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WA Pines v Bannerman

Case Note:

WA Pines Pty Ltd v Bannerman (1980) 30 ALR 559

Introduction

This case was an appeal from the directed orders of a single judge of the Federal Court of Australia that a paragraph in the appellant’s (WA Pines Pty Ltd) original statement of claim seeking declaratory relief under s163A of the Trade Practices Act 1974 (Cth) be struck out and an appeal against the Federal Court judge’s refusal in reference to the appellant’s applications for the discovery, interrogatories and an order by way or particulars. The respondent, (Bannerman), cross-appealed against the original judge’s refusal to strike out another of the paragraphs of the appellant’s statement of claim.

The judgement of Brennan, J. sets out the facts of this case.

Facts of the case

The appellant instituted proceedings under s163A of the Trade Practices Act (Cth) seeking a declaration that a notice issued by the respondent Chairman of the Trade Practices Commission pursuant to s155 of the Act does not compel the appellant to obey the requirements as set out in the notice and therefore has no legal binding effect either in whole or in part upon the appellant’s duty to act in accordance with the said notice.

Section 155 of the Trade Practices Act states:-

  1. If the Commission, the Chairperson or the Deputy Chairperson has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act…a member of the Commission may, by notice in writing served on that person, require that person –
  1. to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer…within the time and in the manner specified in the notice, any such information;
  1. to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or
  1. to appear before the Commission at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents.

The respondent recited in the notice that he had reason to believe that the appellant “…is capable of furnishing information and producing documents relating to matters that constitute or may constitute contraventions of the Act”.

The appellant, in Paragraph 5 of their statement of claim declared that “…lack of definition of the respondent’s state of belief concerning the matters referred to in the notice was inconsistent with the state of belief required to attract the operation of s155 of the Act.”

In Paragraph 6 of the statement of claim the appellant, in alternative, stated that the notice was “issued without the Trade Practices Commission, the respondent or the Deputy Chairman having reason (or alternatively any legally sufficient reason) to believe any of the matters” set out in s155 (1) of the Act.”

The respondent sought an order that paras 5 and 6 of the statement of claim be struck out. In the original hearing, a judge sitting alone in the Federal Court of Australia made an order that para 5 of the statement of claim be struck out as it failed for producing any reasonable cause of action. However, the judge refused to strike out para 6, declined the appellant’s applications for discovery and interrogatories and denied to issue an order by way of particulars that the respondent state the reason to believe any of the matters set out in s 155(1) of the Act.

The appellant appealed against the order striking out para 5 and the judge’s refusal to order discovery, interrogatories and further particulars, while the respondent cross-appealed against the judge’s declination to strike out para 6.

The appellant relied upon s155 of the Act to sustain para 5 in his statement of claim, and asserted the use of 0 15, r 1 of the Federal Court Rules to aid them for an order of discovery of documents to be made against the respondent.

In his cross-appeal, the respondent sought to strike out paras 5 and 6 of the statement of claim and relied upon 0 11, r 16 and 0 20, r 2 of the Federal Court Rules to prevent an abuse of process.

Decisions of the Court

The Court dismissed the appeals, whilst allowing the cross-appeal with the following orders:-

  1. The appeals to be dismissed
  1. The cross-appeal be allowed, and that the order of Toohey J (the Federal Court Judge of the original hearing) be varied by deleting Orders 2 and 3 of his order, and substituting in lieu thereof:--
  1. Paragraph 6 of the applicant’s statement of claim be struck out.
  1. The applicant pays to the respondent his costs of the applications by the applicant and by the respondent.
  1. The appellant pay to the respondent his costs of the appeals and his costs of the cross-appeal.

The Court based its decision on the following legal issues…

Legal Issues

Brennan J in his judgement stated the following:-

The appellant’s argument to sustain para 5 of the statement of claim...that the power of the Chairman of the Commission to give a notice under s 155 depends upon his belief...that a matter “constitutes or may constitute, a contravention [of the Act].” The appellant submitted that the Chairman could not have, at the same time, a belief that a matter is a contravention and a belief that the same matter may be a contravention…

Brennan J then defined “matter” in s 155 (1) of the Trade Practices Act 1974 (Cth).

(a)The matter to which this section refers comprehends the conduct of persons and the circumstances attendant upon it.

(b)A “matter that may constitute a contravention” is the facts being investigated, some of which are not known by the Commission…Such a matter does not take from its character the belief of the Commission…but from the nature and quality of the facts as they are or have been…This (may also) encompass future facts…

(c)The character of the matter is determined objectively, and if it could be shown that a contravention would not be constituted by…facts which exist or have existed...there would be no “matter” relating to which a person could furnish information…as provided for by s 155 (1).

