Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd [2006] FCA 915 | Case summary

REASONS FOR JUDGMENT 1 This is a representative proceeding under Pt IVA Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'), in which the applicants allege that the respondents operated a cartel in contravention of s 45 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act') in the market for vitamins for animal nutrition or health, and premix products containing vitamins, being vitamins A, E, B1, B2, B5, Beta-carotene and Canthaxanthin, which the applicants have described as 'Class Vitamins'. A broad background explanation of the proceedings, and of the allegations of the applicants, may be obtained from the reasons for judgment of Merkel J given on an interlocutory application on 13 March 2002 - sub nom Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 - and on appeal therefrom - Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317. 2 The Group Members are described as: (a) Manufacturers, distributors and suppliers of pre-mixes containing vitamins A, E, B1, B2, B5, Betacarotene or Canthaxanthin for animal nutrition or health purposes (together and severally the 'Class Vitamins'); (b) Manufactures, distributors and suppliers of stock feeds containing class vitamins; (c) Producers of livestock including poultry, pigs, sheep and cattle, and dairy farmers, egg producers and aquaculturalists, who purchased stock feeds containing class vitamins; (d) Manufacturers, distributors and suppliers of veterinary and performance enhancing preparations and supplements containing class vitamins; (e) Manufacturers and distributors of pet food containing class vitamins; who: i) Were at all relevant times ordinarily resident in or carrying on business in Australia; ii) Paid at least two thousand Australian dollars (AUD$2,000.00) in the period 5 March 1992 to 31 December 1999 for class vitamins or pre-mix or other animal health or nutrition products containing class vitamins; and iii) Are not Justices or Registrars of the High Court of Australia or the Federal Court of Australia. 3 The applicants' claim under the Trade Practices Act is for damages, declarations, injunctions and other relief. Damages are claimed both for losses caused by any increase in the price of the Class Vitamins over the price that would have been paid but for the cartel, and for loss of profits on any sales lost as a result of the cartel. 4 In their defences, the respondents have made significant admissions with respect to the applicants' cartel allegations. These admissions vary as between the individual respondents, and the respondents also deny causation, rely, to an extent, upon statutory limitation periods, and allege that the applicants and the group members passed on any higher prices to their customers. 5 By December 2005, discovery in the proceeding had not taken place. In that month, as a result of a mediation arranged by the parties themselves, the applicants accepted an offer by the respondents to settle the proceedings for the sum of $30.5 million, plus $10.5 million by way of costs, subject to the approval of the Court, and in accordance with heads of agreement signed on behalf of the parties on 16 December 2005. 6 The settlement requires the approval of the Court not only as a matter of agreement between the parties: by s 33V(1) of the Federal Court Act, a representative proceeding under Pt VIA may not be settled without the approval of the Court. By Notice of Motion dated 11 July 2006, the applicants sought that approval. However, before any approval under s 33V(1) may be given, notice of the application therefor must be given to group members pursuant to s 33X(4) of the Federal Court Act. By s 33Y(2) of the Federal Court Act, the form and content of such a notice must be approved by the Court. 7 In their Notice of Motion dated 11 July 2006, the applicants sought the following orders: '1. The confidential exhibits to the affidavit of Kim Elizabeth Parker affirmed 11 July 2006 ("Parker Affidavit") be sealed and filed with the Court as confidential exhibits and marked "Not to be opened without leave of the Court or a Judge." 2. Pursuant to sections 33X and 33Y of the Federal Court of Australia Act 1976 (Cth) ("the FCA Act"), the Notice of Application for Approval of Proposed Settlement to Group Members ("Notice of Proposed Settlement") in the terms set out in Exhibit KEP27 to the Parker Affidavit, be approved. 3. On or before [ ] 2006 the solicitors for the Applicants cause the Notice of Proposed Settlement to be: (a) Sent by email or by prepaid post to the last known address of each person who has registered as a Group Member with the solicitors; and (b) Published in each of the following newspapers: (i) Stock & Land (VIC), (ii) The Land (NSW), (iii) Stock Journal (SA), (iv) Farm Weekly (WA), (v) North Queensland Register, (vi) Queensland Country Life; (vii) Adelaide Advertiser; (viii) Brisbane Courier Mail; (ix) Canberra Times; (x) Hobart Mercury; (xi) Melbourne Herald Sun; (xii) Northern Territory News; (xiii) West Australian; (xiv) Sydney Daily Telegraph; and (xv) The Australian 4. The Applicants' solicitors have leave to inspect the Court file and copy any notices of objection filed by Group Members objecting to the settlement. 5. The further hearing of this motion on notice be adjourned to [ ] 2006. 6. Pursuant to section 33V of the FCA Act, the settlement of the proceeding upon the terms set out in the Heads of Agreement executed 16 December 2005 and in the Settlement Scheme, being Exhibits "KEP5" and "KEP6" respectively to the Parker Affidavit, be approved. 7. All costs orders made in this proceeding prior to these Orders be set aside. 8. No order as to costs. 9. The solicitors for the Applicants have liberty to apply. 