Super John Pty Ltd v Futuris Rural Pty Ltd - [1999] FCA 361

FEDERAL COURT OF AUSTRALIA
Super John Pty Ltd v Futuris Rural Pty Ltd [1999] FCA 361
SUPER JOHN PTY LIMITED (ACN 003 375 093) AND OTHERS v
FUTURIS RURAL PTY LIMITED (ACN 061 617 230)
NG 3072 of 1997
HILL J
SYDNEY
24 MARCH 1999

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3072 OF 1997

IN THE MATTER OF ELDERS AUSTRALIA LIMITED (ACN 061 617 230)

BETWEEN:

SUPER JOHN PTY LIMITED (ACN 003 375 093)
First Applicant

BATOKA PTY LTD (ACN 002 904 930)
Second Applicant

ELIZABETH LANCEY AND JULIAN LANCEY
(As Trustees for Elizabeth Superannuation Fund)
Third Applicant

ALLISTAIR HAZARD
Fourth Applicant

IAN MORTON
Fifth Applicant

AND:

FUTURIS RURAL PTY LIMITED (ACN 009 339 333)
IN THE MATTER OF ELDERS AUSTRALIA
Respondent

JUDGE:

HILL J

DATE:

24 MARCH 1999

PLACE:

SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

The applicants in these proceedings move the Court for orders that documents produced in accordance with a large number of subpoenas addressed to persons whose names appear in the notice of motion be not the subject of inspection particularly by the respondent. To understand the point of the motion it is necessary to say something about the pleadings.
By a defence and cross-claim the respondent alleges that the applicants, including but not limited to Mr Catto and companies associated with him, acted in concert to purchase shares in Elders for an improper purpose, that being seeking to extort an extortionate financial benefit from the respondent by using the procedure afforded by s 701(6) of the Corporations Law to delay or prevent the respondent from proceeding to compulsory acquisition pursuant to s 701 of the law or alternatively seeking to obtain a financial benefit substantially exceeding the offer made by the respondent pursuant to a Part A statement so as to delay and prevent the respondent from proceeding to compulsory acquisition.
It is the case of the respondent that in proving the allegations in the statement of claim, if it can, it relies upon the fact that in numerous other cases, Mr Catto has participated in takeover offers from which it is to be inferred that he had in them, as he had in the proceedings the subject of the statement of claim, the improper purpose of extortion. An application to strike out the defence and counter-claim was dismissed by Foster J in October last year. I am not asked to revisit that matter. In his judgement Foster J made reference to the difficulties of using similar fact evidence and in particular to the provisions of ss 97, 98 102 and 135 of the Evidence Act 1995 (Cth).
In the course of that application, his Honour rejected an application for general discovery in respect of what are said to be the various circumstances involving similar facts. His Honour's reasons for doing so included the fact that such discovery would be onerous where there was a possibility at least that the evidence that might be required to be disclosed would ultimately turn out to be intrinsically incapable of having any probative value. His Honour also considered the question whether, on the material then before him, the evidence was likely to have a significant probative value and determined having regard to the onerous nature of the discovery that at that stage discovery should not be granted in general terms.
The subpoenas which thereafter were issued by the respondent, were issued to some 16 or so recipients concerned in takeovers in which Mr Catto and other applicants had acquired or had shares.
The applicants submit that inspection should not be granted, essentially for three general reasons. First, Mr Catto submitted that the documents subpoenaed were not relevant to issues between the parties in the sense that they were not forensically relevant. Second, it was submitted that the subpoenas were being used to achieve discovery by indirect means in circumstances where discovery had been denied and there was involved, in essence, what is popularly referred to as “fishing”. Third, it was submitted that to the extent to which the subpoenaed material included confidential documents brought into existence in connection with the settlement of litigation or potential litigation, inspection should not be granted. The permitting of the inspection of them by the respondent was said to be contrary to the public interest. Submissions were also made in respect to particular matters to which I shall shortly return.
It may be observed that none of the parties subpoenaed ultimately objected to complying with the subpoenas. In saying this, of course, I note that in some cases the terms of the subpoenas were, by consent, amended presumably to restrict the documents to be produced. The applicants have not moved the Court to have the subpoenas set aside.
In some cases, claims for confidentiality have been asserted and the parties have indicated to me preparedness to give appropriate undertakings of confidentiality so that the material in question will be kept confidential to the legal advisers and not disclosed to their clients or other person without the consent of the Court and, of course, would be used only for the purposes of litigation.
The first submission raises the real difficulty that faces me in deciding the motion. It is submitted that the material subpoenaed is not relevant to the issues between the parties. However, that submission is made on the basis ultimately that the similar fact evidence itself will not be relevant to the proceedings. My problem is that while it is clear to me that there will be extensive arguments to be made about the admissibility of similar fact evidence when the proceedings commence, and while the respondent may well have some difficulties in demonstrating the admissibility of the material, some of which is sought to be subpoenaed, having regard to whether it has a significant probative value, it is difficult in the extreme for that matter to be decided at this stage in the proceedings.
The question of whether the material should be inspected is not one which depends upon admissibility in the strict sense. No doubt material which is admissible must be available for inspection, but material which is not admissible may still be available for inspection provided that it has a forensic relevance. On the face of the pleadings, which have not been struck out - which includes the particulars which have been sought and given - evidence will be sought to be led concerning the various take overs, documents in respect of which are the subject of the subpoenas.
