Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited ACN 005 357 522

REASONS FOR JUDGMENT 1 On 16 March 2010, the Court gave judgment in an application by the respondent ("ANZ") by which it sought a direction that it was not obliged to provide verified answers to interrogatories in response to a notice administered by the applicant ("the ACCC") pursuant to an order granting leave under O 16 r 1 of the Federal Court Rules to file and serve a notice requiring answers to interrogatories directed to those matters described in the order. 2 Because the ACCC had failed to issue its notice within the time limited by the order granting leave, the ACCC sought, on the hearing of the ANZ's application for a direction, a further order granting leave to deliver all of the interrogatories the subject of the earlier order. 3 The ACCC in resisting ANZ's application supported each of the interrogatories it had delivered and sought further leave to administer each of those interrogatories. 4 On 16 March 2010 the Court made the following orders: 1. The applicant has leave to issue and serve by 26 March 2010 a notice requiring the respondent to answer interrogatories numbered 1, 2, 3.1 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 4.1, 4.3, 4.4, 4.5, 11, 12, 13 and 22 of the notice to answer interrogatories filed 22 June 2009. 2. The applicant has leave to issue and serve by 26 March 2010 a notice requiring the respondent to answer interrogatories formulated in accordance with paras [121], [123], [137], [141], [147] and [150] of the reasons for judgment published 16 March 2010. 5 The ACCC contends that each party ought to bear its own costs of and incidental to ANZ's Notice of Motion filed 13 July 2009 and of the further application for fresh leave to deliver the interrogatories, on the footing that each party achieved "mixed success" in their respective applications. 6 The ACCC contends that it has been significantly successful in obtaining further leave to deliver a range of the interrogatories the subject of its application, and in defending ANZ's application for relief from answering the contested interrogatories as leave was granted to issue and serve 23 of the 98 contested questions contained within the set of interrogatories. 7 Further, the ACCC contends that ANZ did not approach the task of answering the interrogatories "responsibly" consistent with the obligations described in Aspar Autobarn Co-Operative Society v Dovala Pty Ltd (1987) 16 FCR 284 at pp 284 and 285 per Woodward J as it: • failed to answer the interrogatories to which no objection was taken; • failed to afford the ACCC an opportunity to negotiate the scope or framing of the contested interrogatories in a way which might render those interrogatories acceptable or proper interrogatories; and • failed to advise the ACCC of its contended difficulties in compliance with the obligation to answer each interrogatory, until the last day for compliance. 8 The ACCC contends at [7] of its written submissions that it is for ANZ to show that there is some clear and reasoned basis warranting a departure from the usual rule that costs follow the event as the ACCC has been, it says, significantly successful in the further application for leave. Moreover, the ACCC also contends at [8] of its written submissions that: • the Court's finding that the inquiry embodied in some of the interrogatories (interrogatories 3.2, 4.2, 18, 23, 24, 25, 28 and 38) was too broadly stated; is more efficiently dealt with in discovery; or, is not directly related to a fact pleaded and not admitted; is no basis for a contrary costs order; • where interconnected interrogatories are disallowed (interrogatories 7, 8, 9, 10, 20, 21, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 39 and 40), the weight to be given to the parties' respective success or failure is to be seen in that context; and • while certain interrogatories (7, 17, 20, 24, 26, 33, 35, 39 and 41) were outside the scope of the leave initially given by the Court, there is no finding that the ACCC deliberately sought to act otherwise than in the efficient resolution of the contentious issues before the Court. 9 ANZ contends that costs should follow the event barring special circumstances justifying some other order. It submits that since it has been substantially successful and there are no special circumstances informing the exercise of the discretion, it should have its costs of and incidental to its motion dated 13 July 2009 and of the ACCC's motion for leave to issue interrogatories made before the Court on 15 August 2009. ANZ contends that it was successful in two respects. First, it says it was successful in full in that it was not required to answer the interrogatories filed and served on 22 June 2009 and thus the ACCC was obliged to seek further leave to serve all of those interrogatories. Secondly, it says it was substantially successful in resisting the ACCC's motion for leave to issue the 41 interrogatories comprising 98 questions in all. 10 Further, ANZ at [15] and [16] of its written submissions makes these points. First, importantly, the process of seeking to administer 41 interrogatories comprising 98 questions has not progressed the proceedings by shortening the trial or saving costs. The process of engaging in this lengthy interrogation is said to have served no useful purpose. Secondly, ANZ says that the ACCC was either unreasonable or irresponsible in pressing each and every single interrogatory on the hearing of the motion and in seeking leave to administer each of the interrogatories, in circumstances where it had received ANZ's submissions over a week earlier; it had an obligation to express the questions with the most rigorous precision; and, none of the interrogatories were conceded as being ambiguous, oppressive or irrelevant. 11 Moreover, ANZ says that the ACCC is under an obligation to act as a model litigant. 