Jordan v Gunns Limited
[2010] TASSC 10
•18 March 2010
[2010] TASSC 10
COURT: SUPREME COURT OF TASMANIA
CITATION: Jordan & Ors v Gunns Limited & Anor [2010] TASSC 10
PARTIES: JORDAN, Warrick
KIMBELL, Paul Eric
HARRIS, Nathan
SARGENT, Lee Anthony
THOMPSON, Brett
DANT, Nishant Allan
MAJEWSKI, Ursula Dubiel
MILLS, Christopher Joseph
SHARP, Benjamin Huw
GIBSON, Miranda Kymalee
LEWANDOSKY, Rachel Alison Margaret
v
GUNNS LIMITED (ACN 009 478 148)
FRAME, Calton
FILE NO/S: 486/2009
DELIVERED ON: 18 March 2010
DELIVERED AT: Hobart
HEARING DATE: 25 February 2010
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Procedure – Discovery and interrogatories – Discovery and inspection of documents – Discovery of documents – Generally – Necessity.
Supreme Court Rules 2000 (Tas), r389.
Aust Dig Procedure [429]
Trade and commerce – Trade Practices Act 1974 (Cth) and related legislation – Consumer protection – Misleading or deceptive conduct or false representations – Statements as to future matters and promises – Pleading.
Aust Dig Trade and Commerce [1068]
REPRESENTATION:
Counsel:
Plaintiffs: K J Stanton
Defendants: S B McElwaine
Solicitors:
Plaintiffs: Fitzgerald & Browne
Defendants: S B McElwaine
Judgment Number: [2010] TASSC 10
Number of paragraphs: 31
Serial No 10/2010
File No 486/2009
WARRWICK JORDAN, PAUL ERIC KIMBELL, NATHAN HARRIS,
LEE ANTHONY SARGENT, BRETT THOMPSON, NISHANT ALLAN DANT, URSULA DUBIEL MAJEWSKI, CHRISTOPHER JOSEPH MILLS,
BENJAMIN HUW SHARP, MIRANDA KYMALEE GIBSON and
RACHEL ALISON MARGARET LEWANDOSKY
v GUNNS LIMITED and CALTON FRAME
REASONS FOR JUDGMENT HOLT AsJ
18 March 2010
The plaintiffs have applied for orders pursuant to the Supreme Court Rules 2000, r386, requiring each of the defendants to file and serve affidavits verifying lists of their documents within specified classes. The defendants say that the discovery sought is not necessary.
The starting point is the identification of the questions in issue in the action.
The plaintiffs claim injunctive relief against the first defendant, Gunns Limited (Gunns). It is alleged that Gunns has contravened s52 in Part V of the Trade Practices Act 1974 (Cth). The claim is based upon two representations. The first made in May 2007 and the second made in January 2009. Injunctive relief is also claimed against the second defendant, a natural person, on the ground that he was knowingly concerned in, or a party to, the January 2009 contravention.
The Act s52(1) is as follows:
"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
Injunctive relief is available under s80(1) which, inter alia, provides:
"Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
(a) a contravention of a provision of Part …, V …;
(e)being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision …
the Court may grant an injunction in such terms as the Court determines to be appropriate."
The following allegations in the statement of claim have been admitted:
·Gunns is a corporation conducting forestry operations and is the proponent of a pulp mill proposed to be constructed in the Tamar Valley.
·The pulp mill will require for its operation between 3.2 million and 4 million green tonnes of woodchips per year.
·In May 2007 Gunns, in a document entitled "Bell Bay Pulp Mill Project – The Facts", represented that no wood from old growth forests would be used in the operation of the pulp mill.
·In January 2009 the second defendant, being the servant or agent of Gunns, represented in The Age online that Gunns would not "ever use old growth logs" in the operation of the pulp mill.
·The May 2007 representation was made in trade or commerce.
·Gunns has made numerous identical or similar representations (as set out in the statement of claim par14(a)(i) – (xxvii)) and unless restrained will continue to do so.
The plaintiffs plead that the representations were in respect of future matters and make it clear that they intend to rely upon s51A of the Trade Practices Act which is as follows:
"51A (1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead."
The effect of s51A was explained by Cooper J in Bowler v Hilda Pty Ltd (1998) 153 ALR 95 where he said at 117 – 118:
"Section 51A is an evidentiary deeming provision which reverses the onus of proof. It is not a substantive defence: Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 at 58. In my opinion, the provisional view expressed by the Full Court in Cummings v Lewis (1993) 41 FCR 559; 113 ALR 285 at FCR 567 - 8 to this effect ought to be affirmed.
The consequence of a representor making out the requirements of reasonable grounds is to deny the benefit of the deeming provision. Section 51A(1) and s51A(2) do not operate to prevent an applicant for relief seeking to prove up conduct in contravention of s52 of the Act. However, if an applicant is not intending to rely solely on the operation of s51A to prove up its case, then the positive case to be advanced must be specifically pleaded in order that the respondent knows the case which the applicant will seek to make out on trial."
