Trade Practices Commission v Queensland Aggregates Pty Ltd

[1981] FCA 121

Re: TRADE PRACTICES COMMISSION
And: QUEENSLAND AGGREGATES PTY. LIMITED and BRIAN WHITE (1981) 51 FLR 364
No. G3 of 1981
Practice and procedure - Discovery

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Sheppard J.(1)

CATCHWORDS

Practice and procedure - discovery - claim for privilege from inspection of documents brought into existence solely for purposes of advice to be obtained by or proceedings to be prosecuted by private individuals - documents handed to Trade Practices Commission to assist it in action for penalties brought against respondents against whom private individuals proceeding - documents in possession custody or power of Commission - competing public policies in not discouraging persons from assisting Commission and in administration of justice - preponderant public policy held to be the former - claim for inspection refused.

Trade Practices - Action by Trade Practices Commission for recovery of penalties - Discovery of document in possession of Commission - Inspection - Document brought into existence solely for purposes of advice to be obtained by or proceedings to be prosecuted by private individuals against respondents - Public interest - Encouragement of persons to assist Commission.

Discovery - Public interest in confidentiality.

HEADNOTE

In proceedings by the applicant Trade Practices Commission for the recovery of penalties for breaches of s. 47 of the Trade Practices Act 1974, the second respondent sought inspection of documents brought into existence solely for the purposes of advice to be obtained by or proceedings to be prosecuted by private individuals in connexion with dealings with the respondents, but handed to the Commission to assist in its action.

Held: (1) Inspection should be refused because the public interest in the documents remaining confidential outweighed the public interest in their being disclosed for the purposes of the administration of justice. The makers of the statements would not have handed them over to the Commission if they had thought there was the slightest risk that they might fall into the hands of the respondents.

D. v. National Society for the Prevention of Cruelty to Children, (1978) AC 171; Neilson v. Laugharne, (1981) 2 WLR 537, referred to.

Trade Practices Commission v. Allied Mills Industries Pty. Ltd. unreported (Federal Court of Australia, Sheppard J., 7th May, 1980), distinguished.

(2) Inspection would not have been refused on the other grounds raised by the Commission: (a) that the sole property in the documents was in third parties; (b) nor on the ground of confidentiality, Alfred Crompton Amusement Machines Ltd. v. Customs and Excise Commissioners (No. 2), (1974) AC 405, applied; (c) nor on the ground of legal professional privilege as that in this case belonged to the makers of the statements, persons who were not parties to the action.

HEARING

Brisbane, 1981, July 8-9. #DATE 9:7:1981

MOTION.

Motion for order for inspection of discovered documents.

R. Cooper, for the applicant.

D. Drummond, for the second respondent.

Solicitor for the applicant: B. J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the second respondent: Chambers McNab & Co.

T. J. GINNANE

ORDER

1. The notice of motion be dismissed.

2. The costs of the notice of motion be the second respondent's costs in the proceedings.

Orders accordingly.

JUDGE1

By his notice of motion in this matter the second respondent seeks orders that the applicant produce for inspection by the second respondent documents which are described as a copy of advice from counsel obtained by Messrs. Forde, Knapp and Marshall, solicitors, referring to the dealings of a Mr. Stewart with the two respondents and the office file of Messrs. Kootsookos and Quinn, solicitors, which file is said to contain a copy of a statement by a Mr. Hardy prepared by the solicitors in relation to proceedings instituted by them on Mr.Hardy's behalf against the first respondent. The applicant opposes the making of the orders which are sought.

The documents are referred to inferentially in paragraph 3 of the applicant's list of documents. In that paragraph the solicitor for the applicant says that the applicant has no documents in its possession or power other than those which are in the schedule to the list or which are referred to in a letter dated 5 June, 1981, from the Crown Solicitor to the solicitors for each respondent. The letter refers to the two documents, that is to say the advice and the statement to which I have referred and continues:
"3. Both Messrs. Stewart and Hardy have advised that they regard the abovementioned documents as privileged from production in these proceedings. Accordingly the Applicant has received a letter from their current solicitor, Mr. Andrew Brown, requesting that the documents be immediately returned to his clients.

4. In the circumstances the Applicant therefore has not included those documents in the enclosed List of Documents for production in these proceedings and proposes to return the documents to their respective owners after 14 days from the date hereof. The documents will be held in the Applicant's possession for that 14 day period to enable you, should you so desire, to make application to the Court for their production."

In an affidavit sworn by Miss Hammond, who is a legal officer employed in the office of the Commonwealth Crown Solicitor in Canberra, it is said that she perused the documents in question and came to the following conclusions:
(a) it was very doubtful that the said documents were discoverable in these proceedings; and

(b) if the said documents were discoverable in these proceedings they may properly be the subject of a claim for privilege.
By "discoverable" I take her to mean relevant to issues in the proceedings.

