FEDERAL COURT OF AUSTRALIA BGC (Australia) Pty Ltd v Fremantle Port Authority [2014] FCA 1083 Citation: BGC (Australia) Pty Ltd v Fremantle Port Authority [2014] FCA 1083 Parties: BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) v FREMANTLE PORT AUTHORITY FREMANTLE PORT AUTHORITY v BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) File number(s): WAD 284 of 2011 Judge(s): SIOPIS J Date of judgment: 9 October 2014 Catchwords: PRACTICE AND PROCEDURE – application for leave to issue subpoena for the production of documents – whether there was a legitimate forensic purpose for issuing the subpoena. Legislation: Federal Court of Australia Act 1976 (Cth) s 37M(1) Trade Practices Act 1974 (Cth) s 51AC Competition and Consumer Act 2010 (Cth) Sch 2 s 21 Cases cited: Wong v Sklavos [2014] FCAFC 120 Date of hearing: 10 September 2014 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 28 Counsel for the Applicant: Mr J Thomson SC Solicitor for the Applicant: King & Wood Mallesons Counsel for the Respondent: Mr M Goldblatt Solicitor for the Respondent: Jackson McDonald IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 284 of 2011 BETWEEN: BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) Applicant AND: FREMANTLE PORT AUTHORITY Respondent and BETWEEN FREMANTLE PORT AUTHORITY Cross Claimant AND: BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) Cross Respondent JUDGE: SIOPIS J DATE OF ORDER: 9 October 2014 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The applicant's application for leave to issue a subpoena to Data Analysis Australia Pty Ltd is dismissed. 2. The applicant pay the respondent's costs. 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 284 of 2011 BETWEEN: BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) Applicant AND: FREMANTLE PORT AUTHORITY Respondent and between: FREMANTLE PORT AUTHORITY Cross Claimant AND BGC (AUSTRALIA) PTY LTD (ABN 62 005 736 005) Cross Respondent JUDGE: SIOPIS J DATE: 9 october 2014 PLACE: PERTH REASONS FOR JUDGMENT 1 It is not uncommon for a person strolling along the magnificent Cottesloe beach to look out at the Indian Ocean and see a number of ships at anchor in Gage Roads waiting to enter the port of Fremantle. This case involves five such ships. Those ships had, at different times during 2010, been chartered by the applicant, BGC (Australia) Pty Ltd, a company which manufactures, amongst other products, plasterboard and cement. Four of the ships contained a shipment of gypsum and one of them contained a shipment of cement clinker. All the charter parties for the five ships in question contained a demurrage clause. 2 At all material times, the respondent, Fremantle Port Authority (the port authority), operated the Kwinana Bulk Terminal and Kwinana Bulk Jetty for the loading and unloading of bulk cargo. There is, and was, at the material time, only limited berthing capacity at the Kwinana Bulk Terminal and Kwinana Bulk Jetty. In 2010, and for at least five years prior thereto, the port authority operated a system for the booking of berths which it refers to as the "turn of arrival system". Under that system the port authority's customers advise the port authority of the anticipated time of arrival of the ship. The ships are given a booking slot. On arrival of the ship at Gage Roads, being the name given to that part of the Indian Ocean immediately outside of the port of Fremantle, the port authority allocates a berth when it becomes available, according to the ship's time of arrival by reference to the time of arrival of any other ships that may also be waiting in Gage Roads. Not all ships are delayed on arrival, but it is not uncommon for a ship that has booked a slot under the booking system, to be delayed for up to several days in Gage Roads whilst the ship waits its turn to be allocated a berth to load or unload. I observe that in its pleading, BGC refers to the port authority's booking system as the "over utilisation approach". 3 BGC alleges that in the last quarter of 2010, it was given booked slots for the berthing and unloading of five ships and that in respect of each of these bookings it entered into a port services agreement with the port authority. The agreements are not all in the same terms. However, each of the agreements contained a clause which exempted the port authority from any liability to pay BGC compensation arising from any delay by reason of the unavailability of a berth or any of the port's facilities. The agreements specifically excluded liability in respect of any demurrage costs incurred by BGC. 4 Each of the five ships chartered by BGC was delayed in Gage Roads before the ship could berth and unload its shipment of gypsum or clinker cement. BGC alleges that the following delays occurred: (a) The MV Livanita issued a notice of readiness on 13 September 2010, but only berthed on 19 September 2010. (b) The MV Maria TH issued a notice of readiness on 13 October 2010, but only berthed on 15 October 2010. (c) The MV Ideal Bulker issued a notice of readiness on 23 October 2010, but only berthed on 11 November 2010. (d) The MV Tern issued a notice of readiness on 21 November 2010, but only berthed on 5 December 2010. (e) The MV Livanita issued a notice of readiness on 16 December 2010, but only berthed on 19 December 2010. 