FEDERAL COURT OF AUSTRALIA

PRACTICE & PROCEDURE - Appeal from decision of Administrative Appeals Tribunal which varied summonses by deleting certain paragraphs - whether documents sought in summonses are relevant to proceedings - whether object of summonses is to engage in a “fishing” exercise - whether summons is essentially speculative in nature - discretionary considerations relevant to whether a summons should be set aside - appeal dismissed.

COSTS - Application for order that the applicant pay the respondent’s costs on an indemnity basis - whether adversarial litigation - stranger to principal proceedings successful in having summonses set aside - nature of costs order to be made.

COSTS - Application for costs by a party against whom the notice of appeal was abandoned, after costs incurred - application successful.

Administrative Appeals Tribunal Act 1975 s 44

Federal Court Rules O 62

Trade Practices Commission v Arnotts (1989) 88 ALR 90

Treasurer of the Commonwealth of Australia v Canwest Global Communications                         Corp, (Beaumont, Burchett and Emmett JJ, 30 June 1997, unreported)

Senior v Holdsworth, Ex parte Independent Television News Ltd [1976] 1QB 23

COSCO HOLDINGS PTY LTD v COMMISSIONER FOR TAXATION

QG 157 of 1997

SPENDER J

BRISBANE

12 DECEMBER 1997

THE COURT ORDERS THAT:

1.         The application be dismissed.

2.         The applicant pay the costs of Shredex Pty Ltd, those costs to be taxed if not agreed.

3.         The applicant pay the costs of the Commissioner of Taxation up to and including 10 November 1997 and the costs of the hearing for costs today, those costs to be taxed if not agreed.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

This application is an appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975, (‘the Act’), from decisions of the Administrative Appeals Tribunal, (‘the Tribunal’), striking out certain paragraphs of two summonses obtained at the behest of Cosco Holdings Pty Ltd, (‘Cosco’), and directed to Shredex Pty Ltd, (‘Shredex’).

Section 44(1) of the Act provides:

A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.

The issuing of the summons was pursuant to s 40 of the Act which relevantly provides that:

(1A)  Subject to subsection (1B), for the purposes of the hearing of a proceeding before the Tribunal, the member presiding at the hearing, the Registrar, a District Registrar or a Deputy Registrar may summon a person to appear before the Tribunal at that hearing:

(a)       ...

(b)       ...

(c)        to produce any books, documents or things in the possession, custody or control of the person or persons named in the summons that are mentioned in the summons.

...

Section 3 of the Act, as amended by Act No 1975 of 1995 (which came into effect on 16 December 1995) provides that, unless the contrary intention appears, “proceeding”, in relation to the Tribunal, includes:

...

(f)        any other application to the Tribunal under this Act or any other Act; and

(g)       any matter referred to the Tribunal for inquiry and/or review under this Act or any other Act; and

(h)       an incidental application to the Tribunal made in the course of, or in connection with, an application or proposed application, or a matter, referred to in a preceding paragraph.

The issuing of the summons and the challenges by Shredex to them are incidental to the principal proceeding in the Tribunal between Cosco and the Commissioner of Taxation (‘the Commissioner’).  On 21 February 1997 Cosco applied to the Tribunal for review of an objection to a decision made by a delegate of the respondent, the Commissioner.  The essence of Cosco's complaint was the disallowance in full of Cosco's claim, made on 21 September 1995, for a refund of sales tax paid by Cosco in the period from 1 January 1993 to 30 June 1995.

Cosco manufacturers paper products.  In its manufacturing process it uses waste and scrap paper which it purchases from paper collectors.  It paid, or was liable to pay, sales tax on assessable dealings with the paper products it manufactured. Cosco has claimed that it should be entitled to a refund of sales tax under the Sales Tax Assessment Act 1992.  It makes it claim under s 51 of that Act.

This application, in my opinion, is from a "proceeding in the Tribunal".  The parties to the appeal are properly Cosco, as applicant, and Shredex, as respondent.  There were in fact three summonses that issued out of the Tribunal directed to Shredex.  The first is dated 27 June 1997 and was returnable on 8 July 1997.  By that summons Cosco sought the production by Shredex of:

1.         all original records and documentation relating to the supply of recycled paper to Cosco Holdings Pty Ltd between 1 January 1993 and 30 June 1995;

2.         all documentation relating to the registration of Shredex Pty Ltd pursuant to the Sales Tax Administration Act 1992 for the period including 1 January 1993 and 30 June 1995; and

3.         any copies of documents, handwritten notes or other written documents relating to the survey prepared by the Australian Taxation Office dated 31 October 1995.

This first summons has in fact been overtaken by events, either by compliance by Shredex or by the request for documents in the next two summonses.

