Arnotts Ltd v Trade Practices Commission

Re: ARNOTTS LIMITED and ARNOTT'S BISCUITS LIMITED
And: TRADE PRACTICES COMMISSION
No. G198 of 1989
FED No. 165
Trade Practices
87 ALR 73

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1), Beaumont(1) and Gummow(1) JJ.

CATCHWORDS

Trade Practices - s. 157 of Trade Practices Act 1974 - whether the Court is empowered to refuse to make an order under sub-s. 157 (2) in respect of a document or part of a document, if it is considered that the conditions giving rise to the legal professional privilege of the Trade Practices Commission are satisfied in respect of that document or part of it, and that the privilege is not waived - whether such a power is derived from the common law privilege or the discretion conferred by s. 157 (3).

Trade Practices Act 1974

Federal Court of Australia Act 1976

Trade Practices Commission v Arnotts Limited & Ors. (1989) ATPR 40-930

Waterford v Commonwealth of Australia (1987) 71 ALR 673

Trade Practices Commission v T.N.T. Management Pty. Ltd. (No. 3) (1981) 55 FLR 219

Wellcome Foundation Ltd. v V.R. Laboratories (Aust.) Pty. Ltd. (1980) 42 FLR 266; affd. (1981) 148 CLR 262

Trade Practices Commission v Allied Mills Industries Pty. Limited (Federal Court of Australia, Sheppard J., unrep., 7 May 1980)

Commissioner of Taxation v Citibank Ltd. (Full Court of the Federal Court of Australia, 19 April 1989, unrep.)

Hamilton v Oades (High Court of Australia, 12 April 1989, unrep.)

R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141

Vitzdamm-Jones v Vitzdamm-Jones (1981) 148 CLR 383

Re Tooth & Co. Ltd. (No. 2) (1978) 34 FLR 112

Refrigerated Express Lines (A/asia) Pty. Ltd. v Australian Meat & Live-stock Corporation (1979) 42 FLR 204

R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389

HEARING

SYDNEY

#DATE 27:4:1989

Counsel and Solicitors for C.A. Sweeney Q.C. and P. Comans
the Applicants: instructed by Messrs Clayton Utz

Counsel and Solicitors for B.C. Oslington Q.C. and M. Walton
the Respondent: instructed by the Australian

Government Solicitor

ORDER

Question 1 in the case stated be answered as follows:

Q: 1. Is the Court empowered to refuse to make an order under sub-section (2) of s. 157 of the Trade Practices Act 1974 ("the Act") in respect of a document, or part of a document, if it is considered that the conditions giving rise to legal professional privilege are satisfied in respect of the document or part of it, and that the privilege is not waived? A: Yes.

Question 2 in the case stated be answered as follows:

Q: 2. If so, is the Court's power to refuse to order disclosure of the document, or part of it, derived from:

(a) the common law privilege; or

(b) the exercise by the Court of the statutory discretion conferred by sub-section (3) of s. 157; or

(c) some other, and if so, what, source? A: The Court's power to refuse to order disclosure is an exercise by the Court of the statutory discretion conferred by sub-s.

(3) of s. 157 of the Act.

No order as to costs.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

This matter comes before the Full Court by way of a case stated by a Judge of the Court pursuant to sub-s. 25 (6) of the Federal Court of Australia Act 1976. The case stated (as amended by order made by the Full Court on 24 April 1989) refers the following questions for the opinion of the Full Court:

1. Is the Court empowered to refuse to make an order under sub-section (2) of s. 157 of the Trade Practices Act 1974 ("the Act") in respect of a document, or part of a document, if it is considered that the conditions giving rise to legal professional privilege are satisfied in respect of the document or part of it, and that the privilege is not waived?

2. If so, is the Court's power to refuse to order disclosure of the document, or part of it, derived from:

(a) the common law privilege; or

(b) the exercise by the Court of the statutory discretion conferred by sub-section (3) of s. 157; or

(c) some other, and if so, what, source?

