Trade Practices Commission v Arnotts Ltd
[1989] FCA 384
•27 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. 384
Evidence
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)
CATCHWORDS
Evidence - subpoena to produce documents - whether material sought of sufficient relevance - whether compliance with subpoena unreasonably burdensome.
HEARING
SYDNEY
#DATE 27:7:1989
Counsel and Solicitors
for Industrial Equity Limited: Mr R. White instructed by Norton Smith
Counsel and Solicitors Mr. C.A. Sweeney Q.C. and Mr P. Comans
for the first and second instructed by Clayton Utz
Respondent:
ORDER
Application to set aside subpoena refused.
Costs reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
Industrial Equity Limited ("IEL") applies to set aside part of a subpoena for the production of documents, dated 29 June 1989, issued at the request of Arnotts.
Paragraph 1 of the subpoena is as follows:
"1. All original and copy correspondence, proposals, submissions, notes of meetings, notes of telephone conversations, draft agreements, draft Part A statements, draft correspondence, memoranda, notes for file, press releases or draft press releases made, dated, sent or received in the period 1 April 1989 to date recording or referring to:
(a) the necessity or desirability, prior to, consequent upon, or in connection with Goodman Fielder Wattie Limited ("GFW") making, completing or causing to be made takeover offers for shares in the capital of Industrial Equity Limited ("IEL"), that IEL dispose of its relevant interest or shareholding in Woolworths Limited.;
(b) the opinions which IEL anticipates or perceives is likely to be held, or which any executive officer of IEL anticipates or perceives is likely to be held, by Coles Myer Limited, or by the management of Coles Myer Limited, concerning any proposal by GFW to acquire Woolworths Limited or to acquire a relevant interest in shares in the capital of Woolworths Limited;
(c) the opinion which IEL anticipates or perceives is likely to be held, or which any executive officer of IEL anticipates or perceives is likely to be held, by Franklins Limited, concerning any proposal by GFW to acquire a relevant interest in shares in the capital of Woolworths Limited;
(d) any intention or proposal that IEL shares held by IEL, or held by an associate of IEL, in the capital of Woolworths Limited to be divested prior to, consequent upon or in connection with:-
(i) any proposal of IEL to merge with GFW, or
(ii) takeover offers being made by GFW, or by an associate of GFW, for shares in the capital of IEL.
(e) the effect if any, on the trading relationship presently existing between GFW (or any subsidiary of GFW) and Coles Myer Limited concerning the supply of grocery food products which:
(i) IEL anticipates or perceives, or
(ii) any executive officer of IEL anticipates or perceives
may result from a takeover bid by GFW, or by an associate of GFW, for shares in the capital of IEL;
(f) the effect if any, on the trading relationship presently existing between GFW (or any subsidiary of GFW) and Franklins Limited concerning the supply of grocery food products which:
(i) IEL anticipates or perceives, or
(ii) any executive officer of IEL anticipates or perceives
may result from a takeover bid by GFW, or by an associate of GFW, for shares in the capital of IEL;
(g) the intentions of GFW or of any associate of GFW, in the event that a takeover scheme by GFW or by an associate of GFW for shares in the capital of IEL is successful, to cause IEL or any associate of IEL to divest any shares in the capital of Woolworths Limited to which IEL is entitled."
IEL seeks to set aside sub-paras. (b), (c), (e) and (f) of para. 1. By its counsel, IEL has answered sub-paras. (a), (d) and (g) by stating that no documents are produced in that connection.
The background to the present application is as follows: (1) Over the last three years, IEL acquired a significant shareholding in Woolworths Limited ("Woolworths"). (2) Woolworths is now a wholly owned subsidiary of IEL. (3) IEL is a member of the Brierly Investment Limited ("BIL") Group. (4) On 7 June 1989, BIL announced that (a) it had sold a significant part of its shareholding in IEL to Goodman Fielder Wattie Ltd. ("GFW"); (b) GFW proposed to offer for all the shares in IEL; (c) BIL proposed to accept GFW's offer; (d) subject to the successful completion of GFW's offer, BIL would purchase Woolworths from IEL. (5) On 3 July 1989, Corama Pty. Limited, a company associated with Mr. Abe Goldberg and two of the directors of IEL, announced that (a) it had agreed to purchase 19% of the shares in IEL from BIL; (b) it had agreed to purchase a further 33% of the shares in IEL from BIL, GFW and their associates. (6) On the same day, GFW announced that it did not propose to proceed with its takeover for IEL.
By way of further background information, there was tendered, on behalf of Arnotts, an article in the "Australian Financial Review" dated 20 June 1989 by Mr. Alan Kohler commenting on the takeover of IEL then proposed as follows:
"There is one significant problem in this cosy scenario:
the prospect of having Australia's largest owner and maker of food brands controlled by the owner of Australia's largest supermarket chain.
But the problem in effectively putting together Goodman
and Woodworths is not so much with the Trade Practices Commission, but someone much more powerful - Coles Myer.
Pat Goodman says he insisted that IEL had to sell
Woolworths to Brierley before he would agree to bid for IEL, because he knew Goodman Fielder could not afford to make an enemy of Coles Myer, or Franklins for that matter.
It would be a pyrrhic deal, indeed, if he got
guaranteed space on Woolworth's shelves only to lose it on Coles' and Franklins.
