FEDERAL COURT OF AUSTRALIA

Telstra Corporation Limited v Australian Competition and Consumer Commission [2006] FCA 737

PRACTICE & PROCEDURE – notices under s151AKA Trade Practices Act – discovery sought of internal documents on which decisions to issue notices based – allegations of deficiencies in notices and statutory procedures – determined by construction of notices and statute – allegations that Commission could not have considered material – not require discovery of material on which decision based – allegation that Commission did not consider material – no factual basis – alleged denial of procedural fairness as pleaded not give right to documents – discovery not ordered

Trade Practices Act 1974 (Cth)

Australian Securities Commission v Somerville (1994) 51 FCR 38

Canwest Global Communications Corp v Australian Broadcasting Authority (unreported, Hill J, 16 June 1997)

Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49

Minister for Immigration and Multicultural and Indigenous Affairs v Wong [2002] FCAFC 327

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

WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175

TELSTRA CORPORATION LIMITED (ACN 051 775 556) v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION AND OPTUS NETWORKS PTY LIMITED

NSD810 OF 2006

BENNETT J

14 JUNE 2006

SYDNEY

THE COURT ORDERS THAT:

1.      The notice of motion, dated 29 May 2006, be dismissed.

2.      The applicant pay the costs of the notice of motion.

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

REASONS FOR JUDGMENT

1                     The Australian Competition and Consumer Commission has issued a Part A competition notice under s 151AKA(2) of the Trade Practices Act 1974 (Cth) (‘the TPA’) specifying anti-competitive conduct by Telstra (‘the competition notice’).  The Act provides when such a notice may be issued.  Before issuing the competition notice the Commission was required to give Telstra a written notice pursuant to s 151AKA(10) of the Act (‘the consultation notice’).  The Commission served the consultation notice in purported compliance with the Act.

2                     Telstra, by a notice of motion, seeks discovery of what may generally be referred to as documents internal to the Commission relevant to the decisions to issue the two notices.  The Commission opposes all such discovery.

Background

3                     Section 151AKA(10) of the TPA provides:

‘The Commission must not issue a Part A competition notice under subsection (2) in relation to a carrier or carriage service provider unless the Commission has first:

(a)       given the carrier or provider a written notice:

(i)                 stating that the Commission proposes to issue a Part A competition notice under subsection (2) in relation to the carrier or provider; and

(ii)               describing, in summary form, the kind of anti-competitive conduct that is proposed to be specified in the Part A competition notice; and

(iii)             inviting the carrier or provider to make a submission to the Commission on the proposal by a specified time limit; and

(b)                 considered any submission that was received within that time limit.’

4                     The documents sought on discovery include the following categories:

‘(a)      All documents which record any of the reasons for the decision of the [first] respondent:

(i)                 to issue the Consultation Notice dated 22 December 2005 issued to the applicant (“Consultation Notice”);

(ii)               to issue the Part A Competition Notice dated 12 April 2006 issued to the applicant (“Competition Notice”);

            …

(b)       All documents which record or refer to any of the matters (including any facts or analysis) to which the [first] respondent had regard or relied upon in making any of the decisions referred to in Order 1(a) above.

(c)        Any minutes or other record of any meeting of the Commission at which the following determinations were proposed, made or discussed:

(i)                 the issue of the Consultation Notice;

(ii)               the issue of the Competition Notice.’

The consultation notice

5                     The allegations in the statement of claim are as follows.  Between 23 September 2005 and 22 December 2005, Telstra and the Commission exchanged information and had meetings about Telstra’s proposal to increase the price of HomeLine Part and Home Access.  At no time prior to 30 November 2005 did the Commission communicate any concerns about those increases to Telstra.  The Commission asked Telstra on 30 November 2005 to refrain from implementing the increases pending further investigation by the Commission.  Telstra declined to do so.  On or about 22 December 2005, the Commission decided to and did issue Telstra with the consultation notice.  Telstra alleges that the consultation notice was deficient in its form and content.

6                     Those matters depend on the construction of the consultation notice and the statutory requirements.

7                     By reason of the specified deficiencies, Telstra alleges that the Commission made the decision to issue the consultation notice in circumstances where:

(i)                  it did not have jurisdiction to do so;

(ii)                it was not authorised by the TPA to do so;

(iii)               it did not observe procedures required to be observed by section 151AKA; and

(iv)              the result of the exercise of the power to issue such a consultation notice is uncertain.

