: CY) _A2P §3 JUDGMENT No. ....ssosesosssonsel sscessssseve IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G1ll4@ of 1952 wee ew GENERAL DIVISION DOE & (ROCEOURE BETWEEN: BORDEN AUSTRALIA PTY. OBJECMOS TD INTELLOCATOLIES bimirep Applicant AND: MONSANTO AUSTRALIA LIMITED Respondent CORAM: Lockhart J. 15 April, 1983 REASONS FOR JUDGMENT EX TEMPORE LOCKHART J. Borden Australia Pty. Limited, the applicant, seeks an order requiring Monsanto Australia Limited, the respondent, to answer certain interrogatories which the respondent has declined to answer. Before turning to the interrogatories in dispute 1 shall say something about the case itself. The applicant and the respondent each manufactures ana sells chemicals ana other goods, including a product known as phenolic resin. The respondent also manufactures a prceduct phenol which is used in the manufacture of phenolic resin. The applicant alleges that the respondent is engaging in the proscribed practice of price discrimination contrary to the provisions of s.49 of the Trade Practices Act 1974 ("the Act") in that in its trade or commerce it is discriminating between purchasers of goods of like grade and quality in relation to the prices charged for the goods, and the discrimination is of such magnitude or is of such a recurring or systematic character that it has or is likely to have the effect of substantially lessening competition in a market for goods, being a market in which the respondent supplies those goods. The applicant alleges in effect, as 1 understand it, that the respondent is charging the applicant higher prices for the purchase of phenol than the respondent charges other purchasers, and that in all the relevant circumstances a breach of s.49 results. The applicant also, as I understand it, bases its case upon an alleged breach of s.46 of the Act by the respondent relating to mcnopolisation. The respondent denies the allegation. The applicant sought to administer some 123 interrogatories, including some in confidence, pursuant to earlier directions of this Court. In fact, the combination of interrogatories is such that, in reality, the applicant seeks to administer many more than 123. The responaent has answered meny of the interrogatories but objects to answering those the subject of this application before me. The respondent relied cn an affidavit of Douglas Edward Reid, a company secretary, sworn 15 April 1963, in support of its opposition. Before turning to the particular interrogatories in dispute 1 should say that it is often necessary when dealing with applications for leave to interrogate which are disputed to decide questions of relevance of the interrogatories. It is, of course, always difficult to decide questions of relevance at this stage of any proceeding. Not infrequently matters that are thought not to be relevant at a stage such as this are shown later at the final hearing, as it proceeds, to be relevant, and vice versa. Accordingly, any views 1 may form at this stage on the question of relevance are those that I form because 1 think I have to in order to dispose of the application; but they are, of course, based only on my understanding of the case as it is at the present and are, in any event, prima facie views as of necessity they must be. 1 turn then to the interrogatories in dispute and will deal with them in numerical order which follows also the order of counsel's submissions. the interrogatcries are contained in the "Verified Statement in Answer to Interrogatories" filed by the respondent on 2zZ March 1983. There is also a separate "Verified Statement in Answer to Interrogatories" filed by the respondent in a sealed envelope marked confidential pursuant to earlier directions of the Court. Confidential interrogatory 7 was one which' the respondent answered in part but declined to answer in whole on the ground that to answer it further than it did would be oppressive. In the course of discussion between myself and counsel it is now clear that there will be no dispute in relation to the answer to that question and the respondent is proposing to file a further affidavit to complete its answer. Therefore, the applicant does not press now for an order that the respondent be required to answer that confidential interrogatory 7. Turning te the interrogetories that are not confidential, interrogatory 9 asks:- "Has the RKespondent at any time during each of the said periods made sales of phenol for export? 1f so, that in respect of each such sale:- (i) the price at which the sale was made; (ii) the basis of calcylation of such price and the details of the items constituting its calculation; (iii) the amount cf the profit element of each such price; (iv) the amount of each such price that represented a return on fixed capital costs; (v) the amount of each such price that represented the recovery of direct costs of manufacture. The expression "said periods" is used throughout the interrogatories and its meaning is defined as including some five periods, the first period commencing 1 July 197& and the fifth period ending the date of answering the interrogetories, which is & March 1983. iy) ' The respondent objects to answering the interrogatory \ on the ground that it does not relate tc any matter in \ question between the parties in that it relates only to markets outside Australia which the respondent asserts are not relevant to the issues in this proceeaging having regard to s. 4E of the Act. The applicant asserts that the interrogatory does relate to relevent issues because 6. notwithstanding the provisions of s.4E, if discrimination is practised in relation to