Miss Hammond went on to say that she had discussed the matters set out in her affidavit with a senior solicitor in her office and with counsel, and decided to write the letter of 5 June, 1981, to the solicitors for the respondents as previously mentioned.

It is necessary next to refer to the amended statement of claim filed by the applicant in the proceedings and to the provisions of the Trade Practices Act 1974 which it alleges have been broken. The provisions relied upon are to be found in subsections (1) and (6) of s.47 of the Act dealing with or, rather, providing for breaches of the Act where there is what has been described as exclusive dealing. It is said that the first respondent was guilty of breaches of those provisions because, in return for providing work to various contractors, it required them to acquire motor lorries from a company, Denmac Ford Pty. Limited. It is said that the provision of work was the provision of services within the meaning of s.4 of the Act.

The amended statement of claim contains a number of paragraphs in which specific allegations are made of conduct of the kind to which I have referred. Paragraph 5 deals with Mr. Hardy. It says in or about May 1979 the first respondent offered to supply work as a cartage contractor to Mervyn Walter Hardy or alternatively to him and Patricia Joyce Hardy on condition that he, or alternatively they, acquire a Ford Louisville truck from Denmac Ford Pty. Limited. Likewise paragraph 9 of the amended statement of claim says that in or about late May or June 1979 the first respondent offered to supply work as a cartage contractor to Donald Cameron Stewart or, alternatively to him and Jean Marion Stewart, on condition that he, or alternatively they, acquire a Ford Louisville truck from Denmac Ford Pty. Limited. In each case particulars have been furnished in the amended statement of claim amplifying the allegations which are made in the two paragraphs. Those particulars have been further amplified in additional particulars furnished by correspondence.

I decided that in the circumstances I should look at the documents which are in question. One, as I have indicated, is the advice of counsel. What the second respondent wants from it is not the terms of any advice which was given but recourse to the account given by counsel of facts upon the basis of which he was asked to advise. Counsel for the second respondent made it clear during argument that insofar as the advice was concerned his application was limited to factual statements contained in the advice. So far as the solicitors' file is concerned, it is clear upon a consideration of it, and this was Miss Hammond's conclusion also, that the only relevant document is Mr. Hardy's statement. As I understand the application which is made, it is limited to an order for inspection of that statement. No other document in the file is sought nor, in my view, could it be sought because, as I say, there does not appear to be in it any other document relevant to the issues in this case.

The statement of Mr. Hardy was plainly taken in order to enable his solicitors further to prosecute proceedings against the first respondent which had been instituted on his behalf. Counsel's account of the facts relating to Mr. Stewart's transactions with the first respondent and Denmac Ford Pty. Limited in the advice given to Mr. Stewart was plainly taken from instructions or a statement furnished to him and prepared solely for the purpose of obtaining his advice.

It is probably correct to say that it is a ground upon which inspection of documents may be refused if the documents are clearly the property of a third party and have not been provided to the party making discovery for his use in any particular respect; see Bray on Discovery p.207. I am not, however, clear upon the principle which is involved. I do not think the passages in Bray adequately state what the law is in this regard. It would be necessary, if one were to come to final conclusions upon the principle, to examine a number of authorities which are there referred to. This was not done in argument nor have I undertaken that exercise because I have reached the conclusion that if inspection or no satisfactory evidence of the circumstances in which the documents were handed over. There were some statements made from the bar table during argument but there is no evidence from Mr. Stewart or Mr. Hardy or their solicitor. Miss Hammond does not deal with the matter. On the other hand, she does say that the documents were in the applicant's possession, custody or power. It is true that those words have to be understood in the context of her other evidence, the list of documents and the letter of 5 June, 1981, but the use of them in the absence of direct evidence on the point suggests that the applicant had, with the consent of Messrs. Hardy and Stewart through their solicitor, not only mere physical custody of the documents but also some interest or right in them, limited though it might have been.

It is for the respondent to the notice of motion to show that the case falls within the principle propounded by Bray. In my opinion, it has not done so. In those circumstances, I am not prepared to refuse inspection on the ground that the sole property in the documents was in third parties.

Nor am I prepared to do so on any ground based solely on confidentiality. Plainly, it is not open to me to do so; I refer to Alfred Crompton Amusement Machines Limited v. Customs and Excise Commissioners (No.2) (1974) A.C.405 at p.429.

