Kraft Foods Group Brands LLC v Bega Cheese Limited

1. Orders 1 and 2 accompanying the reasons in Kraft Foods Group Brands LLC v Bega Cheese Limited (No 4) [2018] FCA 1055 announced in court on 13 July 2018 be set aside.
2. By 20 July 2018, Mondelez Australia (Foods) Ltd take all reasonable steps available to it to obtain the documents, or copies thereof, which fall within the categories set out in the form of annexure 1 to the minute of proposed order submitted by counsel for the applicants at the hearing on 6 July 2018, which are in the power, custody or control of Intercontinental Great Brands LLC.
3. If the document(s) are not produced by 4.30pm on 20 July 2018, Mondelez Australia (Foods) Ltd, by a director having knowledge of the facts, is to file and serve an affidavit as to Mondelez Australia (Foods) Ltd's efforts made pursuant to (2) above. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 Kraft Foods Group Brands LLC and H.J. Heinz Company Australia Limited (Kraft), the applicants in this proceeding, seek leave to serve a subpoena on International Great Brands LLC (IGB), a United States corporation. 2 By the terms of the proposed subpoena, Kraft asks that the court order IGB to produce any licence agreement which governs the use in Australia of any trademarks, trade indicia or trade dress (registered or unregistered) appearing on peanut butter bearing the trade mark "Kraft" in the period from 1 October 2012 to 31 December 2017 to which IGB is a party or to which any other company within the Mondelez international group of companies is a party (but excluding any licence agreements to which Mondelez Australia (Foods) Ltd (MAFL) is a party). 3 It was not disputed that the licence agreement or agreements contemplated do exist and are relevant to the issues in dispute in this proceeding between Kraft and the respondent, Bega Cheese Ltd (Bega), the trial of which will commence before me on 6 August 2018. 4 Mr Heerey QC, with Mr Peckham, appeared for MAFL, the company upon whom Kraft proposes to serve the subpoena, by serving it upon Mr Syme, who is "the Director - Commercial Finance ANZ & Japan of the Mondelez International group of companies", according to an affidavit he swore. 5 MAFL opposes the grant of leave to Kraft to issue the subpoena. 6 MAFL submits that the court has no power to issue such a subpoena on a foreign corporation and that, even if such a power exists, leave to issue the subpoena should not be granted because it will not be complied with. 7 This is not the occasion to consider in any detail the cases that consider those questions. As Wigney J explained in Ceramic Fuel Cells (in liq) v McGraw-Hill Financial Inc (2016) 245 FCR 340, 344 at [11], "[t]he question whether the Court has power to grant leave to issue a subpoena to a person outside Australia is controversial and, to an extent, remains unsettled." As Wigney J went on to say (at [11]): … Doubts have been expressed, both in this Court and some State Supreme Courts, about whether general rules of court that permit documents filed in or issued by a court to be served overseas extend to permit the issue and service of subpoenas addressed to persons overseas. In most cases, however, it has not been necessary to decide that question. That is because it has generally been decided that, even if the relevant rules extended that far, the court should nevertheless refuse to issue the subpoena, or grant leave to serve it overseas, in the exercise of its discretion. See too Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 890 at [10], [13] and [32]. 8 In Ceramic Fuel Cells (in liq) v McGraw-Hill Financial Inc (2016) 245 FCR 340, Wigney J issued a subpoena, having concluded that the Court had the power to do so, and should, in the exercise of its discretion, exercise that power due to "unique, if not exceptional circumstances." In that case, among other things, the US addressee had indicated its willingness to comply before the subpoena was issued. However, in the events that occurred, it refused to accept service; it insisted that a subpoena issued by an Australian court was unenforceable in the United States; and it maintained that it would only comply with a subpoena issued by a United States court. In Ceramic Fuel Cells (in liq) v McGraw-Hill Financial Inc (No 2) (2016) 245 FCR 362, Wigney J said (at [6] and [33]): 6. Consideration was also given in [Ceramic Fuel Cells (in liq) v McGraw-Hill Financial Inc (2016) 245 FCR 340] to another important discretionary factor in deciding whether to issue and grant leave to serve a subpoena on a foreign entity. That consideration was that the Court has no effective power to enforce such a subpoena. That consideration was not found to be a weighty factor in deciding whether to issue a subpoena to US Bank National Association given the assurance that had apparently been given in relation to compliance with the subpoena. Of course, the subsequent refusal by US Bank National Association to comply with the subpoena only serves to highlight the importance of giving close consideration to the evidence as to whether compliance with the subpoena is likely to be an issue. … 33…The likely limited utility and unenforceability of the subpoenas is a weighty consideration in the circumstances. In relation to enforceability, it serves well to recall the words of Allsop J in Stemcore (Australasia) Pty Ltd v Oceanwave Line SA [2004] FCA 391 at [12], that a subpoena which is not capable of enforcement is "an empty threat, or the equivalent of a mere request couched in imperative terms". In a case where the foreign entity has indicated a willingness to voluntarily comply with the subpoena, as was believed to be the case in relation to the US Bank National Association subpoena, the unenforceability of the subpoena may well not be seen as an important or definitive consideration. This, however, is not such a case. 9 Even assuming, without deciding, that this court has the power to issue a subpoena to a foreign corporation, requiring it to produce documents in circumstances where non-production would render it liable to contempt in a jurisdiction to which it has not relevantly submitted, I would not exercise that power in this case, because it seems that IGB would not comply with such a subpoena. 