehicle manufacturers which export vehicles to Australia. None of the customers appears to have made any complaint about the conduct of Patrick and P&O notwithstanding the fact that approximately seven years have passed since it was first made known to them. This is not to understate the seriousness of the conduct which has been admitted but it does distinguish it from the clandestine behaviour which is at the heart of price fixing cartels. It is therefore a factor (though of course not the only one) which informs the imposition of a much lower penalty than was ordered in Australian Competition and Consumer Commission v Visy Industry Holdings Pty Limited (No 3) (2007) ATPR p42-185 and ACCC v Qantas. Other relevant factors include those that are referred to at [92] [106] of the Joint Submissions set out above. In addition, as is stated in the Joint Submissions, the admissions of liability have been made well before the hearing and will result in significant saving of court time, costs and expenses to the Commission.


case_outcome: referred to

case_title: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265 ; (2005) 215 ALR 301


case_title: Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329


case_title: Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89


case_title: Australian Competition and Consumer Commission v Visy Industry Holdings Pty Limited (No 3) (2007) ATPR p42-185


case_outcome: applied

case_title: Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR p41-993


case_text: making and giving effect to that arrangement, as at November 2002, had the likely effect of substantially lessening competition in each of the following markets: 44.1 Sydney terminal services market; 44.2 Melbourne terminal services market; and 44.3 Brisbane terminal services market within the meaning of sub-sections 45(2)(a)(ii) and 45(2)(b)(ii) of the Act. THE LEGAL PRINCIPLES APPLICABLE TO DETERMINATION OF PENALTY The Act places on the Court the responsibility to determine the "appropriate" penalty in each particular case, having regard to "all relevant matters", including those specified in s 76(1): NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134 ; (1996) 71 FCR 285 at 290. Four relevant matters are specified in s 76(1), but the Court is not confined to them. A checklist of six additional matters was identified by French J in Trade Practices Commission v CSR Limited (1991) ATPR p41-076 at 52,152 52,153, to which judges have frequently made reference: see NW Frozen Foods at 292. As French J said in Trade Practices Commission v CSR at 52,152, the principal, and probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and others. That is to say, the quantum is informed by considerations of specific and general deterrence: Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 363 ; (1984) 4 FCR 296 at 298. Much has been said in the authorities about the need to deter conduct which is antithetical to the promotion of competition and the seriousness of Parliament's intentions in that respect: NW Frozen Foods at 293 294; Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (2001) ATPR p41-815 at [13]; Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22]; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265 ; (2005) 215 ALR 301 at [39] . As Lindgren J observed in Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89 at [25], the principles governing the imposition of penalties for contravention of Part IV should be considered in light of the most recent Full Court pronouncement in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR p41-993. In that case, at [51], the Full Court listed six propositions that emerge from NW Frozen Foods . They were listed by Lindgren J in Qantas at [26] as follows:- (i) It is the responsibility of the court to determine the appropriate penalty; (ii) Determining the quantum of a penalty is not an exact science and the courts have acknowledged that within a permissible range, a particular figure cannot necessarily be said to be more appropriate than another; (iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy; (iv) The view of the regulator, as a specialist body, is relevant, but not determinative, and its views on matters within its expertise will usually be given greater weight than its views on more "subjective" matters; (v) The court examines all the circumstances of the case, and where the parties have advanced an agreed statement of facts, the court may act on it if it is appropriate to do so; and (vi) Where the parties have jointly proposed a penalty, it is not useful to investigate whether the court would have arrived at that precise figure; the figure will be appropriate if within the permissible range. The Full Court in Mobil Oil (2004) ATPR p41-993 also listed five further points which were usefully summarised by Lindgren J in Qantas at [27] as follows:- First, the rationale for giving weight to a joint submission on penalty is the saving in resources for the regulator and the court, which, in the case of the regulator, can be used to increase the likelihood that other contraveners will be detected and brought before the court. Second, the sixth proposition from NW Frozen Foods (see [26] above) does not mean that the court must commence its reasoning with the level of penalty proposed and limit itself to considering whether that penalty is within the permissible range: the court may, instead, address the question independently at the outset. Third, there was no suggestion in NW Frozen Foods that the admissions or statement of agreed facts had been "tailored or modified to reflect the difficulties faced by the [commission] in proving its case" (at [55]). Fourth, the regulator should always explain to the court the process of reasoning said to justify a discounted penalty (the court referred to Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2002) ATPR 41-851 ; [2001] FCA 1716 at [56] ). Fifth, there is nothing in NW Frozen Foods inconsistent with any of the following propositions: (i) The court may request the parties to provide additional evidence or information or to verify the information provided, in default of which the court may well not be satisfied that the proposed penalty is within the permissible range; (ii) If the absence of a contradictor inhibits the court in the performance of its duty under s 76 of the Act, it may seek the assistance of an amicus curiae or of an individual or body prepared to act or intervene under O 6 r 17 of the Federal Court Rules ; and (iii) If the court is disposed not to impose the agreed penalty, it may be appropriate for the parties or either of them to be given the opportunity to withdraw consent and for the matter to proceed as a contested hearing. THE COURT'S APPROACH TO AGREEMENT ON PENALTY The parties accept that the Court is not merely a "rubber stamp" for the agreement reached between them. It is for me to determine the appropriate penalties having regard to all the circumstances, and taking into account the propositions emerging from NW Frozen Foods , as further explained in Mobil Oil (2004) ATPR p41-993 . The summary of those propositions and further points set out above make clear the public interest factors which underlie the non-litigious resolution of enforcement proceedings and the regard which the Court will have to the views of the regulators. The essential question is not whether I would have, without the assistance of the parties, reached the precise figures agreed between them. Rather, it is whether those amounts are "within the permissible range" in all the circumstances: NW Frozen Foods at 291. In answering that question, it is open to me to commence with the amount of the proposed penalties and then determine whether they fall within the permissible range. Alternatively, it would be permissible to address the appropriate range independently and then determine whether the proposed penalty falls within that range: Mobil Oil (2004) ATPR p41-993 at [54]. THE PARTIES' SUBMISSIONS ON MATTERS RELEVANT TO CONSIDERATION OF PENALTY It is convenient to set out in full the content of [55] [58] and [76] [106] of the Joint Submissions. As noted at paragraph 5 above, an important component of the proposed resolution of these proceedings is the lodgement by AAT of the authorisation application pursuant to s88 of the Act. This is the first occasion on which a court has been required to decide upon the appropriate penalty in such circumstances. In the unusual circumstances of this case, the Commission, Patrick and P&O jointly submit that the primary reason for imposition of the penalty sought in this case is, by way of general deterrence, to deter corporations from risking contraventions of the Act which may otherwise obtain the benefit of an authorisation from the Commission, whether with or without conditions. Patrick and P&O could have sought authorisation for the Arrangement during the relevant period. Patrick and P&O accept that they ought to have sought an authorisation from the Commission for the Arrangement so as to avoid risking contravention of the Act. On the other hand, the Commission accepts that, whilst the terms of the Arrangement were not provided to it for scrutiny in the context of an application for authorisation, it is relevant on the issue of penalty that the conduct did not result from a secret, collusive agreement. In these circumstances, general deterrence will be served by the penalty proposed to be imposed upon the Second and Seventh Respondents, who were directly involved in the conduct at the relevant time. It is submitted that no punitive element is warranted in the penalty awarded by the Court, as there has been no flagrant or wilful contravention of the Act by Patrick, P&O or any related body corporate. ... The conduct which is subject to penalty was engaged in by Patrick and P&O over a period of 14 months, approximately seven to eight years ago. It comprised an agreement between Patrick and P&O to rationalise automotive terminal infrastructure, including by the formation of a joint venture company to provide automotive terminal services in each of the three ports. The three ports constitute the main Australian destinations for importation of motor vehicles. Patrick and P&O intended to make the Arrangement, proceeded to do so and to give effect to it. The volume of commerce, measured by gross sales revenue over the relevant period in the markets affected by the conduct in question, cannot be accurately calculated by Patrick by reference to its audited accounts for the relevant period because Patrick compiled those accounts on an aggregated basis for its whole stevedoring business of which automotive stevedoring was a small proportion. On the basis of the aggregated information contained in its management accounts for the financial year 2001/2002 for its automotive, bulk and general stevedoring division, Patrick estimates that total gross revenue for automotive stevedoring services in the three ports did not exceed approximately $15 million for that financial year. Similarly P&O did not during the relevant period keep accounting records which adequately identified revenues from its automotive stevedoring businesses for each of the three ports. No accounts were kept separately for "automotive terminals" or "automotive stevedoring" businesses. For the years ended 31 December 2001 and 31 December 2002 P&O estimates that total revenues from its automotive terminal and stevedoring businesses for the three ports were $14 million and $15 million respectively. Whilst the conduct had the likely effect of substantially lessening competition in the relevant terminal services markets, the Commission accepts, for the purpose of these proceedings only, that the objectives of Patrick and P&O in entering the Arrangement were likely to have included increasing efficiencies by gaining access to scarce port land and the superior terminal in each port, and improving utilisation of that land. The increased capacity of the joint venture to invest in infrastructure, due to the increased volume of business, was also harnessed. In this respect, regard was had by Patrick and P&O to the desire of the Sydney Ports Corporation and the Port of Brisbane Corporation to have one automotive terminal only, with a view to achieving such efficiencies. The Commission's case was that the conduct of Patrick and P&O, including the creation of AAT, led to a substantial lessening of competition in terminal services markets in each of the three ports. On this issue, the Commission's position was (and remains) that whether the impugned conduct led to the gaining of efficiencies or other public benefits is irrelevant to whether or not there had been a substantial lessening of competition in relevant terminal services markets for the purposes of s45 of the Act. Rather, those matters are only able to be brought to account