FEDERAL COURT OF AUSTRALIA Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 17) [2012] FCA 1278 Citation: Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 17) [2012] FCA 1278 Parties: SCHUTZ DSL (AUSTRALIA) PTY LTD (ACN 009 069 907), SCHUTZ GMBH & CO KGAA and PROTECHNA S.A. v VIP PLASTIC PACKAGING PTY LTD (ACN 095 313 705) and VIP STEEL PACKAGING PTY LTD (ACN 095 314 195) File number: WAD 136 of 2009 Judge: MCKERRACHER J Date of judgment: 15 November 2012 Catchwords: PRACTICE AND PROCEDURE – application to seal confidential exhibit on court file – whether confidential exhibit relied upon disclosed evidence of a 'trap purchase' – consideration of prejudice to the respective parties before trial Cases cited: Bryant v Keith Harris & Co Ltd (1980) 33 ALR 437 Cadbury Pty Ltd v Amcor Ltd (No 2) [2009] FCA 663 Cellular Clothing Co Ltd v G White & Co Ltd (1952) 70 RPC 9 Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 Nick Scali Ltd v Super A-Mart Pty Ltd (2010) 275 ALR 228 Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 7) [2010] FCA 1107 Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 16) [2012] FCA 1255 Date of hearing: Determined on the papers Date of last submissions 7 November 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 19 Counsel for the Applicants/Cross-Respondents: ML Bennett Solicitor for the Applicants/Cross-Respondents: Bennett + Co Counsel for the Respondents/Cross-Claimants: AR Lang Solicitor for the Respondents/Cross-Claimants: Gilbert + Tobin IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 136 of 2009 BETWEEN: SCHUTZ DSL (AUSTRALIA) PTY LTD (ACN 009 069 907) First Applicant/Cross-Respondent SCHUTZ GMBH & CO KGAA Second Applicant/Cross-Respondent PROTECHNA S.A. Third Applicant/Cross-Respondent AND: VIP PLASTIC PACKAGING PTY LTD (ACN 095 313 705) First Respondent/Cross-Claimant VIP STEEL PACKAGING PTY LTD (ACN 095 314 195) Second Respondent/Cross-Claimant JUDGE: MCKERRACHER J DATE OF ORDER: 15 NOVEMBER 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The respondents/cross-claimants' interlocutory application filed 30 October 2012 be dismissed. 2. The respondents/cross-claimants pay the applicants/cross-respondents' costs of the application, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 136 of 2009 BETWEEN: SCHUTZ DSL (AUSTRALIA) PTY LTD (ACN 009 069 907) First Applicant/Cross-Respondent SCHUTZ GMBH & CO KGAA Second Applicant/Cross-Respondent PROTECHNA S.A. Third Applicant/Cross-Respondent AND: VIP PLASTIC PACKAGING PTY LTD (ACN 095 313 705) First Respondent/Cross-Claimant VIP STEEL PACKAGING PTY LTD (ACN 095 314 195) Second Respondent/Cross-Claimant JUDGE: MCKERRACHER J DATE: 15 NOVEMBER 2012 PLACE: PERTH REASONS FOR JUDGMENT INTRODUCTION 1 By interlocutory application dated 30 October 2012 the respondents/cross-claimants (VIP) seek certain confidentiality orders. The orders sought by VIP are that: 1. the documents appearing at pages 65 and 66 of Confidential Exhibit ARS14 to the eleventh affidavit of Andrew Robert Smith sworn on 20 August 2012 be dealt with in accordance with Sch 2 to the Court's Orders of 14 December 2010, as amended by the Court's Orders of 11 October 2011. 2. the applicants/cross-respondents (Schutz) pay VIP's costs of the application. 3. Such further or other order as the Court deems fit. 2 The eleventh affidavit of Mr Smith is an affidavit to be used in support of the substantive evidence to be adduced at trial by VIP. 3 The document in respect of which confidentiality orders are sought is referred to in the following paragraphs of Mr Smith's eleventh affidavit: [82] I am also aware that Schütz promotes its refurbished IBC's as being "less expensive than new units" on the Schütz Website. VIP recently purchased new and refurbished Schütz IBCs for comparative analysis, through unrelated third parties. A copy of the purchase order from a confidential source to Schütz DSL dated July 2012 recording the bulk price for a mixture of new and refurbished Schütz IBCs records the price as approximately $200 per unit. A copy of the purchase order and the Schütz delivery docket is reproduced at pages 19 to 20 of the Confidential Exhibit ARS14. I observe that no distinction is made in the documents between the price or proportion of new against refurbished IBCs supplied. [83] I estimate based upon the above information that the refurbished IBC market (ie used cage and new bottle) currently exploited by Schütz DSL in Australia has an approximate value of $6 to $7 million per annum. This is the market directly threatened by VIP's cross-bottling activities. 4 Schutz oppose the orders and seek access to the document in order to prepare their case. In my opinion they are entitled to such access and the relief sought by VIP should not be granted. My reasons are as follows. 5 The issue concerned has been determined on the papers, although some remarks were made in open court in the context of hearing another interlocutory application by VIP. The course of the present application has been slightly unusual in that Schutz filed initial submissions in opposition before VIP filed submissions in support of the application. Schutz then promptly filed submissions in reply. CONSIDERATION Trap purchase? 6 Schutz contend, correctly, in their initial submissions that a party to litigation from whom a trap purchase is made is entitled to receive from the party who seeks to rely on evidence of a trap purchase notification of all relevant details of the trap purchase, including relevant documentation (Bryant v Keith Harris & Co Ltd (1980) 33 ALR 437 per Franki J (at 439 and 441)). See also Cellular Clothing Co Ltd v G White & Co Ltd (1952) 70 RPC 9 per Harman J (at 14). 7 The parties would agree that the reasoning behind this rule is that a party for whom a trap purchase is made must have an opportunity to test and respond to the trap purchase evidence including by checking its own business or sales records so that it can verify the oral exchanges with employees or agents on which the purchaser relies. Such opportunity may be unavailable if notice is only given months after the event. 8 However VIP deny that the purchase concerned amounted to a trap purchase. VIP do not contradict the assertion by Schutz that VIP failed to notify Schutz of the full details and documentation of the purchase within a reasonably practical time or at all. Confidentiality regime 9 The parties have worked cooperatively under a confidentiality regime referred to in the Court Orders identified in the VIP application. It is common ground that there has been substantial conferral in relation to the disputed documents. However no agreement has been reached in consequence of which VIP pursues its interlocutory application. 