10 In the alternative, Kraft seeks a "Sabre order", so called after the decision in Sabre Corporation Pty Ltd v Russ Kalvin's Hair Care Company (1993) 46 FCR 428. In that case, Lockhart J explained (at pp 431-432): In my opinion the Court has power to direct a party to take steps to obtain access to and discover documents which are in the possession, power or control of a third party where there is a real likelihood that the party to the proceeding would be given access to the documents upon request. Section 23 of the Federal Court of Australia Act 1976 (Cth) confers ample power upon the Court to make orders of the kind sought in paragraph (2) of the notice of motion, namely, an order that the applicant be required to request Joico to take steps to obtain access to and discover documents in the possession, power or control of Joico (the third basis relied on by the respondents and mentioned earlier). Section 23 provides: "The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." This power may be exercised where there is a real likelihood that the party to the proceeding against whom the order is made would be given access to the documents by the third party upon request. (Citations omitted). 11 Kraft seeks orders along these lines: (1) Kraft have leave to issue a subpoena to MAFL in the form of an attachment to Kraft's minute of proposed order; (2) MAFL take all reasonable steps available to it to obtain the documents, or copies thereof, which are referred to in paragraph 1 of the form of subpoena in that minute from IGB; and (3) If the document(s) are not produced, by 20 July 2018, MAFL, by a director having knowledge of the facts, file and serve an affidavit as to MAFL's efforts made pursuant to (2) above. 12 Kraft submits that, consistently with Lockhart J's decision in Sabre Corporation Pty Ltd v Russ Kalvin's Hair Care Company (1993) 46 FCR 428, where his Honour found on the facts that there was a real likelihood that the US corporation would provide the documents to the Australian distributor, such an order should be made in this case because such a real likelihood exists here. Cf Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L. (No 8) [2014] FCA 376 at [24] (per Besanko J). 13 Kraft's principal grounds for seeking a Sabre order are these. First, Mr Syme, in his affidavit sworn on 25 June 2018 directed to a question of confidentiality of documents (see Kraft Foods Group Brands LLC v Bega Cheese Limited (No 3) [2018] FCA 1023), swore that he is the "Director - Commercial Finance ANZ & Japan of the Mondelez International group of companies (Mondelez International Group)"; that Kraft Foods Global Brands LLC is the former name of a company within the Mondelez International Group which is now known as IGB; and that the Mondelez International Group includes IGB. 14 Secondly, Kraft places considerable weight on the terms of a letter written by Clifford Chance, MAFL's solicitors, to Mr Hallett of Spruson & Ferguson Lawyers, solicitor for Kraft. The letter is dated 30 June 2018 and was sent as part of MAFL's efforts to persuade Kraft that: (1) the documents it then sought were irrelevant to any disputed issue in this proceeding (2) the documents contained confidential information; and (3) insofar as the IGB documents were concerned, these were not within MAFL's power, possession or control, and not in Australia. 15 The letter, omitting formal parts, read as follows: For the avoidance of doubt we reconfirm that, on the basis set out in Mr Syme's affidavit dated 25 June 2018 and in our clients' oral submission made to O'Callaghan J on 26 June 2018, our clients consider the [matter] referred to in Mr Syme's affidavit as confidential and commercially sensitive. Our clients reserve their rights to take all necessary measures to preserve the confidentiality of that information. Moreover, we reconfirm our clients' position that such information is irrelevant to any disputed issue in the proceeding. In your client's request for leave to issue a subpoena to Mondelez Australia (Foods) Ltd (MAFL) dated 1 June 2018 the relevance of the documents sought was asserted narrowly, referring only to the question of ownership: "The documents requested at paragraphs 1 and 6 (trade mark licence agreements) are relevant to the ownership of the marks the subject of those licences, including the trade dress." As to your request that our client provide copies of the relevant intermediate agreement(s) between International Great Brands LLC (IGB) and the licensor … under the 2016 and 2017 Licence Agreements, we note that: (i) any such documents falls outside the scope of the subpoena; (ii) in any event, MAFL does not have any such documents in its possession, power or custody; (iii) any such documents are outside the jurisdiction of Australia. … Nevertheless, in the interests of avoiding any further waste of time and resources for the Court and all parties, we are instructed to state the following facts on behalf of our clients: (a) as stated in paragraph 10 of Mr Syme's affidavit, the 2011 Licence Agreement (as defined in Mr Syme's affidavit) was terminated by agreement between MAFL and IGB in December 2016. The parties to that agreement (i.e. MAFL and IGB) remained the same throughout its term; (b) IGB sub-licenced (directly or indirectly) its rights to the Kraft mark in Australia under the MTA to the [ ], for the purposes of the 2016 Licence Agreement (as defined in Mr Syme's affidavit) and the 2017 Licence Agreement (as defined in Mr Syme's affidavit). These facts are uncontroversial, and our clients anticipate that Bega would have no basis or reason to deny them. It follows that there is no further document or information that our clients ought be required to provide to your clients, and there is no need for these matters to be agitated further before O'Callaghan J at the hearing scheduled for Monday 2 July 2018. We await your clients' information in that regard. (Emphasis added). 16 Kraft's point is that Clifford Chance could only have told it that they had been instructed to state as a fact "on behalf of our clients" that IGB sub-licenced its rights to the Kraft mark in Australia under the relevant agreement if those instructions came from IGB. Kraft says MAFL, having ventured into the territory of seeking to avoid "further waste of time and resources for the Court and all parties" by asserting the relevant facts, and having insisted that they were "uncontroversial" facts, there is a reasonable likelihood that if a Sabre order is made of the type described above, the licence agreement(s) will be produced. 17 Mr Heerey submitted that I should not infer that a Sabre order would likely be productive, and that I should not make it for that reason, and because it was an application made with little notice. 18 In all the circumstances, however, I accept that Kraft has established a sufficient basis to permit the court to exercise its discretion to make a Sabre order in the usual form. 19 I will make orders accordingly. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan.