JKC Australia LNG Pty Ltd v AkzoNobel NV

Federal Court of Australia|2020-12-11|Before: Smith J

These orders and the reasons for judgment in support of these orders are made and published from Chambers.
The subpoena to produce documents served by the applicant on Akzo Nobel Coatings (Holdings) Pty Limited on 14 August 2020 and the subpoena to produce documents served by the applicant on Akzo Nobel Pty Limited on 14 August 2020 be set aside in full.
Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BANKS-SMITH J: 1 This is an application brought by the respondents, AkzoNobel NV and International Paint Limited, together with two subpoenaed companies, to set aside subpoenas issued by the applicant (JKC). 2 The first subpoena recipient is Akzo Nobel Coatings (Holdings) Pty Limited, which has an address in Sunshine North, Victoria; the second recipient is Akzo Nobel Pty Limited, of the same address (Subpoenaed Entities). The Subpoenaed Entities are subsidiaries of the first respondent. I will refer to the respondents and the Subpoenaed Entities collectively as the AkzoNobel Parties. 3 I summarised the nature of the main proceedings in JKC Australia LNG Pty Ltd v AkzoNobel NV [2019] FCA 1032, but for ease of reference repeat the summary: [1] The Ichthys Onshore Project is one of the world's largest liquefied natural gas developments. In short, it involves the extraction of gas and condensate from the Ichthys Field in the Browse Basin off North West Australia and transportation of the gas and condensate by 890 km of undersea pipeline to onshore LNG facilities near Darwin for conversion into LNG for export. [2] A short summary of the pleaded case is as follows. [3] The applicant in these proceedings (JKC) entered into a contract with INPEX Operations Australia Pty Ltd (INPEX) for JKC to undertake certain engineering, procurement, supply, construction and commissioning for the project (the contract is referred to as the EPC contract). [4] Relevantly, one of JKC's tasks under the contract was to develop coating specifications for pipework and equipment as necessary for the scope of its works. [5] After various correspondence with one or both of the respondents (AkzoNobel parties), JKC directed certain suppliers to use a particular coating system known as Intertherm 228 on pipework and equipment modules. [6] Following use of Intertherm 228, degradation and decolourisation issues arose with respect to the coated pipework and equipment. [7] In these proceedings, JKC alleges that the AkzoNobel parties engaged in conduct that was misleading or deceptive or likely to mislead or deceive by endorsing the use of Intertherm 228 for the project. [8] JKC alleges that a regime of repairs was instituted, but it alleges that the AkzoNobel parties also engaged in misleading or deceptive conduct with respect to the repair process. [9] JKC alleges that the AkzoNobel parties then advised INPEX and JKC, in effect, that Intertherm 228 was not suitable for use in the manner it was used on the Ichthys Onshore Project. INPEX withdrew its approval for the repair regime and directed JKC to conduct rectification work. [10] JKC says that it has suffered or is likely to suffer loss or damage by reason of the misleading and deceptive conduct of one or both of the AkzoNobel parties. [11] The AkzoNobel parties deny the allegations. 4 Since that summary there have been various amendments to the pleadings but it is not necessary to describe them for the purposes of these reasons.