The second summons, dated 2 September 1997 and returnable 10 September 1997 required the production of a large number of categories of documents, including, inter alia, the production of:

5.         all original or copy management accounts or other records providing information regarding aggregate costs for materials, labour and all other costs on a monthly or six monthly or annual basis, and information relating to the total number of bales or aggregate weight of shredded papers supplied to Cosco Holdings Pty Ltd during the period 1 January 1993 to 30 June 1995;

6.         ...

7.         all original or copy management accounts for the period between 1 January 1993 and 30 June 1995; and

8.         all original or copy end of year annual accounts for the period between 1 January 1993 and 30 June 1995;

...

The third summons, dated 2 October 1997, and returnable on 7 October 1997 sought the production of:

1.         original or copy management accounts covering the period between 1 January 1993 to 30 June 1995;

2.         original or copy end of year annual accounts covering the period between 1 January 1993 and 30 June 1995;

3.         all original or copy general ledger accounts providing information regarding aggregate costs for materials, labour and all other costs on a monthly or six monthly or annual basis during the period 1 January 1993 and 30 June 1995;

...

It should be noted that both the second and third summons were not in fact directed to Shredex but to, in the case of the second summons, the Managing Director, Shredex Pty Limited, and, in the case of the third summons, directed to Mr Jonathan Alroe of Shredex Pty Limited.  Both before the Tribunal and this Court nothing has been submitted concerning the addressee of the second summons and the third summons, and the case has been conducted as if the summonses were properly directed to Shredex.

By decision of the Tribunal dated 18 September 1997, Deputy President S.A. Forgie “decided on 10 September 1997 to vary the summons issued to [Shredex] by deleting paragraphs 5, 7 and 8”.

In order to understand the arguments concerning any relevance of the documents sought in the paragraphs specified above in both the second summons and the third summons to the issues in the principal proceedings, it is necessary to refer to s 11(3) of the Sales Tax Assessment Act 1992, as amended.  The effect of s 11(3) of that Act is that a person is taken to have borne tax on goods if the person purchased the goods “for a price that included tax”.

On 10 September 1997 there was before the Tribunal an affidavit by Mr Alroe, who is the Managing Director of Shredex.  The affidavit was in relation to Shredex's application to set aside certain parts of the second summons.  Mr Alroe swore in that affidavit:

The company did not and does not calculate sales tax for any reason and as such there are no such records.

The reference to "no such records" is a reference to item 12 in the second summons which sought:

all original or copy costing records including records to calculate the cost of sales tax figure for the period between 1 January 1993 and 30 June 1995.

Also in that affidavit, Mr Alroe said concerning the documents sought in paragraphs 5, 7 and 8 of the second summons:

(a)  Relevance

(1)       The production of these accounts necessarily involves production of other and private information which is unrelated to the Company’s dealings with Cosco Holdings.  If it is the true intention of the Summons to obtain information relating only to the acquisition and processing of materials for sale to Cosco as is stated in the Affidavits supporting the Summons then the production of our management and statutory accounts goes much further than this stated intention and is greatly to the Company’s detriment.

(2)       I have noted in the material that production of this information is necessary in order to determine whether sales tax has been incorporated into a price for goods sold to the Applicant.

(3)       I state that at no time has the Company either calculated, added, deducted, or remitted anything to the Australian Tax Office or any other party during the relevant period with respect to sales tax on waste paper sold to Cosco Holdings and hence there was no need to prepare or submit sales tax returns during this period.  Accordingly the accounts of the Company can not be of any assistance in identifying the accounting treatment of sales tax.  Indeed, the Company has no documentation in its possession with respect to the apportionment of costs which one might expect if sales tax was being calculated.  As a result, the private management and statutory accounts of the Company are simply not relevant to the issues under review because they can not assist the Applicant or the Tribunal.

And he further said:

In any event, as the Company does not possess any accounting information relating to sales tax which is relevant to the Applicant and its dealings with the Company, I object to producing the Company's financial records.

The reference in the paragraph numbered (2) above of Mr Alroe’s affidavit to “the production of documents in order to determine whether sales tax has been incorporated into a price for goods sold to the Applicant” is a reference to an affidavit of Professor Robert Graham Walker, who is Professor of Accounting at the University of New South Wales.  In that affidavit which is dated 2 September 1997, Professor Walker said:

I was contacted by Ms Hedy Meggiorin of Minter Ellison to provide assistance in relation to the identification of documents necessary to determine whether the price paid for certain goods by Cosco Holdings Pty Ltd (“Cosco”) included a component for sales tax."

                                                                                    [my emphasis]

He also said:

Specifically, Ms Meggiorin enquired whether the documentation identified in the summons would be sufficient to determine whether the price paid for the goods included a component for sales tax, whether there was any unnecessary duplication, and whether there was any obvious documentation missing from the list of documents.