in the context of an authorisation application made under Part VII of the Act. On the other hand, Patrick and P&O proposed to lead evidence that the relevant markets were no less competitive in future with the impugned conduct than without the impugned conduct, and argue that the operations of AAT resulted in increased efficiencies to customers, being shipping lines and importers, and stevedores (including potentially third party stevedores). Further, they contend that, to the extent such efficiencies could be established, they should be taken into account in the determination of whether or not there had been a substantial lessening of competition in the relevant terminal services markets. The resolution of the proceedings in the manner the Commission, Patrick and P&O propose leaves to the authorisation process currently underway the determination of the question of whether any lessening of competition arising from the operations of AAT (at least in the future) is outweighed by any public benefits able to be established (including any efficiencies). There is no dispute between the Commission, Patrick and P&O that these matters can properly be raised in the authorisation process. Patrick and P&O do not admit that the conduct in fact affected competition in contravention of the Act. Rather it has been admitted that the conduct had the likely effect of affecting competition substantially, as at November 2002. In the proposed resolution of these proceedings, the other allegations in the Second Further Amended Statement of Claim will be dismissed, and accordingly it is not necessary for the Court to consider the purpose or actual effect on competition in any market of the conduct, nor any conduct occurring after November 2002. The Amount of Loss or Damage Caused The Commission, Patrick and P&O jointly submit that it is not possible to determine whether any quantifiable loss or damage was caused by the impugned conduct. P&O and Patrick admit only that the Arrangement was likely to have the effect of substantially lessening competition in the terminal services market and do not admit that it had the effect of causing loss or damage. The Circumstances in which the Conduct took Place The conduct was not clandestine. It was openly conducted between the parties, and was known in the market to have occurred, by customers of Patrick and P&O, the relevant ports corporations, and competitors, such as Toll. Customers were informed of the Arrangement at the time the Arrangement was first contemplated by Patrick and P&O. Degree of power, market share and ease of entry into the terminal services markets Approximately 70% of motor vehicles sold in Australia were imported and 85% of those imported motor vehicles were delivered through the three ports. In the ports of Sydney and Brisbane, Patrick and P&O were the sole providers of automotive terminal services. In the port of Melbourne, Patrick and Toll were the main providers of automotive terminal services. As noted at paragraph 17 above, there were substantial barriers to entry into each of the terminal services markets. The size and financial circumstances of the Contraveners The Second Respondent is a subsidiary of Asciano, a publicly listed company of some size and repute. The Second Respondent has made a separate submission, which includes some confidential material, which relates to the financial circumstances of the corporate group of which the Second Respondent is a member. The Sixth to Eighth Respondents are each ultimate subsidiaries of DP World Ltd which is a substantial listed company in Dubai conducting a container terminal business worldwide. Participation of Senior Management The conduct admitted by Patrick and P&O was carried out by senior management employed at the relevant time. None of the individual executives involved in the conduct remain in the employ of Patrick, or any of the Asciano owned group of companies, or any of the P&O companies owned by DP World. None of the current directors of Asciano were directors of Patrick at the relevant time. Asciano's ownership of Patrick arose from a hostile public company take-over by Toll, and accordingly Toll was not in a position to perform due diligence on the target companies, the First to Fifth Respondents, or to satisfy itself about the compliance with the Act of any of the terms of any arrangements entered into by those companies. It is acknowledged that some shareholders in Asciano may have held shareholdings in the Respondents during the relevant period. For the most part however, the current shareholders in Asciano are public shareholders, whose investment in Asciano would be diminished by reason of the award of any substantial penalty against Patrick. The shareholders of P&O are now completely different to those at the relevant time as set out in paragraphs 11 to 13 above. Culture of Compliance with the Trade Practices Act Asciano retains specialist external legal counsel to conduct trade practices training with its staff on an annual basis and requires all relevant staff, including managers and directors, to attend such training. Training materials are supplied to staff which includes material relevant to compliance with Part IV of the Act generally, as well as in relation to the type of conduct the subject of these proceedings and the availability of authorisation under s88 of anti-competitive conduct on public interest grounds. The DP World group had no involvement in these alleged contraventions or knowledge about them prior to the Commission commencing its investigation of the matter. The DP World corporate respondents, and the DP World Group generally, have taken considerable steps to co-operate with the Commission and have sought to deal with the Commission in an open manner. For example, DP World proactively approached the Commission to bring to a close the long standing Section 155 investigation regarding the container terminal landside interface. DP World has since made considerable efforts to advise the Commission of developments in the container terminal landside interface bearing in mind the various State Government and Port Authority initiatives. The DP World respondents have a corporate culture conducive to compliance with the Act. This is evidenced by DP World providing training to both senior management and compliance training at each of its terminals in 2008 for all personnel likely to be involved in those areas considered appropriate (especially the landside interface). DP World's senior management and its worldwide legal counsel have made it clear to DP World in Australia they wish DP World to engage with the Commission to improve the level of communication. Co-operation and Contrition These admissions have been made well before hearing of the matter, and accordingly will result in a significant saving in court time, and costs and expense to the Commission in continuing to pursue the matter through the courts. Patrick and P&O, as shareholders in AAT, support AAT pursuing its application for authorisation of AAT pursuant to section 88 of the Act, and will incur further costs during that process. The Commission accepts that the decision of Patrick and P&O to agree to resolve these proceedings in this way has saved considerable Court time and Commission resources. Similar Conduct in the Past The Court has not previously found that any of Patrick, Asciano, P&O or DP World have contravened the Act. CONSIDERATION As the authorities make clear, the determination of the amount of a penalty cannot be an exact science: NW Frozen Foods at 290; Mobil Oil (2004) ATPR p41-993 at [51]. The determination of the amount is not done by the application of a formula and the courts have recognised that, within a certain range, one figure "cannot be incontestably said to be preferable to another": Trade Practices Commission v TNT Australia Pty Limited (1994)] ATPR p41-375 at 40,165. The principle of parity of penalty for similar offences is an important one, but as Burchett and Kiefel JJ observed in NW Frozen Foods at 295, things are rarely equal where contraventions of the Act are concerned. Their Honours went on to say that the quantum of penalties imposed in other cases can seldom be of much direct assistance. Here, the question of quantification of the penalty falls to be considered in light of the fact that the conduct in question is admitted to be likely to have had the effect of substantially lessening competition, but no admission is made that this was the purpose, or that it actually had that effect. It is also to be borne in mind that the Commission accepts, for the purpose of these proceedings, that the objectives of Patrick and P&O in entering into the arrangement were likely to include increased efficiencies, as stated in [80] of the Joint Submissions. The Commission's position is that the suggested increased efficiencies are irrelevant to the question of whether there was a substantial lessening of competition. Patrick and P&O dispute that proposition. But the fact that they do so is, no doubt, one that would have informed the negotiation process. So too is the fact that the parties were still in dispute as to whether the impugned conduct had the proscribed purpose or actual effect on competition. What seems to me to be of particular importance is that the parties have agreed that the effect on competition of any continuing conduct by AAT at the terminals in Melbourne, Brisbane and Port Kembla, and any public benefit said to arise from such conduct, will be dealt with pursuant to the Commission's power to grant an authorisation under s 88 of the Act. An application for authorisation has now been made, so that the question of public benefit will be considered by the Commission under s 90 of the Act. Section 90(6) provides that the Commission shall not grant authorisation unless it is satisfied in all the circumstances that the proposed conduct would result, or be likely to result, in a benefit to the public that would outweigh the detriment constituted by the lessening of competition; see also s 90(8). Other important factors are the 14-month duration of the contravening arrangement, which was comparatively short, and the estimated revenue from the automotive terminal and stevedoring businesses at the ports in question. Whilst the total annual value of retail motor vehicle sales in Australia is approximately $25 billion, of which a substantial percentage constitutes vehicles imported through the ports of Brisbane, Sydney and Melbourne, the estimates of gross revenue for stevedoring services is quite small. Patrick estimates that its total gross revenue from stevedoring services in the three ports did not exceed about $15m for the financial year 2001 to 2002. P&O estimates total revenues not exceeding $15m in each of the years in question. Another important factor is that the conduct was not clandestine. It was known in the market and customers were informed of the arrangement when it was first contemplated. It is common ground that Patrick and P&O's customers were large shipping lines which have contractual and other commercial relations with large global motor vehicle manufacturers which export vehicles to Australia. None of the customers appears to have made any complaint about the conduct of Patrick and P&O notwithstanding the fact that approximately seven years have passed since it was first made known to them. This is not to understate the seriousness of the conduct which has been admitted but it does distinguish it from the clandestine behaviour which is at the heart of price fixing cartels. It is therefore a factor (though of course not the only one) which informs the imposition of a much lower penalty than was ordered in Australian Competition and Consumer Commission v Visy Industry Holdings Pty Limited (No 3) (2007) ATPR p42-185 and ACCC v Qantas. Other relevant factors include those that are referred to at [92] [106] of the Joint Submissions set out above. In addition, as is stated in the Joint Submissions, the admissions of liability have been made well before the hearing and will result in significant saving of court time, costs and expenses to the Commission. This is an important aspect of public policy to which the majority judges referred in NW Frozen Foods at 291. As their Honours said, the beneficial consequences which flow from the settlement would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. As Burchett and Kiefel JJ observed in NW Frozen Foods at 291:- The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case. It is also relevant to the quantum of the penalty that Patrick and P&O have each agreed to pay a contribution of $100,000 towards the Commission's costs of the proceedings. The factors to which I have referred above satisfy me that the penalties to be imposed on Patrick Stevedores and P&O Ports are within the permissible range in all the circumstances.