Here the plaintiffs put their case both in reliance on the deeming provision and also by setting up a positive case. The positive case contains the following allegations which the defendants deny:
·The common and ordinary meaning of the terms "old growth trees" and "old growth forests" are respectively "trees which are more than 120 years old" and "forest which contains old growth trees".
·The May 2007 and January 2009 representations, when properly construed, meant that no part of the wood requirement for the operation of the pulp mill would comprise trees more than 120 years old or would be sourced from forests containing such trees.
·"If the proposed pulp mill were constructed, the wood requirement would, in part, be met from:
(a)Trees from old growth forests (and therefore from forests containing trees more than 120 years old); and
(b)Old growth trees (and therefore trees more than 120 years old)."
The defendants have not pleaded any facts to establish reasonable grounds for making the representations. If the defendants wish to advance at the trial that Gunns had reasonable grounds for making the representations those grounds must specifically be pleaded. The rules of pleading and in particular r227 requires that "all the material facts" be contained in the pleading. For a plea of this type to be sufficient such facts as identified by Heerey J in Sykes v Reserve Bank (1998) 158 ALR 710 at 712, would need to be alleged, namely:
"● some facts or circumstances
● existing at the time of the representation
● on which the representor in fact relied
● which are objectively reasonable and
● which support the representation made."
It follows that, on the present state of the pleadings, the plaintiffs will establish that the admitted representations were misleading or deceptive or likely to mislead or deceive by way of the deeming provision if the Court accepts that the representations were as to a future matter.
In the event that the plaintiffs fail to persuade the Court that the representations were as to a future matter, or if the defendants plead and prove reasonable grounds, the positive case put forward by the plaintiffs will need to be considered.
On the existing pleadings only the following questions will or may arise for determination in the action:
·Whether the January 2009 representation was made in trade or commerce?
·Whether the May 2007 and the January 2009 representations were as to a future matter?
·Whether a reasonable member of the public might be induced by the representations to think that trees more than 120 years old, or trees sourced from forests containing such trees, would not be used in the operation of the pulp mill?
·Whether such trees would in fact be used?
·Whether, in respect of the January 2009 representation, the second defendant was knowingly concerned in or a party to the contravention (if there was a contravention)?
The classes of documents sought have been specified by the plaintiffs as follows:
"1Documents relating to, or relied upon by the first or second defendants in making, the first representation.
2Documents relating to, or relied upon by the first or second defendants in making, the second representation.
3Documents relating to, or relied upon by the first or second defendants in making, the representations set out in paragraph 14(a)(i) – (xxvii) inclusive.
4(a) Market research into the perception held by the community of the significance of old growth forests or old growth trees in respect of the proposed pulp mill;
(b)Public relations advice as to the management by the defendants or either of them of the perception held by the community of the significance of old growth forest or old growth trees in respect of the proposed pulp mill;
(c)Documents relating to strategic planning and marketing in respect of the proposed pulp mill which refer to old growth forests or old growth trees;
(d)Documents recording the results of polling of public opinion as to the meaning or significance or concern held by the community regarding old growth trees or old growth forests being used to supply the proposed pulp mill;
(e)Any other documents relating to whether either defendant identified old growth forest or old growth trees as an issue or issues of concern to the community in respect of the proposed pulp mill
(f)Documents relating to the use made of any of the documents referred to in (a) to (e) above in formulating the first representation and the second representation and the representations in para 14(a) of the statement of claim and each of those representations.
(g)Documents identifying how the information in any of the documents referred to in (a) to (f) above would be used to influence the community
5Documents relating to the issues arising under paragraphs 11 and 12 of the Statement of Claim, being whether the first defendant had reasonable grounds for making either of the representations."
Two observations can be made about the classes specified. The first is that they are so generalised and imprecise that there would seem to be little or no difference between an order in the terms sought and an order for general discovery. The second observation is that no documents in the fifth specified class can be relevant as the defendants have not pleaded any facts or circumstances to be put forward as constituting reasonable grounds for the representation.
The defendants rely on r389. It is as follows:
"389 Discovery to be ordered only if necessary
On the hearing of an application for an order under rules 386 or 388 the Court or a judge may –
(a) dismiss the application if discovery is not necessary; or
(b) adjourn the application if discovery is not necessary at that stage of the proceeding; or
(c) refuse to make the order if discovery is not necessary for disposing of the proceeding fairly or for saving costs."
The question for me is whether I am satisfied that the discovery of documents within the specified classes is not necessary for disposing of the proceeding fairly. No submissions were made on behalf of the plaintiffs specifically addressing the matter of necessity. The plaintiffs' submissions focused on relevance.
