Industrial Relations Commission of New South Wales in Court Session CITATION : Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd (No.10) [2002] NSWIRComm 22 FIRST APPLICANT: Gough & Gilmour Holdings Pty Ltd SECOND APPLICANT: Harcourt David Gough PARTIES : THIRD APPLICANT: Anthony Lansley Gilmour FIRST RESPONDENT: Caterpillar of Australia Limited SECOND RESPONDENT: Caterpillar Inc. FILE NUMBER: IRC 5227 of 2000 CORAM: Boland J CATCHWORDS : Unfair Contract - Interlocutory proceedings - Notice of motion seeking orders to produce documents relating to overseas transactions and approval to terminate dealerships - Legitimate forensic purpose - Relevance - Fishing expedition - Order made in limited terms LEGISLATION CITED : Industrial Relations Act 1996 Attorney General v Stuart (1994) 34 NSWLR 667 CASES CITED : Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited (No.9) [2001] NSWIRComm 260 O Company v M Company [1996] 2 Lloyd's Law Reports 347 WorkCover Authority of New South Wales (Inspector Keely) v The Crown in the Right of the State of New South Wales (Police Service of New South Wales) (2000) 102 IR 252 HEARING DATES: 02/13/2002 DATE OF JUDGMENT: 02/19/2002 APPLICANTS Mr R M Goot SC with Mr A B Gotting of counsel Solicitor: Mr J Robinson Harmers Workplace Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr P M Hall QC of counsel Solicitor: Mr T Gooch Mallesons Stephen Jaques JUDGMENT: - 7 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J 19 February, 2002 Matter No IRC 5227 of 2000 Gough & Gilmour Holdings Pty Limited & ors v Caterpillar of Australia Limited & ANOR Application under s 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT NO. 10 1 This notice of motion arises out of proceedings brought by Gough & Gilmour Holdings Pty Limited ("first applicant"), Harcourt David Gough ("second applicant") and Anthony Lansley Gilmour ("third applicant") pursuant to ss 106 and 107 of the Industrial Relations Act 1996. The respondents to the summons for relief are Caterpillar of Australia Limited ("the first respondent") and Caterpillar Inc. ("the second respondent"). I do not propose to relate in any detail the background to this matter. Such information is set out in Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited (No.9) [2001] NSWIRComm 260. 2 The notice of motion, filed on 7 February 2002 by the applicants, moved the Court for an order as follows: 2. An order that the Second Respondent discover and produce all documents, including but not limited to, internal and external memoranda, recommendations, approvals, correspondence, working papers, financial records, financial statements, valuations, handwritten notes, minutes emails, tables, agreements and reports whether in hard copy or electronic form, kept or maintained at its Head Office which evidence, record, concern refer to: (a) the approval, including the basis for such approval, given by the Second Respondent at any time within the last five years, to any person or entity to acquire an interest in any other entity the business of which included the business of a Caterpillar dealership; and (i) the value of the entity or that part of the entity that comprises the Caterpillar dealership; and (ii) any amount paid to, or received by, any such entity for, or in respect of goodwill and/or premium above the entity's net asset value. (b) any approval given by the Chairman or any other authorised officer of the Second Respondent to the termination and/or change to the dealer principal and/or dealer management structure of any Caterpillar dealership within the last five years. 3 Mr R M Goot SC with Mr A B Gotting of counsel appeared for the applicants. Mr Goot's submissions in support of the notice of motion may be summarised as follows: · The test as to whether the second respondent should be required to produce the relevant documents is whether there is a legitimate forensic purpose to obtain the documents and that the documents must be sufficiently relevant to an issue in the proceedings. · The legitimate forensic purpose in this case is to determine whether the second respondent had, in the last five years, given approval to the acquisition of an interest in any Caterpillar dealership. · The documents the applicants seek to have produced are relevant to the issues of the value to the applicants' dealership, in particular, the value above the net asset value; whether any premium above net asset value had been paid; whether any amount categorised as goodwill had been paid. · This is not a fishing expedition because the applicants are aware from the evidence of Mr Banks of at least one transaction involving Toromont Industries Ltd allegedly approved by the second respondent. · The request for production is not oppressive; the second respondent is a large international organisation and the request has been limited to the last five years in respect of documents held at the second respondent's head office. 