case_title: Trade Practices Commission v CSR Limited (1991) ATPR p41-076


case_title: Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 363 ; (1984) 4 FCR 296


case_title: Trade Practices Commission v TNT Australia Pty Limited (1994)] ATPR p41-375


case_outcome: followed

case_text: The Loan Account Statements on their face purport to be documents recording financial transactions, namely loans, involving Rural Finance. They are "records" in the sense that they are part of a repository of information in organised form which is accessible in the ordinary course of a business and for the purposes of that business: Karmot Auto Spares Pty Limited v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 at 565. The Receivers found the documents amongst the business records of Rural Finance when they took control of those records. I find that they were part of Rural Finance's records within the meaning of s 69(1)(a)(i). 25 The terms of s 69(2)(a) do not suggest that it is an essential precondition of admissibility that the "person" in question be identified. The ordinary meaning of the language is that it is sufficient that the person who made the representation, whoever he or she is, had or might reasonably be supposed to have had, personal knowledge of the asserted fact. The policy behind the provision is clear enough. Routine business records, made before any legal proceeding arises or is contemplated (cf the exception in s 69(3)), have an inherent likelihood of reliability which outweighs the common law's aversion to hearsay evidence where the maker of a statement cannot be tested by cross-examination. The utility of s 69 would be greatly diminished if it were necessary to locate among large organisations, perhaps over a long period of time, persons who made representations, often in circumstances where the practical needs of the organisation did not require any identification at the time the representations were made. 26 Prior to the Evidence Act , all Australian jurisdictions had legislation based on provisions of the Evidence Act 1938 (Imp) which rendered admissible statements made in documents outside court where, inter alia, the document formed part of a continuous record. Examples were the Evidence Act 1898 (NSW) ss 14B-14C and the Evidence Act 1958 (Vic) s 5. Such legislation required the maker of the statement to be called as a witness, although that requirement could be dispensed with in certain circumstances, such as death or absence "beyond the seas". The present s 69 , however, says nothing about calling the maker of the statement as a witness. It is therefore hard to see why one should read into the section an obligation to identify the "person" where there is no need for that person to be called.