5 BGC pleads that the unloading of each ship was delayed because of the berthing and operational delays, and that it was, therefore, required to pay demurrage in the following amounts: (a) MV Livanita $179,536.17 (b) MV Maria TH $103,400.50 (c) MV Ideal Bulker $283,528.87 (d) MV Tern $356,936.69 (e) MV Livanita $73,429.21 6 The port authority issued an invoice to BGC for the port services provided in the berthing and discharging of the cargo of each of the five ships. However, BGC only partially paid each of the invoices. BGC deducted from the invoiced amount, the amount which it had incurred by way of demurrage in respect of the delay in berthing and discharging the cargo from each ship. 7 BGC commenced this proceeding seeking a declaration that it was entitled to deduct the amounts paid as demurrage from the amounts invoiced by the port authority. BGC alleges that in requiring it to enter into each of the port services agreements which contained the demurrage exemption clause, the port authority engaged in unconscionable conduct, alternatively, acted beyond power. 8 The port authority has cross-claimed for the sum of $955,853.73, which the port authority claims is the amount which BGC has wrongfully withheld and accrued interest. 9 In support of its claim that the port authority engaged in unconscionable conduct in contravention of s 51AC of the Trade Practices Act 1974 (Cth) (and s 21 of Sch 2 to the Competition and Consumer Act 2010 (Cth)), and that it would be unconscionable to permit the port authority to enforce the demurrage exemption clause, BGC relies upon the following circumstances: (a) The port authority had exclusive control of the only port within the immediate vicinity of Perth with a capacity to handle bulk cargo. (b) The port authority and its customers were in an unequal bargaining position. (c) At the time of BGC's entry into the port services agreements, and for the preceding five years, the port authority adopted a berth booking approach which involved and resulted in ships being delayed for substantial periods after arrival at Gage Roads, whilst the ships waited for a berth to become available (d) In relation to three of the five shipments in issue, the port authority knew at the time that it allocated BGC a booking slot it was likely that each ship would be delayed in Gage Roads whilst the ship waited for a berth to become available. 10 BGC has also claimed that on the proper construction of the Port Authorities Act 1999 (WA), the port authority did not have the power to require users of the port of Fremantle to enter into an agreement by which the port authority limits the extent of its liability as it had purported to do in the impugned port services agreements. 11 At para 23 of its statement of claim, BGC pleads that the booking approach adopted by the port authority during the period 30 June 2006 to 30 June 2011 (which, as I have said, BGC pleads as the "over utilisation approach") "involved or resulted in vessels being delayed for substantial periods of time because of the unavailability of the berths". In support of that pleaded allegation, BGC referred to the following particulars: (3) the particulars of unavailability with respect to the Kwinana Bulk Terminal, which are set out below: (a) In the financial year 2006/2007, 19% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 80 hours. (b) In the financial year 2007/2008, 44% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 75 hours. (c) In the financial year 2008/2009, 37% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 66 hours. (d) In the financial year 2009/2010, 32% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 58 hours. (e) In the financial year 2010/2011, 61% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 158 hours. 12 The facts referred to in the particulars above, repeat the facts as to delays by reason of the unavailability of the berths, which the port authority reported in its annual report for each of the five years in question. In light of that circumstance, it is not surprising that the port authority in its defence and cross-claim, conceded that the facts alleged as to the extent of the delays caused to ships by the unavailability of berths during the five year period are accurate. 