                                                                                                [my emphasis]

He continued:

... the intention was to obtain information relating only to the acquisition and processing of materials for sale to Cosco in the form of bales of shredded paper.

Later Professor Walker said:

My recommended amendments [to an earlier draft summons] were designed to reduce the information to be sought from individual paper collectors to that which I considered would be sufficient to identify the structure of the paper suppliers’ costs in processing scrap paper, the sources of the paper suppliers’ purchases of unprocessed scrap paper, and to enable estimates to be made of the extent to which the price paid for goods by Cosco may have included a component for sales tax.

The affidavit concluded:

Accordingly I formed the view that the specification of all of the documents identified in the revised summons would be necessary to establish that sales tax was a component of the price paid for goods, and to estimate the dollar value of that component.

Mr Van Homrigh, a partner at KPMG who assisted in the identification of documents necessary to evidence the inclusion of sales tax in the price paid for certain goods, said in an affidavit that was before the Tribunal on the occasion of its consideration of paragraphs 5, 7 and 8 of the second summons:

It is my opinion that the documents requested in the summons are necessary in order .... to determine whether the price paid for the goods included a component for sales tax.

                                                                                                [my emphasis]

In the reasons of 18 September 1997 Deputy President Forgie expressed her conclusions as follows:

21.       Having looked at the summons, the statements of facts and contentions of both parties and the statement of Professor Walker and the affidavit of Mr Van Homrigh, it still has not become clear to me just how the documents sought would assist the applicant to address the issues which seem to be raised by its application.  At this stage of the proceedings, its relevance is not apparent to me.

22.       The lack of apparent relevance, together with the width of the material sought and the invasion of [Shredex’s] commercial sensitivities lead me to conclude that paragraph 5 of the summons should not stand.  For the same reasons, paragraphs 7 and 8 cannot stand.

23.       At the hearing, I indicated that the summons would be set aside or revoked.  On looking at it again as well as at the director’s affidavit, it appears to me that revocation of the whole summons is not the appropriate course.  [Shredex] had responded to all paragraphs other than 5, 7 and 8.  It had done so through its director who stated that it did not have documents of the type specified in those paragraphs.  Setting aside a summons to which the company has already responded seems inappropriate.  I have, therefore, directed that the summons be varied by deleting paragraphs 5, 7 and 8....

24.       I note that the applicant is at liberty to ask the tribunal to issue another summons should it so wish.  I indicated to Mr Batch that he might consider narrowing its compass and take that course.

In purported reliance on the liberty referred to in paragraph 24 immediately above, Cosco issued a third summons.  Having regard to the commonality of what was sought in that summons with what was sought in the second summons (although there is some narrowing of the documents sought in paragraph 3 from what had previously been sought in paragraph 8 of the second summons) it might have been arguable that the request for the third summons constituted an abuse of process.

In the event, however, the Tribunal on 7 October 1997 constituted this time by Deputy President Forgie, Senior Member Mr K.L. Beddoe and Member Mr J.D. Horrigan, specifically considered the documents sought in paragraphs 1, 2 and 3 of the third summons.  In that consideration, the Tribunal had before it a second document from Professor Walker, which was a draft (unsworn) affidavit.

Section 33 of the Act relevantly provides that:

33(1)  In a proceeding before the Tribunal:

...

(b)     the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and

(c)     the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate.

...

In light of that section, the Tribunal was entitled to have regard to this second document of Professor Walker.

That document might be described as argumentative, in the sense of challenging the finality of the statements of Mr Alroe in his affidavit to which reference has previously been made concerning sales tax.  In Professor Walker's second document, he says, in paragraph 1:

I refer to my previous affidavit in which I outlined reasons why I considered that access to the documents listed in an amended summons would be necessary in order to determine whether the price paid for shredded and baled paper by Cosco Holdings Pty Ltd, (“Cosco”) included a component for sales tax.  I have been asked to amplify those reasons in a second affidavit.

In paragraph 29 Professor Walker makes reference to the statement by Mr Alroe as follows:

I state that at no time has the Company either calculated, added, deducted or remitted anything to the Australian Tax Office or any other party during the relevant period with respect to sales tax on waste paper sold to Cosco Holdings and hence there was no need to prepare or submit sales tax returns during the period.

Professor Walker said:

I disagree with Mr Alroe’s reasoning.  The fact that Shredex did not calculate add, deduct or remit anything to the Australian Tax Office does not mean that there was no ‘need’ for Shredex to have prepared sales tax returns.  I also disagree with Mr Aloe’s (sic) assertions about relevance.  If Shredex was liable to have paid sales tax on waste paper sold to Cosco, but has failed to do so, then the management accounts, annual statutory accounts, and other records held by Shredex Pty Ltd would indeed be relevant to the issues under review by the Tribunal.  Similarly, if the price Shredex charged for baled and shredded paper involved the passing on of sales tax previously paid, then in my opinion Shredex’s management accounts and records would be relevant to the issues under review by the Tribunal.