Basis of application to set aside subpoenas 5 The respondents (who it is accepted by JKC and the Court to have a sufficient interest within the meaning of r 24.15(1) of the Federal Court Rules 2011 (Cth)) and the Subpoenaed Entities challenge the subpoenas, which are relevantly identical, on four grounds, being that the subpoenas: (1) substantially duplicate the discovery process, in which the Subpoenaed Entities have agreed to provide relevant documents to the respondents; (2) require the production of documents that lack apparent relevance to the issues arising on the pleadings; (3) are unreasonably broad and lack reasonable particularity; and (4) are oppressive in that they will impose an excessive burden on the Subpoenaed Entities. 6 After the application to set aside the subpoenas was filed, conferral continued between the parties and there has been considerable agreement by the Subpoenaed Entities as to categories of documents they will produce. Proposed amendments to the subpoenas have been agreed and incorporated in a marked up schedule. Further amendments have been proffered by JKC but they have not been agreed to. 7 I attach as Schedule A to these reasons a copy of one of the proposed amended subpoena schedules in marked-up form that includes both the agreed and proffered amendments. The relevance of including Schedule A is that it reveals the extensive nature of the suggested amendments. 8 Rule 24.15 of the Federal Court Rules provides that: Setting aside or other relief (1) The Court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in relation to it. (2) An application under subrule (1) must be made on notice to the issuing party. (3) The Court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest. 9 The power granted by the rule provides scope for amendment as well as setting aside. There are examples in the authorities where this Court has ordered that a subpoena be amended: an example is FAI Home Security Pty Ltd v Jay-N-Tee Pty Ltd [1999] FCA 1408 (Finkelstein J). 10 However, there is little authority on the scope of the rule in circumstances where extensive amendments are sought. A decision as to whether or not the power should be exercised may be informed, at least in part, by reference to cases in other jurisdictions that have dealt with that question. I also have regard to the overarching purpose of civil practice and procedure described in s 37M of the Federal Court of Australia Act 1976 (Cth) and the Practice Note on the National Court Framework and Case Management (CPN-1). 11 In Santos Ltd v Pipelines Authority of SA (1966) 66 SASR 38 at 56, Debelle J stated: On an application to set aside a subpoena, the court is concerned to ensure that the parties have not abused the right to obtain the subpoena: Raymond v Tapson (1882) 22 Ch D 430; Purnell Bros Pty Ltd v Transport Engineers Pty Ltd (1984) 73 FLR 160 at 175. Ambiguity aside, this subpoena is neither oppressive nor an abuse of process. Where an obvious amendment would cure an ambiguity, it might be appropriate for the court to amend the subpoena on the application of the party who obtained the issue. There is nothing in the terms or the spirit of s 17 of the Commercial Arbitration Act or in the Supreme Court Rules which tells against such a course. The purpose of the subpoena is to facilitate the proper administration of justice between parties: Lucas Industries Ltd v Hewitt (at 570). If the court does not permit an amendment, the party can again apply for the issue of a subpoena in terms which are satisfactory. It would defeat the interests of justice, if not to engage also in an excess of legalism, to deny the power to amend to cure an ambiguity. However, the power to amend should not be lightly exercised. It is not the task of the court to redraw the subpoena in order to make it unobjectionable. The power should be exercised only where the amendment is obvious, readily cures the ambiguity and the subpoena is not otherwise oppressive. If it applies to do so, I would permit PASA to amend its subpoena by deleting the words 'management report' and substituting therefor the words 'all reports prepared by or for management'. 12 In Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [No 6] [2012] WASC 450, Edelman J cited the above extract from Santos and refused to amend a subpoena issued by Lanco Resources Limited, stating: [26] The appropriate course for Lanco Resources International to have taken should have been for it to have issued a fresh subpoena. In oral submissions it was suggested that I might exercise a discretion to issue a fresh subpoena. Even assuming that the Court is empowered to exercise a discretion to reformulate, rewrite, and issue a new subpoena on behalf of Lanco Resources International, it is not appropriate to do so. Nor would I exercise a discretion to issue a subpoena in the terms of the proposed amended subpoena. It is not necessary to say anything more than that the issue of a new subpoena in the precise terms of the proposed amendments or the issue of a subpoena in some undefined but reformulated manner would raise serious concerns, including oppression. These concerns are an insuperable obstacle to the Court issuing the subpoena as amended or drafting any fresh subpoena for Lanco Resources International. 13 The following extract from Findlay v Grimmer [2013] WASC 234 (Kenneth Martin J) is also useful: [16] RSC O 36 r 4 affords both a power to set aside a subpoena and a power to make such further orders as the court thinks appropriate. In the circumstances, I will evaluate a potential exercise of either power, in the context of the necessary formality concerning what is involved in properly answering a subpoena bearing in mind the potential contempt sanctions for a non-compliance. These outcomes are strict in their potential consequences. [17] This action is now case-managed in my CMC list. I have had the benefit of references to case authorities that address a somewhat narrow power of the court to allow amendments to a subpoena, beyond a bare blue pencilling excision: see Perdaman Chemicals & Fertilisers Pty v Griffin Coal Mining Co Pty Ltd [No 6] [2012] WASCA 450 [11] - [12] (Edelman J). [18] Here, I think the safest course overall - bearing in mind a non-compliance controversy that has evolved - is to set aside this subpoena, preserving the plaintiff's right to issue a further document subpoena of a narrower scope, as it has offered in the conferral correspondence. The fresh subpoena may be in such terms as the plaintiff thinks fit, but no doubt sensibly taking account of the conferral dialogue that has ensued to date, the objections or concessions that have been made and these reasons. 14 In this case, as is apparent from Schedule A, the parties accept that extensive amendments to the subpoena would be required in order to reflect the current position between the parties. They also accept that it follows that the appropriate course is that the subpoenas as issued be set aside. However, merely allowing the application to set aside the subpoenas on that basis would not assist with resolution of the real questions between the parties. Whilst fresh subpoenas could be issued that incorporate the agreed refinements, there remain five categories where agreement has not been reached. The sensible course from a case management perspective is to address those disputed categories so that if JKC seeks to issue any fresh subpoenas, it may do so having regard to these reasons. This approach accords with that taken in Findlay v Grimmer. The reasons may also assist with further conferral.