8                     Telstra also alleges that the Commission did not provide sufficient information in the consultation notice or otherwise, so as to enable the consultation required by s 151AKA(10) to be ‘genuine, informed, specific and practical’ and to enable Telstra to respond adequately.  It is alleged that the Commission could not pay proper, genuine and realistic regard to Telstra’s submission in response where the process had “failed” as pleaded.

9                     Telstra alleges that, by reason of the matters pleaded, the Commission failed to comply ‘with its duty to accord procedural fairness and natural justice to Telstra in connection with its decision to issue the Consultation Notice’.

10                  The allegations are denied.

11                  The statement of claim, which Telstra says was carefully drawn, does not logically require knowledge of the actual processes of the Commission in its consideration of the consultation notice.  Bearing in mind that the consultation notice is a written notice that is required to be given before a Part A competition notice may issue and that s 151AKA(10) sets out what it must contain, the matters that Telstra raises in its pleading can be dealt with by a consideration of the notice itself. 

12                  The statement of claim asserts that the Commission could not have considered the submission that Telstra made in response to the consultation notice.  That raises an objective test and does not, logically, require consideration of the Commission’s actual consideration. 

13                  It is not clear, nor is there any detail in the pleading, what is contemplated by the duty to accord procedural fairness and natural justice in giving to Telstra the statutory written notice beyond an obligation to comply with s 151AKA(10)(a).  Telstra submits that the Commission “must have” taken into account ‘material or other analysis’ to ground the issue of the consultation notice, which was not and did not have to be revealed to Telstra under s 151AKA(10)(a) and that the Commission’s failure to give Telstra this information is a failure to comply with the duty to accord procedural fairness.  The inference that there must have been other material is drawn from the differences between the consultation notice and the competition notice.

14                  Section 151AP provides that when deciding whether to issue a competition notice, the Commission must have regard to ‘such other matters as the Commission considers relevant’ and that the Commission does not need to notify the carrier or carriage service provider of those matters.

15                  Telstra is either correct about an entitlement to such other information or it is not but the information itself is not relevant to that entitlement; in either case discovery of the information itself is not necessary.  Telstra is not entitled to the documents sought on discovery in respect of the consultation notice.

The competition notice

16                  The statement of claim sets out the interaction between Telstra and the Commission between the consultation notice and the issue of the competition notice.  Telstra alleges that the competition notice is invalid.  It alleges that the competition notice is defective in its content and that it deviates in significant respects from the consultation notice.

17                  That latter allegation and other alleged deficiencies in the competition notice can be tested by construction of the notices, a comparison between the two notices and a consideration of whether the competition notice complies with the statutory requirements as to content.  The allegation does not relate to the Commission’s own documents.

18                  Telstra alleges that the decision to issue the competition notice was made in circumstances where, inter alia, the Commission did not observe procedures required to be observed by s 151AKA.

19                  To the extent that it is alleged that the Commission was obliged to give Telstra the opportunity to make submissions and evidence and to provide further information in either the consultation notice or the competition notice, the Commission concedes that it did not do so and asserts that it was under no such obligation.  Those allegations raise the existences of a right to the further information but do not give rise to a right to the documents sought themselves.

20                  The statement of claim then alleges:

‘The Commission was required to have a proper regard to the submission provided to it by Telstra pursuant to section 151AKA(10)(b) of the TPA prior to the issue of the Competition Notice but could not and did not do so where the consultation and submission process failed in the respects pleaded in paragraphs 11 to 32 above.’

21                  The allegations are denied. 

22                  To the extent that it is alleged that the Commission could not have had regard to Telstra’s submission, that again does not require consideration of what the Commission did.

23                  That leaves the question whether the pleading that the Commission did not have regard to Telstra’s submission entitles Telstra to discovery of the documents sought.  It is also alleged that by reason of matters pleaded, including the alleged failure to have regard to Telstra’s submission prior to the issue of the competition notice, the Commission failed to comply with its duty to accord procedural fairness and natural justice to Telstra in connection with its decision to issue the competition notice.  It is this aspect of the pleading on which Telstra primarily relies to assert a right to discovery.