13 I might add that the port authority has not admitted in its pleading all of the facts and matters alleged in para 23 of BGC's statement of claim. Application for leave to issue subpoena 14 The parties have given discovery and the proceeding has been set down for trial for five days commencing on 1 December 2014. There remain a few outstanding matters with which the parties are dealing. However, there is one current application in respect of which it is necessary for the Court to rule. That is an application by BGC for leave to issue a subpoena for the production of documents directed to Data Analysis Australia Pty Ltd (DAA). 15 The background to the application is deposed to by Mr James Wang, a solicitor from King & Wood Mallesons, the firm of solicitors acting for BGC in this proceeding. Mr Wang's evidence shows that the port authority discovered a report of a study undertaken for the port authority by DAA in April 2011 to assist the port authority to "accurately estimate" the amount of cargo that the Kwinana Bulk Terminal could process in 2011/2012 under a number of different scenarios. Although the study was not directed to the period in issue in this proceeding, it is apparent that DAA was provided with historical data about the berth occupancy in respect of a number of regular customers of the port authority (of which BGC was one) in order to produce what is referred to in the report as the "baseline model" of berth occupancy. 16 The report states that the baseline model shows an average waiting time for ships of 3.1 days and a maximum waiting time of 15.4 days. 17 The draft subpoena calls for the production of the following documents: 1. Documents relating to the engagement of Data Analysis Australia Pty Ltd (DAA) by Fremantle Port Authority for the preparation of the report titled "Simulation of Kwinana Bulk Berth 2" dated April 2011 (Report). 2. All documents including any emails, spreadsheets, electronic records, instructions, raw data Fremantle Port Authority provided to DAA or any of its consultants or contractors (including Mr Hana Sakai, Ms Emma Smith, Dr John Henstridge or Ms Donna Hill) in relation to: a) berth utilisation generally, and/or at the port of Fremantle, and/or at Kwinana Bulk Terminal and/or Kwinana Bulk Jetty during the period 2005–2011; and/or b) delays in the port of Fremantle. 3. Emails, letters and other correspondence sent by staff employed by Data Analysis Australia to Fremantle Port Authority staff relating to the preparation and/or consideration of the Report. 4. Emails, letters and other correspondence sent by contractors and/or consultants engaged by DAA to Fremantle Port Authority staff relating to the preparation and/or consideration of the Report. 5. Models, including Extend, calculations, working papers and other documents containing information used to prepare the Report. 6. Draft and final versions of the Report. 7. Documents and correspondence relating to the engagement of DAA by Fremantle Port Authority for the provision of any reports, data analysis, modelling or other consulting services that consider the issue of delays in berthing vessels generally, and/or at the port of Fremantle and/or delays in berthing vessels at Kwinana Bulk Terminal and/or Kwinana Bulk Jetty for the period 2005-2011. 8. Draft and final versions of any reports, data analysis, modelling or other documents in relation to the issue of delays in berthing vessels generally, and/or at the port of Fremantle and/or delays in berthing vessels at Kwinana Bulk Terminal and/or Kwinana Bulk Jetty for the period 2005-2011. 9. All documents including any emails, draft and final versions of any reports, data analysis or modelling in relation to berth utilisation generally, and/or at the port of Fremantle, and/or at Kwinana Bulk Terminal and/or Kwinana Bulk Jetty during the period 2005-2011. 18 The Full Court in the case of Wong v Sklavos [2014] FCAFC 120 (Wong) recently summarised the principles that apply in relation to the issuing of subpoenas. At [12], the Full Court observed: The party issuing a subpoena bears the onus of demonstrating that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings: Santos Ltd v Pipelines Authority of South Australia (1996) 66 SASR 38 at 52. A subpoena may be set aside if it requires the production of documents which do not have apparent relevance to the issues arising on the pleadings: Trade Practice Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) [2010] FCA 398; (2010) 269 ALR 76 at [39]-[40]; McHugh v Australian Jockey Club Limited [No 2] [2011] FCA 724 at [13]; McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233; (2005) 221 ALR 785 at [35]; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 558 at [17]. Other cases have used different terminology, but with essentially the same effect, for example, by requiring that, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative (R v Barton (1981) 2 NSWLR 414 at 420), or that the material sought is reasonably likely to add in some way to the relevant evidence in the case (Spencer Motors Pty Ltd v LNC Industries Ltd (1982) 2 NSWLR 921 at 927), or that it be "on the cards" that the documents sought will materially assist the party at whose request the subpoena has been issued: Allister v The Queen (1984) 154 CLR 404 at 414; Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364 at [13], [35]-[38]. 