Context - denial that carried on business in Australia 15 An important matter in the context of this application is that the respondents deny that they carried on business in Australia at the relevant time. The first respondent is incorporated under the laws of the Netherlands. The second respondent is incorporated under the laws of the United Kingdom. The respondents deny carrying on business in Australia through the Subpoenaed Entities, through certain business names including International Paint, or through other related entities. The respondents plead that other identified subsidiaries carried on business in other countries, such as Thailand and China, in their own right. 16 JKC has provided particulars by letter to the respondents' solicitors setting out the basis upon which JKC asserts that the respondents carried on business in Australia. The letter comprises a list of facts, including: (a) the fact that that your client created marketing and technical information for its products, including Intertherm 228 … for use in various jurisdictions including Australia; (b) the fact that your client distributed internationally marketing information and the technical material referred to in paragraph (a) above through the website 'www.international-pc.com', which was accessible in Australia; (c) the fact that your clients conducted testing of coating products for use in Australia; … (g) the fact that your clients supervised the product quality of products manufactured by its Australian subsidiaries; … (k) your clients' provision of technical support to its Australian subsidiaries with respect to the performance and maintenance of its products. 17 A number of the remaining impugned categories in the subpoenas are directed at this issue.

Some preliminary matters 18 There is an ongoing discovery process underway in these proceedings. For the purpose of discovery the parties prepared a Redfern schedule with a number of objections that required determination by the Court. I made directions in that regard on 18 January 2019. 19 The parties then embarked on a process of conferral as to further discovery and prepared a second Redfern schedule. There remain some disputed categories, as to which the parties have filed evidence and submissions (the last submissions were filed 11 December 2020). I will determine the objections to those categories in due course. 20 The AkzoNobel Parties assert that the subpoenas the subject of this application duplicate the discovery process and that the Subpoenaed Entities have provided and have agreed to continue to provide documents to the respondents relevant to the proceedings so that they may be discovered by the respondents. Therefore, they submit, there is no utility in the issue of the subpoenas. The subpoenas add to the costs that will be incurred by the parties and constitute an abuse of process. 21 The Subpoenaed Entities have written letters to the respondents that were before the Court, stating that to the extent the Subpoenaed Entities hold documents relevant to the proceedings, they will provide them to the respondents. It would follow that the respondents would discover such documents. 22 JKC contends that although those letters have been provided, whether documents will in fact be produced to the respondents remains uncertain. JKC submits that currently there is no basis upon which the Subpoenaed Entities are compelled to provide such documents to the respondents. JKC cannot be sure to what extent searches will be undertaken and to what extent a complete set of relevant documents will be provided. It seeks the comfort of a process that compels compliance by the Subpoenaed Entities. To this end, JKC suggested alternative courses, such as seeking an order that the respondents be obliged to make due inquiries of the Subpoenaed Entities (see, for example, Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428 at 432) or that officers of the Subpoenaed Entities voluntarily provide an affidavit listing the documents in their possession that fall within the categories and that have been provided to the respondents, and so in effect the Subpoenaed Entities would be providing voluntary third party discovery. The parties were unable to agree to either of those options and so JKC has pursued the option available to it under the Federal Court Rules of seeking documents from the Subpoenaed Entities by the issue of subpoenas. 23 JKC points to other reasons why the issue of subpoenas is not an abuse of process, despite the discovery process continuing between the parties. JKC says that in light of the pleaded case, it must establish that the respondents carry on business in Australia. Therefore, it seeks documents that the Subpoenaed Entities, being based in Australia, have in their possession. It submits that the fact that the respondents may also have such documents in their possession and may discover them does not assist in providing evidence of a relevant link between the respondents and the conduct of business in Australia. 24 JKC also refers to its definition of 'Product' in the subpoenas and the fact that it seeks documents relating to a broader range of products than the particular products in issue in the proceedings. It submits that evidence as to the marketing of products, even where it relates to different products than those the subject of the proceedings, may support its contention that the respondents carried on business in Australia. 