FEDERAL COURT OF AUSTRALIA PRACTICE AND PROCEDURE – subpoenas – third subpoena to produce documents - directed to one party and two non‑parties – to produce documents for the period "1 January 1994 to date" - applications to set aside – whether oppressive – whether documents sought relevant to issues in proceeding. Trade Practices Commission v Arnotts Limited (1989) 88 ALR 90 - applied Commissioner for Railways v Small (1938) 38 SR (NSW) 564 - applied Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 - applied National Employers' Mutual General Association Limited v Waind and Hill [1978] 1 NSWLR 372 - applied AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v AUSTRALIAN SAFEWAY STORES PTY LIMITED & ORS VG 762 of 1996 GOLDBERG J MELBOURNE 15 DECEMBER 1998 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 762 of 1996 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: AUSTRALIAN SAFEWAY STORES PTY LIMITED (ACN 004 319 439) First Respondent GEORGE WESTON FOODS LIMITED (ACN 008 429 632) Second Respondent MARK JONES Third Respondent BERNIE BROOKES Fourth Respondent JUDGE: GOLDBERG J DATE OF ORDER: 15 DECEMBER 1998 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The subpoenas issued on or about 10 November 1998 at the request of the first, third and fourth respondents directed to George Weston Foods Limited, Quality Bakers Australia Limited and Sunicrust Bakeries Pty Limited be set aside. 2. The first, third and fourth respondents pay the costs of George Weston Foods Limited, Quality Bakers Australia Limited and Sunicrust Bakeries Pty Limited in respect of their respective motions to set aside the subpoena addressed to each of them. 3. The first, third and fourth respondents pay the costs of Quality Bakers Australia Limited and Sunicrust Bakeries Pty Limited in respect of the first, third and fourth respondents' motion served 27 November 1998 and filed 2 December 1998, to vary confidentiality undertakings and the order for confidentiality made by Registrar Efthim on 14 October 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 762 of 1996 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: AUSTRALIAN SAFEWAY STORES PTY LIMITED (ACN 004 319 439) First Respondent GEORGE WESTON FOODS LIMITED (ACN 008 429 632) Second Respondent MARK JONES Third Respondent BERNIE BROOKES Fourth Respondent JUDGE: GOLDBERG J DATE: 15 DECEMBER 1998 PLACE: MELBOURNE REASONS FOR JUDGMENT The applicant ("the Commission") has filed an application, supported by a statement of claim subsequently amended ("amended statement of claim"), seeking pecuniary penalties, declarations and injunctive relief against the first respondent, Australian Safeway Stores Pty Limited ("Safeway"), two of its employees (the third and fourth respondents) and the second respondent, George Weston Foods Limited ("George Weston") in relation to allegations of various contraventions of Pt IV of the Trade Practices Act 1974 (Cth) ("the Act"). The first, third and fourth respondents have filed a defence, in substance, denying the allegations of the contraventions of the Act. George Weston made certain admissions in its defence which resulted in it admitting that it contravened the Act in five respects and on 30 May 1997 I ordered that George Weston pay certain pecuniary penalties in respect of those contraventions (75 FCR 238). On or about 10 November 1998 at the request of the solicitors for the first, third and fourth respondents (collectively referred to as "Safeway") three subpoenas for production were issued addressed to each of the three major plant bakers in Victoria, namely George Weston, Quality Bakers Australia Limited ("Quality Bakers") and Sunicrust Bakeries Pty Limited ("Sunicrust"). Each of George Weston, Quality Bakers and Sunicrust has filed a motion seeking an order that the subpoena served on it be set aside. Quality Bakers in its motion seeks in the alternative an order that compliance with the subpoena be stayed until it has been compensated for its costs of compliance with two earlier subpoenas for production served on it. The grounds relied upon by each of the parties served with a subpoena are essentially the same, namely oppression and relevance. In each case the subpoena served was the third subpoena served, the two preceding subpoenas being served on or about 5 June 1997 and 10 September 1998. The motions came on for hearing on 2 December 1998 and were heard at the same time as a motion by Safeway to vary undertakings as to confidentiality given by Safeway in relation to confidential annexures to witness statements filed and served by the Commission and to vary the undertaking required by Registrar Efthim on 14 October 1998 as a condition of access to confidential documents produced in response to the second set of subpoenas. I have already given my reasons and rulings in relation to that motion and the parties do not require those reasons to be incorporated in these reasons. The only outstanding issue in relation to the Safeway motion is the appropriate order for costs, Quality Bakers and Sunicrust having sought their costs of that motion. The issues in the proceeding A second further amended statement of claim, amended on 14 May 1998, was filed on 19 May 1998. I only refer to those parts of the amended statement of claim which are relevant to the issues currently before the Court. In it the Commission alleges that there is and was at all material times a market in Victoria for the supply, on a wholesale basis to food retailers and/or to the retail level, of bread products ("the wholesale market"). The Commission alleges that at all material times Safeway had and has a substantial degree of