19 It is, therefore, necessary to determine whether BGC has satisfied the onus of demonstrating that there is a legitimate forensic purpose in issuing a subpoena for the production of the documents having regard to the matters that are in issue in the proceeding. 20 BGC said that there was a legitimate forensic purpose for the issue of the subpoena because the documents which it seeks to subpoena from DAA are relevant to its contention that during the five year period, ships which had used the port authority's booking approach had been delayed because of the unavailability of berths. 21 BGC acknowledges that the DAA report was only produced after BGC had entered into the five impugned port services agreements and, therefore, members of the board of the port authority would not have had knowledge of the contents of the report, at the time the impugned agreements were entered into. However, BGC said that it is apparent from the contents of the report that DAA had been given access to the historical data about the utilisation of the berth at the Kwinana Bulk Terminal, and it was this historical element of the study which rendered the documents sought relevant to its allegation of historical delays to ships using the port authority's booking system. 22 Senior counsel for BGC said during argument, that if the Court was not minded to give BGC leave to subpoena all of the documents referred to in the draft subpoena, the Court should, at least, give leave to issue the subpoena to produce the documents relating to the historical data of berth utilisation, including the files comprising the computer model used in compiling the baseline model. 23 The provisions of s 37M(1) of the Federal Court of Australia Act 1976 (Cth) are relevant in considering BGC's application. Section 37M(1) provides that the overarching purpose of the conduct of civil litigation in this Court, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. One means whereby the Court seeks to give effect to the overarching purpose is by seeking to procure, so far as is possible, that the Court processes are used for the purpose of contesting only those issues which are truly in dispute between the parties. 24 In this regard, it is relevant to recognise the limited role that the allegations of the historical delays to ships using the port authority's booking system, plays in BGC's unconscionability contention. The historical delays issue is deployed in aid of the contention that the port authority was aware of the historical delays to ships using its booking system and the attendant risk that ships would incur demurrage charges, and, in light of this knowledge, used its unfair bargaining power to require its customers to enter into agreements which excluded liability for demurrage charges incurred by the customers. In view of the limited basis on which the question of the historical delays is relevant to BGC's unconscionability contention, and the concession by the port authority that the historical delays to the extent particularised by BGC, did occur, it will not be necessary at trial to explore the minutiae of every ship which was delayed in Gage Roads due to an unavailability of a berth over the five year period. 25 These circumstances mean that there will be no contest at the trial that throughout the five year period, ships which had made a booking for a berth under the booking system operated by the port authority, were delayed by reason of the unavailability of berths on arrival at Gage Roads, to the extent particularised by BGC. 26 Further, and in any event, the DAA report discloses the results of the analysis undertaken by DAA of the historical data, namely, that the average delay was 3.1 days and the maximum delay was 15.4 days. In light of the port authority's concession and the limited relevance of the details of the historical delays to the just resolution of the dispute, there would be no utility for the expeditious and cost effective disposal of this proceeding, in requiring DAA to produce the source documents in respect of an issue which is already conceded and which will not be in contention at trial. 27 Accordingly, in my view, these documents (which include the files comprising the computer model) are not documents which are sufficiently relevant to an issue in contest at the trial nor are they, applying the observations of the Full Court in Wong, "reasonably likely to add in some way to the relevant evidence in the case". The same goes for all the other documents listed in the draft subpoena. 28 BGC's application for leave to issue a subpoena to Data Analysis Australia Pty Ltd is dismissed. I will hear the parties on costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 9 October 2014