Trade Practices Commission v Arnotts Limited

[1989] FCA 304

CATCHWORDS

Practice - Subpoena to produce documents - whether oppressive -

reasonable particularity required.

Words and Phrases - "Policy"

TRADE PRACTICES COMMISSION	V . ARNOTTS LIMITED & ORS.
No. G1316 of 1988
Beaumont, J.
Sydney
23 June 1989

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No. G1316 of 1988

)

GENERAL DIVISION 1

BETWEEN:	TRADE PRACICES COMMISSION
Applicant

AND :  ARNOTTS LIMITED
First respondent
ARNOTT'S BISCUITS LIMITED
Second respondent
FLEDSPAC PTY. LIMITED
Thlrd respondent
THE DICKENS CORPORATION PTY. LIMITED
Fourth respondent

NINUTE OF ORDER

JUDGE MAKING ORDER: Beaumont, J.

DATE ORDER MADE:	2 3 June 1989
WHERE MADE:	Sydney
THE COURT ORDERS:

1.    Set aslde so much of para. 6 of the subpoena as requires productlon of the documents descrlbed in para. l(e)(A) and (B) thereof.

2 .    Application to set aslde so much of the subpoena as

requires productlon of the documents descrlbed in para
l(e)(C) thereof refused.

3 .    No order as to the costs to date of Coles' notlce of motlon dated 7 June 1989.

Note: Settlement and entry of orders is dealt wlth in Order 36

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No. G1316 of 1988

)

GENERAL DIVISION )

BETWEEN:  TRADE PRACICES COMMISSION
Applicant

AND :	ARNOTTS LIMITED First respondent ARNOTT'S BISCUITS LIMITED Second respondent FLEDSPAC PTY. LIMITED Thlrd respondent
THE DICKENS CORPORATION PTY. LIMITED Fourth respondent

CORAM: Beaumont, J. DATED: 23 June 1989

REASONS FOR JUDGMENT

(On application by Coles Myer Limited to set aslde para.6

of the subpoena for production dated 2 June 1989)

Coles Myer Limited (hereafter "Coles") seeks to set aslde para. 6 of the above subpoena, whlch requires Coles to produce "[all1 Pollcy Flles". In order to understand what is meant by the phrase "Pollcy Flles", it 1s necessary to refer to the terms of reference provided in other parts of the subpoena as follows:

(1) By para. l(e) of the subpoena, "Policy Flles" means:

"(A) Current Flles kept for the principal or substantial purpose of recording, or providing a reference source in respect of, the pollcy of Coles Myer in respect of:

(i)  dealings between the Coles New World Supermarkets Divlslon of Coles Myer Limlted and suppllers;

(11) dealings between Shoey's Pty. Limlted and

suppllers;

(iii)dealings between John Weeks Pty. Limited and suppllers;

(iv) dealings between Coles Myer Limlted and suppllers;

(V) the policy of Coles Myer for the marketing of biscults under the name or style 'Farmland'; or

(vi) the pollcy of Coles Myer concerning the marketing of products under the name or style "Farmland".

(B) To the extent that the same are not included in sub-paragraph (A) hereof, all pollcy flles referred to by Mr. R. Stucki in evidence in these

proceedings on 22 May 1989.

(C) To the extent that the same are not included in sub-paragraphs (A) or ( B ) hereof, the Current or Current Files located at 762-838 Toorak Road, Tooronga known or referred to as the 'Policy Memos Flle' or in which documents known or

referred to as 'Pollcy Memos' are kept."

(It is common ground that the head offlce of Coles is

at 762-838 Toorak Road, Tooronga.)

By para. l(c), "Coles Myer" means "Coles Nyer Llmlted and all of its subsldlarles".

( 2 )

( 3 ) By para- l(d) "Current Flles" means:

"...flies in current use at any one of:

(i)  the offlce of Coles Myer at 762-838 Toorak Road, Tooronga ;

(11) the Vlctorlan State office of the Coles New World Supermarkets Division;

(ili)the New South Wales State offlce of the sald

Division;

(iv) the head offlce of Shoey's Pty. Llmited;

(V) the head offlce of John weeks Pty. Limited;

but does not include flles or documents removed from such offices and placed in locations reserved for the storage of documents.''