market power in the wholesale market as an acquirer of bread products in the wholesale market. Allegations of specific conduct said to be contraventions of various provisions of Pt IV of the Act are then set out. These relate to what I will call, loosely, the April 1995 Preston Market store agreement (pars 7‑12), the May 1995 and November 1995 Albury incidents (pars 13‑14), the November 1995 Ferntree Gully incident (par 15). It is alleged that various contraventions of the Act occurred as a result of these matters (pars 16A‑16E). There is then alleged the August 1994 Traralgon incident, the April 1995 Lalor and Thomastown incidents, the May 1995 Geelong incident (par 17A). It is alleged that these incidents constituted contraventions of various provisions of Pt IV of the Act. There is then alleged the July 1994 Vermont incident, the May 1994 Frankston incident and the July 1994 Cheltenham incident (par 18A). It is alleged that these incidents constituted contravention of various provisions of Pt IV of the Act. It is alleged that Safeway has taken advantage of its substantial degree of market power in the wholesale market in contravention or attempted contravention of s 46(1) of the Act (pars 19A to 19G). Various breaches of the Act are then alleged against Safeway (pars 20‑29) and against the third and fourth respondents (pars 30‑33). Paragraph 34 of the statement of claim is in the following terms: "Further, each of the First, Third and Fourth Respondents threaten and intend, unless restrained by this Honourable Court to continue to engage in conduct of the type herein alleged. PARTICULARS The threat and/or the intention is to be inferred from the conduct of the Respondents herein alleged and the fact that Safeway has kept the Third and Fourth Respondents employed and to the Applicant's knowledge has not altered its procedures or directions to such individuals to ensure that the alleged infringing conduct is not repeated." In the amended defence Safeway denies the existence of the wholesale market alleged by the Commission and says that each of it, Sunicrust and Buttercup: "… is constrained by the prices at which other bread products are supplied by other wholesalers and by retailers in Victoria." It is apparent from the pleadings that the identity and definition of the market in which Safeway is said to be operating, and the extent of its power in that market, are very much in issue and that the relevant issues said to constitute contraventions of the Act occurred during 1994 and 1995. The third subpoena Save for par 1(h) which was contained only in the subpoena directed to George Weston the three subpoenas sought production of the same documents in the same terms. The schedule to the George Weston subpoena is in the following form: "1. All original or copy records: (a) submitted to senior management or to the Board of the Company (or any related body corporate) in the period 1 January 1994 to date (the 'Period') recording any consideration or examination by the Company of the impact upon the Company's business in Victoria during the Period, of competition from any one or more of: (i) plant bakers (other than the Company); (ii) independent bakeries (other than plant bakers); (iii) in-store bakeries; (iv) hot bread shops; (v) any other suppliers of articles of food prepared by moistening, kneading, and baking meal or flour usually with the addition of yeast or leaven ('Bread Products'); (b) recording research or analysis referring to the shares of sales of Bread Products made by companies or persons supplying Bread Products in Victoria during the Period; (c) recording research or analysis of the profitability of the Company's bread manufacturing, distribution and selling operations in Victoria during the Period; (d) being summary records analysing, or recording, the cost of producing, distributing and selling in Victoria during the Period: (i) code C 680 g Bread Products; (ii) code D 900 g Bread Products, (the 'Specific Products'); (e) being instructions or directions given by the Company during the Period to employees or agents selling, or offering for sale, the Specific Products to retailers in Victoria as to the price at which the Specific products should be sold to such retailers; (f) analysing whether the Specific Products were, during the Period, being sold in Victoria by the Company at a profit or loss; (g) being or recording or referring to any strategy adopted, or proposed for adoption, by the Company during the Period to deal with, or respond to, competition with other Bread Products supplied in Victoria; (h) being summary records analysing or recording or referring to the price, and any rebates, allowances or discounts at which the Specific Products were sold in Victoria in the Period, to retailers other than Coles, Franklins, Safeway, by any one or more of: (i) Leslie Brian Lovett; (ii) Graham Wallace Taylor; (iii) Paul Lindsay Toohey; (iv) Timothy Gerard Maine; (v) David Andrew Gladstone; (vi) Christopher John Gunton; or any person reporting to any of the persons identified in (i) to (vi) above." It is important to note that the subpoena seeks the production of documents which came into existence during the period defined as "1 January 1994 to date". It was suggested that there was some ambiguity in the expression "to date" but for present purposes it is sufficient to conclude that it covers the period up to at least 10 November 1998, the date on which the subpoenas were issued. Each party served with a subpoena led evidence to support the submission that compliance with the subpoena would result in such oppression as to lead to the conclusion that the subpoena should