No doubt Woolworths' competitors will be watching
Brierley's shareholding in Goodman, and whether IEl chief Rodney Price emerges at the helm of Goodman."
On behalf of IEL, it is submitted that the subpoena is, to the extent of the sub-paras. (b), (c), (e) and (f) of para. 1, oppressive because it requires IEL to make searches and inquiries which place an unreasonable burden upon it. Reference is made, in particular, to the circumstances first, that the documents sought appear to have, at best, marginal relevance in the principal proceedings, and secondly, that approximately 30 persons are engaged in the administration of the affairs of IEL and inquiry would need to be made of each of those persons for the purpose of complying with the subpoena.
Reliance is placed, by IEL, upon the decision and reasoning of Waddell J. in Spencer Motors Pty. Ltd. v. LNC Industries Ltd. (1982) 2 NSWLR 921. The evidence there indicated that it would take about 200 man hours to search for certain of the documents sought. Waddell J. referred to the well-known statement by Jordan C.J. in Commissioner for Railways v. Small (1938) 38 SR (NSW) 564 at pp 574-5 that a subpoena addressed to a party should state "with reasonable particularity" the documents to be produced and that, even if the documents are specified, a subpoena addressed to a party will be set aside as abusive "if great numbers of documents are called for and it appears that they are not sufficiently relevant." Waddell J. said (at p 926):
"In my opinion the passage cited from Small's case
should be regarded as applying to a subpoena to a person not a party to the proceedings which should be held to be oppressive or an abuse of process if the production of the documents which it describes is excessively burdensome and the documents appear not to be 'sufficiently relevant' to the proceedings. I appreciate that this is a very vague proposition but there seems to be no way in which it can be stated more precisely. Each case must, of course, depend upon its own circumstances."
Waddell J. set aside part of the subpoena on the grounds that the documents sought were of questionable relevance yet imposed upon the person answering the subpoena "a very substantial burden."
It is convenient, in the first instance, to consider each of the sub-paragraphs of para. 1 now in question separately.
Sub-paragraph (b) calls for the documents specified recording or referring to "the opinion which IEL anticipates or perceives is likely to be held, or which any executive officer of IEL anticipates or perceives is likely to be held, by Coles Myer Limited, or by the management of Coles Myer Limited, concerning any proposal by GFW to acquire Woolworths Limited or to acquire a relevant interest in shares in the capital of Woolworths Limited".
An important part of Arnotts' defence to the principal proceedings is the power which, Arnotts claims, the retail chains are able to exercise in the wholesale market for biscuits. This has become a central issue in the main proceedings. IEL and executive officers of IEL, as the parent of Woolworths, another major food retailer, have, arguably, the necessary expertise to express an opinion as to how the wholesale biscuit market might operate in the future if Arnotts were to acquire Nabisco. Part of their process of reasoning could arguably include a view as to how a major retailer, as Coles Myer Limited is, would have reacted in the future if GFW had taken over Woolworths. These matters are thus of adjectival relevance in the principal proceedings. It is true that the relevance of the material is perhaps not obvious. But it cannot be dismissed as insignificant. In my opinion, the views of executives of IEL and, in turn, the views of executives of Coles Myer, could prove to be important in the main litigation as expert or opinion evidence as to the possible effects of the proposed acquisition of Nabisco by Arnotts.
Although it will be necessary to inquire of some 30 executive officers in this regard, it could not reasonably be said that this line of inquiry is itself burdensome. Moreover, there is no evidence to suggest that any significant volume of documentation is called for.
In my view, the call made by this sub-paragraph is for a legitimate forensic purpose.
Sub-paragraph (c) calls for the documents specified recording or referring to "the opinion which IEL anticipates or perceives is likely to be held, or which any executive officer of IEL anticipates or perceives is likely to be held, by Franklins Limited, or by the management of Franklins Limited, concerning any proposal by GFW to acquire Woolworths Limited or to acquire a relevant interest in shares in the capital of Woolworths Limited".
Franklins Limited is another major retailer of food. The comments made in (b), above, apply.
Sub-paragraph (e) calls for the documents specified recording or referring to "the effect if any, on the trading relationship presently existing between GFW (or any subsidiary of GFW) and Coles Myer Limited concerning the supply of grocery food products which:
(i) IEL anticipates or perceives, or
(ii)any executive officer of IEL anticipates or perceives
may result from a takeover bid by GFW, or by an associate of GFW, for shares in the capital of IEL".The comments made in (b), above, apply.
Sub-paragraph (f) calls for the documents specified recording or referring to "the effect if any, on the trading relationship presently existing between GFW (or any subsidiary of GFW) and Franklins Limited concerning the supply of grocery food products which:
(i) IEL anticipates or perceives, or
(ii) any executive officer of IEL anticipates or perceives
may result from a takeover bid by GFW, or by an associate of GFW, for shares in the capital of IEL".
The comments made in (c), above, apply.
Having considered each of the sub-paragraphs separately, I now turn to consider their combined effect. Their adjectival relevance remains the same, that is, in my view, sufficient for present purposes. So far as their combined effect in terms of their capacity to require an obligation on IEL to ransack its records for a large number of documents, there is no evidence to suggest any difficulty in this area.
In all the circumstances, in my opinion, there was no abuse of process in the issue of the subpoena.
The application to set aside the subpoena must be refused.
4
1
0