12 Section 43(2) of the Federal Court of Australia Act 1976 provides that "the award of costs is in the discretion of the Court or Judge". In Hughes v Western Australian Cricket Association & Ors [1986] FCA 382 at [9], Toohey J observed that the discretion must be exercised judicially in light of the following considerations. First, ordinarily, costs will follow the event and a successful litigant ought to receive his costs in the absence of special circumstances justifying some other order: Ritter v Godfrey (1920) 2 KB 47. Secondly, where a litigant has succeeded upon only a portion of his or her claim, the circumstances may make it reasonable that he or she bear the expense of litigating that portion of the claim upon which the litigant has been unsuccessful: Forster v Farquhar (1893) 1 QB 564. Thirdly, a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered to pay the other party's costs of those issues. In this sense, the term "issue" does not mean a precise issue in the technical pleading sense but a disputed question of fact or law which is in issue between the parties as part of the controversy: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. 13 In this case ANZ has successfully established that some of the interrogatories are proper interrogatories. The ACCC had originally sought leave to issue and serve 41 interrogatories comprising 98 questions. Leave was ultimately granted to the ACCC to issue and serve 18 questions as formulated and a further 16 questions as reformulated in the judgment. The order for leave therefore extended to 34 interrogatories. Nevertheless, 16 questions as delivered required reformulation. Leave to issue and serve 64 of the questions was refused. 14 The ACCC asserts that "interconnected interrogatories" that have been disallowed should be seen in the context of their interconnection. The term "interconnected interrogatories" means those questions according to which a response is conditional or dependent upon another interrogatory being determined to be a proper interrogatory. For example, a response to interrogatory 8 would only have been required if leave had been given to administer interrogatory 7. The refusal of leave to administer interrogatory 7 had the effect that interrogatory 8 did not fall for consideration. 15 The ACCC contends at [8] of its submissions that interrogatories 7, 8, 9 and 10; 20 and 21; 26, 27 and 28; 29, 30, 31 and 32; 33 and 34; 35, 36 and 37; 39 and 40 are interconnected interrogatories. There is throughout the set of interrogatories a sequential interconnection between a number of them. In that sense, the submission of the ACCC is correct (except as to interrogatory 28). The effect of the interconnected interrogatories is that 40 questions might properly be considered to be 16 questions notwithstanding that they require officers of and advisers to ANZ to consider all of the interrogatories in context. The interconnected nature of the interrogatories might be seen in this sense: • interrogatories 7-10 comprise eight questions the answers to which are dependent upon the five questions contained in interrogatory 7; • interrogatories 20-21 comprise nine questions the answers to which are dependent upon the five questions contained in interrogatory 20; • interrogatories 26-27 comprise nine questions the answers to which are dependent upon the two questions contained in interrogatory 26; • interrogatories 29-32 comprise six questions the answers to which are dependent upon the one question contained in interrogatory 29; • interrogatories 33-34 comprise two questions the answers to which are dependent upon the one question contained in interrogatory 33; • interrogatories 35-37 comprise four questions the answers to which are dependent upon the one question contained in interrogatory 35; • interrogatories 39-40 comprise two questions the answers to which are dependent upon the one question contained in interrogatory 39. 16 The result is that there were, properly considered, 74 questions rather than 98 questions asked. Therefore, ANZ's objections were upheld in respect of 40 out of 74 questions. 17 On one view then, each party has been successful to a significant degree in demonstrating that either a substantial number of the interrogatories were improper or demonstrating that a number of the interrogatories were proper and others might be sustained with the assistance of some degree of reformulation by the Court. That degree of reformulation was necessary in order to try and ensure that the parties achieved some utility out of the applications having regard to the substantial time, energy, effort and application that was required in order to deal with the sequence of questions; consider them in the context of the pleadings and the specific issues to which the interrogatories were directed; consider whether the particular interrogatory addressed an issue in controversy on the pleadings; and whether the interrogatory was oppressive, ambiguous or otherwise not relevant to an issue in the proceeding. 18 It is true that the ACCC failed to comply with the earlier order and thus no obligation to answer any of the interrogatories arose in ANZ. It was quite entitled, as of right, to refuse to answer any of the interrogatories. The hearing, in substance, was transformed into a further application for leave to administer all of the interrogatories the subject of the earlier order. The ACCC pressed each and every interrogatory in that application. A number of those interrogatories went beyond the scope of seeking to extract admissions as to matters not formally admitted in the pleadings. The ACCC contends that had ANZ acted responsibly in dealing with the interrogatories as delivered, much of the dispute as to the scope of the interrogatories might have been avoided. The ACCC relies upon these observations of Woodward J at p 285 in Aspar Autobarn Co-Operative Society v Dovala Pty Ltd (1987) 16 FCR 284 as a correct statement of the duties and responsibilities ANZ faced in dealing with the interrogatories: If the use of interrogatories is to be effective, the task must be approached responsibly on both sides. It should not be seen as a battle of wits, or indeed as any form of contest. It is an opportunity to assist the parties and the court to have the matter prepared for trial as quickly and as cheaply as possible. … So far as persons interrogated are concerned, it is my view that they also have a responsibility, to the court and to their opponents, to do their best to answer interrogatories in an open and helpful way, not in a clever or grudging way. Thus I believe they and their advisers should not avoid answering a question which is relevant but contains an obvious typing error. If the intention is clear enough, it should be answered - with an appropriate reference to the error. If the nature of the error is not reasonably clear, then of course the interrogatory cannot be answered. Where an interrogatory is largely unobjectionable, but goes too far in some aspect, so as to make that portion of it oppressive or irrelevant, then I believe the reply should answer the unobjectionable part (provided it is reasonably severable) and object to going further - not object to answering the whole interrogatory. 