The relevance asserted by Professor Walker is the subject of no further elaboration, except perhaps by what follows in paragraph 30 of his second document where he says,

Further, if it can be demonstrated that Shredex or any other paper collector had failed to formally charge sales tax on products it had sold to Cosco, then it would be possible to apportion any gross mark-ups over production costs as including an element of sales tax.  In other words, one can impute a sales tax component as being part of the price charged for shredded and baled paper.   Such a process of imputation is well recognised in accounting....

                                                                                                [my emphasis]

The Tribunal gave its reasons orally concerning paragraphs 1, 2 and 3 of the third summons on 7 October 1997, the transcript of its reasons recording:

THE D.PRESIDENT:  We have read the second affidavit of Professor Walker, read both the second summons and the third summons addressed to Shredex, noted that the second summons is in paragraph 3 marginally narrower than the previous summons, read the decisions which I gave originally in relation to the second summonses when I struck out paragraphs 5, 7 and 8, and in relation to paragraphs 1, 2 and 3 for the reasons that I gave in relation to paragraphs 5, 7 and 8 we have concluded that paragraphs 1, 2 and 3 should also be struck out.

On the appeal, the primary submission by Mr Batch SC on behalf of Cosco, focused on the relevance of the documents sought in the specified paragraphs of the second and third summonses.   In the course of submissions, the court was urged not to take or make a concluded view of whether any sales tax to be imputed into the price Shredex charged Cosco was properly to be considered as being within s 11(3) of the Sales Tax Amendment Act 1992.  Reference was made by analogy to the reticence of courts in granting a striking out application, as to which see Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v The Commissioner for Railways (NSW) (1964) 112 CLR 125, and, more recently, Australian Building Industries Pty Limited v Stramit Corporation Limited, (Northrop, Lindgren and Lehane JJ, 1 December 1997, unreported).

The argument for Cosco on this application is that, while no sales tax was in fact paid by Shredex in respect of the goods it supplied to Cosco, it might be shown by inspection of the documents sought by the two summonses that it should have been.  Cosco further submitted that, while the price that Shredex charged Cosco was not calculated by Shredex on any basis which included a component for sales tax, where it could be shown that the price that Shredex charged Cosco could not have been any higher if a sales tax component were to be included in it (a claim which it was said on behalf of Cosco was a consequence of the price pressure from international competitors of Shredex in the supply of baled paper to Cosco) it would then be possible to impute a component of the sales price to Cosco as an imputed sales tax.  It would then at least be arguable that that component was to be taken into account in accordance with s 11(3).

On reflection, if it had been demonstrated that the documents had the capacity to support those conclusions, there is merit in the submission that the documents may have a possible relevance in the issues in the principal proceedings.   The possible relevance would be dependent upon whether the argument concerning the imputed component of the purchase price and s 11(3) is sustainable, i e, the documents would be relevant to the exercise outlined by Professor Walker, which might be relevant to whether Cosco has borne some sales tax, depending on the proper construction of s 11(3).

However, that is not the case here.   This is truly a case where the summonses are based on speculation and the object is properly to be described as “fishing”.  I refer to the repeated assertions by Professor Walker as to the object of obtaining the documents, which object was repeated by Mr Van Homrigh.   The object for wanting to inspect the documents is to see whether a case can be made out along the lines elaborated in submissions by Mr Batch.

In Trade Practices Commission v Arnotts (1989) 88 ALR 90, Beaumont J was concerned with the question of whether documents should be produced pursuant to a subpoena.   It is, in my opinion, important to have regard to the nature of the argument concerning relevance in that case.   His Honour said at 102:

...it is submitted, on behalf of Arnotts, that the documents required do have apparent relevance to the issues in the proceedings.  Arnotts say that the material sought can reasonably be expected to throw light on, first, the definition of the relevant market in the principal proceedings and secondly, the suggestion (which it denies) of its domination of the market by virtue of the Nabisco acquisition.

His Honour continued:

The general test for present purposes is well settled.  The issue of a subpoena will be an abuse of process if it is not used for a legitimate forensic purpose: see Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100-1.  But, as Deane and Gaudron JJ observed in Hamilton v Oades (1989) 85 ALR 1 at 11, the court’s general powers in this area have a dual aspect: ‘The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice...[This] power...is not restricted to defined and closed categories...In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power.  The terms ‘oppressive’ and ‘ vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously and unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’:  Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389 per Deane J at 411; 79 ALR 9 at 45.

In other words, the present inquiry is not limited to an analysis of the true purpose of Arnotts in procuring the issue of the subpoena.  It is also material to look at the impact of the subpoena upon Mattingly.