25 JKC also submits that the overlap between the documents sought by the subpoenas and those sought by discovery from the respondents is in any event not complete (and refers, in particular, to category 10 of the subpoenas). 26 It is clear that the parties have made a concerted effort to agree the scope of document production without formal orders. That process has now reached a hurdle. I consider JKC is entitled to utilise the step of seeking to issue subpoenas to the Subpoenaed Entities, bearing in mind they are not parties to the litigation. That there might be other options to obtain documents - such as by consent through production to the respondents or by third party discovery applications - does not deny JKC the right to use the legitimate tool of a subpoena, provided it is not deployed in an oppressive or improper manner. 27 Whilst I accept that the prospect of duplication of work loomed large before the proposed reduction of the scope of some of the categories, I do not consider that continues to be as significant an issue, now that the categories have been refined by agreement. I also consider there is force in JKC's submission that in light of the pleaded denial by the respondents that they carried on business in Australia, there is forensic evidentiary value for JKC in ascertaining whether the Subpoenaed Entities have relevant information amongst their business records in Australia that has been provided to them by, or is otherwise connected to, the respondents. Viewed realistically, such documents are reasonably likely to add in some way to the relevant evidence as to that contested issue. The scope of the particulars provided by JKC and to which I have referred supports this view. It may be that the ultimate probative value of such documents is of little weight, but that is not matter that can be assessed now. 28 The assessment of relevance is addressed in a number of cases, including Wong v Sklavos [2014] FCAFC 120, to which the parties referred. The Full Court in that case said: [12] Although the parties referred to several authorities concerning the requirement for subpoenaed documents to have apparent relevance to an issue in a proceeding, in our opinion, the applicable principles are well established. The party issuing a subpoena bears the onus of demonstrating that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings: Santos Ltd v Pipelines Authority of South Australia (1996) 66 SASR 38 at 52. A subpoena may be set aside if it requires the production of documents which do not have apparent relevance to the issues arising on the pleadings: Trade Practice Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) [2010] FCA 398; (2010) 269 ALR 76 at [39]-[40]; McHugh v Australian Jockey Club Limited [No 2] [2011] FCA 724 at [13]; McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233; (2005) 221 ALR 785 at [35]; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 558 at [17]. Other cases have used different terminology, but with essentially the same effect, for example, by requiring that, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative (R v Barton (1981) 2 NSWLR 414 at 420), or that the material sought is reasonably likely to add in some way to the relevant evidence in the case (Spencer Motors Pty Ltd v LNC Industries Ltd (1982) 2 NSWLR 921 at 927), or that it be 'on the cards' that the documents sought will materially assist the party at whose request the subpoena has been issued: Allister v The Queen (1984) 154 CLR 404 at 414; Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364 at [13], [35]-[38]. 29 As to the question of oppression, the AkzoNobel Parties submit that it would be burdensome to comply with the subpoenas as many documents might require review, having regard to the breadth of the proposed categories. It was also submitted that the subpoenas were oppressive on the basis that they placed an obligation on the Subpoenaed Entities to form a judgement as to which documents might relate to the category. 30 JKC submits that whether or not a task is burdensome is to be measured having regard to the interests of justice generally; the fact that knowledge about some matters is held solely by the respondents; that the AkzoNobel Parties are represented by the same solicitors; and that the respondents may be taken to have some knowledge that will assist the Subpoenaed Entities in complying with any subpoena. I have taken all of those matters into account in these reasons. 31 I will deal with the question of oppression with respect to each of the impugned categories, but note that the principles were not in issue. It suffices to refer to Re Excel Finance Corp Ltd; Worthley v Australian Securities Commission (1993) 41 FCR 346 (as to excessive width) and Adelaide Steamship Company v Spalvins (1997) 24 ACSR 536 (as to formation of a judgement). 32 I note that JKC has confirmed that it would agree to an order pursuant to r 24.22(1) of the Federal Court Rules that it pay any reasonable loss or expense incurred by the Subpoenaed Entities, and submits this is relevant to the question of oppression. The offer to meet reasonable costs of compliance is not an answer to the oppression arguments raised in this matter. The fact that reasonable costs of compliance with a subpoena may be met does not remove the need to consider carefully the scope of a subpoena, the work involved in order to comply, the proper and reasonable incurring of costs of complex litigation and the effect on the resources of the parties and the Court.