4 Mr P M Hall QC for the second respondent opposed the motion. Mr Hall submitted: · In correspondence between the parties' solicitors it was said by the applicants that the documents to be produced were relevant to "The reasonableness of the offer made by ACE to our clients …". Quantum of the offer by ACE was never an issue in the proceedings. Up to this point the applicants have not referred to or sought to rely on overseas transactions in relation to the fairness or otherwise of the ACE offer. See O Company v M Company [1996] 2 Lloyd's Law Reports 347. · Discovery was given in accordance with a structured process in February 2001. This issue of other transactions was not included in the discovery process at that time. · Opening up the issue of overseas transactions at this stage of the proceedings will cause further delay; it is a fishing expedition in international waters. · An order in the applicant's favour would likely lead to a task for the second respondent of considerable magnitude and would be oppressive. · The applicants' evidentiary case is closed. It would be unreasonable to now open up this issue of overseas transactions. · As to the issue of approval by the chairman of the second respondent to terminate and/or change the dealer principal or management structure of any dealership in the last five years, it is not relevant to the issue of termination of the applicants' dealership. 5 In Attorney-General v Stuart (1994) 34 NSWLR 667 at 681, Hunt CJ at CL said: The concept of legitimate forensic purpose is not confined to claims of public interest immunity. It arises whenever a party seeks access to documents for which he has issued a subpoena; where objection is taken, a party who is unable to show that it is at least "on the cards" that such documents will assist his case is not entitled to have access to such documents simply to see whether they may do so: R v Saleam (16 NSWLR at 17-18). He is not entitled to conduct a fishing expedition. The need to show a legitimate forensic purpose arises even if the claim of public interest immunity fails. It is therefore a prerequisite before the balance required for that claim can be struck. 6 Colman J expressed a somewhat stricter test in O Company v M Company. There his Honour said at 351: … the document or class of documents must be shown by the applicant to offer a real probability of evidential materiality in the sense that it must be a document or class of documents which in the ordinary way can be expected to yield information of substantial evidentiary material to the pleaded claim and the defence to it in the broad sense which I have explained. If the document or class cannot be demonstrated to be clearly connected to issues which have already been raised on the pleadings or which in the ordinary way be expected to be raised in the course of the proceedings, if sufficient information were available, the application should be dismissed (original emphasis). 7 The first class of documents that the applicants want produced are in relation to the offer made by Australian Capital Equity (ACE) to the applicants in relation to the sale of the applicants' business. It was submitted that "In order to assess the reasonableness of this offer it is relevant to examine documents which evidence offers/payment made by other incoming dealers for Caterpillar businesses, including the offers/payment in respect of premium above net assets (including the components of premium and the rationale for the payment of the premium)." The value of the applicants' business is clearly an issue in the case, evidenced by the focus on the conduct of the applicants and ACE in relation to the negotiations for the sale of the business, the alleged assurance by the respondents to the applicants in relation to obtaining a fair price for the business and the amount of expert evidence devoted to this question of value, including the questions of goodwill or "premium above net assets". 8 The question is whether the documents sought by the applicants have any legitimate forensic purpose. That is, whether information relating to the sale of other Caterpillar dealerships in different parts of the world over the past five years will, or is even likely to, assist the applicants' case. It seems to me that all the applicants can say in this respect is that such documents may do so. Except for the Toromont transaction there is no suggestion or indication that in the last five years there have been any overseas transactions relating to Caterpillar dealerships, let alone that there may be information about such transactions that may assist the applicants in their case. In my opinion, except for the Toromont transaction, the applicants have not demonstrated that it is at least "on the cards" there are documents that would assist their case, let alone that the documents offer "a real probability of evidential materiality". 