Without restricting this inquiry, it is convenient to address the present application in the first instance by reference to two questions:

(1)  Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance established?  Does the subpoena have a legitimate forensic purpose to this extent?  This involves a consideration of the matter from the standpoint of Arnotts.

(2)  Is the subpoena seriously and unfairly burdensome or prejudicial?...

His Honour concluded, at 103, as follows:

The test of adjectival relevance is satisfied if the material has apparent relevance.   In my opinion, the documentation called for here could possibly throw light on the issues in the main case.  In my opinion, adjectival relevance is established.

Notwithstanding the use of the word "possibly" in this paragraph, in my opinion, that word is not used in any speculative sense.   I take his Honour's conclusion expressed in that paragraph as an acquiescence to the correctness of the submission that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings.  It is not a question of looking at the documents to see if the documents might permit a case to be made.

The question of the meaning of "fishing" was recently considered by a Full Court of the Federal Court, in Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp, (Beaumont, Burchett and Emmett JJ, 30 June 1997, unreported).   That was a case where the Treasurer of the Commonwealth of Australia sought leave to appeal orders of discovery of documents that were before him in a decision which was challenged under s 39B of the Judiciary Act 1903.

It was contended on behalf of the Treasurer in that case both below and before the Full Court, that the discovery ordered in favour of the respondents enabled them "to engage in a mere fishing exercise, in pursuit of a case unsupported by anything other than bare assertion".  Their Honours said at page 2:

The objection encapsulated in a metaphoric expression "fishing" has been understood as a good ground to deny an order for discovery for a very long time.  It was stated in Bray on Discovery (1885) at 16:

Discovery is given in courts of equity to assist a plaintiff in proving a known case, and not to assist him in a mere roving speculation, the object of which is to see whether he can fish out a case.

What this means was explained, and the metaphor was elaborated, by Owen J in Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN(NSW) 250 at 254:

A ‘fishing expedition’, in the sense in which the phrase has been used in the law, means, as I understand it, that a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding out whether there are any there or not.

Their Honours continued:

...by the late twentieth century, the law has undergone some change in favour of the doubtful plaintiff wishing to penetrate the obscurities of a dark pool.  He may, in a range of cases, utilise the provisions of Order 15A rule 6 of the Rules of Court of this Court, or similar rules in other courts, which are expressly framed to enable him to investigate a possible claim by means of the process for discovery of documents.  Rule 6 takes, as a sufficient starting point for an order for discovery before action, a situation where ‘there is reasonable cause to believe that the applicant has or may have the right to obtain relief’. (Emphasis added.)  The power to order discovery in a case actually pending in the Court can hardly be less extensive than the power which may be used to gain discovery for the benefit of a person who is without evidence even to mount a case, and so resorts to Order 15A.  In Caltex Refining Co Pty Limited v The Amalgamated Metal Workers’ Union (Lockhart, Burchett and Gummow JJ, 6 December 1990, unreported), the conclusion was drawn by Burchett J (with the agreement of Lockhart and Gummow JJ):

‘This objection [ie  the ‘fishing’ objection] to applications for discovery of documents does not now have the weight it was once thought to have.  Perhaps it should be seen as a metaphor with more colour than substance.  Modern procedures actually provide as something desirable for what might once have been criticised as "fishing" - see Order 15A of the Rules of this Court, particularly Rule 6.  It would be ironic if the Court refused an applicant, on this basis, discovery after action, when discovery could have been obtained (at the expense of incurring extra costs) by an application before action.

Discovery should be controlled, and may be limited to documents relevant to particular issues, but it is a valuable weapon in the armoury of justice.  The real objection which, in some cases, justifies discovery being limited to particular issues is the objection of oppression.

Their Honours continued:

A modern statement of the principle which has been repeatedly followed is that made by Brennan J (with whom Bowen CJ agreed) in W.A. Pynes Pty Ltd v Bannerman (1980) 41 FLR 175 at 181, where what is required to obtain a discovery order in a doubtful case was expressed as follows:

sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery.

His Honour contrasted such a case (at 182) with a case where "the proceeding is essentially speculative in nature".  Similarly, Smithers J in Melbourne Home of Ford Pty Ltd v Trade Practices Commission (1979) 36 FLR 450 at 462 looked for “a basis for investigation by this Court”.  See also Nestle Australia Ltd v Commissioner of Taxation (1986) 10 FCR 78 at 83, TNT Australia Pty Limited v Fels (supra), Trade Practices Commission v TNT Australia Pty Limited (1994) 16 ATPR 41,960; and AB v National Crime Authority (Jenkinson, Burchett and Whitlam JJ, 3 July 1996, unreported).