The reference, in para. l(e) (B), to evidence given by

Mr. Stuckl on 22 May 1989 is to evldence glven in the

cross-examination of Russell Stuckl, chlef executive offlcer, Food and Liquor retailing of Coles and Chlef Executive of Coles New World Supermarkets, in an appllcatlon by Coles to set aslde an earlier subpoena issued at the request of the flrst and second respondents. In his evidence, in answer to senlor counsel for the first and second respondents, Mr. Stucki sald:

"MR SWEENEY: Mr Stucki, does Coles Myer have any settled policy for the procedure to be followed in relatlon to llstlng and dellsting products?---Each buslness would have a policy.	And would that pollcy be embodled in a wrltten form in	the pollcy file?---I am not able to say that it would
be in every buslness.
Generally speaking there is a policy flle, is there not?---Generally speaklng there is a pollcy flle for each of the indlvldual businesses.
And in that pollcy flle are contained the memoranda relatlng to the pollcy of that business?---Yes, there would be.
And you would expect to flnd in that flle in relatlon to each business the pollcy relatlng to dellsting and rellstlng and so on, would you not?---I would expect to but I cannot categorically say that I have seen it and

understand that it is in existence in every one of the
business.

And that pollcy file is kept, that 1s a current flle is ~ t , in each case?---There would be a handbook of that type.

Is it a loose leaf sort of handbook?---I cannot say in every case....

.... what if you made a new pollcy and a new plece of

policy paper came into existence would you insert it in the book?---Again depending on the business; we are talking about 15 buslnesses and located in those areas that I previously mentioned they could have varying methods of recording that policy.

Well how do you do it at Toorongal---We are a decentralised operation; we do not control everything from Tooronga.

Do you have a policy book at Tooronga, a policy file?. . .

HIS HONOUR: So where is the Victorian state operation that Coles ran from?---Bourke Street, Melbourne.

MR SWEENEY: Well now, 1s there a pollcy file in Bourke Street, Melbourne?---For that business there would be

And is there a pollcy flle - - -

HIS HONOUR: What do you mean by "that business"?---For the Coles New World business whlch is the one that operates out of Bourke Street.

MR SWEENEY: That would be the pollcy file for the state of victoria for that business would it?---Yes, it would. Your Honour, if I could just add: that would be for Coles New World for Vlctoria only.

I understand that. And is there a pollcy file in	relatlon to the whole of Coles buslnesses kept at
Toorongal---Not to my knowledge."

In his affidavit sworn 19 June 1989 in this application,

Mr. Stuck1 elaborated as follows:

"15. My prlnclpal experience regarding document

storage and retrieval relates to Coles New World

- victoria, a dlvlslon of Coles Myer. I have

prevlausly stated in evldence given to thls Court on 22nd May 1989 that I believed there would be a 'pollcy file' for thls dlvlsion, relatlng to the listlng and dellsting of products.

16.    The document that I referred to is a loose leaf book known as a 'Procedures Manual'. This book is not in current use as it has been undergoing substantial revislon for some perlod of time, and I am informed by Mr John Raymond Neate, General Manager, Proprietary Brand Merchandise of Coles New World Divislon and verily belleve that New World offlces were advised about six months ago to disregard the said Procedures Manual, as it was outdated and was being revised, and that if anyone had any queries as to procedures, they were to contact the said Mr Neate.

Apart from the Procedures Manual I have referred to, I have no actual knowledge of any files kept by any divisions or subsidiary wlthin Coles Myer. I belleve documents referring to codes of practice and policies regarding certaln matters would be kept, but I am unable to identify where such documents are, nor how such documents would be filed, so as to be located without a search of every file held."

It is convenient to group the documents the subject of para. 6 into three classes and to deal separately with the challenges now made.

( A ) The files described in para. l(e)(A)

In thls group are the current flles "kept for the
principal or substantial purpose of recording, or providing a

reference source in respect of, the pollcy of Coles Myer in

respect of the [dealings and the policies specified in sub-paras.	(1) to (vi)]." Thus, two main ingredients must exlst before a
document will fall wlthin thls category: (1) the requisite purpose must be demonstrated; (11) the document must deal, in the stipulated way, with the "policy" of Coles or its

On behalf of Coles, it is submitted that thls part of the subpoena should be set aside as oppressive.

In LUCaS Industries Ltd. v. Hewitt (1978) 45 F.L.R. 174, Smithers J. (Bowen C.J. and Nimmo J. agreeing) said (at pp.188-9):

"...counsel for the defendant submitted that the subpoena 1s oppressive and fishing. In this submission he concentrated upon two elements, namely, the width of the demands made by the subpoena, and that so many of the documents of which production 1s sought have to be identified by the judgment of the respondent as to whether their contents 'relate to' some subject matter. ~t is true that in a subpoena duces tecum documents required to be produced must be specified with reasonable particularity.

But a degree of generality in the descrlptlon of the documents may according to circumstances be compatible with reasonableness in thls respect. Thus, in respect of documents concerning the treatment of a hospital patlent, production of which is required from the hospital, a description such as 'the hospital records relating to treatment of Mr. X between January and July 1977' would be acceptable. Such a description places upon the hospltal the burden of searching for the records but, having regard to modern buslness organization and practices, such a burden is reasonable."