case_text: In Lee v Minister for Immigration and Multicultural Affairs [2002] FCA 303 there was an issue as to whether a notice of a decision was sent by the Minister to the applicant by a certain date. One piece of evidence relied on by the Minister was a copy, produced from the departmental files, of a letter addressed to the applicant advising of refusal of the application and enclosing the reasons for that refusal. The copy letter bore a handwritten notation " 20/3/01 Scanned in delivery centre 20/3/01 Aust Post says" Hely J observed at [22] that the notation was made by a person unknown, apparently as a result of a communication with an unknown person at Australia Post. He inferred that somebody at Australia Post informed somebody at the Department on 20 March 2001 that the letter was in the delivery centre of Australia Post on that date. His Honour admitted the notation under s 69(2)(b) as being made in the course of the Department's business on the basis of information directly supplied by a person from Australia Post who might reasonably be supposed to have had knowledge of the asserted fact, namely that on 20 March an envelope containing the letter was in the delivery centre of Australia Post. On appeal it was not necessary for the Full Court to consider this particular ruling: Lee v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 305.


case_outcome: cited

case_title: Lee v Minister for Immigration and Multicultural Affairs [2002] FCAFC 305


case_text: Other authorities supporting the proposition that the "person" need not be identified are Duke Group Ltd (in liq) v Arthur Young (1990) 55 SASR 11 and Australian Securities and Investments Commission v Rich [2005] NSWSC 417 ; (2005) 216 ALR 320 at [197] . To the extent that Nicholson J in Maritime Union of Australia v Geraldton Port Authority [1999] FCA 685 at [52] held that identification of the person referred to in s 69(2) is an essential prerequisite for admissibility I would respectfully disagree.


case_text: Other authorities supporting the proposition that the "person" need not be identified are Duke Group Ltd (in liq) v Arthur Young (1990) 55 SASR 11 and Australian Securities and Investments Commission v Rich [2005] NSWSC 417 ; (2005) 216 ALR 320 at [197] . To the extent that Nicholson J in Maritime Union of Australia v Geraldton Port Authority [1999] FCA 685 at [52] held that identification of the person referred to in s 69(2) is an essential prerequisite for admissibility I would respectfully disagree. 30 Senior counsel for the Commissioner referred to the detailed discussion of recent authorities by Austin J in Rich at [95]-[118]. However, that analysis rather focussed on the question of authentification, in the sense of provenance, and whether, as Bryson J held in National Australia Bank Ltd v Rusu [1999] NSWSC 539 ; (1999) 47 NSWLR 309, authentification cannot be achieved solely by drawing inferences from the face of the document itself where there is no other evidence to indicate provenance. Whether that be correct (as Austin J points out, there has been subsequent criticism of such a view) there is adequate authentification here in the evidence of the Receiver who physically located the document among the business records of Rural Finance; see Evidence Act s 58. 37 Rural Finance Loans Spreadsheet . This document and the following one were compiled in November 1992 by employees of KPMG after the appointment of the Receivers. They are nevertheless records kept by Rural Finance for the purposes of ss 69 and 1035: Rich at [266]-[272]. The document records the payments in question as being due on 30 September and 30 December 1987 and paid on 2 October 1987 and 4 January 1988. 38 It was argued that the document was prepared for the purpose of conducting, or in contemplation of or in connection with, a "proceeding" and thus excluded from the operation of s 69 by virtue of subs (3). "Proceeding" is not defined in the Act . Presumably it means litigation. The identity of the person who compiled the document is not known. There is no evidence as to what he or she in fact contemplated; cf Lee in the Full Court at [27]. There is no reason to conclude that such persons contemplated litigation at the stage the entries were made. The more natural inference is that the document was prepared as a matter of routine to assist the Receivers in an understanding of the financial position of Rural Finance and to seek payment of amounts due. Whether or not litigation might ensue in respect of any particular debtor was a matter for the future. 39 In any case, the s 69(3) exclusion does not apply to documents admissible under s 1305.


case_text: Senior counsel for the Commissioner referred to the detailed discussion of recent authorities by Austin J in Rich at [95]-[118]. However, that analysis rather focussed on the question of authentification, in the sense of provenance, and whether, as Bryson J held in National Australia Bank Ltd v Rusu [1999] NSWSC 539 ; (1999) 47 NSWLR 309, authentification cannot be achieved solely by drawing inferences from the face of the document itself where there is no other evidence to indicate provenance. Whether that be correct (as Austin J points out, there has been subsequent criticism of such a view) there is adequate authentification here in the evidence of the Receiver who physically located the document among the business records of Rural Finance; see Evidence Act s 58.


case_text: By reason of the failure to pay the two $5000 instalments on time Mr Guest became legally liable for repayment of the full amount of the loan and interest thereon. The interest which accrued under the loan agreement during the relevant years was therefore "incurred" by him. In those years they were presently existing liabilities: Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation [1981] HCA 6 ; (1981) 144 CLR 616 at 627.


case_title: Cook v Fowler (1874) LR 7 HL 27

case_text: Senior counsel for the Commissioner argued that following the maturity of the loan the amounts due were not interest but damages for the loss of use of money: Cook v Fowler (1874) LR 7 HL 27.


case_outcome: distinguished

case_text: As a matter of construction of the loan agreement, this argument fails at the outset. By cl 3A(i) the parties agreed: "that the Loan is for a period commencing on the date of this Agreement and subject to the provisions hereinafter contained as to periodic repayment, the balance of the Principal Sum (if any and any other monies outstanding) shall be paid by the Joint Venturer to the Lender on the 31 st March, 1992." The Principal Sum is the sum of $55,000 and the provisions as to periodic repayment are the provisions for the payment of the two amounts of $5000 (cl 3B(i)) and the deductions from the sale of fruit proceeds (cl 3B(ii)). As to interest, cl 3A(ii) provides: "subject to clause 3A(iii) [which provides for a rate of 15% when payments are made within seven days of the due date] interest shall accrue at the rate of nineteen (19%) per centum on the balance of the Principal Sum from time to time outstanding such interest to be calculated annually in arrears on the 31 st March in each year of this Agreement." (19%) Accordingly, the liability to pay interest does not cease if all or any part of the Principal Sum has not been repaid by 31 March 1992. The case is to be distinguished from Gair v Federal Commissioner of Taxation [1944] HCA 29 ; (1944) 71 CLR 388 where the mortgage provided for the payment of interest for a period of one year, but there was no covenant to pay interest thereafter. 69 What was alleged to be owing by Mr Guest in the writ and the invoice of 14 March 2002 and admitted to be owing in the deed of settlement, was interest. There is no mention of damages. Nor in any of the authorities hereafter mentioned was it suggested that liabilities incurred after the term of the loan in question were for damages rather than interest.


