ACCC v Australian Safeway Stores Pty Ltd

RULING 1 The applicant ("the Commission") has sought to tender two invoices from Tip Top Bakeries to Cheapa Food Barn, Forest Hill numbered N290546 and N295469 for deliveries of bread made to Cheapa Food Barn in the weeks respectively ended 10 July 1994 and 17 July 1994. That tender is the subject of objection by the first respondent ("Safeway") and the third respondent who submit that I should reject the tender pursuant to s 135 of the Evidence Act 1995 (Cth) on the grounds that the invoices have no probative value or alternatively that any such probative value is substantially outweighed by the danger that they might be unfairly prejudicial to the first and third respondents. 2 The invoices show the deliveries of bread made by Tip Top to the Cheapa Food Barn at Forest Hill on each of the days from Monday 4 July 1994 to Sunday 17 July 1994 (both inclusive) and the returns of bread made on the same days. In particular, they show that on Monday 4 July through Saturday 9 July 1994 there were deliveries of three promotional products, Hot Baked Toast 680g, Hot Baked White 680g and Hot Baked Wholemeal, each of which was priced at a unit price of $1.62 with a discount of 62 ˘ leaving a net cost price of $1.00 per unit. No such deliveries were shown on the invoices to have been made on the days on and between 10 July and 17 July 1994. 3 The Commission seeks to tender the invoices not as part of the proof of a particular pleaded contravention of the Trade Practices Act 1974 (Cth) ("the Act"). Rather, the tender is put on the basis that the invoices are relevant to the issue that Safeway had a policy of deleting or withdrawing plant bakers' products from a Safeway supermarket when at the same time the plant bakers were supplying bread to an independent supermarket or retailer at such discounted wholesale prices as enabled the retailer to sell the bread at prices lower than the price at which Safeway supermarkets in the vicinity were retailing similar bread. The Commission has pleaded that such deletions or withdrawals would occur and last while the plant bakers' products were being sold by the independent supermarkets or retailers at a special or discounted price: Fifth Further Amended Statement of Claim par 6D(h). 4 The Commission has pleaded that this policy was implemented in a number of particular instances which are set out in the Fifth Further Amended Statement of Claim. One such contravention relied upon is the deletion of Buttercup products from the Safeway supermarket at Vermont between mid July and 8 October 1994. The Commission wishes to use the invoices in support of the proposition that there was a further application of the policy by deleting Tip Top products at the Safeway Vermont Supermarket from 23 June to 11 July 1994. 5 The gravamen of the respondents' objection to the admissibility of the invoices is that neither the Tip Top deletion from the Safeway supermarket at Vermont nor any suggestion that Mr Jones instructed the Tip Top deletion was put to Mr Joseph Carroll, the owner of the Cheapa Food Barn at Forest Hill or to Mr Jones. 6 As the tender of the invoices was sought to be made on the 57th day of the trial, in the course of cross‑examination of Mr Ralph Hanna the former store manager of the Safeway Vermont Supermarket, it is necessary to understand how the issue has arisen. 7 The Commission filed witness statements of Mr Carroll, the owner of a number of Cheapa Food Barn stores including Forest Hill. The statements were dated 23 October 1997 and 26 September 1998 and he was called to give evidence on 9 March 1999. Mr Carroll said that up to around 3 July 1994 he purchased from Tip Top a brand of bread called "Hot Baked" which he purchased for less than 99˘ a loaf and was able to retail for 99˘ a loaf. He was told around the end of June 1994 by the Tip Top sales representative that the deal on Hot Baked bread was going to have to end and that the rebate of 63˘ would be withdrawn. In his first witness statement he annexed a copy of a Tip Top invoice for the week ending 26 June 1994 showing the supply of Hot Baked bread at a cost price, after discount, of 99˘ per unit. He then contacted Buttercup and started buying Black and Gold bread from Buttercup in July 1994 which he retailed at 99˘ a loaf. He ceased purchasing Hot Baked bread for his Forest Hill store from Tip Top in July 1994. 8 I allowed evidence to be led (subject to objection) about the cessation or supply of the Hot Baked Tip Top bread to Mr Carroll's store on the basis that it was relevant to the manner in which the policy, for which the Commission was contending, was implemented as a matter of practice. I made further similar rulings in relation to evidence of incidents said to have occurred by way of implementation of the Safeway policy, albeit not alleged as contraventions of the Act in the statement of claim. 