Lockhart J, in reference to Melbourne Home of Ford v Trade Practices

Commission [1] concluded that “…’matter’ is itself a complex of facts…answering the description of the ‘matter’ that may or may not constitute [sic] a contravention of the Act.”

Furthermore, using the reference of Riley McKay Pty Ltd v Bannerman[2], Lockhart J defined “reason to believe” from s 155 (1) of the Act as:-

…Meaning that the Commission must believe that a person is capable of furnishing information, producing documents or giving evidence, and there must be reasonable grounds or cause for belief before the power conferred by s 155 (1) is exercised.

Brennan J, referring to various cases [3], stated:- “…a challenge to the validity of a s 155 (1) notice requires the applicant to show that the Chairman has no reason to believe that the person…is capable of furnishing information, producing documents or giving evidence…”

Furthermore, Lockhart J defined the words “that constitutes or may constitute” as outlined in s 155 (1) “…intends to draw a distinction between existing or past contraventions…”[4]

In relation to discovery of documents, discovery could not be obtained in the …absence of evidence that the respondent did not have the belief required by s 155 (1).

The court heard no argument to suggest that para 6 was inapposite to raise a challenge though the difficulty in supporting a challenge was recognised. To make this challenge good, it was argued that the respondent may be required to give discovery under 0 15, r 1 of the Federal Court Rules. This rule states that after a direction hearing pursuant to Order 10…any party may unless the court otherwise orders…require any other party to give discovery of documents. In comparison with the Civil Procedure Act 2005 (NSW), under 5.4 (1) it is for the Court to decide whether to grant discovery.

Furthermore, the respondent seeks to strike out paras 5 and 6 of the statement of claim, relying upon rules 0 11, r 16 and 0 20, r 2 of the Court to aid him. 0 11, r 16 states “where a pleading discloses no reasonable cause of action…or is otherwise an abuse of process…the Court…may order any part of the pleading to be struck out.”

0 20, r 2 states “where in any proceeding...no reasonable cause of action is disclosed...the Court may order the proceeding to be…dismissed. Under 13.4 and 14.28 of the Civil Procedures Act 2005, the change to these “orders” that may be given, is for an evidentiary hearing to be held when an application is first put forth to the Court.

Implications

Brennan J stated the difficulty a recipient of a notice has in challenging the validity of a notice as deemed by s 155 (1), that para 5 did not raise the challenge and so it was right to strike it out.

In relation to the discovery of documents, Brennan J referred to the

case of Melbourne Home of Ford v Trade Practice Commission[5]. An order for discovery and interrogatories was denied on the basis that the applicant was indulging in a “fishing exercise”[6], and the original judgement was correct.

Where the respondent sought to strike out paras 5 and 6, relying upon previously discussed rules of the Court, the test to be applied was confirmed by Barwick CJ in General Steel Industries v Commissioner for Railways (NSW)[7]. This case dictated that the jurisdiction demonstrating the power to strike out a proceeding should be sparingly used and only when the case is extremely clear.

Conclusion

Lockhart J agreed with the judgement of Brennan J whilst adding the following observations:-

The appellant sought the aid of this Court to indulge upon a ‘fishing expedition’. [sic] Based upon the established principles, this Court should refrain from that. The appellant’s challenge to…allow discovery…fails. I would dismiss the appeals and allow the cross-appeal with costs.


Footnotes

[1] (1979) 5 TPC 26; [1979] ATPR 40-107

[2] (1977) 15 ALR 561; 31 FLR 129

[3] Nakkuda Ali v Jayaratne [1951] AC 66; Registrar of Restrictive Trading Agreements v Smith [1969] 1 WLR 1460; Bradley v Commonwealth (1973) 1 ALR 241; Inland Revenue Commissioners v Rossminster Ltd [1980] 1 All ER 80

[4] Antitrust Civil Process Act 1962 (US); Hart-Scott-Rodino Antitrust Improvements Act 1976 (US); United States v Union Oil Co 343 F (2d) 29 (1965) referred to

[5] (1979) 5 TPC 26; [1979] ATPR 40-107

[6] see also:- Associated Dominion Assurance Society Pty Ltd v John Fairfax & Sons Ltd (1952) 72 WN (NSW) 250

[7] (1964) 112 CLR 125 at 129 and 130


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