price by the respondent in its sales of phenol to the applicant in Australia yet the respondent sells to overseas customers at lower prices so that the applicant is paying more for the phenol purchased by it than are those overseas purchasers, this is a matter which is said to be relevant in determining the issues tendered by the pleadings based on s.49. This includes the issue whether the price discrimination is such that it is likely to have the effect of substantially lessening competition in the relevant market for goods, that market being the Australian market. It is in my prima facie view only markets in Australia that are the subject of the prohibitions imposed by s.49 so far as is relevant to this case, but in any event there is no evidence before me that overseas sales would have any effect such as that alleged in relation to the Australian market. As I said earlier in certain general observations, the view 1 form as to relevance at this stage is not to be treated as necessarily being the final view in due course when the case reaches its final hearing; but for these reasons and the absence of evidence I have referred to, I am not satisfied that the interrogatory does seék answers to matters relevant to any issue between the parties and accordingly 1 disallow Y that interrogatory. | It is common ground that having disallowed that, I will also Gisallow interrogatories 13 and 14. Interrogatory 17 asks:- "What is the 'RAP study group'? Identify the person or bodies constituting the same and say what proposals or reports it has made. To the extent to which such proposals or reports are in writing identify the writing and say where it may be inspected. To the extent to which such proposals or reports are verbal state between what persons the conversations occurred and give their substance." In my view that interrogatory does not relate to any matter in issue between the parties so far as I can glean from the pleadings and the interrogatory itself. The "RAP study group", as it is called, may or may not have anything whatever to do with questions relating to price discrimination such as is alleged to have taken place in this case, and there is simply nothing before me which convinces me that there is any relevance to:any issue by the matters raised in the interrogéetory. Accordingly, 1 disallow that interrogatory. Interrogaetory 21 asks:- "Does any related or parent company of the Respondent have to the knowledge or belief of the kKespondent or any cof its officers a transfer pricing policy in the United States? If so, state the policy. It has not been established to my satisfaction that whatever transfer pricing policy there may exist in the United States on the part of the parent or any related company of the respondent, it has any relevance to any of the issues in this case and I disallow that interrogatory. It is common ground that accordingly I woula disallow interrogatories 22 and 23. Interrogatory 24 asks:- "Has any officer of the kespondent considered the effect upon competitors of the Respondent of the transfer pricing. policy of the kespondent? If so, identify each such officer, and state whether such consideration was written or verbal. lf written, identify the writing and say where it may be inspected. lf verbal, state between what persons the conversaticns constituting the same occurred and give their substance." The respondent objects to answering this interrogatory on the ground that it is said to be oppressive. In paragraph 2 of his affidavit Mr keid has sworn:- "The Respondent says Interrogatory 24 is oppressive because tO answer it would necessitate making inquiries of every employee of the Respondent who has been invelved in the marketing of phenol and phenolic resin over the last 4U years, as phenol was first manufactured in Australia by the Respondent in or about 1942. The employees who may have considered the matters raised in this Interrogatory would have included Production Managers, Sales Managers, business Directors and Commercial Directors many of whom 1 believe are now dead or have left the employ of the Respondent. At the present time there are approximately ZU employees falling within the above categories who are employea at various locations througheut Australia by the Respondent." Even without the benefit cf the sworr statement ot Mr Reid I would heve rejected this interrcegatory because on its face it seems tc me it would require the respencent ~HGEGE 1c. in an Cppressive task, but with the berneiit ct his evidence 1 am satisfied that the objection is well teéken ena the interregatory should be disallowed. Interrogatory 351i asks:- "If the answer to any part of the preceding Interrogatory is affirmative give full details of:- (i) the level of cost or costs below which phenolic resin was sold; (ii) the date of each such sale; (iii) the person to whom each such sale was made; (iv) the sale price; (v) the quantity sold; (vi) the officer or efficers of the Respondent who:- (a) considered, (b) recommended, (c) decided, upon each such sale. ll. Mr Reid has also sworn in relation to this interrogatory:- "As to interrogatory 31 1 say that there are 17 individual grades of phenolic resin which are referred to in the answer to that interrogatory. These grades are: PP1256, PP116l, PP1211, PP1234, PP1253, PP1145, PP159, PP1027, PP10G62, PP1065, PP1169, PP1244, PP775, PP115&, PP1245, PP1249, PP1071. To answer this interrogatory any further would involve extracting the invoices and order forms for each of the sale of these resins since 1 July 197&. These invoices are not kept separately from invoices and order forms relating to