Trade Practices Commission v Arnotts Ltd
[1989] FCA 364
•14 JULY 1989
Re: TRADE PRACTICES COMMISSION
And: ARNOTTS LIMITED; ARNOTT'S BISCUITS LIMITED; FLEDSPAC PTY. LIMITED and
THE DICKENS CORPORATION PTY. LIMITED
No. G1316 of 1988
FED No. 364
Practice
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)
CATCHWORDS
Practice - subpoena duces tecum - objection to production - subpoena addressed to director of company - documents called for the property of the company - company claims privilege (self-incrimination) - company forbids director from producing documents.
HEARING
SYDNEY
#DATE 14:7:1989
Counsel and Solicitors Mr. J.P. Hamilton and
for Mr. E.S.K. Doble: Mr. S.P. Gullotta instructed by
Philip Parbury
Counsel and Solicitors Mr. C.A. Sweeney Q.C. and
for the first and second Mr. P. Comans instructed by
respondents: Clayton Utz
ORDER
Declare that Mr Doble is not bound to product the four documents identified in the reasons for judgment.
Costs reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
The background to this application appears in the reasons for judgment given to-day in the Mattingly matter. A further subpoena was issued, at the request of Arnotts, addressed to Mr. E.S.K. Doble. The subpoena, as amended, requires the production of the following documents:
"1. All original and copy correspondence, briefs, reports, memoranda, surveys, research, analyses, notes, minutes, graphics, feasibility studies or other documents made, dated, sent or received in the period 1 January 1987 to date recording or referring to:
(a) any proposal to market or launch for sale in Australia any variety of biscuit;
(c) any instruction received or given concerning any proposal to market or launch for sale in Australia any variety of biscuit;
(d) the date or dates for the estimated implementation of any proposal to market or launch for sale in Australia any variety of biscuit;
(f) the biscuit business of Nabisco Brands Pty. Limited (known as Cereal Foods Pty. Limited);
(g) any proposal to import biscuits for sale in Australia;
(j) any proposal for the distribution of biscuits in Australia;
(k) any proposal for the test marketing of any variety of biscuit anywhere in Australia; or
(l) the results of test marketing of any biscuit anywhere in Australia.
2. All notes of telephone conversations, memoranda, original or copy correspondence, minutes, file notes or other documents comprising, recording or referring to:
(a) instructions given or received (since 1 September 1988) to part with possession or control of any document described in paragraphs 1(a), (c), (d), (f), (g), (j),
(k) and (l) hereof:
(b) the parting with possession or control of any document described in paragraphs 1(a), (c), (d), (f), (g), (j),
(k) and (l) hereof:
(c) the receipt by any person from Edward Doble or Mattingtly Pty. Limited of possession of control of any document described in paragraphs 1(a), (c), (d), (f),
(g), (j), (k) and (l) hereof.
3. Any file or files from which a document described in paragraphs 1(a), (c), (d), (f), (g), (j), (k) and (l) has been removed since 1 September 1988."
When the subpoena was called, senior counsel for Mr. Doble read an affidavit sworn by Mr. Doble on 21 June 1989 as follows:
"2 The only documents which I have which are within the requisitions made of me under the subpoena are the property of HDM Mattingly Advertising Pty. Limited.
3 There are 5 directors of the company other than myself. I have spoken to 3 of those other directors namely David Mattingly Ian Herdman and Alan Studley and each of the 4 of us concurs in decision by the company that I be forbidden by it from producing the documents to the Court in answer to the subpoena and that I be required to take this objection in Court."
Mr. Doble was called to give evidence. His evidence in chief in the first instance was as follows:
"And you are a director of the company now known as H.D.M. Mattingly Advertising Pty. Limited?---Correct. Which was formerly called Mattingly Pty. Limited, is that correct?---Correct.
And you have sworn an affidavit in connection with this subpoena and the documents you hold in answer to it?---I have.
There are, are there not, only four documents you have that answer any of the descriptions set out in this subpoena recently served on you?---Correct. HIS HONOUR: Mr. Hamilton, I must say I read this affidavit as being a Rochfort type of situation. MR HAMILTON: Yes, your Honour, it is. HIS HONOUR: You are now talking of incrimination, are you?