In my opinion, the request for documents in the present case is in the second category referred to by Sir Gerard Brennan.  They are, in my opinion, "essentially speculative in nature", and that that is so is demonstrated by the candid stated purpose of Professor Walker and Mr Homrigh. 

One case which seems to me to confirm that conclusion is Senior v Holdsworth, Ex parte Independent Television News Ltd [1976] 1QB 23.

In that case, the plaintiff in an action in the County Court for damages for assault in the course of the breaking up of a three-day pop festival alleged that he had been punched on the nose by a police officer.  Before the trial, by means of a witness summons, issued by the Registrar, the plaintiff sought the production and exhibition by International Television News Ltd (ITN) of all film and video, both transmitted to the public and untransmitted, taken by their camera crews of the breaking-up.  The trial judge ordered ITN to produce all the film negative of the events at the festival.  He refused leave to appeal.

After the trial, there having been non-compliance with ITN with the order of the trial judge, an order was sought requiring ITN to show cause why a fine should not be imposed on them for not obeying the order.  ITN then applied ex parte to the Court of Appeal asking that the order be set aside.  The Court of Appeal treated the proceedings as an application for leave to appeal from the judge's order, and granted leave to appeal, and allowed the appeal.  The Court held that the order to produce all film negative taken during the three days of the festival was so wide as to be oppressive and should therefore be set aside.

For present purposes, the observations concerning relevance are important.  Orr and Scarman LJJ held that film was a “document” within the relevant County Court Rules and the issue of a summons to produce it was obligatory on application duly made, and was an administrative and not a judicial act.  They further held that the remedy for a party served with such a summons was to apply to the Court to set it aside, and that the Court would set it aside if satisfied that the production sought was irrelevant, oppressive, and abuse of process of the Court, or privileged from production in relation to the particular legal proceedings;  and that an appeal would lie with leave from a refusal to set it aside.  Lord Denning MR, on the other hand, concluded that films and tape recordings which require special apparatus to operate them are not "documents" for the purposes of a subpoena duces tecum and do not come within the existing procedure for such a summons.  Of assistance in the present case is Lord Denning's observation touching on the question of relevance, and, in particular, the question of what constitutes impermissible speculation.  At 34, the Master of the Rolls said:

...I think that, on due notice being given, the courts have the power to order the ITN to produce and show the untransmitted film when the course of justice so requires - of course, on all their expenses being paid just like conduct money.  But the court should exercise this power only when it is likely that the film will have a direct and important place in the determination of the issues before the court.  The mere assertion that the film may have some bearing will not be enough.  If the judge considers that the request is irrelevant, or fishing, or speculative, or oppressive, he should refuse it.

In this particular case, it was mere speculation that the untransmitted film would contain a photograph of the incident: and it was oppressive to require the whole film to be shown when only one small incident was involved.

The Master of the Rolls therefore was of the view that it was "mere speculation" that the untransmitted film would contain a photograph of the incident.  It seems to me that it is truly speculation whether a trawling through the documents sought by the various summonses will permit Professor Walker to conclude as it is indicated he might.

For these reasons, the central question of relevance I think was correctly determined by the Tribunal.

There are two other aspects to which reference should be made.  The first is that it is not simply a question of relevance that determines whether a summons should be issued.  There is a number of important discretionary matters to be considered.  As Clarke J said in South Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710 at 719:]

...there is no doubt that a subpoena, particularly one addressed to a stranger must be couched in terms of reasonable particularity.  It may call for the production of such a large number of documents of doubtful possible relevance that it should be regarded as oppressive and an abuse of process: see the example given by Moffitt P in Waind (at 382).  If a court is called upon to rule that a subpoena is an abuse of process in this sense, it will need to carry out an exercise of judgment upon the particular facts in each case, including but not limited to the terms of the subpoena, bearing in mind the need to balance the reasonableness of the burden imposed upon the recipient and the invasion of his private rights with the public interest in the due administration of justice and, in particular, that all material relevant to the issues be available to the parties to enable them to advance their respective cases.  There is, in every case, a clash between these competing interests and whilst the balancing exercise to which I have referred must be carried out, it is the latter interest which is predominant.

And later his Honour said:

In determining whether the subpoena offends, the court will, as I have said, need to consider all the circumstances.  Quite apart from the terms of the subpoena are the identity of the recipient and his connection with either the parties or the matters in issue, the extent of the burden which may be apparent from the subpoena itself or from evidence adduced for this purpose, and the possible relevance between the documents called for and the dispute before the court.

The fact that what is sought by the paragraphs in the second and third summonses the subject of this present application are the management accounts covering the period January 1993 to 1995, the end of year annual accounts, and the general ledger accounts providing information regarding aggregate costs for materials, labour, and other costs on a monthly or six monthly or annual basis during the period 1 January 1993 to 30 June 1995, in circumstances where Cosco is a competitor with Shredex in the acquisition of shredded paper, is clearly a relevant consideration.