Category 5 33 The first category that remains in issue is category 5: All marketing Documents (including any brochures, advertisements and pamphlets) for each Product from the Relevant Period that: (a) were prepared, produced, checked, approved, provided or distributed by either of the Respondents; or (b) refer to either of the Respondents. 34 The AkzoNobel Parties make three complaints about category 5. First, they say that the reference to all marketing documents is too broad and therefore is oppressive, particularly when read with the balance of the description of the category. 35 Second, as to paragraph (a), they say that the Subpoenaed Entities cannot assess whether particular documents were 'prepared, produced, checked, approved, provided or distributed' by either of the respondents, that being a matter upon which the respondents may have some insight, but upon which the Subpoenaed Entities do not. Therefore, on the submission, an attempt to comply with the category involves a judgement call and so is oppressive. For convenience, I will refer to this as the judgement objection, as it also arises in other categories. 36 Third, the AkzoNobel Parties submit that use of the expression that documents 'refer to either of the respondents' is oppressive because the terms 'AkzoNobel' and 'International Paint', are used as brand names in numerous documents. JKC accepts it is not clear from use of those expressions to which entity the document may refer. Therefore, it is not clear, without more, that a reference to those words in a document is a reference to the respondents, to another entity or simply a reference to a brand name. For convenience, I will refer to this as the reference objection, as it arises with respect to other categories. The AkzoNobel Parties note that the relevance of documents which simply refer to a brand name is questionable and so any forensic value of such a document is disproportionate to the task required in locating all documents that use those expressions. 37 As to the judgement objection, JKC accepts that there is a difference in the position as to documents that are 'prepared, produced, checked and approved' by the respondents and those that are 'provided or distributed' by the respondents and are in the Subpoenaed Entities' possession. As to the first expression, it is unclear how the Subpoenaed Entities reviewing any particular document would be able to discern whether it met that description. On the other hand, locating and ascertaining those documents that were 'provided or distributed' by the respondents ought to be a manageable task. However, JKC submits that the burden of complying with the proposed category is outweighed by the interests of justice. 38 As to the reference objection, JKC accepts that use of a broad filter to locate documents that refer to 'AkzoNobel' or 'International Paint' may lead to the production of many documents which include those words and in a manner that does not discriminate between a brand and a corporate entity. JKC accepts that a more narrow filter (such as searching by 'AkzoNobel NV', 'International Paint Limited' or 'International Paint Ltd' will reduce the search task and the number of documents to be produced. However, again, JKC submits that the burden of complying with the proposed category is outweighed by the interests of justice. 39 I accept the AkzoNobel Parties' submission that the category is oppressive as currently drawn. A requirement that involves a review of each document that might be within the category in order to assess whether the respondents prepared, produced, checked and approved it is oppressive in the circumstances. An obligation to assess whether any reference to 'AkzoNobel' or 'International Paint' might be a reference to the respondents is oppressive. To avoid oppression, the category should be refined. For example, on the basis of the evidence currently before me, I do not consider it would be oppressive for the Subpoenaed Entities to search for and produce marketing documents that have been provided or distributed by the respondents or that refer to either or both of the respondents by the names 'AkzoNobel NV', 'Akzo Nobel NV', 'International Paint Limited' or 'International Paint Ltd'. 40 In forming this view I have not ignored the fact that, when making the discovery determinations referred to at [18] above, I raised as an issue the question of discovering documents that 'refer' to something, and whether such a description is helpful where documents of no forensic value inevitably will be captured by such a description. However, in this case, where it is third parties who are obliged to undertake the requisite searches, where the mention of one of the respondents' names may have some relevance, and where I have found that the category should in any event be refined, I do not consider the use of 'refers' creates the difficulties that may occur in other scenarios. 41 It is also to be borne in mind that the respondents, separately, remain obliged to make discovery as to the issue of whether they conduct business in Australia. JKC will therefore have access to documents provided by the respondents, together with any documents they obtain from the Subpoenaed Entities for the purpose of trial. For example, the respondents in the course of making discovery would be expected to produce any emails from them to the Subpoenaed Entities that might attach any marketing documents relevant to the pleaded issues. 42 It may be that after the discovery process has been completed by the parties and after receipt of any documents from the Subpoenaed Entities, there may be a legitimate forensic requirement to seek further specific classes of documents by subpoena. These reasons should not be seen as limiting the rights of the parties in that regard.

Category 6 43 The second category that remains in issue is category 6: All Documents recording the formula(e): (a) for Intertherm 228; or (b) for each Product, where the Document was prepared, produced, checked, approved, provided or distributed by either of the Respondents or where the Document refers to either of the Respondents. 44 The AkzoNobel Parties take no issue with the scope of category 6(a) and have indicated they will produce copies of such documents. However, as to category 6(b), again the judgement objection is made, as is the reference objection. JKC submits that to the extent complaint is made as to the scope of the documents, it only seeks documents that record the formulae 'being the records that are formally or conventionally used to record such formulae'. To my mind that is a valuable limitation on scope. However, I would uphold the judgement objection and the reference objection, for the reasons applicable to category 5. The category should be similarly refined. 45 I note that there are likely to be confidentiality issues that arise as to the production of documents that refer to (for example) formulae. Any such issues can be dealt with in due course. Confidentiality is not of itself a reason to set aside the subpoenas: see the discussion in Wong v Sklavos at [30]-[37]. That is particularly so in this case where the parties have a confidentiality regime already in place.

