Australian Competition and Consumer Commission v P.T. Garuda Indonesia Ltd (No 2)
[2012] FCA 1429
•14 December 2012
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v P.T. Garuda Indonesia Ltd (No 2) [2012] FCA 1429
Citation: Australian Competition and Consumer Commission v P.T. Garuda Indonesia Ltd (No 2) [2012] FCA 1429 Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v P.T. GARUDA INDONESIA LTD (ARBN 000 861 165) File number: NSD 955 of 2009 Judge: PERRAM J Date of judgment: 14 December 2012 Catchwords: PRACTICE AND PROCEDURE – Discovery – application for discovery – where trial has already commenced – whether there has been delay in bringing application – whether discovery should be allowed during trial – whether objections to individual categories should be allowed Legislation: Competition and Consumer Act 2010 (Cth) s 155
Federal Court Rules 2011 r 20.11
Date of hearing: 11 December 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 42 Counsel for the Applicant: J Halley SC, E Collins SC, J Clarke, C Arnott, J Clark, N Shaw, V Bosnjak, T Dinh Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: M Leeming SC, T Brennan Solicitor for the Respondent: Norton White
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 955 of 2009
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: P.T. GARUDA INDONESIA LTD (ARBN 000 861 165)
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
14 DECEMBER 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The applicant be granted leave to file in Court an interlocutory application seeking discovery from the respondent.
2.The parties bring in short minutes to give effect to these reasons by 21 December 2012.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 955 OF 2009
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: P.T. GARUDA INDONESIA LTD (ARBN 000 861 165)
Respondent
JUDGE:
PERRAM J
DATE:
14 DECEMBER 2012
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The Commission applies for discovery from Garuda. Garuda resists this in a global way by raising two distinct arguments, in addition to arguments at the level of individual categories.
The two questions of general principle are: first, whether the Commission's application should be defeated by reason of its delay in making it; secondly, whether it can truly be said that discovery from Garuda is, in the requisite sense, necessary when the Commission has already opened its case against Garuda in some detail.
I reject both of these arguments, persuasively advanced though they were. In the rather exceptional circumstances of this case, I do not think there has been any relevant delay by the Commission. The ungainly constellation of factors which brought Garuda into this litigation in October is nobody's fault. In every direction, the procedural consequences were unpalatable. The parties have done extraordinarily well to get the case started, and I detect no default on anyone's part. My perception is that there is not present any form of tardiness which would warrant the withholding of a discovery order.
Nor do I think that the fact that the Commission has opened against Garuda makes any difference. It was made quite plain that its opening was proceeding concurrently with its quest for documents and that, if the quest were ultimately successful, it would seek to use that material (if it had not yet closed its case), or seek to reopen the case (if it had).
Largely for similar reasons, the proposition that the Commission has waived its rights to discovery or elected not to pursue them should also be given its quietus.
Rule 20.11 of the Federal Court Rules 2011 provides that:
A party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible.
In considering how this rule applies in the present circumstances, I have taken into account the following matters:
(a)the obvious inconvenience to all parties of providing discovery even whilst the trial is continuing, and possibly over the Christmas vacation;
(b)the lack of any evidence from Garuda – that is, sworn testimony – as to the hardship or prejudice it might suffer if the order were made;
(c)the fact that discovery has been given in all of the other proceedings;
(d)the public interest involved in the ventilation and pursuit of anti-trust proceedings;
(e)the fact that neither party is responsible for the rather unusual situation which presently arises – that is, from Garuda's late appearance;
(f)the implausibility of conducting proceedings such as the present without access to the relevant airline's internal materials; and
(g)the fact that the Commission, for reasons which Garuda cannot be blamed, was unable to utilise its powers under s 155 of the Competition and Consumer Act 2010 (Cth).
In my opinion, the present application does not infringe r 20.11. Plainly, there may be consequences for the balance of the trial in permitting discovery, but the time for assessing those considerations will be when they arise.
In any event, I am not presently of the view that granting discovery will inevitably derail the proceedings, although I accept there is some risk of this.
I turn, then, to the individual categories which are in dispute, noting that, by and large, many of them have been agreed through a sensible and cooperative approach by both parties.
Annexure A to the interlocutory application sets out 36 categories of documents, each of which is said to be relevant to the Commission’s conduct and market cases against Garuda.
Category 1 is as follows:
All periodical marketing or sales reports (however described) concerning the cargo business of Garuda in each of the calendar years in the Relevant Period, sent to the head office of Garuda from Garuda stations located in Hong Kong and Jakarta.
The Commission submitted that the words ‘excluding all accounting records’ should be added. With that change, I am content that the category is not too broad, as Garuda submitted that it was, and on that basis I will permit it.
Categories 2 and 5 were objected to. Category 2 is:
In lieu of discovery, a table identifying all sales relating to the carriage by Garuda of mail for postal authorities to or from Australia listing each of the following for each financial or calendar year of the Relevant Period:
a. the names of the postal authorities;
b. the annual revenue received by Garuda from each postal authority;
c.the annual amount of surcharges received by Garuda from each postal authority referable to the carriage of the mail by Garuda; and
d. the annual weight of mail carried for each postal authority.