be set aside. Each party had complied with the first and second subpoenas in a manner which had required the undertaking of extensive searches at various premises and the consideration of issues such as legal professional privilege and confidentiality. In particular, George Weston led evidence that in order to comply with the third subpoena it will, for the third time, be required to undertake extensive searches of its business records and that because of the breadth of the scope of the subpoena it will take a number of George Weston staff at least three or four weeks to assemble the documents. It is also said that a number of the documents sought fall within the scope of the first and second subpoenas. It should be noted that the documents sought in the first and second subpoenas were documents which came into existence during 1994 and 1995. George Weston also claimed that the classes and descriptions of the documents sought were oppressively wide and in some cases fell outside the scope of the issues raised in the amended statement of claim. Sunicrust led evidence that many of the documents covered by the subpoena contained information of extreme sensitivity to Sunicrust because Safeway is both a customer of it and a competitor. Sunicrust said that documents covered by the terms of the subpoena were located at numerous locations and that in order to comply with the subpoena approximately twelve senior staff, among others, would be required to conduct exhaustive searches of their own files. Sunicrust estimated that each of the twelve staff would be required to spend approximately fifteen hours on the task, a total of 180 person hours. Quality Bakers led evidence that it would take a considerable amount of time to access and to collect the documents covered by the subpoena. For example, it was said that to locate every document covered by par 1(b) of the subpoena would take Mr Linton, the general manager of the Pampas Division of Quality Bakers a minimum of one week because he was one of the few people in the organisation who knew where the documents might be located, that they had been archived in more than sixty boxes and that it would be necessary for him to go through each box. The present time of the year is a very busy time for Mr Linton having regard to other commitments he has in his organisation. In relation to par 1(c) of the subpoena Mr Linton said that there would be approximately 200 documents in approximately sixty boxes at four locations which would need to be searched thoroughly by himself. Mr Linton said that to provide the cost information sought in par 1(d) of the subpoena would be an extremely extensive exercise at a number of locations and that the number of documents was most extensive. He also said that the task involved in locating the documents in par 1(e) of the subpoena was also very extensive. The documents are contained in approximately forty boxes, that it took approximately two weeks to go through the files which related to 1994 and 1995 for the purposes of the second subpoena and that the resources are not available to perform that task at this time of the year. Ian Gilmour, the company secretary of Goodman Fielder Limited, the parent company of Quality Bakers, has estimated that compliance with the subpoena would involve himself and two other senior executives spending at least two weeks full time searching for, reviewing and collating relevant documents and that thereafter a considerable time would need to be spent with the company's solicitors in obtaining advice on issues of confidentiality and privilege. He also says that it is likely that other executives would have documents covered by the subpoena and time would have to be spent locating those documents. Relevant principles The parties referred me to a number of cases which considered the principles applicable to setting aside subpoenas. There was little controversy as to the relevant principles to apply, rather the issue was the degree or emphasis to be given to particular considerations, particularly in relation to the extent of any oppression and the balancing of it against the need for Safeway to prepare its case. A useful summary of the relevant considerations is found in the judgment of Beaumont J in Trade Practices Commission v Arnotts Limited (1989) 88 ALR 90 (also reported in 21 FCR 306 but not on this point) where at 102 his Honour said: "The general test for present purposes is well settled. The issue of a subpoena will be an abuse of process if it is not used for a legitimate forensic purpose: see Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100‑1. But as Deane and Gaudron JJ observed in Hamilton v Oades (1989) 85 ALR 1 at 11, the court's general powers in this area have a dual aspect: 'The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice … [This] power … is not restricted to defined and closed categories. … In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms 'oppressive' and 'vexatious' are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are 'seriously and unfairly burdensome, prejudicial or damaging' and 'productive of serious and unjustified trouble and harassment': Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389 per Deane J at 411; 79 ALR 9 at 45.' In other words, the present inquiry is not limited to an analysis of the true purpose of Arnotts in procuring the issue of the subpoena. It is also material to look at the impact of the subpoena upon Mattingly. Without restricting this inquiry, it is convenient to address the present application in the first instance by reference to two questions: (1) Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of