case_text: In any event, if the amount owed was damages rather than interest, it would be for the same amount. Damages incurred in the course of conducting a business, such as, for example, libel damages paid by a newspaper company, are deductible: The Herald and Weekly Times Ltd v Federal Commissioner of Taxation [1932] HCA 56 ; (1932) 48 CLR 113. 71 This issue, which also arises under the carrying on business limb, raises the question whether Mr Guest has shown there was a sufficient nexus between his incurring of interest liabilities in 1998 to 2001 and the blueberry growing business in which, following the appointment of Receivers, he ceased to have any involvement after 1991.


case_text: A line of cases supports the proposition that a loss or outgoing may be deductible even if it is incurred some years after the associated business, or the taxpayer's involvement in it, has ceased: Placer Pacific Management Pty Ltd v Federal Commissioner of Taxation (1995) 31 ATR 253, Federal Commissioner of Taxation v Brown (1999) 99 ATC 4600, Federal Commissioner of Taxation v Jones (2002) ATC 4135, and R & D Holdings Pty Ltd v Deputy Federal Commissioner of Taxation (2006) ATC 4472. In Placer the claimed deduction was for a payment in settlement of litigation in respect of defective goods supplied. In the other cases it was for interest on a business related loan. 73 That the gap in time may be considerable is demonstrated by the following table: Case Business ceased Deduction allowed Placer 1981 1989 Brown 1990 1994 Jones 1993 1998 R & D 1990 1999 In R & D there is the qualification that the business in question, the leasing of an office building, was still carried on, although not by the taxpayer but by a mortgagee in possession.


case_text: A line of cases supports the proposition that a loss or outgoing may be deductible even if it is incurred some years after the associated business, or the taxpayer's involvement in it, has ceased: Placer Pacific Management Pty Ltd v Federal Commissioner of Taxation (1995) 31 ATR 253, Federal Commissioner of Taxation v Brown (1999) 99 ATC 4600, Federal Commissioner of Taxation v Jones (2002) ATC 4135, and R & D Holdings Pty Ltd v Deputy Federal Commissioner of Taxation (2006) ATC 4472. In Placer the claimed deduction was for a payment in settlement of litigation in respect of defective goods supplied. In the other cases it was for interest on a business related loan. 73 That the gap in time may be considerable is demonstrated by the following table: Case Business ceased Deduction allowed Placer 1981 1989 Brown 1990 1994 Jones 1993 1998 R & D 1990 1999 In R & D there is the qualification that the business in question, the leasing of an office building, was still carried on, although not by the taxpayer but by a mortgagee in possession. 77 In Brown the taxpayers borrowed money to fund the purchase of a delicatessen. They sold the business in 1990 but the proceeds were not sufficient to discharge the loan. They continued to pay interest until the loan was discharged in 1995. The Full Court (Lee, RD Nicholson and Merkel JJ) upheld the decision of the trial judge that there was a sufficient connection between the occasion for the payment of interest and the carrying on of the business. On the appeal, the Commissioner had argued that once the business had ceased the payment of the interest was not to be found in the carrying on of the business but in the voluntary decision of the partnership not to repay the loan and to continue to pay interest instalments (at [15]). 83 Their Honours referred to Brown and the passage quoted at [79] above. They observed (at [17]) that in the instant case the taxpayer had no free choice between continuing the loan and repaying it. They said: "In our view the obiter dictum in Brown deals with the case of a true election where the borrower has the resources to pay out the loan but decides not to and rolls the loan over instead. In any event ... the loan in the present case was not a 'rollover' business loan facility, but one that would run for the agreed term unless the taxpayer decided to repay early." 84 In the present case there is no evidence one way or the other as to Mr Guest's personal financial resources in March 1992 or August 1996. Since the onus of showing that his assessments are excessive lies on him, if it is necessary for him to show that non-repayment of the loan was due to impecuniosity then his appeal must fail. 85 However, the authorities do not in my view establish that, as a matter of law, interest on a business-related loan ceases to have that character once an opportunity to repay the loan is not taken, the only exception being where the failure to repay is due to the taxpayer's impecuniosity. 88 There remains the argument based on sheer passage of time. There may come a time when the period between cessation of business and payment or incurring of interest is such that in all the circumstances the payment is "no longer sufficiently proximate to the activities of the business to be deductible": Brown at [25]. As senior counsel for the Commissioner accepted, the period cannot be precisely stated. The answer must depend, as was said in Brown at [25], upon commonsense or practical weighing of all the factors. 89 In itself the period of time in the present case is substantial, but it is not really disproportionate to the periods that have been considered not sufficient to destroy proximity in other cases; see [73] above. At the most, the period in this case might be said to be approaching the outer limits. Also there is the factor that from the point of view of the lender and its successors willingness to enforce the loan was never abandoned, either by the Receivers or Equus. It is not as though some commercial archaeologist came across a long forgotten loan and set about recovery.


case_text: A line of cases supports the proposition that a loss or outgoing may be deductible even if it is incurred some years after the associated business, or the taxpayer's involvement in it, has ceased: Placer Pacific Management Pty Ltd v Federal Commissioner of Taxation (1995) 31 ATR 253, Federal Commissioner of Taxation v Brown (1999) 99 ATC 4600, Federal Commissioner of Taxation v Jones (2002) ATC 4135, and R & D Holdings Pty Ltd v Deputy Federal Commissioner of Taxation (2006) ATC 4472. In Placer the claimed deduction was for a payment in settlement of litigation in respect of defective goods supplied. In the other cases it was for interest on a business related loan. 73 That the gap in time may be considerable is demonstrated by the following table: Case Business ceased Deduction allowed Placer 1981 1989 Brown 1990 1994 Jones 1993 1998 R & D 1990 1999 In R & D there is the qualification that the business in question, the leasing of an office building, was still carried on, although not by the taxpayer but by a mortgagee in possession. 80 In Jones a husband and wife conducted a trucking business in partnership. They took out a loan with the ANZ Bank in 1990. In 1992 the husband died. In 1993 the business ceased. The wife recommenced full-time employment as a nurse using more than half her after tax income to repay the loan. In 1996 the wife refinanced the loan with another lender to obtain a lower interest rate. The Full Court (Beaumont, Finn and Sundberg JJ) upheld the wife's claim for deductions of interest for the years 1993-1998. 81 Their Honours (at [10]) rejected the Commissioner's argument that the taxpayer only became obliged to pay interest in the years in question because she chose not to repay the principal sum and that the "occasion" for the interest repayment was each periodic decision to keep the loan on foot. They did so for two reasons. First, the loan was for a fixed term and was not dependent on periodic decisions on the taxpayer's part to keep it alive. Secondly, she did not have the financial capacity to do so. Their Honours noted (at [11]) that "the borrowed funds and the interest on them were always referrable to the former business"