The second aspect to which I wish to refer was not referred to in the course of submissions, but, on reflection, seems to me to be not an irrelevant consideration, and that is the question concerning privilege.  The privilege against self-incrimination has been the subject of recent decision by the High Court, which indicates that it is not available to a corporation, but there may be aspects of that matter that are thrown up by the expressed hope that an inspection would reveal that Shredex ought to have paid sales tax, notwithstanding its acknowledgement that it has not.  Essentially Cosco asserts that it might be demonstrated that Shredex has been in breach of its statutory obligations.  Some consideration might have to be given to the question of the extent to which the privilege against self-incrimination might or might not be available to Shredex.  The position of natural persons who might have been associated with any such alleged contravention might also have to be considered.

Even if Cosco had been successful in this application on relevance, it seems to me it would have been necessary to send the matter back to the Tribunal to consider the discretionary aspects of the matter.  The reasons of the Tribunal of 18 September 1997, while making some reference to discretionary factors, I think fairly has to be viewed as being founded on relevance.  But since, in my opinion, I am not satisfied that there is any error of law that attended the decision of the Tribunal concerning either the second or third summonses, the application is dismissed.

On the question of costs, Shredex seeks an order that Cosco pay Shredex's costs on the basis that such costs are to include all the costs except insofar as they are of an unreasonable amount or unreasonably incurred so that, subject to such exceptions, Shredex will be completely indemnified by Cosco for its costs.

This is the order that was made in Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 which dealt with an application for indemnity costs in an adversarial context.

It is accepted that the normal practice is an order for party and party costs in the sense of O 62 r 19 of the Federal Court Rules.  It might be thought that where a taxation is to include all necessary and proper costs for the attainment of justice or for maintaining or defending the rights of a party but are not to include costs incurred or increased through over-caution, negligence or misconduct or the payment of special fees to counsel or by other special charges or expenses to witnesses or other persons or by other unusual expenses, there would not be a great difference between an order in terms of that contemplated by O 62 r 19 and an order of the kind that was made in Re Wilcox.

But that there are such differences appears from the judgment of Cooper and Merkel JJ in Re Wilcox at 732, and also from the judgment of Shepherd J in Colgate-Palmolive Company v Cussens Pty Limited (1993) 46 FCR 225, particularly at 227 where his Honour refers to the observation of Rogers J in Qantas Airways Ltd v Dillingham Corporation (Supreme Court, NSW, 14 May 1987, unreported), where Rogers J speaks of the "yawning gap" between costs on a party and party taxation of costs and costs payable by the successful party to its own solicitors.

As a matter of fundamental principle, one should not lose sight of the fact that labels ought not to mask the true content of what is sought to be achieved by an order for costs.  Section 43 of the Federal Court of Australia Act (1976) (Cth) provides that:

...the Court or a Judge has jurisdiction to award costs in all proceedings before the Court ...other than proceedings in respect of which any other Act provides that costs shall not be awarded.

Detailed provisions in relation to costs are made in O 62 of the Federal Court Rules.  Rule 12 of that order provides that:

(1)  Except as otherwise ordered in all proceedings commenced on and after the date these Rules came into operation, solicitors are, subject to these Rules, entitled to charge and be allowed the fees set forth in the Second Schedule in respect of the matters referred to in that Schedule and higher fees shall not be allowed in any case except such as are by this Order [62] otherwise provided for.

...

Order 62 r 19 provides:

On every taxation the taxing officer shall allow all such costs charges and expenses as appear to him to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of a party, but, except as against the party who incurred them, costs shall not be allowed which appear to the taxing officer to have been incurred or increased -

(a)     through over-caution, negligence or misconduct;

(b)     by payment of special fees to counsel or special charges or expenses to witnesses or other persons; or

(c)     by other unusual expenses.

It is accepted that the costs to which rr 12 and 19 apply are costs on a party and party basis and in Colgate Palmolive (supra) Shepherd J made the observation at 226:

[Those rules] do not contemplate the award of costs on any other basis.  It is a matter of notoriety that the indemnity for costs which one party recovers from another pursuant to the common order that one pay the costs of the other does not very often provide the party entitled to the benefit of the order with anything approaching a full indemnity for the costs which have in fact been incurred.

His Honour continued:

In years gone past the divergence between costs incurred and costs actually recovered on a party and party taxation was not so great, but it is clear that that divergence has existed at least until the last century and indeed before.

The present case is adversarial litigation and the exceptional circumstances which lead to the grant of indemnity costs instanced by Shepherd J in his guidelines which appear at 232 and 233 of the report are not present here.  However, Shredex is a stranger to the primary litigation between Cosco and the Commissioner of Taxation.  It was successful before the Tribunal in resisting summonses directed to it at the behest of Cosco on two separate occasions and has been brought to this court as respondent by Cosco, who unsuccessfully sought to challenge the correctness of the decisions made by the Tribunal.

