P & M Quality Smallgoods Pty Ltd v Seven Network

Alister v R [1983] HCA 45; (1984) 154 CLR 404 Attorney General for New South Wales v Dylan Chidgey [2008] NSW CCA 65 Fitzgerald v Magistrate's Court of Victoria [2001] VSC 348; [2001] 34 MVR 448 CASES CITED : Lakato v Walker [1999] NSWSC 1036 Lakatoi v Walker ([1998] NSWSC 470 R v Le [2000] NSWCCA 49 Regina v Saleam [1999] NSWCCA 86 Roads & Traffic Authority of NSW v Conolly

TEXTS CITED : S Odgers, Uniform Evidence Law (Thomson Reuters, 8th ed, 2009)

P & M Quality Smallgoods Pty Ltd (Plaintiff) PARTIES : Seven Network (Operations) Pty Ltd (First Defendant) Anthony Rechici (Second Defendant)

COUNSEL : Mr B McClintock SC, Ms C Rubagotti (Plaintiff) Mr D R Sibtain, Ms L Brown (First Defendant)

SOLICITORS : Landerer & Company (Plaintiff) Johnson Winter & Slattery (First Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2010/00150419 P & M Quality Smallgoods Pty Ltd trading as Primo Smallgoods v Seven Network (Operations) Pty Ltd & Ors

JUDGMENT 1 The plaintiff, P & M Smallgoods Pty Ltd T/as Primo Smallgoods ("Primo") moves on a notice of motion dated 22 July 2010 to set aside subpoenas in paragraph three. At the outset the plaintiff was granted leave to add an additional subparagraph (g) to paragraph three, in order to include a subpoena issued on 14 July 2010 to Woolworths Ltd. 2 The first defendant, Seven Network (Operations) Limited (ACN 052 845 262) ("Seven") opposed the application. 3 The proceedings are listed for hearing commencing on 30 August 2010. There is an interlocutory regime in place as outlined below. 4 The plaintiff brings these proceedings in relation to a proposed segment on Seven's Today Tonight program, which was based on an interview and film taken by a former employee of the plaintiff. [ ]. 5 The causes of action relied on by the plaintiff are that the representations in the proposed broadcast constituted an injurious falsehood and were also breaches of the Fair Trading Act 1987. 6 In defence to these claims, Seven contends that the allegations in question were true. 7 The plaintiff previously obtained an interlocutory injunction to restrain the defendant from broadcasting the relevant allegations, which concern its practices in Victoria. 8 The subpoenas in question in this application are addressed to Primo's major customers, such as supermarket chains and fast food restaurants. The subpoenas have been served and the plaintiff having received notice of this now brings the present application. The plaintiff's position

9 The plaintiff submitted the subpoenas should be set aside because they amount to an abuse of process, contending that on their face the subpoenas were plainly a fishing expedition and could not produce documents that would have any relevance to the way the proceedings had been framed by the pleadings. 10 The plaintiff admitted that it had a commercial motivation to pursue the present application since the subpoenas were addressed to some of its valuable customers and it did not want them to be vexed by having to produce documents. The first defendant's position 11 In support of the relevance of the subpoenas in question, Seven essentially submitted that they went either directly [or indirectly] to whether two ultimate allegations in question were true or false. Seven contended that the subpoenas addressed to Primo's customers could indicate whether there was a practice of auditing Primo's productions methods, which in turn would go to establishing whether or not the central allegations were true. 12 Here Seven drew on the examination in chief of Primo's chairman and chief executive officer, Mr Lederer, during an interlocutory hearing where he had given evidence of various audits that Primo was subject to by its customers (as extracted below). 13 Regarding the allegation of fishing, Seven submitted that the subject matter of the subpoenas had been advanced by Mr Lederer's evidence, and that if the audits that were said to take place actually occurred, they would surely be documented. The authorities 14 In Attorney General for New South Wales v Dylan Chidgey [2008] NSW CCA 65, Beazley JA [with whom James and Kirby J. agreed] had occasion to examine the correct test for determining whether a party is required to produce documents pursuant to a subpoena, doing so inter alia by reference to the decision of Simpson J (Spigelman CJ and Studdert J agreeing) in Regina v Saleam [1999] NSWCCA 86. 15 Beazley JA observed as follows:

64 The test for determining whether a party is required to produce documents pursuant to a subpoena was stated by Simpson J (Spigelman CJ and Studdert J agreeing) in Regina v Saleam [1999] NSWCCA 86 at [11], in the following terms: "The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case. …

65 The genesis of the expression " on the cards " is to be found in the judgment of Gibbs CJ in Alister v R [1983] HCA 45; (1984) 154 CLR 404 at 414. …