And it is not a case where legal professional privilege alone can be relied upon. Any privilege is that of Messrs. Hardy and Stewart who are not parties to the proceedings. It may have been another matter if the advice were intended to be used by the applicant as legal advice to it or were to be used by its legal advisers as a guide to them as to what the legal position of the applicant might be; but there is no evidence to that effect and the documents themselves suggest that that was probably not the case. In this respect, this case is plainly distinguishable from Enthoven v. Cobb (1852) 2 De G., M. and G. 595; 42 E.R. 1019) as explained by Lord Cross in Crompton ((1974) A.C. at p.430); see also Bray on Discovery at p.207.

Counsel for the applicant recognised his problems in relation to the matters so far dealt with. An alternative submission relied upon by him was that inspection should be refused because the public interest in the documents remaining confidential outweighed the public interest in their being disclosed for the purposes of the administration of justice. Reliance was placed upon a line of authority which has, to this point of time, culminated in Neilson v. Laugharne (1981) 1 A.E.R.829.

The submission is an interesting one. It opens up considerations which are undoubtedly difficult and of extreme importance. In short, it is said that the public interest is better served by non-disclosure. Compelling disclosure in the circumstances of a case such as this would, so the submission ran, indicate to people who wish to assist the Commission in the performance of its duties and functions that the supply of information and documents by them might not be kept confidential. This could well discourage law abiding citizens from assisting the Commission in its investigations. That was the sort of consideration which persuaded the judges in Laugharne to refuse inspection. It is said to apply here particularly because the enforcement of the Trade Practices Act is a matter of important public policy; cf. Allied Mills v. Trade Practices Commission (1981) 34 A.L.R. 105 at p.142.

An earlier case in the line of authority was D. v. National Society for the Prevention of Cruelty to Children (1978) A.C.171. There Lord Kilbrandon said (pp.245-246):
"(1) In civil proceedings a judge has no discretion, simply because what is contemplated is the disclosure of information which has passed between persons in a confidential relationship (other than that of lawyer and client), to direct a party to that relationship that he need not disclose that information even though its disclosure is (a) relevant to and (b) necessary for the attainment of justice in the particular case. If (a) and (b) are established, the doctor or the priest must be directed to answer if, despite the strong disuasion of the judge, the advocate persists in seeking disclosure. This is also true of all other confidential relationships in the absence of a special statutory provision, such as the Civil Evidence Act 1968, regarding communications between patent agents and their clients.

(ll) But where (i) a confidential relationship exists (other than that of lawyer and client) and (ii) disclosure would be in breach of some ethical or social value involving the public interest, the court has a discretion to uphold a refusal to disclose relevant evidence provided it considers that on balance the public interest would be better served by excluding such evidence.

(lll) In conducting the necessary balancing operation between competing aspects of public interest, the presence (or absence) of involvement of the central government in the matter of disclosure is not conclusive either way, though in practice it may affect the cogency of the argument against disclosure. . . . . . . . . . . . .

(lV) The sole touchstone is the public interest, and not whether the party from whom disclosure is sought was acting under a 'duty' - as opposed to merely exercising 'powers'. A party who acted under some duty may find it easier to establish that public interest was involved than one merely exercising powers, but that is another matter.

"(V) The mere fact that relevant information was communicated in confidence does not necessarily mean that it need not be disclosed. But where the subject matter is clearly of public interest, the additional fact (if such it be) that to break the seal of confidentiality would endanger that interest will in most (if not all) cases probably lead to the conclusion that disclosure should be witheld. And it is difficult to conceive of any judicial discretion to exclude relevant and necessary evidence save in respect of confidential information communicated in a confidential relationship.

(Vl) The disclosure of all evidence relevant to the trial of an issue being at all times a matter of considerable public interest, the question to be determined is whether it is clearly demonstrated that in the particular case the public interest would nevertheless be better served by excluding evidence despite its relevance. If, on the balance, the matter is left in doubt, disclosure should be ordered."

D. v. National Society for the Prevention of Cruelty to Children was a case where a plaintiff in an action against the society sought disclosure of the name of an informant who had given information to an officer of the society that the plaintiff had been ill-treating her child. It was a case, therefore, where the society wished to protect confidential sources of information. Laugharne was a similar case, although to a degree different because, as Lord Denning pointed out in the course of his judgment (p.833), some informed guesswork would fairly clearly indicate from whom the statements in question in that case had probably come.

What was protected by the court's decision, however, was not so much sources of information as what those giving information had said in statements made by them to a police inspector. In the present case sources of information are plainly known. It must be expected by the respondents that Messrs. Stewart and Hardy will give evidence to the effect of the allegations made concerning the respondents' dealings with them in the amended statement of claim and in the particulars furnished in amplification of those allegations. It is for that reason that the second respondent seeks discovery of the relevant parts of the advice given by Mr. Stewart and of Mr. Hardy's statement.