Later (at p.192) Smithers J. clted the following

observations by Lord Denning N.R. in Rio Tinto Zinc Corporation
v. Westlnghouse Electric Corporation [l9781 A.C. 547 (at p.562):

"The description [ ~ n a subpoena] should be

sufflclently speclflc to enable the person to put hls hand on the documents or the flle wlthout hlmself having to make a random search - In short, to know specifically what to look for."

Accordlng to Mr. Stuckl's later affidavit evidence, Coles New World, Victorian Division, maintains a flle known as a "Procedures Manual". Although Mr. Stuck1 does not have a personal knowledge of the posrtlon in the other buslness operations conducted by Coles or its subsidiaries, in the absence of any materlal to the contrary, the inference is open that, in the conduct of those other operations, a flle styled "Procedures Manual", or its equivalent, is malntalned. Para. l(e)(A) does not, in terms, require production of that class of document. ~t calls for something much wider, that is, a file kept for the stipulated purpose in respect of the "policy" of Coles and its subsidiaries in respect ofthe stated deallngs or policies. ~ h u s ,

the deflnltion of what is meant by "policy" is central to the
identlflcatlon of the subject matter of para. l(e)(A).

In the absence of any deflnltlon of "pollcy" in the subpoena itself, it must be assumed that the word was intended to have its ordinary dictionary meaning. Accordlng to the Macquarie Dictionary, the primary meanlng of "policy" is "a deflnite course of actlon adopted as expedient or from other considerations: a -

business policy." The Oxford Engllsh Dictionary, 2nd ed. (1989)

government, party, ruler, statesman, etc.; any course of action	gives: "5. A course of action adopted and pursued by a
adopted as advantageous or expedient. (The chlef llving sense.)" The Oxford Dlctlonary cites, as an illustration, "authorltatlve lnformatlon which those . . . at the pollcy-maklng or executive level might be expected to need." According to Garner's Dictionary of Modern Legal Usage (1987) "pollcy" means "a concerted course of action followed to achieve certain ends; a plan."
In a buslness context, "policy" usually means a specific declsion or set of decisions deslgned to carry out a chosen course of actlon, that 15, a projected programme consisting of a desired objective and the means to achieve it (see Lockheed Alrcraft Corp. v. Superior Court in and for Los Angeles County, Cal. App. 153 P. 2d 966, 973; Klrchof v. Friedman 457 P. 2d 760, 762). In Kirchof, supra, the question for decision was whether certain matters fell withln the "general policies" of the operatlon of a restaurant business on the one hand, or were part of the "day to day management" of the business, on the other. Jacobson J. said (at p.762):

"The term 'policy' has been defined as 'a specific decision or set of declslons deslgned to carry out a chosen course of action; a projected program consisting of deslred objectives and the means to achleve them.' (Merriam-Webster New International

Dictionary (3rd ed.1961).

No general principles can be laid down as to when control becomes a matter of general policy, as that term has been deflned, or is a matter of 'day to dayr operatlon, each individual situation being determined by the partlcular facts involved. However, it appears to the court, especially in the type of business involved here, that control and

direction in the areas of menus, personnel,

advertising and entertainment may, in a particular	case, be a matter of policymaking rather than 'day	to day' operatlon. For example, the questlon of
whether or not to serve steaks or pork chops on a partlcular day may very well be a matter of 'day to day' operatlon. However, the overall type of menu presented by a restaurant certainly influences the atmosphere or image whlch the restaurant wishes to convey. The same may be sald for the type of advertlslng a restaurant uses. This is also true of the hlring of other employees in the restaurant
- the hiring and flrlng of a busboy or dishwasher
havlng no effect on the overall operatlon of the buslness, whlle the employment of a chef or a hostess meeting the publlc would affect that operatldn. Probably no slngle functlon sets the tone of a restaurant-bar establishment more than the type of entertainment offered - a jazz band

would attract a certain type of clientele, while a Western band would attract another, although the declsion as to when thls entertainment might be presented could be in the area of 'day to dayr

operation."

It is apparent from this dlscusslon that ~t is one thlng to articulate the distinction in principle, whlch undoubtedly exists, between "pollcy", on the one hand, and "day to day management", on the other. Yet it 1s a different thing, and often a more difficult exercise, to endeavour to apply this distinction in any particular case. Questions of fact and degree will often arlse, and to determine whether a particular matter

IS, or is not, "pollcy", wlll call for the making of a judgment

that the subject of the inquiry has, or does not have, certaln characteristlcs. The making of that judgment can be a controversial matter, about whlch, in border-llne cases at least, different mlnds mlght reasonably come to different conclusions.