If I decide now that inspection is not to be granted, I immediately foreclose the possibility of that material being tendered by the respondent in the respondent's defence and in the cross claim. I could really only decide what is to be litigated in the main proceedings when evidence of the respondent in chief, other than the similar fact evidence, has been given, and when the precise nature of the similar fact evidence is explored.
I have to say I do not find it attractive to have to examine what are said to be similar facts in a whole series of other transactions. I am conscious of the need to ensure that when the case comes for hearing, it does not become unmanageable and become the running of some 20 or so cases all concerned with take overs when only one is, in essence, in issue.
Nevertheless, at this stage it cannot be said that the material subpoenaed is irrelevant to issues between the parties. It clearly is while those issues remain as they are and include allegations of similar conduct as evidence of the conduct which is said to have been adopted by Mr Catto and others in the present proceedings.
The second submission should in my view by rejected. A reason why general discovery was rejected by Justice Foster was the onerous requirement which discovery would have imposed upon the applicant. That issue does not arise here. Once it is concluded that the material is forensically relevant to the issues between the parties then there can be no impediment to inspection being granted of it particularly where there is no objection on the part of the party subpoenaed to the documents being produced or made available to the parties.
It is difficult to understand the third submission. The fact that material the subject of settlement may be subpoenaed is said to be in some way an impediment to people settling proceedings. With respect that seems unlikely. Generally speaking, the documents subpoenaed concern the settlement of proceedings between various parties who have no objection to the documents being made available and the applicant who does. The applicant's real objection, of course, is not public interest but rather that the material should not be made available to the respondent at all because to do so might either harm the case of the applicant or at least extend the period of hearing.
A number of matters were raised in relation to specific matters to which I would draw attention. It is said in respect of some nine of the subpoenas that what is subpoenaed are or include court documents. These may or may not include documents that are the subject of public knowledge. In that case, of course, there can be no impediment to their being inspected. However, they may include material subject to the principle in Home Office v Harman [1983] 1 AC 280. That is to say, subject to an implied undertaking to the Court that the materials be used only for the purpose of litigation and for no other purpose without the consent of the Court. I would not permit inspection of documents subject to such undertakings unless application were made and approval given from the relevant court that the material be available for the present litigation. The order granting inspection should accordingly be so limited.
Secondly, it was submitted that certain documents were correspondence in reply to letters of Mr Catto and should not be made available. With respect, if the material emanating from Mr Catto is forensically relevant, so too are the replies. The replies would indeed be admissible if the letters of Mr Catto were ultimately found to be admissible as probative.
Thirdly, it is submitted that in respect of certain subpoenas, identified as those numbered 1, 5, 6, 8, 11 and 12, in a document which I have initialled and will date, concerned correspondence with other persons not being Mr Catto who were applicants in the proceedings. It was said that the case did not concern any suggestion of extortion on their behalf. However, the pleadings do and accordingly this objection fails.
Next, it was submitted that in some 12 cases documents subpoenaed include drafts of settlements. To the extent that these drafts are drafts prepared by the party subpoenaed for that party's own purpose I would agree they should not be the subject of inspection. If, on the other hand, they are drafts prepared for the purposes of submission to the other party in the litigation with which they are concerned and were so submitted then, of course, they are relevant to the issue of inspection and should be able to be inspected.
Finally it is said that in some cases material subpoenaed extended to dealings with other shareholders not being the applicants in the proceedings at all. These included particularly the subpoena concerning Pivot Limited and that concerning Coca Cola Amatil. The particulars make it clear that there are allegations of settlement negotiations in both matters. To the extent that the materials subpoenaed go to those allegations I see no reason why the documents should not be available for inspection. However, to ensure that the inspection does not go beyond the matters particularised I would limit the inspection by reference to the terms of the particulars.
To give effect to these reasons I would order the respondent to prepare short minutes which will deal with the court document question, the draft settlement agreements and the matters which I have referred to concerning Pivot and Coca Cola Amatil. Draft short minutes should be prepared by close of business tomorrow and faxed to the applicants.
If they are agreed then they can be forwarded to my associate and I will make orders accordingly. If there is disagreement then I direct counsel for the respondent to contact my associate and I will arrange to have the matter put back in the list for argument about the specific wording of the orders. The short minutes should deal as well with confidentiality undertakings, the terms of which can hopefully be agreed by the parties. I will extend the timetable as previously set, in each case by two weeks.
The matter will then stand over to 28 May 1999 unless there is a necessity in the meantime, of course, to come back on the form of orders.
I will direct the applicant to pay just the costs of today.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill J.
Associate:
Dated: 24 March 1999

Solicitor for the Applicant: Stephen Blanks & Associates

Counsel for the Respondent: M L Bennett, JML Hill

Solicitor for the Respondent: Messrs Watson Mangioni, as agents for
Bennett & Co

Date of Hearing: 24 March 1999

Date of Judgment: 24 March 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 3072 OF 1997

JUDGE:	HILL J
DATE:	24 MARCH 1999
PLACE:	SYDNEY

Solicitor for the Applicant:	Stephen Blanks & Associates
Counsel for the Respondent:	M L Bennett, JML Hill
Solicitor for the Respondent:	Messrs Watson Mangioni, as agents for Bennett & Co
Date of Hearing:	24 March 1999
Date of Judgment:	24 March 1999