MR. HAMILTON: Your Honour, I will only deal with incrimination if your Honour rules against me on Rochfort. If we are within the Rochfort principle, then this man ought not produce them, the company ought; the company indeed has first been subpoenaed to produce them and taken its objection, which your Honour will determine upon the return of that subpoena. Your Honour, we did not know which order they were to be called on.
HIS HONOUR: I was only seeking to clarify it. MR HAMILTON: But the clarification is that our first answer to this subpoena is a Rochfort answer. HIS HONOUR: But in paragraph 2, am I to assume that means that Mr Doble has possession of these documents himself, or are they the company's possession? MR HAMILTON: Your Honour, I was indeed about to ask a question to clarify that.
Mr Doble, the four documents that have been mentioned, insofar as they have been in your possession have they been in your possession in your capacity as an officer of the company or have they ever at all been in your possession in any personal capacity?---They have been in my possession as an officer of the company. Yes, that was the additional question that I sought to ask, your Honour."
In the course of Mr. Doble's cross-examination, I granted Mr. Hamilton, senior counsel for Mr. Doble, leave to re-open his examination in chief over the objection of senior counsel for Arnotts. Mr. Hamilton then further examined as follows:
"MR HAMILTON: Do you believe that the four documents that you have spoken of have a tendency to incriminate you?---They could.
Do you recall when it was that the original subpoena to produce documents was served on the company?---Tuesday, May 30."
Mr. Sweeney then cross-examined Mr. Doble. For present purposes the relevant part of the cross-examination, appearing at pages 28O8 and 28O9 of the transcript, is reproduced in the reasons for judgment given this day in the Mattingly matter.
On behalf of Mr. Doble, it is submitted that the present case is analogous to the situation arising where an employer forbids his employee to produce documents. Reliance is placed upon the reasoning in Rochfort v. Trade Practices Commission (1982) 153 CLR 134.
In that case, an unincorporated association had as a member another unincorporated association; the association engaged an executive officer whose duties included the provision of services for the member; the officer had custody of certain documents which had been prepared while he performed duties relating to the member; a subpoena duces tecum was served on the officer requiring him to produce those documents; on the return of the subpoena, the officer appeared and stated that the documents were in counsel's chambers but he objected to producing them on the ground that they were not in his personal possession but were in the possession of the member, its own members and its executive and he had no authority to produce them; he had neither sought nor obtained authority to produce to the court the documents mentioned in the subpoena from either the association or the member. It was held that the officer had such possession, custody or control of the documents that he was obliged to produce them in answer to the subpoena.
Gibbs C.J. said (at pp 138-9):
"A person who is properly served with a subpoena duces tecum in due form requiring him to produce specified documents must...attend at the place directed by the subpoena and produce such of the specified documents as are in his possession. If the documents are not in his possession, however, he is not obliged to endeavour to acquire them from the person who has possession of them, 'no man being obliged, according to any sense of the effect of such a subpoena, to sue and labour in order to obtain the possession of any instrument from another for the purpose of its production afterwards by himself, in obedience to the subpoena': Amey v. Long ...A subpoena duces tecum, or process having the same effect, is an essential means of securing the administration of justice, but, since the ends of justice are not to be obtained by illegal means, a person to whom a subpoena is addressed is not required to obtain improperly the documents of another, even though he may happen to have access to them. It is, perhaps, for this reason that it has been held that a person who has possession of documents only as a servant cannot be compelled to produce them if his master refused to allow him to do so: Crowther v. Appleby...; Re Higgs; Ex parte Leicester...Similarly, one partner has been held not compellable to produce books which were partnership property when the other partners would not consent to their production: Attorney-General v. Wilson...; Lee v. Angas.... I have suggested that the person to whom the subpoena is directed should have possession of the documents, but it does not seem to me that it is necessary to inquire whether the person concerned is a bailee or a mere custodian. Some authorities use 'custody' or 'control' interchangeably with 'possession' in this regard: see, e.g. Eccles...The question is whether the servant has such possession, custody or control of the documents that he may bring them to court in obedience to the subpoena without violating his duty to his master. If he in fact brings them with him, that may show that he was entitled to do so, and in that event their production may be called for: Lee v. Angas...; Crowther v. Appleby...