Section 157 of the Trade Practices Act 1974 ("the Act") is in the following terms:

"157. (1) Where -

(a) a corporation makes an application to the Commission (meaning the Trade Practices Commission) for an authorization;

(b) the Commission gives a notice under sub-section 91 (4) to a corporation to which an authorization has been given;

(c) a proceeding is instituted against a corporation or other person under section 77, 80 or 81; or

(d) an application is made under section 80A or sub-section 87

(1A) or 87A (1) for an order against a corporation or other person, the Commission shall, at the request of the corporation or other person and upon payment of the prescribed fee (if any), furnish to the corporation or other person -

(e) a copy of every document that has been furnished to, or obtained by, the Commission in connexion with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person; and

(f) a copy of any other document in the possession of the Commission that comes to the attention of the Commission in connexion with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person, not being a document obtained from the corporation or other person or prepared by an officer or professional adviser of the Commission.

(2) If the Commission does not comply with a request under sub-section (1), the Court shall, subject to sub-section

(3), upon the application by the corporation which, or other person who, made the request, make an order directing the Commission to comply with the request.

(3) The Court may refuse to make an order under sub-section (2) in respect of a document or part of the document if the Court considers it inappropriate to make the order by reason that the disclosure of the contents of the document or part of the document would prejudice any person, or for any other reason.

(4) Before the Court gives a decision on an application under sub-section (2), the Court may require any documents to be produced to it for inspection.

(5) An order under this section may be expressed to be subject to conditions specified in the order."

It is appropriate shortly to state the course of the litigation giving rise to the case stated. The principal proceedings were instituted by Application filed 20 October 1988. In the principal proceedings, the Trade Practices Commission is the applicant, and the respondents are Arnotts Limited, Arnott's Biscuits Limited, Fledspac Pty. Limited, and The Dickens Corporation Pty. Limited. On the case stated, the applicants are Arnotts Limited and Arnott's Biscuits Limited respectively, and the Trade Practices Commission is the respondent. In what follows, the parties are identified by their position on the case stated, unless the contrary is indicated.
An application for interlocutory relief in the principal proceedings was heard and disposed of by a judgment delivered by a Judge of the Court on 24 October 1988. This judgment is now reported, Trade Practices Commission v Arnotts Limited & Ors. (1989) ATPR 40-930. Directions were given for the prompt preparation of the case for trial. The trial commenced on 17 April 1989, and is proceeding.
The nature of the principal proceedings appears from the Amended Statement of Claim filed 12 December 1988 and the Amended Defence dated 24 January 1989 of the first and second respondents in the principal proceedings (the applicants on the case stated), and the Affidavit of Michael Thomas Corrigan sworn 19 April 1989.
The first applicant holds the whole of the issued capital of the second applicant. Fledspac Pty. Limited ("Fledspac") holds the whole of the issued capital of the The Dickens Corporation Pty. Limited ("Dickens") which in turn holds the whole of the issued capital of Cereal Foods Pty. Ltd., formerly named Nabisco Brands Pty. Limited ("Nabisco"). It is alleged in the Statement of Claim (and denied by the first and second applicants) that Nabisco is a manufacturer of biscuits supplying approximately 8% of the Australian consumption of biscuits.
The second applicant and Fledspac have executed an Agreement dated 24 October 1988 whereby Fledspac granted to the second applicant an option to purchase from Fledspac the whole of the issued capital of Dickens ("the call option"). The Agreement further provided that the second applicant granted to Fledspac a right to require the second applicant to purchase from Fledspac the whole of the issued capital of Dickens ("the put option"). The pleadings put in issue whether upon the exercise of the call option or the put option, the second applicant would directly acquire and the first applicant would indirectly acquire the whole of the issued capital of Dickens, and each of the first and second applicants would thereby indirectly acquire both the whole of the issued capital of Nabisco and that which is described in the pleadings as the biscuit business of Nabisco.
Further, it is alleged in para. 17A of the Statement of Claim (para. 17A) that upon the execution of the Agreement dated 24 October 1988, (i) the second applicant acquired directly and the first applicant acquired indirectly a legal or equitable interest in the whole of the issued capital of Dickens and (ii) each of the first and second applicants have thereby indirectly acquired a legal or equitable interest in the whole of the issued capital of Nabisco and the biscuit business of Nabisco. The first and second applicants admit allegation (i), but deny the other allegation.
The respondent then alleges (and the first and second applicants deny) that by reason of these matters, the first applicant and second applicant is, or are, or will be, or will be likely to be, in a position to dominate the market in Australia for the supply of biscuits to wholesalers and retailers ("the market"). Alternatively, it is alleged (para. 19) that the first applicant or the second applicant is, or they both are, already in a position to dominate the market, and that the result of the acquisition of the whole of the issued share capital of Nabisco will or will be likely substantially to strengthen the power of the first applicant or the second applicant or both of them to dominate the market.
There is then (para. 20) an allegation by the respondent of contravention by the first applicant and second applicant of paras. (a) and (b) of sub-s. 50 (1) of the Act. Finally, the respondent alleges that the first applicant in causing or permitting the second applicant to make the acquisition shall, inter alia, be directly or indirectly knowingly concerned in or party to the contravention of the Act by the second applicant. These allegations are denied. The respondent claims injunctive relief against the first and second applicants, Fledspac and Dickens.
Sub-section 50 (1) of the Act is as follows:

"50. (1) A corporation shall not acquire, directly or indirectly, any shares in the capital, or any assets, of a body corporate if -

(a) as a result of the acquisition, the corporation would be, or be likely to be, in a position to dominate a market for goods or services; or

(b) in a case where the corporation is in a position to dominate a market for goods or services -

(i) the body corporate or another body corporate that is related to that body corporate is, or is likely to be, a competitor of the corporation or of a body corporate that is related to the corporation; and

(ii) the acquisition would, or would be likely to, substantially strengthen the power of the corporation to dominate that market."

On 5 April 1989, the solicitors for the first and second applicants wrote to the solicitor for the respondent a letter, the opening paragraph of which read as follows:

"Pursuant to Section 157 of the Trade Practices Act we hereby request the Commission to furnish to us on behalf of our clients a copy of every document (not being documents obtained from our clients or otherwise produced on discovery or subpoena) that has been furnished to, obtained by, or is in the possession of the Commission in connection with this matter and which tends to establish our clients' case."

On 10 April 1989, the solicitor for the respondent wrote to the solicitors for the first and second applicants referring to the letter of 5 April 1989, and to a directions hearing before the Court on Friday 7 April 1989. In the course of that directions hearing, counsel for the respondent indicated that it would not be complying with the request and counsel for the first and second applicants made application for an order pursuant to s. 157 (2) of the Act. This was stood over to the commencement of the hearing on 17 April 1989.
On 19 April 1989, the first and second applicants filed an Application for an order directing the applicant in the principal proceedings, the respondent to the application, "to comply with the request under section 157 (1) of the Trade Practices Act by the first and second applicants dated 5 April 1989". The trial judge then stated the case for the Full Court. Fledspac and Dickens were not joined to the Application filed 19 April 1989 and did not seek to be heard before us on the case stated.
We turn to consider the questions referred by the case stated, which are conveniently dealt with together. At the outset, we should note that the proceedings before us were conducted expressly on the footing that the legal professional privilege referred to in the questions was that of the Commission. No question arose as to what might be the operation of s. 157 where documents were held by the Commission and a third party asserted that the documents were communications the subject of its legal professional privilege which had not been waived. Nor did any question arise as to the impact of s. 157 upon documents containing information disclosed by third parties to the Commission in confidence, or upon documents against disclosure of which the Commission might rely upon public interest immunity. While the area covered by the public interest immunity privilege may overlap with that covered by legal professional privilege, the application of each is the subject of an entirely separate exercise: Waterford v Commonwealth of Australia (1987) 71 ALR 673 at 679-686.
Section 157 does not apply exclusively to proceedings in the Court in respect of contravention of the Act. Thus, it applies where a corporation makes an application to the Commission for authorisation (s. 88) and to administrative action by the Commission to revoke an authorisation (sub-s. 91 (4)). Accordingly, to fall within s. 157, a document need not be admissible in evidence, and the phrase in sub-s. 157 (1) "tends to establish the case of the corporation or other person" has to be understood not only in the context of curial proceedings, but also as applicable to the resolution of issues by an administrative process with use of documents having a probative tendency: Trade Practices Commission v T.N.T. Management Pty. Ltd. (No. 3) (1981) 55 FLR 219 at 226.
That case is also authority for the propositions:

(a) In relation to curial proceedings such as the present proceedings, the intention disclosed by s. 157 is that a corporation is to be given fair treatment in the sense that it is to be given documents which the Commission has and which would support the corporation's case, in the sense of tending to establish that case.

(b) A document will be "prepared by an officer ... of the Commission" if it has been drawn up by an officer, whether or not any particular contribution of ideas is evident in its contents.

(c) If a document tends to impeach the Commission's case, it tends to establish the case of the corporation or other person within the meaning of s. 157.

(d) A document which might suggest some line of inquiry which could be of assistance to the corporation in conducting its case does not answer the description of a document which tends to establish that case; the contrast with the ambit of the obligation on discovery will be apparent (see Wellcome Foundation Ltd. v V.R. Laboratories (Aust.) Pty. Ltd. (1980) 42 FLR 266 at 268-269; affd. (1981) 148 CLR 262).

The doctrine of legal professional privilege, as it has been developed in Australia, extends to confidential, professional communications between government agencies and their salaried legal officers undertaken for the sole purpose of seeking or giving legal advice or in connection with anticipated or pending litigation: Waterford v Commonwealth of Australia (1987) 71 ALR 673 at 678, 687; see also Trade Practices Commission v Allied Mills Industries Pty. Limited (Sheppard J., unrep., 7 May 1980, pp 4-9 ff.). The privilege of the client against disclosure without its consent or waiver is not confined to disclosure in judicial or quasi judicial proceedings: Commissioner of Taxation v Citibank Ltd. (Full Court, 19 April 1989, unrep.).
The applicants submitted that the legal professional privilege of the Commission was abrogated in respect of those documents which fell within the terms of sub-s. 157 (1); the result was that the Court was not empowered to refuse to make an order in respect of such a document even though it considered the conditions giving rise to legal professional privilege were satisfied. The respondent (the Commission) submitted that its legal professional privilege was untouched by s. 157; the result was that the Court would refuse to order disclosure and the Court's power to do so derived from the continued operation of the common law privilege.
The parties accepted that the common law privilege might be abrogated only by the manifestation of a clear legislative intention, which clear intention might be demonstrated by reference to express words or necessary implication. Reliance was placed upon what was said by the High Court (with reference to the privilege against self incrimination) in Hamilton v Oades (12 April 1989, at pp 7 (per Mason CJ), 14-15 (per Deane and Gaudron JJ.), 27 (per Dawson J)). The primary debate between the parties on the case stated involved assertion and denial that s. 157 effected such an abrogation of the Commission's legal professional privilege. But in our view this was to regard the issue with too drastic a simplicity.
We have referred to the intention disclosed by s. 157 in relation to curial proceedings as one of fair treatment to the corporation seeking from the Commission documents which it has and which tend to establish the corporation's case. This intention throws light on the question whether the legislation also discloses an intention to qualify or limit (without abrogating) the operation of the common law privilege. We return to further examination of s. 157.
Sub-section 157 (1) is so expressed as not to apply to documents "obtained from the corporation or other person or prepared by an officer or professional adviser of the Commission". Before us, counsel for both sides used the word "exempt" to describe the status of documents to which these words applied. It is to be expected that documents which are exempt in this sense would include documents prepared by an officer or professional adviser, to which there attaches the legal professional privilege of the Commission. The obligation of the Commission to furnish copies of documents does not extend to these documents and the Court would not make an order under sub-s. 157 (2) that the Commission comply with a request in so far as the applicants thereby sought to obtain copies of these documents. Other documents to which the legal professional privilege of the Commission did attach would not be "exempt" from the operation of s. 157. If, in respect of these other documents, the Commission does not comply with a request under sub-s.157 (1), the corporation or other person making the request might approach the Court for an order directing the Commission to comply with the request.