10. Such further or other orders as the Court deems appropriate.' When the Notice of Motion came on for hearing on 17 July 2006, the applicants indicated that they proposed to deal with it in two parts; first, on that day, they proposed to ask the Court to make orders in accordance with pars 1-5 of the Notice of Motion; and secondly, on the adjourned date fixed in accordance with par 5 of the orders sought, they proposed to move the Court in terms of the remaining paragraphs of the Notice of Motion. 8 Of the matters proposed to be dealt with on 17 July 2006, par 1 of the Notice of Motion is concerned with claims for confidentiality in relation to various exhibits of the affidavit affirmed in support of the Notice of Motion by Kim Elizabeth Parker, a principal in the firm of solicitors conducting the case on behalf of the applicants. Paragraphs 2-5 of the Notice of Motion are concerned with the content and publication of the notice required by s 33X(4) of the Federal Court Act. 9 Of the groups of documents sought to be kept confidential on the court file, the first three are tables setting out the sales figures of the respondents. I was told that the underlying data on which these tables were based contained sensitive commercial information, the property of the respective respondents. As between each respondent and the applicants, this consideration would not have protected the documents from disclosure in these proceedings, although the Court might have been persuaded to make orders under s 50 of the Federal Court Act with respect to the data. But, the actual tables constituting the first three exhibits for which confidentiality is claimed were, I was assured by the respective respondents, brought into existence to enable the respondents to hold without prejudice discussions with a view to the settlement of this proceeding, first as between the respondents themselves, and then as between the respondents as a group and the applicants. On the basis of these assurances, I am persuaded that the exhibits to Ms Parker's affidavit designated "KEP-2", "KEP-3" and "KEP-4" are privileged, that it is appropriate that their publication be prohibited pursuant to s 50 of the Federal Court Act and that they be sealed on the court file, with restricted access, pursuant to s 33ZF of that Act. 10 The next two documents for which confidentiality is claimed are opinions of the applicants' legal advisers prepared for the purpose of advising the applicants with respect to the settlement of this proceeding. They are clearly privileged and, accordingly, I would make similar orders under s 50 and s 33ZF of the Federal Court Act in relation to those documents, being exhibits to Ms Parker's affidavit designated as "KEP-7" and "KEP-8". 11 The next two documents for which confidentiality is claimed are reports by export economists retained by the applicants' solicitors, and provided to the applicants for the purpose of furnishing them with a technical basis for assessing the adequacy of the settlement proposal in the light of the loss and damage most probably suffered by them and other group members. Because they were brought into existence for the purpose advising the applicants in relation to this proceeding, I consider that these documents too, designated "KEP-9" and KEP-10" in Ms Parker's affidavit, are subject to privilege, and should be covered by the confidentiality orders which I make. 12 The next document for which confidentiality is claimed is an affidavit by Charles Wright of a Canadian law firm that represented class members in a corresponding proceeding in Canada. The affidavit sets out his view as to the reasonableness of the proposed settlement in Australia. This affidavit was obtained by the applicants' solicitors for the purposes of assessing the adequacy of the settlement proposal, and is prima-facie privileged. It is designated as exhibit "KEP-14" in Ms Parker's affidavit, and I would make the same orders in relation to it as I have above. 13 The final two groups of documents for which confidentiality is claimed, designated as exhibits "KEP-24" and "KEP-25" in Ms Parker's affidavit, are working tables and calculations by the applicants' solicitors themselves, prepared for the purpose of achieving a settlement of this proceeding. They are clearly privileged and should be protected from disclosure in same terms as those applicable to the other documents to which I have referred. 14 As to the terms of the notice required by s 33X(4) of the Federal Court Act, I required the applicants to accept certain minor, but important, changes thereto before I would give my approval for the notice to be published. The applicants readily accepted those changes, and the respondents raised no objection thereto. The notice as, in effect, settled by the Court appears in order made by the Court, and I need say nothing further about it in these reasons. 15 The applicants agreed to add the Weekly Times to the list of publications in which the proposed notice would be inserted. 16 Although not the subject of any order which I made, I was told on 17 July 2006 that the applicants intended to make the proposed settlement the subject of a media release. Further, at my suggestion, the applicants agreed to notify such trade and industry associations as they considered would probably be relevant to group members. Each of these additional measures, although not subject of the Court's order, would, in my estimation, be helpful in securing the purpose of the applicants, and of the Court, of maximising the prospect that all group members would have the proposed settlement drawn to their attention. 17 These are my reasons for the orders herein made on 18 July 2006. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd

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