Arnotts. (2) Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of Mattingly." In Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Jordan CJ said at 574‑575: "Where the subpoena is addressed to a party, it is still necessary that it should state with reasonable particularity the documents which are to be produced: … Even if the documents are specified, a subpoena to a party will be set aside as abusive if great numbers of documents are called for and it appears that they are not sufficiently relevant …" This passage was cited by Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921. His Honour then said at 926: "In my opinion the passage cited from Small's case should be regarded as applying to a subpoena to a person not a party to the proceedings which should be held to be oppressive or an abuse of process if the production of the documents which it describes is excessively burdensome and the documents appear not to be 'sufficiently relevant' to the proceedings. I appreciate that this is a very vague proposition but there seems to be no way in which it can be stated more precisely. Each case must, of course, depend upon its own circumstances." Waddell J then referred to the judgment of Moffitt P in National Employers' Mutual General Association Limited v Waind and Hill [1978] 1 NSWLR 372 at 383 and continued at 927: "His [Moffitt P] views may, perhaps, be summarized by saying that inspection should be granted so far as is necessary in the proper conduct of the litigation and this means where it is reasonably likely to add, in the end, in some way or other, to the relevant evidence to the case. In my opinion this is the test which should be applied to the question whether the present subpoenas are oppressive or an abuse of process in the sense submitted." Submissions of subpoenaed parties George Weston, Sunicrust and Quality Bakers submitted that the subpoenas were oppressive in two respects. First, they were obliged for the third time to undertake extensive searches through their records. Secondly, the terms of the subpoenas were such as to be unfairly burdensome upon them. They also pointed to the fact that a number of the classes of documents sought in the first and second subpoenas. They also submitted that the documents sought did not have an "apparent relevance" to the issues in the proceedings. They pointed in particular to the period covered by the subpoenas from 1 January 1994 to date when the contraventions alleged occurred in 1994 and 1995. They also submitted that the documents sought in pars 1(c)‑1(f) were not relevant to any issues in the proceeding as the profitability of their bread operations and the costs of the bread operations were not relevant either to market definition or the extent of Safeway's market power. It was submitted, in substance, that profitability and costs do not provide evidence which assists in determining the level or degree of competition in the relevant marketplace. Safeway submitted that the period covered by the subpoenas was relevant to the issues in the proceeding as the issues related to the period beyond 1994 and 1995 up to the present day. This submission was based on the allegation in the amended statement of claim that there "is and was at all material times" a wholesale market (par 6B), the allegation that not only that Safeway had market power at relevant times but also that Safeway "has" market power (par 6E) and the allegation in par 34 that Safeway intends to continue to engage in the relevant contraventions. Safeway submitted that the relevant question to ask was whether the documents sought forensically informed issues in the proceeding. It was submitted that the time taken to comply with the subpoenas was no reason to set them aside but that one should balance such factors against the "apparent relevance" of the documents and take a broad view of relevance. Safeway submitted that subpoenas had to be looked at in the light of Safeway's pleading that there were not two markets namely wholesale and retail but rather one market for the sale of bread products. Safeway denied the distinction between the wholesale market and the retail market and submitted that the documents sought in par 1(a), (b) and (g) of the subpoenas were informative as to whether there was a wholesale and/or a retail market. It was submitted that the documents sought in par 1(d) of the subpoena were relevant to the issue whether bread had been sold to competitors of Safeway more cheaply than to Safeway. It was submitted that Safeway was trying to understand why it could not buy bread more cheaply. Reliance was placed upon the conversation referred to in par (ii) of the Particulars under par 15 of the amended statement of claim where the question was asked by a George Weston representative whether it was selling bread competitively. It was submitted that the documents sought in par 1(e) of the subpoena were relevant to Sunicrust's reasons given to the retailer referred to in sub‑par (ixA) of the Particulars under par 17A(c) of the amended statement of claim and that they were relevant to the motivation of the persons who were making statements about Safeway. It was submitted that the documents sought in par 1(f) in relation to profitability were relevant because profitability had a relevance to market circumstances and the degree of intensity of competition in the market. Reasoning I am satisfied that the subpoenas should be set aside on the ground that they are oppressive and also on the ground that they seek documents which are either irrelevant or of peripheral relevance to the issues in the principal proceeding. In reaching the conclusion