The power or obligation of the Commission under sub-s. 157 (1) is, of course, of administrative character. The balance of s. 157 involves the Court, and thus the exercise of the judicial power. The Court acts not by way of judicial review of the administrative action of the Commissioner under sub-s. 157 (1). Rather, the remaining sub-sections of s. 157 serve a dual function of the character described in various High Court authorities including R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 155, 165, and Vitzdamm-Jones v Vitzdamm-Jones (1981) 148 CLR 383 at 411, 425, 429, namely the creation of a right (to have the Commission comply with a request) and the investment of a court with jurisdiction in respect of a "matter", the giving of effect to that right by administration of a particular remedy (cf. ss. 86, 163, 163A of the Act). See also Re Tooth & Co. Ltd. (No. 2) (1978) 34 FLR 112 at 116, 139-140.
If the subject of a request which has been refused by the Commission is documents which are not "exempt" and to which the legal professional privilege of the Commission attaches, and the applicant seeks an order from the Court, then, under sub-s. 157 (4), the Court may require the documents to be produced to it for inspection before it gives a decision on the application: cf. Refrigerated Express Lines (A/asia) Pty. Ltd. v Australian Meat & Live-stock Corporation (1979) 42 FLR 204 at 212; R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389 at 393-394. An order may be made subject to conditions: sub-s. 157 (5).
However, the Court may refuse to make any order in respect of a document or part of a document if it considers it inappropriate to do so, because such disclosure would "prejudice any person" (a phrase which includes but is not confined to the Commission) or "for any other reason". One such reason, in our view, would be the legal professional privilege which the Commission otherwise would enjoy against disclosure. In this way, the doctrine of legal professional privilege is accommodated rather than abrogated by the scheme of s. 157. If, in a given case, the Court orders disclosure (without or subject to conditions) despite what otherwise would be the operation of the privilege, then to that extent and in that particular situation the common law privilege of the Commission has been qualified or diminished by the order of the Court in exercise of its statutory powers.
By qualifying or diminishing the scope of the Commission's common law privilege on the one hand and by affording the Commission an opportunity to demonstrate prejudice or other reason in a particular case, on the other hand, the legislative scheme contained in s. 157 achieves an appropriate balance of the respective interests involved.
What is done by the Court will depend upon the exercise of its discretion on a case by case basis. Nothing said here is intended to control the manner in which the discretion is exercised. But we would refer again to the general intention disclosed by s. 157 in relation to curial proceedings.
In our view, the questions in the case stated should be answered as follows:

Q: 1. Is the Court empowered to refuse to make an order under sub-section (2) of s. 157 of the Trade Practices Act 1974 ("the Act") in respect of a document, or part of a document, if it is considered that the conditions giving rise to legal professional privilege are satisfied in respect of the document or part of it, and that the privilege is not waived? A: Yes.

Q: 2. If so, is the Court's power to refuse to order disclosure of the document, or part of it, derived from:

(a) the common law privilege; or

(b) the exercise by the Court of the statutory discretion conferred by sub-section (3) of s. 157; or

(c) some other, and if so, what, source? A: The Court's power to refuse to order disclosure is an exercise by the Court of the statutory discretion conferred by sub-s.

(3) of s. 157 of the Act.

Since neither side succeeded in its primary argument, we would make no order as to the costs of the case stated.

[1989] FCA 165

27 APRIL 1989