In The Cornmissloner for Rallways v. - Small (1938) 38

S.R. 564, Jordan C.J. said (at p.573):

"If [a subpoena] be addressed to a stranger, it must specifywlth reasonable particularltythe documents

which are requlred to be produced.	A subpoena ....
him to search for and produce all such documents as	ought not to be issued to such a person requiring
he may have in hls possession or power relatlng to a particular subject matter. It is not legltlmate to use a subpoena for the purpose of endeavouring to obtaln what would be in effect discovery of documents agalnst a person who, belng a stranger, is not llable to make discovery. A stranger to the cause ought not to be requlred to go to trouble and perhaps to expense in ransacking hls records and
endeavouring to form a judgment as to whether any
of his papers throw llght on a dlspute whlch is to be litigated upon issues of whlch he is presumably lgnorant:"

In my opinion, this reasoning applles here. The subpoena, in the present respect, does not, in my vlew, specify with reasonable particularity what 1s called for. Although a degree of generality may be legitimate, the present wording, in my vlew, travels beyond what is reasonable. The use, in the terms of reference, of the general phrase "policy" has the effect of compelling Coles to form a judgment whether documents held by it have, or do not have, the particular characterlstics already

mentioned. Glven the potential complexity of that question, it

IS, I thlnk, unreasonable to expect Coles to endeavour to make such a judgment correctly, runnlng the risk of penalty if it errs in its assessment. Thls part of the subpoena must be set aslde.

(B) The policy Flles described in para. l(e)(B)

It wlll be recalled that this part of the subpoena requlres production of "all Pollcy Files referred to by Mr. R. Stucki in evidence in these proceedings on 22 May 1989." On behalf of Coles, it 1s again submitted that it would be unreasonable and oppressive to requlre it to respond.

The relevant portlons of Mr. Stuckl's evidence have already been set out. It wlll be recalled that although Mr. Stucki flrst sald that each buslness of Coles would have a "Pollcy Flle", he later quallfled that evldence by saylng that although he was aware that Coles New World, Vlctorlan Dlvlslon, malntalned a loose-leaf type of manual, he was not aware whether the other businesses kept such a file. As I have already

indicated, the Inference may be open that the other businesses

did maintain such a flle.

It is thus apparent that there is a measure of ambiguity in this part of the subpoena. It falls to make clear whether that which is called for is what Mr. Stucki first identified as the "Policy Files" or, rather what he later described as the loose-leaf type of manual. In other words, it is not clear whether Coles' attention was to be drawn to the one question and answer dealing wlth "Policy Flles", on the one hand, or the ultlmate version given by Mr. Stuck1 in whlch reference is made to the loose-leaf manual or its equivalent in the case of other businesses, on the other hand. The reference, in the subpoena, to "Policy Files" would tend towards the former construction. But tending against this, and in favour of the latter construction, 1s the assumption that a reader of the subpoena would be expected to form the conclusion that what was intended to be picked up were the "Policy Files" disclosed by a consideration of the whole of Mr. Stuckl's evldence - i.e. the loose-leaf type of manual or its equivalent in the case of other businesses.

In my opinion, it is unreasonable to expect Coles, at the risk of penalty, to make the correct judgment required to	resolve these uncertainties. This part of the subpoena must be
set aside.
(C) The flles called for by para. l(e)(C)
Thls part of the subpoena requlred production of "the current files located at 762-838 Toorak Road, Tooronga known or referred to as the 'Pollcy Memos Flle' or in which documents

known or referred to as 'Pollcy Memos' are kept." Production is required to the extent that the documents are not lncluded in (A) or (B) above. Slnce ( A ) and ( B ) have been set aslde, (C) remalns as a free-standing requirement.

Again, lt is contended on behalf of Coles that this requirement is oppressive.

I cannot agree. In my oplnion, this part of the subpoena identifies, wlth reasonable particularity, what is sought, The lllustratlon of the subpoena of the hospital records given by Smithers J. in Lucas, supra, is in point. Also apposlte here are the observations by Lord Denning In Westinghouse that the description "should be sufficiently specific to enable the person to put hls hand on the documents or the file without himself havlng to make a random search - in short, to know specifically what to look for."

The subpoena calls for specific files which are
described by reference to their title or by reference to their

function. In my opinlon, there is nothlng unreasonable or

uncertain in thls requirement. The application to set aside this	part of the subpoena must fall.
costs
On 21 June 1989, I reserved the costs of the unsuccessful appllcatlon to set aslde para. 8 of the subpoena. Since Coles have had a substantial measure of success here but failed there, I propose to make no order as to the costs of Coles' application.

I c e r t i f y t h a t t h e preced ing

(12) pages a r e a t r u e copy o f t h e

Reasons f o r Judgment h e r e l n o f

h l s Honour Mr.	~ u s t l c e	Beaumont.
Dated:	2 3 June	1 9 8 9