Category 5 is as follows:
All contracts for the carriage of mail, or copies of tenders for contracts for the carriage of mail, from Relevant Countries to Australia that applied in the Relevant Period.
Two issues arise here. First, there is a significant dispute between the parties as to the relevance of mail vis-à-vis cargo. I do not propose to resolve that debate by a side-wind in the course of a discovery application. I do not accept, therefore, Garuda's submissions about these categories to the extent that they are based on the proposition that mail has no place in these proceedings. That objection to these categories fails.
Secondly, it was said that Category 2 was, in truth, an interrogatory rather than discovery. Assuming for present purposes that interrogatories are not in fact an aspect of discovery (an assumption which is probably not correct), I would agree. However, I will grant leave to issue an interrogatory in the form of proposed Category 2(b). It will be necessary for the Commission to articulate, in the course of its compliance with the orders I make today, a short minute of order seeking to ask that interrogatory in a proper form.
Category 3(b) is as follows:
In lieu of discovery, for freight carried from a Relevant Country to Australia, a table listing each of the following for each financial or calendar year during the Relevant Period:
…
b.for hard block space agreements to which Garuda was a party, the revenue earned from enforcement of provisions of that agreement against a freight forwarder where the freight forwarder did not utilise the capacity required to be paid for under the terms of that block space agreement.
The Commission indicated, during the course of argument, that it was happy to limit the terms of 3(b) to the agreements; that is, so that it would simply read ‘for hard block space agreements to which Garuda was a party’. Again, as the category plainly appears on its face, it is, in truth, an interrogatory. In principle, I am minded to allow an interrogatory in the present form, subject to the limitation to which the Commission has agreed. In reaching that conclusion, it will be implicit that I have rejected Garuda's objections based upon breadth, which were, in any event, largely based upon the form of 3(b) prior to the Commission agreeing to limit it in the manner indicated.
Category 8 is as follows:
All Documents comprising or recording any communications between Garuda stations located in Australia, Hong Kong and Jakarta with shippers, consignees or consignors in the Relevant Period.
Garuda submitted that this was close to general discovery. I do not agree. It may be that some of these internal communications did deal, as Mr Leeming SC submitted that they might, with complaints, but even that does not appear to me to be an irrelevant matter. There will be discovery of the category.
Categories 11 and 12 are as follows.
11.Documents recording any notification by IATA in the period 14 March 2000 to 30 April 2000 that:
a.Resolution 116ss had been disapproved or could not be declared effective;
b.IATA would cease publishing or circulating the IATA Fuel Price Index; or
c.airlines should not engage in any pricing actions tied to the IATA Fuel Price Index.
12.All announcements issued by Garuda in relation to the introduction, imposition or withdrawal by Garuda of a fuel surcharge on air freight services from a Relevant Country during the period 1 November 1999 to 31 January 2002.
It was said these would relate to time-barred matters because they reach back in time to the period in which IATA was considering the position of Resolution 116 ss. However, in my opinion, they remain relevant to proving what occurred at that time. The Commission's case is that the present arrangements or understandings are the historical progeny of the original IATA direction and the Lufthansa index. These seem to me to be centrally relevant categories.
Categories 15A and 15B are as follows:
15A.All communications sent to or received from, in the period 11 September 2001 to 31 October 2006, the following email address:
c. [email protected]; or
referring to the fuel or insurance surcharges on the supply of air freight services from Hong Kong referred to in the Amended Statement of Claim.
15B.All communications sent or received by any employee of the Hong Kong branch office of Garuda Cargo, which refer to the fuel or insurance surcharges on the supply of air freight services from Hong Kong, referred to in the Amended Statement of Claim.
Garuda, it should be noted, articulated an objection during the course of the trial that the Commission has not shown that the emails received at these addresses were, in fact, read. In light of that objection, it seems to me to be very difficult to resist the proposition that they should be discovered. There will be discovery of these categories.
Category 21 is as follows:
For any meeting of the Air Cargo Representative Board – Indonesia referred to in the Amended Statement of Claim all notes, draft minutes, or other documents recording or evidencing discussions at the meeting or the outcome of the meeting.
Three of the board meeting minutes are in fact missing. These are the minutes for 6 May 2004, 11 May 2004 and 4 April 2005. Garuda does not oppose discovery in terms of this category in relation to those meetings, but it does object in relation to the balance where the minutes are already available.
Despite that, I accept that the Commission should have discovery in relation to the other meetings as well. I do this because Garuda has denied that any agreement was reached at these meetings. That denial entitles the Commission to a broader range of inquiry than might otherwise be the case if the agreement were admitted.
Category 27 is as follows:
All documents recording or referring to each of the positive allegations in the Defence to the Amended Statement of Claim that the Respondent charged or did not charge a fuel surcharge on carriage, as the case may be, as set out in Schedule A.
I will not set schedule A out. I can see no basis upon which this material is not discoverable. It is, so it seems to me, at the heart of the case.
Category 27A is as follows:
All communications between any of M Azhar, S M Pulungan, Uun Setiawan or Risa Persana on the one hand and the international airlines referred to in paragraphs 65 to 104 and 231 to 245 of the Amended Statement of Claim on the other, regarding the surcharges referred to in paragraphs 65 to 104 and 231 to 245 of the Amended Statement of Claim.
It was said by Garuda that this was rather old and that very much work would need to be done in order to comply with the category. I do not accept that the age of the material is a disentitling factor in the present circumstances.
As to the inconvenience, it is sufficient to observe that there is presently no evidence before me as to the nature or extent of this difficulty. I accept that there will be inconvenience involved, naturally enough, in the process of giving discovery at this time of year and during the course of conducting a trial, but there is nothing before me to make good a substantive argument made on prejudice. In those circumstances, the category will be allowed.
Category 31 is as follows:
All documents comprising communications between the revenue management section in the head office of Garuda Cargo on the one hand and any branch office of Garuda located in Indonesia or Hong Kong, on the other referring to fixing of any of the surcharges, prices or fees referred to in the Amended Statement of Claim.
It was said that this would be onerous. However, there was no evidence as to the nature and extent of the burden, and the category appears to seek material of central importance. I propose to permit the category.
Category 32 is as follows:
All documents evidencing a practice of the revenue management section in the head office of Garuda Cargo of fixing or setting the rates (including any surcharges) charged by Garuda for the carriage of cargo from Indonesia or Hong Kong during the Relevant Period.
Mr Leeming submitted that the expression ‘evidencing a practice’ was not fair, as it would require those conducting the discovery exercise to embark upon forensic decisions. I agree with this submission. The use of an expression in those terms is not appropriate in a discovery category. I disallow Category 32.
Annexure B to the interlocutory application is as follows:
Hong Kong
1.All invoices and air waybills issued by Garuda in respect of the air freight carried by Garuda from Hong Kong in the following periods:
a. 29 October 2001 to 2 November 2001;
b. 7 January 2002 to 11 January 2001;
c. 8 April 2001 to 12 April 2001;
d. 8 July 2002 to 12 July 2002;
e. 7 October 2002 to 11 October 2002; and
f. 13 January 2003 to 21 January 2003
Indonesia
2.All invoices and air waybills issued by Garuda in respect of the air freight carried by Garuda from Jakarta to Amsterdam in the following periods:
a. 18 August 2003 to 22 August 2003;
b. 12 October 2003 to 17 October 2003; and
c. 1 December 2003 to 5 December 2003.
3.All invoices and air waybills issued by Garuda relating to the air freight carried by Garuda from Jakarta to Singapore in the following periods:
a. 19 May 2003 to 23 May 2003;
b. 15 September 2003 to 19 September 2003;
c. 12 January 2004 to 16 January 2004;
d. 9 February 2004 to 13 February 2004; and
e. 17 May 2004 to 21 May 2004.
4.All invoices and air waybills issued by Garuda relating to the air freight carried by Garuda from Jakarta to Taipei, Seoul and Japan in the period:
a. 1 January 2004 to 31 January 2004.
5.All invoices and air waybills issued by Garuda relating to air freight by Garuda from Jakarta to Kuala Lumpur, Saigon, Bangkok, Shanghai, Beijing, Canton and Japan in the following periods:
a. 9 February 2004 to 13 February 2004; and
b. 17 May 2004 to 21 May 2004.
6.All invoices and air waybills issued by Garuda relating to the air freight carried by Garuda from Jakarta to Singapore and Kuala Lumpur in the following periods:
a. 18 October 2004 to 22 October 2004;
b. 14 February 2005 to 18 February 2005;
c. 20 June 2005 to 24 June 2005;
d. 15 July 2005 and 20 July 2005; and
e. 17 October 2005 to 21 October 2005.
7.All invoices and air waybills issued by Garuda relating to the air freight carried by Garuda from Jakarta to destinations in TC1/2 in the following periods:
a. 18 July 2005 to 22 July 2005; and
b. 18 September 2005 to 23 September 2005.
8.All invoices and air waybills issued by Garuda relating to the air freight carried by Garuda from Jakarta in the period:
a. 19 September 2005 and 23 September 2005.
The Commission originally sought further discovery in relation to the above matters from Garuda by letter of 4 December 2012. As can be seen, essentially what was sought was discovery of all invoices and air waybills on specified routes during specified periods. By the time of the hearing, however, the Commission had narrowed its position and was content to be satisfied by a sampling process, the nature of which will be obvious from above.
Garuda submitted that many of the proposed categories for sampling could have no bearing on the proceedings. For example, so Mr Leeming asked in respect of Item 2, what good could seeing the surcharges being levied between Jakarta and Amsterdam serve?
Initially I was disposed to see the strength of that point, but Ms Collins SC submitted that I should not. She pointed out that Garuda's defence did not admit the surcharges on some of the routes (including Amsterdam), and this was therefore an issue. Further, so she submitted, when the Commission's case was a circumstantial one based on facts including price movements in the relevant markets, it must be relevant to see whether Garuda moved its prices on all of its routes. If it did, the agreement alleged was said to be more likely.
I propose to accept that submission. There should be discovery, by way of an agreed sampling process, of the documents described in Annexure B to the interlocutory application.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 17 December 2012
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