It is usual, in dealing with the costs incurred by non-parties to litigation, such as is third-party discovery on summonses to produce documents, to make orders that the stranger be paid all reasonable expenses incurred in answering the obligations that the court imposes on it.  There is something of that consideration present here, but there is not, it seems to me, any established basis on which in ordinary adversary litigation indemnity costs might be ordered.

The court must make its order as to costs having regard to the fact that this is adversarial litigation and that there has been no establishment of circumstances calling for the grant of indemnity costs, but at the same time recognise that Shredex is a party brought here in circumstances where it is a stranger to the principal proceedings in the AAT and it was successful both there and below.  The court should be sensitive to see that it is not unreasonably out of pocket, notwithstanding its success at all levels of its disputation with Cosco.

In those circumstances, I am minded to make an order which may or may not conform to either an indemnity order or a party and party costs order as that might be thought to apply. 

The order that I make is that the applicant pay to the respondent all costs, charges and expenses which in the opinion of the taxing officer have been necessary or proper or reasonable for the attainment of justice or for maintaining or defending the rights of the party.

This makes it plain that provided costs have been reasonably incurred or are of a reasonable amount, Shredex will be paid.

An application for costs on behalf of the Commissioner has also been made in respect of his costs associated with proceedings QG157 of 1997, in which a notice of appeal was served on the Commissioner on 9 October 1997.  In relation to that, the Australian Government Solicitor wrote to the solicitors for Cosco on 29 October noting that that document related to six separate decisions, five of which were made by Deputy President Forgie and one by a three person Tribunal.  It was said:

the Commissioner is not a proper party to some of the decision, namely, those relating to various summonses addressed to Shredex Pty Limited.  To enable the Commissioner to respond to the appropriate applications, the applications should appear in separate proceedings.

The letter continued:

I have sought instructions from my client to file a Notice objecting to the competency of the appeal and seeking the Commissioner's costs of and incidental to the within application at the directions hearing on 21 November 1997.  However, if your client withdraws the Appeal and notifies me of the same on Monday, 3 November 1997.  I will recommend to my client the Commissioner take no further action in relation to the appeal.

The solicitors for Cosco replied on 31 October 1997.  The middle paragraph of that letter reads:

Having said this, whilst we do not accept your contention in relation to competency of the appeal, given the recent adjournment in this matter, our client is currently considering whether it will abandon some appeal points.  If it does, those appeal points are likely to be those points in which your client has an interest.  We will be in a position to advise you of such abandonments soon after 18 November 1997.

In relation to costs, we do not consider that your client would incur costs other than appearing at the directions hearing.

If our client abandons appeal points against your client, any further representation of your client in the appeal would be opposed.

On 10 November 1997, Cosco's solicitors wrote to the Australian Government Solicitor:

We confirm that our client, Cosco Holdings Pty Ltd, will abandon the points of appeal against your client, the Commissioner of Taxation, due to the recent adjournment granted by the Administrative Appeals Tribunal.  As the only remaining issue in the appeal relates to production of documents by Shredex Pty Ltd, any further appearance by the Commissioner of Taxation in the appeal will be objected to by your client.

In resistance to the application for costs on the part of the Commissioner, counsel for Cosco says that the abandonment of the appeal as against the Commissioner was brought about because the proceedings were adjourned in the Tribunal.  It was then submitted that consistent with the observations of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523, there has not been an adjudication on the merits between Cosco v The Commissioner of Taxation in respect of the appeal in QG 157 of 1997 and consequently there ought to be no order as to costs.

However, in the view I take of the matter, the fact that for reasons which were good and sufficient to Cosco, it chose, by letter of 10 November 1997, to abandon the points of appeal does not provide a basis on which the court should refuse to make any order as to costs up until that time.

This is not a case where the court, in making an order for costs, is predicting whether or not one party or the other would win if the appeal had proceeded.  This is not a case where the court is basing a costs order on some view of the merits of the appeal, which it cannot in fact form.  The circumstances are simply that for reasons which were good and sufficient to Cosco, it chose to abandon its appeal against the Commissioner of Taxation by letter of 10 November 1997.

In those circumstances it seems to me plain that in the exercise of the power to award costs conferred by s 43 of the Federal Court of Australia Act, I ought order that Cosco pay the costs of the Commissioner of Taxation up to and including 10 November 1997 and the costs of the hearing for costs today, those costs to be taxed, if not agreed.

The limitation expressed in that order means that the Commissioner of Taxation has no entitlement to costs he may have incurred subsequent to 10 November 1997, except his costs of today in relation to the question of costs.

Associate:

Dated:              12 December 1997