9 In WorkCover Authority of New South Wales (Inspector Keely) v The Crown in the Right of the State of New South Wales (Police Service of New South Wales) (2000) 102 IR 252, Hungerford J observed at [32] that in looking at whether the purpose of a summons to produce was a 'fishing expedition' or there was some legitimate forensic purpose, that it came down to "a balancing exercise involving the nature of the documents sought in light of the apparent issues." With the exception of the Toromont transaction, the balance here lies against the applicants. Additionally, the application to have the documents produced has been made late in the proceedings. If the applicants had thought that information regarding overseas transactions in Caterpillar dealerships would assist their case it would have been open to them to seek discovery of such documents in February 2001, or when it became clear to them that the respondents were making an issue of the value of the applicants' business, not after their substantive evidentiary case is closed. 10 As to the Toromont transaction, Mr Banks, an expert witness for the applicants, referred to this in his evidence. Apparently, in 2001 Toromont purchased the shares of Powell Equipment Limited, a Caterpillar dealer in the province of Manitoba, Canada and that Caterpillar had approved the change. Mr Goot, for the applicants, sought to tender certain documents in relation to the Toromont transaction and to elicit further evidence from Mr Banks in relation to it. Mr Hall, for the respondents, opposed the move on the grounds of inadmissibility and lateness. The Court decided to refuse the applicants' application in relation to the Toromont transaction, indicating that it was the lateness of the application that ultimately swayed the Court in making its decision. 11 It was not only the lateness of the application that the Court had regard to but also the admissibility of the material, which Mr Hall described as "mishmash". The Court remains concerned about the material relating to Toromont only now entering the proceedings. However, any information that may now be brought forth as a consequence of an order to produce could at least overcome earlier objections as to its admissibility. Furthermore, I consider that it is at least "on the cards" – I could put it no higher - that material relating to the Toromont transaction could assist the applicants in their case. On balance, I have come to the view that I should order the production of material relating to the Toromont transaction. 12 The second class of documents sought by the applicants, was in relation to any approval given by the chairman or any other authorised officer of the second respondent to the termination and/or change to the dealer principal and/or dealer management structure of any Caterpillar dealership in the last five years. It was submitted that there had been evidence in the proceedings to the effect that for there to be any termination or change to the dealer principal of a Caterpillar dealership, approval is required by the chairman or other authorised officer. The applicants submitted the respondents discovered no such documents and that they were, therefore, entitled to test the proposition. The respondents submitted that they did not agree that no such documents had been discovered by them and maintained that they had complied with their discovery obligations in this regard. An issue in the proceedings is whether the chairman of the second respondent actually gave approval to terminate the applicants' dealership. I am not persuaded that the inferences I might be able to draw from approvals given by the chairman or any other authorised officer of the second respondent to the termination of an overseas dealer, would be other than of minimal evidential weight. Furthermore, the request for such documents has been made too late in the proceedings. The order sought in this respect is refused. Orders 13 I make the following orders: The Second Respondent shall produce all documents, including but not limited to, internal and external memoranda, recommendations, approvals, correspondence, working papers, financial records, financial statements, valuations, handwritten notes, minutes emails, tables, agreements and reports whether in hard copy or electronic form, kept or maintained at its Head Office which evidence, record, concern refer to the approval, including the basis for such approval, given by the Second Respondent in respect of the purchase by Toromont Industries, a Canadian public company, of Powell Equipment Limited a Caterpillar dealer in Manitoba, Ontario in 2001; and (i) the value of the Powell entity or that part of the entity that comprised the Caterpillar dealership; and (ii) any amount paid by Toromont for, or in respect of goodwill and/or premium above the Powell entity's net asset value. 14 Costs are reserved. 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