Category 10 46 The third category that remains in issue is category 10: All Documents created during, or covering, the Relevant Period recording the result of: (a) any testing of Intertherm 228; (b) any testing of any coating products manufactured or sold by you, where: (i) the testing was directed, checked or approved by, or carried out by or with assistance from, either Respondent; or (ii) the Document refers to either Respondent. 47 As to category 10, category 10(a) is not in issue. 48 However, the AkzoNobel Parties raise several issues with respect to category 10(b). Significantly, they complain that the category of testing of 'any coating products manufactured or sold by you' is too broad. They also make the judgement objection and the reference objection. 49 Some evidence addressing this category was given by Mr Arthur Zafiriou, the financial controller of AkzoNobel Pty Ltd and the company secretary of both Subpoenaed Entities. He states as follows: 15. Paragraph 10 of the documents sought by the Subpoenas requires production of all documents created during, or covering, the Relevant Period recording the result of any testing of any coating products manufactured or sold by Akzo Nobel Coatings (Holdings) Pty Limited or Akzo Nobel Pty Limited. 16 During the Relevant Period, Akzo Nobel Pty Limited operated manufacturing plants at Yeronga, Queensland (with a capacity of approximately 10 million litres per year) and Sunshine, Victoria (with a capacity of approximately 30 million litres per year). The Yeronga plant closed in 2015. 17. Akzo Nobel Pty Limited manufactures coating products for a number of different industries and materials, including protective coatings, marine (shipping), yacht, metals (coil and packaging) and wood. I do not know the exact number of individual products that would have been manufactured by Akzo Nobel Pty Limited during the Relevant Period. Each product has its own stock keeping unit (SKU). Each SKU is grouped into different categories and families. For example, product no 5348943, INTERTHANE 990 PHB000/A5L/RP is an SKU. This SKU is part of the Interthane 990 family/category. 18. I do not know the exact number, but there would have been around 50 to 60 thousand different SKUs manufactured across the 2 plants during the Relevant Period. 19. While a product is being manufactured, batch testing is continually undertaken and the results recorded as part of the quality control process and to ensure compliance with specifications. The Sunshine plant conducts around 300 to 500 batch tests per week. The Yeronga plant averaged around 200 to 250 batch tests per week. 50 JKC submits that it does not seek batch test results within this category. It submits that it seeks only the documents recording the testing results, such as reports or other formal documentation utilised to record testing results. It submits that once batch testing is ignored, there is no evidence as to how much testing would be involved. In my view, what is otherwise meant by testing (if not batch testing) is therefore unclear and that is perhaps one reason the evidence is somewhat equivocal. However, counsel for the AkzoNobel Parties submitted the category still covers a very large number of products and a very large number of tests. 51 This category is oppressive having regard to its scope, questionable forensic value and the judgement and reference objections. Having regard to Mr Zafiriou's evidence as to the number of products manufactured for diverse circumstances and the potential for a very large number of tests to be undertaken (even leaving aside batch testing), compliance with this category would require production and review of potentially many, many documents. JKC's offer to limit the document class to those that 'record' test results in this context does not greatly assist, as one can fairly assume that the results of each test must be formally recorded in any event. 52 Rather than the Court attempting to re-write this category for JKC, it is suggested that JKC, having regard to Mr Zafiriou's evidence, reconsider the manner in which a useful category of documents that may evidence an involvement or supervision link with the respondents might be described. For example, whilst by use of appropriate filters the task of collating testing documents that refer to 'AkzoNobel NV', 'Akzo Nobel NV', 'International Paint Limited' or 'International Paint Ltd' might be feasible, it is unlikely that a description that requires the subpoena recipient to assess whether each test was 'directed, checked or approved by, or carried out by or with assistance from either respondent' is a workable description. The position may be different, however, if the type and frequency of testing (not being batch testing) is clarified. With some refinement, the task of assessing the role of the respondents (if any) with respect to testing may become manageable for the Subpoenaed Entities. I also note that (for example) to the extent any such 'directions' or 'approvals' from the respondents exist, it may be that they exist separately and are not part of the testing records themselves.