I will consider the question of necessity in the context of each of the five issues which will or may arise for determination at trial.
The first issue is whether the January 2009 representation was made in trade or commerce. At the hearing I was informed that the discovery application was not directed to this issue. However, as an order in the terms sought would necessarily encompass the discovery of documents relating to whether the representations were made in trade or commerce I will need to deal with the question of whether discovery is necessary for the fair disposition of this issue.
The nature of the enquiry as to "trade or commerce" was identified by Mason CJ, Deane, Dawson and Gaudron JJ in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603 – 604 as follows:
"Indeed, in the context of Pt V of the Act with its heading 'Consumer Protection', it is plain that s52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character."
The content of the representation and the manner of its publication have been admitted in the pleadings. So to has the context, namely that Gunns is a corporation conducting forestry operations and the proponent of a pulp mill which will consume between 3.2 million and 4 million green tonnes of woodchips per year. The question of whether the January 2009 representation made in The Age online was made in trade or commerce is to be considered having regard to its content, the manner of publication, the context and audience. It is capable of fair consideration and determination without resort to the defendants' documents. Discovery is not necessary for the fair determination of this issue.
The resolution of the issue of whether the May 2007 and January 2009 representations were as to a future matter lies in an analysis of the representations themselves and is neither dependent upon nor assisted by the discovery of documents.
The resolution of the issue of whether a reasonable member of the public might be induced by the representations to think that trees more than 120 years old, or trees taken from forests containing such trees, would not be used in the operation of the pulp mill will be dependent upon the content of the representations in the context of information in the public domain and public perceptions. The enquiry on this matter is not dependent upon and is unlikely to be assisted by the discovery process. Discovery is not necessary for the fair determination of this issue.
Next there is the question of whether trees more than 120 years old, or sourced from forests containing such trees, would be used in the operation of a proposed pulp mill. The indicators on this matter will include the capacity of the pulp mill; the suitability and availability of such trees and the acquisition, harvesting and transport costs. Gunns may have documents indicative of feasibility and likelihood. I am unpersuaded that a discovery order in relation to such documents is not necessary for fairly disposing of the question.
Counsel for the defendants submitted that a discovery order would cause oppression. There was no evidence in support of this assertion. Counsel sought to persuade me that the vastness of the potentially relevant documentation was a matter of common knowledge. He said that this was apparent from the existence of the Pulp Mill Assessment Act 2007. I can find nothing in that legislation and know of no matter of common knowledge which indicates that the amount of documentation concerning the type of trees which might be used in the operation of the pulp mill is so extensive as to make discovery of it oppressive. I will hear counsel as to whether I should afford an opportunity to Gunns to present evidence of oppression.
The allegation that the pulp mill will use trees more than 120 years old and trees sourced from forests containing such trees is, in the paragraph of the statement of claim in which it appears, rolled in with the allegations that such trees are old growth trees and such forests are old growth forests. The denial of this paragraph is general. Counsel indicated that instructions would be taken and that there was a possibility that an admission would be forthcoming that such trees would be used. If the issue is removed from the matters in question in the proceeding there will be no entitlement to discovery on the matter.
The last issue is whether, in respect of the January 2009 representation, the second defendant was knowingly concerned in or a party to the contravention.
The question relates to the liability of the second defendant and not the first defendant. There being no issue between the plaintiffs and the first defendant on the matter no discovery will be ordered against the first defendant with respect solely to this issue.
In ACCC v Michigan Group Pty Ltd (2002) FCA 1439 at par303 Dowsett J set out the circumstances in which a natural person may be knowingly concerned in a contravention of s52 by representations. He said:
"It is quite possible that the act of a natural person respondent on behalf of a corporation will constitute a contravention of the Act by that corporation, and yet the natural person respondent will be found not to have been knowingly concerned in that contravention. In the case of representations as to existing facts, this is because it is not necessary to show that the respondent corporation knew of the misleading nature of the statement in question, but knowing involvement predicates such knowledge on the part of the relevant natural person. The matter is even more complex in the case of representations as to future matters. A representation on behalf of a corporation will constitute a contravention if the corporation fails to show reasonable grounds for it. However a natural person respondent bears no onus of proof. It will be necessary for ACCC to demonstrate that such a person:
● knew that the representation was made; and either:
● knew that it was misleading; or
● knew that the corporation had no reasonable grounds for it."
The second defendant's documentation, or absence of it, will be important to the verification or refutation of evidence he may give as to his state of mind. I am unpersuaded that an order for discovery against him is not necessary.
I will hear counsel as to the disposition of the application against the first defendant. There will be an order against the second defendant. As the classes of documents specified in the application have been expressed so broadly that the application is effectively an application for general discovery, the order will be a general order requiring the second defendant to make, file and serve an affidavit verifying his list of documents.
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