The rules to which I have referred are not designed to enmesh legal proceedings in meaningless technicalities. Their purpose is to ensure that a subpoena duces tecum is addressed to the right person. It will not always be the case that a servant who has custody of documents will be the wrong person to require to produce them; his authority may be such that he can produce them without violating his duty to his master. In the present case...the only possible inference is that the appellant's possession of the documents was, to use the words of Smithers J. in the Full Court, 'full and unqualified', and that the appellant was entitled, without violation of his duty, to produce the documents in answer to the subpoena and therefore bound to do so." (Emphasis added)
Mason J. said (at p l4l) that the main issue for decision was the degree of possession, custody or control of documents required to sustain an application for an order to produce them under a subpoena.
His Honour (with the agreement of Wilson J.) said (at pp l43-l45):
"Neither the Federal Court Rules nor the form of the subpoena issued by the Court explicitly limit the obligation to produce documents owed by a person served with a subpoena to documents which he holds. The subpoena, which has the effect of a court order, requires the person to whom it is addressed to produce the documents which it describes. It assumes that he has the ability or capacity to produce them. At times this idea has been expressed by saying that the person served is bound to produce any document which is in his possession, custody or control. But these statements should not be allowed to obscure the true effect of the subpoena - it binds a person who can produce the documents to do so.
A special problem has arisen with respect to documents held by an employee in the course of his employment....(I)n Crowther v. Appleby...it was decided that an employee was not bound to produce a document which he held for his employer when the latter had forbidden its production...There is...every reason for thinking that the court can compel a person to produce documents which he is physically able to produce. But there are factors which need to be taken into account before deciding that the court will insist on production by an employee of his employer's documents. The obligation to produce documents pursuant to a subpoena duces tecum is a qualification upon, or an intrusion into, the citizen's right to keep his documents to himself (Penn-Texas (No. 2)...) In the absence of some compelling reason it is right that the owner of the documents should decide in the first instance whether any of them are caught by the subpoena and that he should bear the responsibility for not producing such of them as are ultimately held to be covered by the subpoena. To acknowledge that the employee's possession is sufficient in itself to sustain an obligation to produce, without reference to his employer, would be to disregard the employer's rights with respect to his documents. What is more, it would deprive him of the privilege of objecting to produce a document on the ground that it has a tendency to incriminate him. The privilege against self-incrimination is that of the witness who is called to produce. He cannot claim the privilege on the ground that the document tends to incriminate another (Reg. v. Kinglake...; R. v. Adey...; Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation... Recognition of these interests of the employer suggests that in general it is he, not his employee, who should be required to produce the documents." (Emphasis added)
It follows, in my view, that even if it be assumed that Mr. Doble, rather than Mattingly, "had" the four documents now called for, he should not be ordered to produce them. It is apparent that the documents are the property of Mattingly; that Mattingly claims that it may be incriminated by the production of the documents; and that Mattingly has forbidden Mr. Doble to produce them, no doubt because it fears that it might be prosecuted. In respect of the call on Mattingly's subpoena, I have already held that his fear was substantially grounded. To order the production of the four documents through the mechanism of this subpoena would be to destroy the privilege of Mattingly against self-incrimination. It would be doing indirectly what cannot be done directly. The process of the court can not be used to deprive Mattingly of its proper claim of privilege against self-incrimination.
On behalf of Arnotts, it is submitted that the reasoning in Rochfort's Case applies only in a master and servant situation. It is said that the position of Mr. Doble is different because he is not merely an employee, but a director of Mattingly. However, the well-recognised right of power of a director to inspect the company's documents springs from his fiduciary obligation to advance the interests of the company (see Molomby v. Whitehead (1985) 63 ALR 282 at pp 292-3). Here the company is claiming a privilege and instructing the director not to produce the documents the subject of that claim. It would be inconsistent with the director's fiduciary duties to the company to act contrary to that instruction. An employee would be in the same position.
In the circumstances, it is unnecessary to deal with the other points that were taken on behalf of Mr. Doble, namely, that the documents were not in his possession but in the possession of Mattingly and that production may incriminate him, as well as Mattingly.
I propose to declare that Mr. Doble is not bound to produce the four documents identified in the reasons for judgment.
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