Category 11 53 The fourth category that remains in issue is category 11: All Documents created during, or covering, the Relevant Period recording any control quality practice or processes that applied to any coating product manufactured or sold by you, where: (a) the Document was prepared, produced, checked, approved, provided or distributed by either of the Respondents; (b) the Document refers to either of the Respondents; or (c) the practice or process is or was prepared, directed, controlled or approved by either Respondent. 54 As to category 11 the AkzoNobel Parties contend that the category is oppressive for the same reasons relevant to category 10. That is, the reference to 'any coating product manufactured or sold by [the Subpoenaed Entities]' is too broad, having regard to the number and nature of products referred to by Mr Zafiriou; the judgement objection arises with respect to category 11(a); the reference objection arises with respect to category 11(b); and the judgement question arises with respect to category 11(c). 55 JKC does not know the precise manner in which the respondents or Subpoenaed Entities describe or record documents that address control quality practices or processes. JKC has emphasised that it is only seeking documents that 'record' such control quality practices or processes. It anticipates that such documents are of a formal nature and it suggests that such documents might more properly be described as procedures, manuals, presentations or other types of formal documentation. From that description it seems to me that the types of documentary records sought by JKC can reasonably be understood. The number of such documents is highly unlikely to be anywhere near the number of test results referred to in category 10. Therefore, I do not consider category 11 suffers from the same oppressive breadth issue as category 10. However, as currently drafted it remains oppressive on the basis of the judgement objection and the reference objection. 56 It is open to JKC to refine the category further. I accept that records or documents (such as procedures, manuals, presentations or other type of formal documentation) that address control quality practices or processes and that indicate involvement as between the respondents and the Subpoenaed Entities potentially have forensic relevance.

Category 12 57 Finally, category 12 remains in issue: Any employee secondment agreement entered into during the Relevant Period: (a) between you and either of the Respondents; or (b) between you and any other Group Company, where the agreement refers to either of the Respondents. 58 Category 12(a) has been agreed between the parties. As to category 12(b), the AkzoNobel Parties submit that the terms of any employee secondment agreement with an entity other than the respondents lacks relevance. JKC submits that such an agreement might indicate, for example, that employees of subsidiary companies were to act at the direction of the respondents and so in this manner such an agreement may be relevant to the issue of whether the respondents carried on business in Australia. 59 In my view this suggestion as to the terms of such agreements is overly speculative. I am not satisfied that there is a basis for requiring production of employee secondment agreements unless they relate to arrangements between the respondents and the Subpoenaed Entities.

Conclusion 60 For the reasons given at [7]-[14] above, the subpoenas will be set aside. 61 The course that JKC wishes to take from here is a matter for it and its advisors. I anticipate there will be further conferral between the parties. It is open to JKC to seek leave for further subpoenas to issue. I expect these reasons will be taken into account in the drafting of any further subpoenas. However, it remains open for JKC to pursue other methods of gathering information, including further discovery, should it consider that to be an appropriate course. 62 I will reserve the question of costs of the application. If the parties reach agreement as to the treatment of costs they may provide a minute, if required. Otherwise, the question of costs may be raised at the next case management hearing in this matter. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.

Associate: Dated: 11 December 2020 Schedule A Revised Schedule of documents In this Subpoena: (a) 'Document', means (i) anything on which there is writing; or (ii) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; or (iii) anything from which sounds, images or writings can be reproduced with or without the aid of anything else; or (iv) a map, plan, drawing or photograph. (b) 'Group Company' means each of the following companies: (i) Akzo Nobel (C) Holdings B.V.; (ii) Akzo Nobel Coatings B.V.; (iii) AkzoNobel Coatings (Holdings) Pty Limited; (iv) Akzo Nobel Coatings International B.V.; (v) Akzo Nobel Coatings Ltd; (vi) Akzo Nobel Coatings Ltd NZ; (vii) Akzo Nobel Coatings Vietnam Limited; (viii) Akzo Nobel Finance Limited; (ix) Akzo Nobel International Paint (Suzhou) Co Ltd; (x) Akzo Nobel Limited (PAPUA NEW GUINEA); (xi) Akzo Nobel N.V.; (xii) AkzoNobel Pty Limited; (xiii) International Paint (Nederland) B.V.; (xiv) International Paint LLC Yacht; (xv) International Paint Ltd; and (xvi) International Paint Singapore Pty Ltd. (c) 'Plant' means the Ichthys LNG plant located at Bladin Point, Northern Territory, Australia. (d) 'Product' means each of the following products: (i) Intertherm 228; (ii) Intertherm 228 HS; (iii) Intershield 300; (iv) Interbond 1202UPC; (v) Interzone 954; (vi) Interbond 2340UPC; and (vii) Intertherm 875. (e) 'Relevant Period' means the period 2010-2017. The Documents and things you must produce are as follows:

All licensing agreements between you and any other Group Company entered into during, or covering, the Relevant Period, (a) to which one or other of the respondents is a party; or (b) which refer to the respondents, or otherwise evidence the activities or role of the respondents in the conduct of the Akzonobel / International Paint business in Australia.
If not covered by (1), all licensing agreements between you and any entity entered into during, or covering, the Relevant Period, concerning: (a) Intertherm 228; and (b) Intertherm 228 HS; where: (c) one or other of the respondents is a party; or (d) the document refers to the respondents, or otherwise evidences the activities or role of the respondents in the conduct of the Akzonobel / International Paint business in Australia.
All royalty agreements between you and any other Group Company entered into during, or covering, the Relevant Period, (a) to which one or other of the respondents is a party; or (b) which refer to the respondents, or otherwise evidence the activities or role of the respondents in the conduct of the Akzonobel / International Paint business in Australia.
All marketing or advertising agreements between you and any other Group Company entered into during, or covering, the Relevant Period, (a) to which one or other of the respondents is a party; or (b) which refer to the respondents, or otherwise evidence the activities or role of the respondents in the conduct of the Akzonobel / International Paint business in Australia.
All marketing Documents (including any brochures, advertisements and pamphlets) for each Product from the Relevant Period that: (a) were prepared, produced, checked, approved, provided or distributed by either of the Respondents; or (b) refer to either of the Respondents.
All Documents recording the formula(e): for each Product. (a) for Intertherm 228; or (b) for each Product, where the Document was prepared, produced checked, approved, provided or distributed by either of the Respondents or where the Document refers to either of the Respondents.
All agreements between you and any other Group Company entered into during, or covering, the Relevant Period for the provision of (a) marketing support for any coating products sold or manufactured by you; and/or (b) technical support for any coating products sold or manufactured by you, where: (c) one or other of the respondents is a party; or (d) the document refers to the respondents, or otherwise evidences the activities or role of the respondents in the conduct of the Akzonobel / International Paint business in Australia.
All Documents recording the testing and the result of any batch testing of: (a) Intertherm 228; and (b) Intertherm 228 HS, used on the Plant in the Relevant Period
[Category not pressed.]
All Documents created during, or covering, the Relevant Period recording the result of: (a) any testing of Intertherm 228; (b) any testing of any coating products manufactured or sold by you, where: (i) the testing was directed, checked or approved by, or carried out by or with assistance from, either Respondent; or (ii) the Document refers to either Respondent.
All Documents created during, or covering, the Relevant Period recording any control quality practice or processes that applied to any coating product manufactured or sold by you, where: (a) the Document was prepared, produced, checked, approved, provided or distributed by either of the Respondents; (b) the Document refers to either of the Respondents; or (c) the practice or process is or was prepared, directed, controlled or approved by either Respondent.
Any employee secondment agreement entered into between you and any other Group Company during the Relevant Period: (a) between you and either of the Respondents; or (b) between you and any other Group Company, where the agreement refers to either of the Respondents.
All Documents (including any letters, emails (and attachments thereto), facsimile transmissions, file notes and minutes of meetings) recording any communication that occurred in the Relevant Period about: (a) the coating products known as Intertherm 228 and Intertherm 228HS where the communication: (i) was with or copied to either of the Respondents or their employees, officers or representatives; (ii) referred to either of the Respondents or their employees, officers or representatives; or (iii) evidences or relates to any performance issues or difficulties with the products, the appropriate usage of the products, the PDS for the products, any performance testing of the products or the track record of the products; (b) the formulae for each Product, where the communication: (i) was with or copied to either of the Respondents or their employees, officers or representatives; or (ii) referred to either of the Respondents or their employees, officers or representatives; (c) any quality control practice or process that applied to any coating products manufactured or sold by you, where the communication: (i) was with or copied to either of the Respondents or their employees, officers or representatives; or (ii) referred to either of the Respondents or their employees, officers or representatives; (d) [Categories 13(d) and (e) are not pressed.]
[Category 14 is not pressed.]
Copies of all contracts of employment between you and (a) Ben Biddle; (b) Ben Burrell; (c) Andrew Smith; and (d) Jamie Shaw.

Federal Court Rules 2011(Cth)r 24.15, 24.22

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (22)

Cited By (1)