19 However, there is a further part of the observations of Woodward J omitted from that quote which is also relevant to the matter and the additional words at the end of the paragraph beginning "If the use of interrogatories is to be effective …", in these terms: The chief obligations on the interrogator are to ask questions as clearly and concisely as possible, and to ask only those questions which really require an answer in the particular case - by way of providing information not already known or making a relevant and required admission - in order to advance the interrogator's case or help to meet the opposition's case. Excessive reliance on precedents and the word processor provides the most common cause of unnecessary and badly‑framed interrogatories. 20 ANZ contends that the ACCC is required to act as a model litigant and therefore it ought to have delivered the interrogatories within the time limited by the initial order. Its failure to do so made a further application necessary and it ought to pay the costs of that application. Further, ANZ says that acting as a model litigant requires the ANZ to discharge the chief obligations of the interrogator and frame the questions as clearly and concisely as possible and to ask only those questions which really require an answer in the particular case, that is to say, answers required having regard to the pleadings. ANZ relies upon the observations of Refshauge J in Nelipa v Robertson [2009] ACTSC 16 at [97] in these terms: [I]t is not the function of the court to ensure compliance with the Directions or to become the disciplinary tribunal for alleged breaches. Nevertheless, it is clear that the obligation to act as a model litigant and the failure to act in that way can be a relevant factor in considering the appropriate order as to costs. 21 As to the question of model litigant obligations, clause 2(a) of Appendix B to the Schedule to the Legal Services Directions 2005 (Cth) issued by the Commonwealth Attorney‑General under s 55ZF of the Judiciary Act 1903 (Cth), provides: 2. The obligation to act as a model litigant requires that the Commonwealth and its agencies act honestly and fairly in handling claims and litigation brought by or against the Commonwealth or an agency by: (a) dealing with claims promptly and not causing unnecessary delay in the handling of claims and litigation […] 22 The resolution of the question of costs in this application ultimately turns on these considerations. The suite of interrogatories delivered by the ACCC and then made the subject of the subsequent application for leave consequent upon the hiatus caused by the initial failure to deliver the interrogatories within time contained a wide range of questions which amounted to 98 separate questions although, as earlier indicated, having regard to the interconnection factors, distilled to 74 questions. A substantial number of those interrogatories were not framed as clearly and concisely as possible and were not simply directed to only those questions which really required an answer in the particular case having regard to the pleading which put in contest a number of matters which the ACCC sought to have conceded through the interrogatories. The contest as to those matters was truly a matter for trial, evidence and findings of fact. 23 Further, a number of the interrogatories had to be reframed in order to ensure that the parties obtained some utility from the process of interrogation. Since the validity of the vast majority of the interrogatories was put in issue and the subject of extensive argument, the Court took the view that the matters ought to be dealt with so that some advantage may be obtained for the parties from the process. 24 Having regard to the discussion of the matters canvassed at [7] to [17] and [91] to [101], it would have been open to the Court to reject the interrogatories as inappropriate on the footing that the determination of whether each interrogatory was a proper interrogatory involved a substantial and time consuming deconstruction and analysis of not only the interrogatories but the pleadings, the scope of the controversy and the arguments for and against the validity of the particular interrogatory. 25 Ultimately, the interests of the parties are not advanced by such analyses. 26 However, ANZ might have responded in a more purposeful way by seeking to indicate as plainly as it could the matters it perceived each interrogatory to address and then suggest a way in which the information might be provided in a contained but balanced and proportional way. Ultimately however, the ACCC must frame the interrogatory in a way which does not cast an obligation on the other side to do the best it can with the interrogatory and reframe it. The intention must be made clear. If the intention is clear enough, the interrogatory should be answered. However, if the intention is not clear, the person interrogated does not have an obligation to frame what it perceives to be the intention, seek the acceptance by the interrogator and then answer the accepted interrogatory. 27 A number of the interrogatories could have been answered by ANZ and the ACCC was successful in respect of a number of the interrogatories. However, it seems to me that having regard to the scope of the interrogatories; the consequential analysis they entailed; and the challenge made to them by ANZ, ANZ was successful in the main on the matters of substance. I propose to order that the ACCC pay 80% of the costs of ANZ of and incidental to the applications. I certify that the preceding twenty‑seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.