10 Without going into the detail, Schutz complain that the delivery docket concerned evidences only part of the sale of IBCs to a company on behalf of VIP. Reliance is also placed on the fact that there were apparently discussions with a representative of that company and perhaps a representative of Schutz. The evidence concerned does not descend to the actual parties to the conversation or the details or content of it. It is possible that Schutz may have additional documents in relation to this purchase but there seems no basis for any suggestion that the purchase itself or the documents recording it could attract the protection of the confidentiality regime. Schutz, in its initial submissions, contended that: VIP assert that the Disputed Documents should be dealt with in accordance with the Confidentiality Regime because they disclose the identity of [the company], engaged by VIP to conduct the trap purchase. Although the parties' trade rivalry justifies the strictness of the confidentiality regime to protect commercially sensitive information, it should not be used to conceal from Schutz DSL evidence of a transaction between Schutz DSL and one of its customers in circumstances where VIP seeks to rely on that transaction in support of an allegation of misleading conduct against Schutz DSL. 11 VIP, on the other hand, deny that is not the purpose for their reliance on the documents. Schutz point out that no other documents have been discovered by VIP in relation to the purchase. Schutz seek an order that VIP urgently give discovery of all documents evidencing or referring to the trap purchases referred to in [2] of Mr Smith's eleventh affidavit. No motion has been put on for that further discovery order but by dismissing the VIP claim I indicate that discovery should be given of this documentation. Response by VIP 12 VIP rely upon the authorities which emphasise the caution with which the Court should permit trade rivals to have access to each other's commercially sensitive documents in litigation if that access is not strictly necessary. 13 As the cases reveal, it is necessary to strike a balance between the necessary disclosure which litigation requires, on the one hand, and the legitimate concern of a trade rival to retain secrecy of commercially sensitive information. 14 As noted by Gordon J in Cadbury Pty Ltd v Amcor Ltd (No 2) [2009] FCA 663 (at [6]), the balancing exercise 'may need to be reviewed as a matter progresses to trial or at the trial itself.' 15 This is particularly so in a case such as this because I have in the earlier stages of this substantial dispute taken steps to prevent intrusive access to sensitive information, such as customer records, where I was not satisfied that at that stage of the litigation the access was necessary (see, for example, Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 7) [2010] FCA 1107 (at [6])). However, the matter is now set down for trial. The parties are devoting resources to the finalisation of their evidence at trial. As reflected in my recent judgment concerning subpoenas (Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 16) [2012] FCA 1255), it is clear that subject to a suitable confidentiality regime, the parties' hands should not be tied to the same extent that the principles of commercial confidentiality might suggest at an earlier stage of the litigation when it is less evident that the matter will ultimately proceed to a trial. 16 VIP complain that the disputed documents, if disclosed to Schutz, would reveal the identity of a customer of VIP. They rely on Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 where Kiefel J (at [17]), in making an assessment of whether access to the information was necessary at that particular stage of the litigation, concluded in that paragraph that it could not 'presently' be said to be necessary for the conduct of the case. 17 In the present case, the level of disclosure seems to be quite limited but as it is relied upon by VIP as part of its case, in my view, Schutz should have access to the details of the information. Even if the purchase was not a 'trap purchase', and on which I make no finding, VIP do rely upon the evidence of Mr Smith in relation to the purchase for a matter of objective fact as to the basis of a calculation of the value of the market. It is self evident, however, that the exchanges surrounding the purchase may bear upon the weight to be given, if any, in the context of the evidence concerned. The possible usage of the evidence 18 While one can accept that there may be a debate as to whether the purchase constituted a trap purchase, nevertheless the observations of Yates J in Nick Scali Ltd v Super A-Mart Pty Ltd (2010) 275 ALR 228 are presently apposite as Schutz contend. There, his Honour observed (at [17]): The evidence to which objection is taken in the present case does not involve a trap order in the usual sense of that term. However it does share a characteristic of evidence of a trap order: unbeknown to each person engaged in the relevant conversation, transaction or event, his or her answers or reactions to a question or request, made by an initiator in pretence, is intended to be used in evidence adversely to that person or to another in whose interest that person acts or is taken to act. Evidence having this provenance is not unusual in litigation where the causes of action involve allegations of conduct claimed to be misleading or deceptive or calculated to lead to deception or confusion. The obtaining of such evidence, by means of engaging persons in conversations, such as in the present case, is countenanced without criticism unless the obtaining of the evidence involves some additional conduct involving impropriety. It is not suggested that there has been any impropriety in the obtaining of the challenged evidence in this case. What the respondent does complain about is the fact that, the evidence having been obtained, notice should have been given of it (including adequate particulars) well before service of the affidavits in question. CONCLUSION 19 For the foregoing reasons, I am satisfied at this stage of the proceedings with trial dates having been set that the prejudice in the documents remaining confidential may substantially outweigh any prejudice to VIP in their disclosure. For those reasons the application will be dismissed with costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 15 November 2012