72 In Roads & Traffic Authority of NSW v Conolly , Adams J referred to a decision of Balmford J in Fitzgerald v Magistrate's Court of Victoria [2001] VSC 348; [2001] 34 MVR 448, in which her Honour, at [20], stated, " I note that in the second edition of the Oxford English Dictionary 'on the cards' is defined as meaning 'within the range of probability' ". Adams J said at [12]: "Accepting this to be so, it seems to me that the relevant "range" is therefore between the barely probable and highly probable. With respect, it seems to me that this area of the law is bedevilled with metaphors. I think the essential notion is that there is a reasonable chance that the material sought will assist the defence. If it is reasonable to infer that the material sought exists and that it is relevant to an issue, though its content is unknown, it will almost invariably be logically the case (as it seems to me) that such a chance exists, even though it might be thought to be unlikely. Seeking that material therefore seems to me to be a legitimate forensic purpose, providing of course that the factual issues and the character of the material sought are precisely identified." (Emphasis added) 16 In Lakatoi v Walker [1999] NSWSC 1036, I outlined an earlier interlocutory judgment of Rolfe J in the same proceedings ([1998] NSWSC 470) which dealt with a number of subpoenas which had been issued and dealt with a number of notices of motion seeking to set aside those subpoenas. The judgment included a reasonably detailed examination of the authorities and of the principles involved. Rolfe J enunciated, in a fashion which I would not depart from, the basic parameters which are to inform the Court in the exercise of its discretion where an application to set aside a subpoena is pursued. 17 On the one hand, there is clearly to be recognised, the obvious danger of permitting a party by use of the subpoena procedure, to investigate issues of credit having no conceivable relevance to issues pleaded, in the sense that to permit subpoenas of that type to be called would open up matters falling outside the legitimate field of enquiry raised by the issues in contest. On the other hand, it seems to me quite clear that inspection should be granted, so far as is necessary, in the proper conduct of the litigation, where the Court forms the view that the material falls within the legitimate field of enquiry raised by the issues in contest and is reasonably likely to add in the end in some way or other to the relevant evidence in the case. The exercise, recognised by Rolfe J, involves the need to balance these alternative considerations. 18 The determination of the Court in the balancing exercise and in particular the proper approach to the question of relevance, requires the Court, as Rolfe J indicated, to bear in mind the entitlement of the parties to build up what his Honour referred to as 'an evidentiary mosaic'. 19 As Rolfe J said, that exercise generally cannot be done, particularly in complicated commercial litigation, by the tender of one piece of evidence or the assertion that only limited material is relevant to the issues involved. As his Honour said, 'particularly is that so when one must have regard to the desirability of as full a cross-examination as possible, assisted by the availability of documents which will aid that'. Hence, as his Honour stated, both as to issues and as to the issue of credit, the Court should not be astute to find irrelevance at an early stage in the proceedings. 20 The breadth of the definition of relevance should also be borne in mind. As Sully J observed in R v Le [2000] NSWCCA 49 at [19]:

[Section] 55 speaks of a rational effect that is brought about "directly or indirectly". This is very broad language, and it suggests, in my opinion, a wide rather than a narrow focus to the inquiry whether a proffered piece of evidence has the rational potential which s55 requires. See further S Odgers, Uniform Evidence La w (Thomson Reuters, 8 th ed, 2009) at p182-183. Returning to the instant situation 21 Mr Sibtain of counsel appearing for Seven, took the Court to evidence in chief adduced before Bergin CJ in Eq by the plaintiff from Mr Lederer. His evidence included the following:

Q. Could I ask you this; there are two issues I want to focus on. First, are Primo's products subject to auditing, if I could put it like that, by supermarket chains who buy from them? A. We have an audit at least once a week form a different authority. Every major retainer audits all our sites. We get audited from people like McDonalds, Burger King, Safeway. Every major retailer audits our factory. We have got employed in our factories roughly 50 people who are quality assurance people. These people receive an audit at least once a week, sometimes we get twice a week.

Q. From who do the audits come? A. All our usual, all usual retail

Q. would you name them? A. Coles, Woolworths, Aldi, Franklins, McDonalds, Nestle, Qantas, and so forth. Q. What in your experience does such an audit involve? A. Well, the audit can involved numerous things, they go through the factor looking for hygiene, health, make sure the systems are in order, make sure the quality assurance program is adhered to, make sure that what we do is correct. [Transcript 17 June 2010] 22 Likewise Mr Sibtain on the current application drew upon an affidavit made by Mr Vincent Grillo on 28 June 2010 into a support of the plaintiff's case. The affidavit included in paragraph 5(m) the following:

As I have stated above, Prime Safe carries out investigations and audits of the Victorian Distribution Warehouse at least biannually. Prime Safe also has at all times the right to carry out investigations and audits of the Victorian Distribution Warehouse without notice. In addition, as far as I am aware the Chullora Processing Plant in New South Wales is constantly and without notice audited by not only the NSW Food Authority and the Australian Quarantine and Inspection Service, but also by NCSI International (for and on behalf of Woolworths Limited) and SAI global and SGS Auditing Services (for and on behalf of Coles Supermarkets). 23 Mr Sibtain's proposition was that to the extent that the pleadings did not in terms mention anything about audits, the above evidence supports the proposition that it is simply incorrect for the plaintiff to contend that there is no relevance in Seven having access to the documents on subpoena. Decision 24 There is indeed a balancing exercise of some significance to be treated with in this unusual litigation. In my judgment the proper approach to the question of relevance requires the Court to bear in mind the entitlement of the parties to build up an evidentiary mosaic. 25 In the circumstances subject to such confidentiality regime as may be appropriate the application to set aside the subject subpoenas should be dismissed.

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