Inspection is sought because both documents are thought to contain an account of dealings by the two witnesses with the respondents and with Denmac Ford Pty. Limited. Access to such material may assist the second respondent in cross-examination or in otherwise preparing his case for trial or in the conduct of that case.

An inspection of the documents reveals that in the one case there is involved an actual advice of counsel instructed on Mr. Stewart's behalf and in the other that there was obtained a statement for the purposes of a case already brought by Mr. Hardy against the first respondent. There is no evidence about it other than the documents, but the documents in the file of which the statement is part establish that the statement was brought into existence solely for the purpose of the litigation in which Mr. Stewart is involved. There could not have been any other reason for its compilation. It follows that if Messrs. Stewart and Hardy were parties to the proceedings and thus obliged to give discovery or were served with a subpoena to produce the documents from their own custody, they could successfully object to inspection of the documents on the grounds that the documents had come into existence solely for the purpose of obtaining legal advice or for the purposes of prosecuting proceedings to which one of them was a party.

That is not of course the situation which here confronts me, as I have earlier pointed out. It is the applicant from whom inspection of the documents is sought and it cannot claim privilege from inspection on grounds which would so clearly be available to the two witnesses. What I think emerges, however, is that Messrs. Stewart and Hardy through their solicitor decided to assist the applicant by making available the documents to it. They must be taken to have done so upon the understanding that the documents would be treated as confidential but might prove of some assistance to the Commission in its proceedings against the respondents. Upon reflection, I think the conclusion may fairly be drawn that they would not have handed over the documents if they had thought that there was the slightest risk that they might fall into the hands of the respondents and their legal advisers.

I should pause to say that I have not reached the conclusion just drawn without some misgivings. No affidavit evidence to warrant it was placed before me but I bear in mind that this is an interlocutory application and I do not think that parties to it should be taken to task for gaps in their evidentiary material to the same extent as would be the case in a final hearing. I would have preferred to express my conclusions upon the basis of direct evidence deposed to in affidavits, the deponents of which were exposed to cross-examination, but after due consideration I feel driven to the conclusion which I have reached by the nature of the documents which are in question and the internal evidence which is revealed by an inspection of the solicitor's file.

My findings being as they are, I can now come to the question which has to be decided. There is a clear public interest in documents being available in proceedings so that justice may be done but there is, in my opinion a preponderant public interest in people such as Messrs. Stewart and Hardy in this case being able to confide in a body such as the applicant which has the important public function of administering and enforcing provisions of the Trade Practices Act. Any other view would be grossly inhibiting.

In my opinion the case, although factually different, falls within the principle established in D. v. National Society for the Prevention of Cruelty to Children and Laugharne. For that reason I think that inspection should be refused.

There are two or three matters that I should add before concluding. It was submitted by counsel for the second respondent that this in effect was a claim for Crown privilege and that there was a well recognized procedure for the making of such a claim. In my opinion it is not a claim for Crown privilege in that sense. It is true that the applicant, the Trade Practices Commission, is an agency or emanation of the Crown, but Crown privilege falls into a different category from privilege of this kind. So much is made clear in the judgment of Lord Denning in Laugharne (p.834).

Then I should mention that counsel for the applicant based an alternative argument upon the provisions of s.157 of the Trade Practices Act. The conclusion which I have reached makes it unnecessary to consider that submission. Accordingly, I express no view upon it.

Finally I should say that the submission which I have upheld in this case was not put to me in Trade Practices Commission v. Allied Mills Industries Pty. Limited (7 May, 1980, unreported) perhaps because the authorities were not then as clear as they have become since the judgments in Laugharne were delivered. Judgment in that case was delivered after my judgment in Allied Mills. Be that as it may, all I wish to make clear is that the point now raised was not in that case adverted to by counsel, nor considered by me.

In the result, the notice of motion in this case is dismissed.

I have given some thought to the question of costs upon which I will hear counsel in a moment, but my tentative view is that the costs should be the second respondent's costs in the proceedings. Although he has failed in the claim for inspection which he made, he has failed because of a view taken by me upon the basis of what is contained in the relevant documents, inspection of which was not available to him. There was no affidavit evidence upon which the applicant could have succeeded. Furthermore, the terms of Miss Hammond's letter of 5 June, 1981, were such as almost to invite the application which has been made. In those circumstances I think a fair result, so far as costs are concerned, would be one under which the second respondent will recover costs if he is ultimately successful and will not have to pay costs if he is not but, as I say, I shall hear counsel on that question.

(Argument ensued)

Having considered the submissions that have been made, I have decided not to depart from the tentative view which I have expressed. The formal orders I make are, the notice of motion is dismissed, the costs of the notice of motion will be the second respondent's costs in the proceedings, and the documents which were handed to me will be returned.