that the subpoenas are oppressive I have taken into account the following facts and circumstances – this is the third round of subpoenas issued and served; the categories and classifications of documents sought cover a number of categories and classifications in the first and second subpoenas; the current statement of claim was amended in May 1998 and the second round of subpoenas were issued and served on or about 6 October 1998; the subpoenas require most extensive inquiries and investigations involving the use of a number of persons over an extended period of time; complying with the subpoenas will require the dedication of substantial personnel resources of George Weston, Sunicrust and Quality Bakers for a considerable period of time at a difficult time of the year. I have also taken into account, on the issue of oppression, my finding that the documents sought are either of no relevance or of peripheral relevance to the issues in the principal proceeding. They are not reasonably likely to add to the relevant evidence in the proceeding and are not sufficiently or apparently relevant. Even if I were to limit the period covered by the subpoenas to 1994 and 1995, a substantial part of the documents sought have been covered by the first and second subpoenas and in the circumstances deposed to by the relevant witnesses from the subpoenaed parties as to what is involved in going back through their records I consider it sufficiently burdensome and oppressive for them to undertake this task for a third time that the subpoenas should be set aside. I have also reached the conclusion independently of the ground of oppression that it is appropriate to set the subpoenas aside on the grounds of relevance. In my opinion the documents sought over the relevant period namely "1 January 1994 to date" are not of apparent relevance to the substantive issues in the principal proceeding. Although it is alleged that there "is" a wholesale market for bread products in Victoria, that Safeway has market power in that market and that Safeway intends to continue to engage in the conduct complained of, it is apparent from the amended statement of claim that the only incidents upon which reliance is placed to constitute contraventions of the Act are those specified in 1994 and 1995. The particulars relied upon for the allegation of Safeway's continuing to engage in the contravention is that it is to be inferred from the conduct in 1994 and 1995 and the fact that Safeway has kept the third and fourth respondents employed and has not altered its procedures or directions to those respondents to ensure that the conduct is not repeated. It is not suggested that there are any specific acts or conduct relied upon as contraventions post‑1995. Although the amended statement of claim alleges that there "is" a wholesale market and that Safeway has a substantial degree of market power in the wholesale market, the relevance of the relevant market definition and Safeway's degree of market power in it is related to the period of the relevant contraventions of the acts alleged namely 1994 and 1995. I do not consider, as presently advised and on the present state of the pleadings, that there will need to be any significant or substantial inquiry made in the proceeding in relation to the nature and extent of the relevant market and Safeway's market power in relation to it post‑1995. It is not alleged in Safeway's defence that the nature of the market or Safeway's power in it (whatever it may be) has changed, altered or diminished since 1995. It follows, therefore, in my opinion, that the documents sought in the subpoenas in relation to the period post‑1995 are either of no apparent relevance or not of sufficient relevance to the substantive issues in the principal proceeding. There are further bases for setting aside particular paragraphs of the subpoenas on the grounds of relevance. It is submitted by Safeway that sub‑pars 1(a), (b) and (g) are directed to the issues of market definition and the remaining sub‑paragraphs are directed to the issue of existence of market power. I consider that those paragraphs requiring the production of documents relating to profitability and costs not to be relevant to these issues. It follows therefore that the subpoenas should be set aside. Having regard to the fact that the parties subpoenaed have succeeded in their motions and substantially succeeded on issues relating to varying the confidentiality undertakings and orders presently in place it seems to me that the appropriate order for costs should be that the first, third and fourth respondents pay George Weston, Sunicrust and Quality Baker's costs of their respective motions to set aside the subpoenas and their costs of the first, third and fourth respondents' motion to vary the confidentiality undertakings and the confidentiality order made by Registrar Efthim on 14 October 1998. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg Associate: Dated: 15 December 1998 Counsel for the Applicant: Mr J B R Beach Solicitor for the Applicant: Australian Government Solicitor Counsel for the First, Third and Fourth Respondents: Mr P R Whitford Solicitor for the First, Third and Fourth Respondents: Clayton Utz Counsel for the Second Respondent: Ms M Sloss Solicitor for the Second Respondent: Arthur Robinson & Hedderwicks Counsel for Sunicrust Bakeries Pty Mr P W Collinson Limited: Solicitor for Sunicrust Bakeries Pty Limited: Malleson Stephen Jaques Counsel for Quality Bakers Australia Limited: Mr P J Booth Solicitor for Quality Bakers Australia Limited: Blake Dawson Waldron Date of Hearing: 2 December 1998 Date of Judgment: 15 December 1998