the sale of other phenolic resins which are referred to in the answer to interrogatory 25, and further the invoices and order forms are located in many locations throughout Australia. Il anticipate that to extract the relevant invoices: and order forms would involve 17 employees of the respondent working a total of no less than 5S number of days. 12. For those reasons it is said that to answer the interrogatory would be oppressive and vexatious and it does not relate to any issue between the parties. in my view it would be oppressive to require the respondent to answer that interrogatory and 1 accordingly reject it. Interrogatory 32 is much the same as interrogatory 31, save that Mr Reid has also sworn in relation to interrogatory 32:- "As to interrogatory number 32 1 say that before the persons who were involved in the particular sales can be identified it would be necessary to extract the invoices and order forms referred to in the preceding paragraph hereof. Thereafter it would be necessary to identify the sales representatives and marketing personnel who were involved in each particular sale since 1976. l anticipate that some of these persons may not still be employed by the Respondent and their whereabouts may not be known. In 1982 there were approximately lo sales representatives throughout Australia involved generally in the sale cf these resins." 1 in fact regard paragraphs 3 and 4 of Mr keid's affidavit, which relate to interrogatories 31 and 32 respectively, as really covering substantially the same ground so that what he swears in those paragraphs applies to both interrogatories 31 and 32. l reject interrogatory 32. Interrogatcry 33 must therefore be rejected. Interrogatory 46 asks:- "Has there been any occasion Guring each of the said periods on which the Respondent has not priced phenol on an import parity basis? If so, give the full particulars of each such occasion and say, (i) why import parity was not méintained; (ii) whether anyofficer or employee of the Respondent had any conversation with any person during each of the said periods concerning whether import parity should be maintained and, if so, identify the persons who participated in each such conversation and state the substance of each such conversation." 14. The respondent objects to answering that interrogaétory on the ground that:- "On no occasion relevant to the issues raised by these proceedings: but in some instances sales were effected to New Farm, Yorkshire and others in which those companies were granted export rebates since the subject matter of the sale was to be exported by those companies." The objection in substance is the same as it was in the case of interrogatory 9 and I would reject interrogatory 46 for the same reasons save for a separate argument advanced by counsel for the applicant namely, that interrogatory 46 seeks to interrogate the respondent as to sales made by it to companies in the Australian market but for export by those companies. In my view, this does not establish any relevant difference for -the purpose of this application, and l therefore reject interrocetory 46. Again, 1 shoula say that whether in due course at the trial that additional point of counsel for the applicant is shown to be gcooa is another matter, but at this stage 1 do not think relevance has been shown. 1 should add to that, nor has evidence been aaducea 15. which would tend to show that even if technically relevant the interrogatories should be allowed. It follows that interrogatories 47 and 4% will likewise be rejected. Interrogatory 48 asks:- "If the answer to any part of the preceding Interrogatory is in the affirmative, identify the participants in each such conversation and give the sbstance thereof and state the date thereof." Objection is taken to answering that interrogatory on the ground that it is oppressive and vexatious. Mr Reid has sworn in relation to that in paragraph 5: "The Respondent says in relation to Interrogatory 48 that it is oppressive because to answer it would necessitate making enquiries of every employee of the Respondent who has at any time, not only during the periods referred to in the Applicant's Interrogatories had any discussions concerning the matters referred to in this Interrogatory. The Responaent has' been _Manufacturing phenol since 1942 and the employees who may have discussed cr ioe. considered the matters raised in this Interrogatory would be impossible to estimate but I believe many hundreds, some of whom are dead and others of whom are no_ longer employed by the Respondent. At the present time there would be approximately 43 number of employees of the Respondent to whom enquiries could be made to answer this Interrogatory and these employees are located at various offices of the Respondent throughout Australia." In my opinion the objection to that interrogatory being answered is also well taken on the ground of oppression, and I would not allow it. Interrogatory 49 raises the same point as interrogatory 46, and therefore I will not allow it. As interrogatory 50 is consequential on interrogatory 49, I will not allow it. I come then to interrogatory 5&. it asks:- 17. "Has the Respondent at any time:- (i) made a dumping complaint in respect of styrene monomer importers; (ii) informed any styrene monomer manufacturer of its intention to make a dumping complaint in respect of it." The Respondent answered:- "The Respondent objects to answering this interrogatory on the ground that the interrogatory does not relate to any matter in question between the parties." An objection is taken to that interrogatory on the ground that it does