case_title: R & D Holdings Pty Ltd v Deputy Federal Commissioner of Taxation (2006) ATC 4472


case_text: The concept of a break in the nexus was applied in Commissioner of Taxation v Riverside Road Lodge Pty Ltd (in liq) (1990) 23 FCR 305. In 1970 the taxpayer company borrowed money to acquire land and construct a motel. There were repayments and further borrowings. In 1979 the taxpayer transferred the property to the trustee of a unit trust, the beneficiaries of which were the shareholders in the taxpayer. The consideration for the transfer was the current value, payable on demand, interest free. The trustee then leased the property back to the taxpayer, which continued to conduct the motel business. The disputed deduction was for interest on pre-1979 loans incurred after the transfer. 76 The Full Court (Northrop, Wilcox and Hill JJ) observed (at 314) that the case was not one where the activities of the taxpayer in operating the motel ceased during any relevant year of income. However, in 1979, as a result of the sale and lease-back, the character of the activities of the taxpayer changed. Before, it was an owner/operator of a motel; afterwards it was an operator of a motel owned by others and of which it was only a tenant. The Full Court disagreed with the view of the trial judge that the 1979 change was not sufficient to change the relationship between the interest payments and the business activity. The interest outgoings ceased to be "relevant and incidental" to the business activities engaged in by the taxpayer after 1979. They had "no real connection at all with the business of running a rented motel" (at 315). 82 Their Honours (at [14]) observed that Riverside Road: "...does not establish that a taxpayer who has a legal right to repay a business loan after the cessation of business can never thereafter deduct interest payable on the loan. All it decided is that, in the circumstances of that case, which involved a distinct change in business activity during the currency of the loan, interest continued to be deductible after the cessation of the business for which the loan was incurred because the taxpayer was contractually bound to pay interest until the loan was repaid." 86 Here the occasion of the borrowing from Rural Finance and the consequent interest liability was undoubtedly to be found in business operations directed towards the gaining or producing of assessable income. The cessation of the taxpayer's involvement in the business did not in itself retrospectively alter the occasion of the borrowing. Apart from cessation, there was no event which altered the taxpayer's relationship to the business, such as occurred in Riverside Road . In 1987 Mr Guest became obliged to pay interest on a business-related borrowing. The obligation arose from his entering into the loan agreement and failing to make the two $5000 repayments on time. In the tax years in question his liability for interest arose under the same obligation. He owed the interest in his capacity as borrower of the same loan to a successor in title of the original lender. Apart from the sheer passage of time argument, the interest liabilities had a "real connection" with Mr Guest's blueberry growing business. 87 The point may be illustrated by a hypothetical example. A taxpayer has a business- related loan. While the business is still operating, the term of the loan comes to an end. The taxpayer has the resources to repay the loan, but decides not to, perhaps because the interest rate is favourable, or perhaps he simply overlooks the matter. The interest would continue to be deductible. There seems no logical reason why a different result should occur in a situation where the business has ceased. 90 As often happens in such cases (see Riverside Road at 312), consideration of s 8-1(1)(a) and (b) tended to overlap. If, as I find to be the case, Mr Guest succeeds under (a) he does not need to establish the carrying on business element of (b). Nevertheless, I find that this element has been satisfied. 91 It is true that there is no evidence that Mr Guest ever visited the blueberry farm or did anything to participate in the business other than sign documents, pay some money, return income and claim deductions.


case_text: Their Honours reviewed the case law, and in particular the decision of the High Court in Steele v Deputy Commissioner of Taxation (1999) 197 CLR 449. They applied (at [20]) the statement of the High Court, adopting what was said by Lockhart J in Federal Commissioner of Taxation v Total Holdings (Aust) Pty Ltd (1979) 79 ATC 4279 at 4283, that a taxpayer may be entitled to a deduction after a business has ceased, provided the occasion of a business outgoing is to be found in the business operations directed towards the gaining or production of assessable income generally. However, cessation of business may be of factual importance. Their Honours (at [24]) concluded that the trial judge was correct in determining that the occasion for the loss or outgoing in question was the payment of interest which the taxpayers were obliged (their Honour's emphasis) to pay under the loan contract.


case_title: Federal Commissioner of Taxation v Total Holdings (Aust) Pty Ltd (1979) 79 ATC 4279 at 4283


case_text: This does not mean, however, that Mr Guest was not carrying on business. He did so by engaging his agent Johnson Farm Management for that purpose: qui facit per alium facit per se ; see also Commissioner of Taxation v Sleight [2004] FCAFC 94 ; (2004) 136 FCR 211 at [46] - [61] , the facts of which are quite similar to the present case. Mr Guest's involvement in the blueberry growing at Corindi was comparable to that of English absentee landlords of Irish estates in the nineteenth century. They conducted their business through the medium of agents such as Captain Hugh Boycott, who gave his name to the language. 93 The blueberry project involved the motive of profit, albeit not immediate, repetition of activities, systematic organisation, and the investment by Mr Guest and the other three individuals of significant amounts. This was not a hobby. 94 Since there will need to be some adjustment to the amounts (see [63] above), I direct counsel to bring in minutes of proposed orders to give effect to these reasons. I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey . Associate: Dated: 23 February 2007 Counsel for the Applicant: G T Pagone QC and M Flynn Solicitors for the Applicant: Coadys Counsel for the Respondent: R A Brett QC, S Steward and S Sharpley Solicitor for the Respondent: Australian Government Solicitor Dates of Hearing: 29 November 2006, 8 February 2007 Date of Judgment: 23 February 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/193.html


case_text: The written submission on the part of the Appellant that there has been a breach of s 359A is also rejected. If the submission is to be construed as an application for leave to amend the Notice of Appeal to raise an additional ground of appeal, the application for leave is refused. It was not an argument raised before the Federal Magistrate and no explanation has been advanced as to why the argument should now be entertained: Coulton v Holcombe [1986] HCA 33 ; (1986) 162 CLR 1. 13 A letter was in fact forwarded to the Appellant pursuant to s 359A inviting him to comment on the matters therein set forth. The letter is that dated 12 April 2007 and provided in relevant part as follows: You are invited to comment, in writing, on the following information: • When you applied for the Bridging A visas on 22 November 2006, your application for substantive visas (ie Protection visas) had been finally determined. This information is relevant because it may indicate that you do not meet the requirements of cl. 010.211(2)(b). • When you applied for judicial review of the decision in relation to your protection visas on 24 October 2006, you did not hold Bridging A visa or a Bridging B visa. This information is relevant because it may indicate that you do not meet the requirements of cl. 010.211(3)(c). • You applied for Protection visas in Class XA on 18 January 2006. This information is relevant because it may indicate that you do not meet the requirements of cl 010.211(4)(b). • You had not made valid applications for a subclass of a visa prescribed by cl 010.211(5)(a). This information is relevant because it may indicate that you are unable to meet the requirements of cl. 010.211(5)(a). • You had not made valid applications for a subclass of a visa prescribed by cl 010.211(6)(a). This information is relevant because it may indicate that you are unable to meet the requirements of cl. 010.211(6)(a). • At the time of the Tribunal's decision, the judicial review of a decision in relation to your application for Protection visas has been completed and there is no evidence that the decision has been appealed. This information is relevant because it may indicate that you do not meet the requirements of cl. 010.211(3)(d) and therefore cl. 010.221. If the intent of the letter was to invite comments from the Appellant in relation to the matters raised, it is (with respect) far from satisfactory. The letter, not surprisingly, has all the hallmarks of being written by a person with experience and detailed and extensive knowledge of the Migration Act and Migration Regulations . But it is a letter written to a non-lawyer and a person (at the very least) not fluent or conversant with the English language. Nowhere in the letter is there a reference to the clauses referred to being provisions to be found in the Migration Regulations . The origin or source of the clauses referred to would remain a mystery to the reader. Nowhere in the letter are the provisions of those clauses of the Regulations set forth, and a copy of the Regulations or an extract is not annexed. Those with access to the three volumes of the current Migration Regulations may also experience difficulty in finding the clauses of present relevance. Even an educated person may well have difficulty in making any meaningful comment in such circumstances. A letter inviting a person to comment upon undisclosed provisions is, it is considered, not much of an " invitation to comment".