9 At the time Mr Jones was cross‑examined, Safeway had filed a witness statement by Mr Ralph Hanna the store manager at Safeway Vermont dated 14 December 1998 in which he gave evidence of two conversations with Mark Jones in or about June 1994. In these conversations he told Mr Jones he needed a bread to sell at 99˘ to match Cheapa Food Barn, that Mr Jones told him that he had arranged for Captain Cutless to be delivered for sale at 99˘, that they could not get the same deal from Buttercup and had therefore made the decision to withdraw the Buttercup product from Safeway Vermont. Mr Hanna did not give evidence of any withdrawal of Tip Top bread from the Safeway Vermont supermarket. Mr Jones did not recall ever having a telephone conversation with Mr Hanna and said that he did not know Mr Hanna and he had never heard of him. 10 After Mr Jones' evidence was concluded, Safeway served a supplementary statement of Mr Hanna dated 20 July 1999 in which he corrected his evidence as to the dates on which he had been store manager at Safeway Vermont. In his first statement he said that he had become store manager at Safeway Vermont on 13 September 1993 and remained there for approximately twelve months. In his supplementary statement he annexed his employment records which showed that he commenced annual leave for four weeks on 11 July 1994 and did not return to Safeway Vermont but acted as relief store manager at Safeway Mentone and thereafter became store manager at Safeway Hampton. 11 Scan data records in evidence showed that Captain Cutless was first introduced into the Safeway Vermont Supermarket on 23 June 1994 and that Buttercup products were not delivered to the Safeway Vermont Supermarket in the period 16 July 1994 to 25 October 1994. Although Mr Hanna's recollection was that Captain Cutless was in the supermarket when he went on annual leave on 8 July 1994 and that Buttercup products were not then being sold, he could not explain why the scan data indicated that Buttercup products were not withdrawn until 16 July 1994. 12 Thus, on one view of the evidence, the conversations Mr Hanna said he had with Mr Jones in or about June 1994 could not have related to the withdrawal of Buttercup bread. The Commission wishes to tender the Tip Top invoices for the purpose of inviting the Court to draw an inference that Mr Hanna did have a conversation with Mr Jones about competing with Cheapa Food Barn's 99˘ bread but that Mr Jones did not refer to getting the same deal from Buttercup and withdrawing Buttercup products but rather, referred to Tip Top products. In this way the Commission seeks to establish an implementation of the Safeway policy as the Commission alleges it existed and was implemented. 13 It is apparent from other evidence that Captain Cutless was introduced into the Safeway Vermont Supermarket from 23 June 1994 and that Tip Top products were deleted from the Safeway Vermont Supermarket after that date up until 11 July 1994. 14 The Commission submits that the two invoices are relevant to the manner in which it contends the Safeway policy was established and implemented. The Commission contends that the invoices have probative value in relation to that policy and its implementation as they demonstrate that the dates of the Tip Top promotion at Cheapa Food Barn Vermont coincided with the period during which Tip Top bread was deleted from the Safeway Vermont Supermarket. 15 The respondents submit that it is unfair to tender these invoices as Mr Jones has not had the opportunity to respond to the allegation that there was a deletion of Tip Top products from Safeway Vermont between 23 June 1994 and 11 July 1994 which he implemented. However, Mr Jones has denied that he knew or ever spoke to Mr Hanna. 16 The complaint of unfairness made by the respondents is that when Mr Jones was cross‑examined he was cross‑examined extensively in relation to the Safeway Vermont incident, the thrust of which related to the withdrawal of Buttercup bread only. It was never suggested that there was any withdrawal of Tip Top bread. However, at that point of time the evidence which it appeared would be led by the respondents from Mr Hanna was that the withdrawal at that time from the Safeway Vermont Supermarket was of Buttercup bread only. It was only after Mr Hanna's supplementary statement that it became apparent that the conversations with Mr Jones to which Mr Hanna had earlier referred might well refer to a Tip Top deletion rather than a Buttercup deletion.