not relate to an issue between the parties. It is said that the relevance of this interrogatory is that although the product styrene monomer is a different product to the products phenol or phenolic resin, nevertheless the respondent is said to have followed the same proscribed practices in relation to styrene monomer as it has done with respect to phenol. I am not satisfied that this interrogatory relates to any relevant matter in the case ana I disallow it. 1&. Interrogatory 61 asks:- "During each of the said pericds:- (i) has there been a market for the sale of phenol in Australia; (ii) for what purposes was phenol suitable; (iii) were any other products (and, if so, which) suitable for the same use or substitutable or otherwise competitive with phenol?" The respondent replied: (i) & (iii) the Respondent objects to answering these interrogatories on the ground that they are oppressive and vexatious in that they relate to matters of law; (ii) Phenol was suitable for manufacturing phenolic resins, aspirin, rubber chemicals, herbicides and phenolic -moulding compounds. The respondent objects to answering interrogatories 61(i) and (iii) on the ground that they are oppressive and vexaticus and relate to méetters of law. It cGces not object 19. to answering interrogatory 61(ii). l have ae little difficulty with the language of interrogatory 61l(iii), but I think it is fair that it should be read as if it saia:- "were any other products, and if so which, suitable for the same use as or substitutable for or otherwise competitive with phenol?" In my view the interrogatory is not one that should be allowed, as it asks the respondent to interpret a difficult question which it should not have to ao. In addition it relates to a question of law or fact and law. - Whether there has been a relevant market for the sale of a commodity for the purposes of the Act seems to me essentially a matter for the Court to determine. what the facts are which go to establish whether there is a relevant market, of course, may in appropriate cases be properly the subject of the interrogating power but this interrogatory is not permissible. Interrogatories 62 and ©3 would likewise be not allowed. Interrogatory 65 asks:- "During each of the said periods:- (i) (ii) (iii) (iv) 2c. was there a market for phenolic resin in Australia for use in the manufacture of particleboard; was there a market for phenolic resin in Australia for use in exterior bonding of flooring particleboard; was any product other than... phenolic resin suitable for use in the manufacture of flooring particleboard and, if so, what product or products; was any product other than phenolic resin suitable for use in the exterior bonding of flooring particleboard and, if so, what product or products." The respondent answered: (i) (iii) (iv) and (ii) The Respondent cbjects to answering these interrogatories on the ground that they are oppressive and vexatious in that they relate to matters of law. Yes, mimosa tannin and malimine urea formaldehyde (MUF) resin. Yes, mimcsa tannin and melamine urea formaldehyde (MUF) resin." 21. Objection is taken to answering interrogatory 65(i) and (ii) on the ground that they are oppressive and vexatious and relate to matters of law. In my view, this objection is well founded. It does ask questions requiring the respondent to determine whether there was a market for phenolic resin in Australia, or for use in certain processes. For the reasons 1 have given in relation to interrogatory 61 this interrogatory likewise is disallowed. So is interrogatory 66 disallowed. Interrogatory 67 asks:- "At any (and which) times during each of the said periods have the Applicant and the Respondent been competitcrs in the sale of: (i) phenolic resin; (ii) phenolic resin for use in the manufacture of particleboard or flooring particleboard (stating which); (iii) phenolic resin for use in the external bonding of flooring particleboard. 22. The respondent answered:- "The Respondent objects to answering this interrogatory on the ground that it is oppressive and vexatious in that it relates to a question of law." Objection is taken to answering that on the ground that it is oppressive and vexatious in that it relates to a question cf law namely, that it requires the party being interrogated to say whether during certain times the parties have been competitors in the sale of the various products. That, in my view, does raise a question of law or of mixed fact and law and whether they have been competitors or not is for the Court to decide. The interrogatory in my view is not permissible. Nor will interrogatory 6% be allowed as it is consequential on 67. That deals I think with all the interrogatories that are in dispute. Accordingly, as to all the interrogatories to which objection was taken, I disallow them. What about costs? As to costs counsel for the applicant sought in reply to support the interrogatories on the basis that they related to so much of the applicant's case as concerned s.40 cf the Act. 23. The argument was stated but not developed. 1 do not think it right that in those circumstances I should have to go through each of the interrogatories again to deal with them in the light of s.46 without the benefit of detailed argument. As to costs, the respondent has almost' entirely succeeded in its resistance to the application for answers to interrogatories. The proper order for costs is that the applicant should pay the respondent's costs of the Notice of Motion of 8 April 1983 insofar as it relates to the orders sought in paragraph l. Otherwise, there should be no order for costs of that motion.