case_text: It is considered that the appeal must be dismissed for the reasons previously given by both the Migration Review Tribunal and the Federal Magistrates Court. The Grounds of Appeal seek to characterise the errors as being errors of law, jurisdictional error and procedural fairness. There is also a ground which asserts that the Federal Magistrate did not apply Randhawa v Minister for Immigration, Local Government & Ethnic Affairs (1994) 52 FCR 437. The grounds are expressed in the most general terms but content may be given to them if reference is made to the reasons for decision of the Tribunal and the Federal Magistrate. 5 The Appellant's written submissions filed in this Court also make a submission as to a breach of s 359A of the Migration Act 1958 (Cth). 6 It is considered that each of the Grounds of Appeal should be dismissed as should the submission in respect to s 359A. 11 The decision of the Full Court in Randhawa v Minister for Immigration, Local Government & Ethnic Affairs (1994) 52 FCR 437 is a decision as to the definition of a " refugee ". Its relevance to the present proceedings, other than an impermissible attempt to now recanvass the earlier unsuccessful claims for a protection visa, is not apparent.


case_text: Provision is made in the Migration Act 1958 (Cth) for the grant of a visa: s 65. Section 73 provides for the grant of a " bridging visa ", provided an applicant satisfies criteria which may be prescribed by regulation: s 31(3). Failure to satisfy those criteria requires a refusal of the application: SJSB v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 225 at [15] per Ryan, Jacobson and Lander JJ. 9 For present purposes, the regulations of relevance may be found in Schedule 2 to the Migration Regulations 1994 (Cth), being regulations 010.211 and 010.221. Those regulations relevantly provide as follows: 010.21 Criteria to be satisfied at the time of application. 010.211 (1) The applicant meets the requirements of subclause (2), (3), (4), (5) or (6). (2) An applicant meets the requirements of this subclause if: (a) the applicant has made, in Australia, a valid application for a substantive visa of a kind that can be granted if the applicant is in Australia; and (b) that application has not been finally determined;... ... (3) An applicant meets the requirements of this subclause if: ... (c) at the time of that application, he or she held a Bridging A (Class WA) or Bridging B (Class WB) visa; .... ... (4) An applicant meets the requirements of this subclause if: ... (b) he or she has not applied for a Protection (Class AZ) or Protection (Class XA) visa; ... ... (5) An applicant meets the requirements of this subclause if: (a) the applicant has made a valid application for: [specified visas]...; ... (6) An applicant meets the requirements of this subclause if: (a) the applicant has made a valid application for: ...[specified visas]; and ... 010.22 Criteria to be satisfied at the time of decision. 010.221 The applicant continues to satisfy the criterion set out in clause 010.211. 10 For the reasons given by the Migration Review Tribunal, the Appellant does not satisfy Clauses 010.211(2), (3), (4), (5) or (6). The now Appellant did not satisfy Clause 010.211(2)(b) as his application for a protection visa had been " finally determined " at the time of his application in November 2006. That phrase is further defined by s 5(9) of the Migration Act 1958 (Cth). In the circumstances of the present case, the application for the protection visa had been " finally determined " as the delegate had refused the application and there had been no review " instituted as prescribed " within the meaning of s 5(9)(b). The Appellant did not satisfy cl 010.211(3)(c) as he was not the holder of a bridging visa A or B; he did not satisfy cl 010.211(4)(b) as he had applied for a protection visa; and there was no evidence that he had applied for a class of visa prescribed by cl 010.211(5)(a) or (6)(a).


case_title: SZBYR v Minister for Immigration & Citizenship [2007] HCA 26 , 235 ALR 609

case_text: Comfort was sought to be drawn by the Respondent Minister in a submission that the matters in respect of which comment was sought was not " information" within the meaning of s 359A and that, accordingly, an invitation need not have been sent at all. That submission may well be correct. It may well be that the matters set forth are more in the nature of the thought processes or reasoning of the Tribunal: SZBYR v Minister for Immigration & Citizenship [2007] HCA 26 at [18] , [2007] FCA 26 ; 235 ALR 609 at 616 per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. But, insofar as the Appellant is concerned, such subtleties do not deny the fact that he would have received the letter and read that it was forwarded to him in an attempt to " ensure both a fair and speedy review process ." The letter previously stated: The Migration Act 1958 (the Act) contains provisions intended to ensure both a fair and speedy review process. These include opportunities for review applicants to respond to material before the Tribunal, as well as limits on further opportunities if there is a failure to provide comments within a specified period. Section 359A of the Act states that the Tribunal must explain, and invite comments on, 'particulars of any information that the Tribunal considers would be the reason, or part of the reason, for affirming the decision that is under review.' If a letter in the form of that forwarded to the Appellant is to be sent, it is considered at a minimum that the letter should identify the source of the requirements being set forth and either extract the relevant provisions or annex a copy of the relevant Regulations . The bona fides of the author of the letter are not in question. What is in question is whether such matters as were disclosed in the letter put the recipient in a position where he could meaningfully contribute to what was held out as a " fair and speedy review process ". 15 Such deficiencies in the letter, however, do not advantage the Appellant, even if a breach of s 359A is made out and even if leave to raise the matter had been permitted. The simple fact is that he cannot bring himself within regulation 010.211 of Schedule 2 to the Migration Regulations and leave to amend should thus be refused. Any relief would have been refused as a matter of discretion: cf SZBYR v Minister for Immigration & Citizenship [2007] HCA 26 at [27] [29], [2007] FCA 26 ; 235 ALR 609 at 618 19 per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. In the present case, the refusal of leave to amend and the refusal of relief, even if a breach be established, is an exercise of discretion that " is proper, prudent, economical and just ": [2007] HCA 26 at [87] per Kirby J. 16 None of the Grounds of Appeal is made out. 17 Accordingly, the appeal must be dismissed. An award of costs is always discretionary but there is no reason why the usual approach to the award of costs should not apply.


case_text: The evidentiary burden on a party in Worimi's position in circumstances where the moving party must prove a negative proposition has been described in Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 (at 565) as similar to ' the evidential burden placed upon an accused in a criminal trial who seeks to raise the issue of self-defence which the Crown must disprove '. 57 All of the evidence is to be weighed according to the proof which it was in the power of one side to produce and in the power of the other to have contradicted ( Apollo Shower Screens at 565). Once the Land Council has established sufficient evidence from which the negative proposition, an absence of native title, may be inferred, Worimi carries an evidential burden to advance evidence of any particular matters going to the existence of native title. It is then for the Land Council to deal with the evidence in the discharge of its overall burden of proof ( Apollo Shower Screens at 565). 58 Worimi submits that the Land Council is in a position to call all of the customary expert evidence and has not done so. The Land Council submits that Worimi is in the position to adduce evidence from other Worimi persons in support of his claim and has not done so. Each party asserts that he or it is under no obligation to provide further evidence. 60 The power of a party to adduce evidence may be relevant to the weight to be accorded to the evidence presented ( Apollo Shower Screens at 565; Blatch v Archer [1774] EngR 2 ; (1774) 1 Cowp 63 at 65; Ho v Powell (2001) 51 NSWLR 572 at [15]). It may also be relevant to the standard of proof. There is, however, a distinction between the probabilities on limited material available and whether limited material provides an appropriate basis on which to reach a reasonable decision ( Ho at [14]). 188 Much has been made in submissions of which party is better able to call evidence and the effect on the proof of a negative proposition. On one hand, the Land Council has not called evidence from all the Worimi people. It has called seven witnesses, some of whom have studied Worimi history and have knowledge of Worimi laws and customs and others from Worimi's family. It has, as I have said, been authorised to bring this application. Worimi asserts that (at least) his family, as part of the Garuahgal clan, has native title rights and interests over the Land. It is Worimi who has the greater means to produce evidence from his family or from other Garuahgal or Worimi people to contradict the proposition of no native title. In particular, if Worimi asserts that Lot 576 and Kingsley Beach are a women's site of which he cannot have personal knowledge, the absence of any evidence of the laws and customs associated with that site from a woman supporting his assertion is telling. The only evidence in support of Worimi's claims was filed in respect of his claimant applications and was from Worimi's mother, who is Yorta Yorta, and from his wife, sister and daughters (Priscilla Dates changed her evidence in these proceedings), who say little more than that they take their information from Worimi and support his assertions. The failure on Worimi's part to call corroborative evidence lessens the burden of proof on the Land Council to establish the negative proposition ( Apollo Shower Screens at 565). It does not increase the burden on the Land Council. 189 I am satisfied that there has not been the necessary connection with the Land and the observance of the asserted laws and customs. This is not because of Worimi's temporary absence in Western Australia. It is because, on the evidence, I am satisfied that there was no women's site on or near Lot 576 and that there was no use of a waterhole on or near Lot 576 associated with the birth of Worimi children. If there were such a site or such use, it has long since ceased to be used. Worimi's attempt to revive such use in the case of his daughter and the birth of his grandson is insufficient to give rise to native title rights and interests in the Land. 190 The group or communal rights that form the basis of Worimi's case are in respect of the claimed women's sight on or near the Land. The characterisation of Worimi's asserted native title rights and interests has changed over time. Worimi also claims rights in respect of his own observance of traditional hunting and gathering customs on the Land. However, Worimi appears to assert that these rights are held by all Worimi people or at least by the Garuahgal clan. There is no sufficient evidence that any such rights, whether individual, group or communal, are possessed under a normative system of traditional laws acknowledged and customs observed by Worimi people or by the Garuahgal clan. Worimi's account of traditional hunting and gathering law and custom has been disputed by the Land Council's witnesses.


case_text: The power of a party to adduce evidence may be relevant to the weight to be accorded to the evidence presented ( Apollo Shower Screens at 565; Blatch v Archer [1774] EngR 2 ; (1774) 1 Cowp 63 at 65; Ho v Powell (2001) 51 NSWLR 572 at [15]). It may also be relevant to the standard of proof. There is, however, a distinction between the probabilities on limited material available and whether limited material provides an appropriate basis on which to reach a reasonable decision ( Ho at [14]).


case_title: Bodney v Bennell (2008) 167 FCR 84

case_text: The Land Council relies on Worimi's own evidence to demonstrate a lack of continuity in the practices said to have been carried out on or near the Land. Worimi acknowledges that, whether or not Lot 576 and the area at Kingsley Beach are women's sites and associated with the birth of children, whether Worimi, Maaiangal or Garuahgal, there has not been a continuous connection with such people and the observance of traditional laws and customs since sovereignty. Accordingly, there has not been the requisite "connection" with the Land as required by s 223(1) of the Act ( Bodney v Bennell (2008) 167 FCR 84 at [171] [174]). This is not because of the physical presence or absence on the Land. It is because the practices of his own family, that he says are associated with the Land, were not observed at least from the time of his grandmother until his daughter went onto the Land in 2006. I accept that, at least now, Worimi feels strongly about his Aboriginal heritage. Worimi accepts that he has taken some of the customs observed by the Dunghutti people, as described and observed by his wife Cynthia, in practising with his daughter the customs connected with birth and baptism that he said were carried out on the Land and Kingsley Beach. That could be said to reflect the incorporation, in the ordinary course, of other customs and practices into the traditional forms of the Garuahgal people. 170 As was said in Yorta Yorta at [47] and repeated in Bodney at [47], if the normative system has not existed throughout the period since sovereignty, the rights and interests which owe their existence to that system will have ceased to exist. The law and custom arise out of and go to define a particular society, a body of persons united in and by its acknowledgment and observance of a body of law and customs ( Yorta Yorta at [49]; Bodney at [46]). ' Unless a society has, and acknowledges and observes, laws and customs under which native title rights and interests are possessed, there can be no native title rights whether communal, group or individual ' ( Bodney at [157]). It is therefore necessary for a person claiming native title to show that the normative system that existed at sovereignty is substantially the same as the one that exists today ( Bodney at [47]). This must be established for each generation to establish that the laws and customs have continued to be acknowledged and observed substantially uninterrupted ( Bodney at [70] [74]). 171 Where individual native title rights are claimed, they arise out of and depend upon the traditional laws and customs of the community in question ( Bodney at [148]). Rights may be communally held or held by a sub-group or, indeed, by an individual, depending on the nature of the society said to be the repository of the traditional laws and customs that give rise to the native title rights and interests ( Northern Territory of Australia v Alyawarr, Kaytetye, Warumungu, Wakaya Native Title Claim Group [2005] FCAFC 135 ; (2005) 145 FCR 442 at [79] and [80]). In the present case, the native title rights over a Worimi women's site would be held by Worimi women. They deny such rights for Lot 576.