24                  The principles concerning discovery in proceedings for judicial review are not really in dispute.  Discovery is available and ordered where necessary in the proceedings. “Necessary” refers to necessity for the fair disposition of the case (Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 at [31] per Gleeson CJ, Gaudron and Gummow JJ).  That is determined by the pleadings and what is in issue between the parties (Canwest Global Communications Corp v Australian Broadcasting Authority (unreported, Hill J, 16 June 1997)).

25                  The Commission asserts that Telstra is engaged in a ‘fishing expedition’.  As stated by Hill J in Canwest at [32]–[36], it is not illegitimate for a party to obtain evidence through the discovery process to support its case, notwithstanding that knowledge of the existence of the material did not exist before discovery.  The distinction is between discovery for the purpose of determining whether a case exists and discovery to compel production of documents for use in the case.  There is a distinction between mere assertion and a pleading that puts factual matters at issue.  Where the pleadings raise an issue to be decided to which a party’s documents may be relevant, the Court will have discretion to order discovery (Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp (unreported, Beaumont, Burchett & Emmett JJ, June 1997)).  Discovery may be ordered without particulars of the allegation, however where there is no evidence to suggest that a bare allegation has foundation and the allegation is denied that is ‘mere fishing’ and the proceeding is essentially speculative in nature (WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 per Brennan J at 181-182).

26                  There was, prior to the competition notice, a relationship between Telstra and the Commission, a factor adverted to in WA Pines.  There is not, however, ‘something upon which the Court can base its conclusion that the applicant may have a right to relief’ (Minister for Immigration and Multicultural and Indigenous Affairs v Wong [2002] FCAFC 327 at [33]).  Telstra has not particularised the allegation that the Commission did not consider its submissions, nor provided any evidence in support of the allegation.  Inferences drawn from the pleadings may be sufficient but such inferences need to be grounded (Wong at [35]).  The Commission has not provided reasons for the decision to issue the competition notice and that is a relevant consideration (Australian Securities Commission v Somerville (1994) 51 FCR 38 at 49) but does not, of itself, support an inference that the Commission failed to consider Telstra’s submissions.  Telstra does not allege that the Commission had no reason to believe that Telstra had engaged or was engaging in the relevant anti-competitive conduct or that the notices were issued for a collateral or improper purpose.

27                  The allegation that the Commission did not have proper regard to Telstra’s submission is not of itself founded on any factual assertion as to the internal workings of the Commission.  It is said to follow from specified facts and matters manifested by the conduct of the Commission in dealing with Telstra.  There is no issue that raises a consideration of the documents sought, which are internal to the Commission.

28                  Section 151AKA(10)(b) requires the Commission to consider any submission received from Telstra.  The statement of claim alleges that the Commission ‘was required to have proper regard to the submission provided to it by Telstra pursuant to s151AKA(10(b)…and did not do so where the consultation and submission process failed in the respects pleaded’.  That raises an objective test.  Even viewing the pleading beneficially to Telstra as an unqualified allegation that the Commission did not consider Telstra’s submission, the documents sought go well beyond the issue whether the Commission did or did not consider that submission.  They extend to any of the reasons for the issue of the competition notice and to the decision making processes within the Commission with respect to the issue of the competition notice.

29                  Telstra contends that there has been a failure by the Commission to provide Telstra with material or data or information on which the Commission relied in determining to issue the two notices and that this constitutes failure to comply with statutory procedures and a denial of procedural fairness or natural justice.  The Commission accepts that, factually, such information was not provided.  That seems to conflict with its pleaded defence, in which the allegation that, for example, Telstra was not given notice of the material and analysis on which the Commission based its allegations and statements in each of the consultation notice and competition notice, is denied. 

30                  The Commission now accepts that, if it were required to provide such information, it did not.  If procedural fairness or natural justice required such notice to be given, the Commission did not accord those rights.  The Commission contends that it was not obliged to do so.  If the Act mandates such provision of information, that can be determined, irrespective of the information.  If procedural fairness or natural justice require such provision of notice, that too can be determined without a consideration of the details of the information not provided.

31                  Telstra also seeks in category (d), discovery of documents apparently already provided to Telstra.  The Commission asserts that Telstra is already in possession of all documents in this category.  That assertion, made during the hearing of the motion and in the Commission’s written submissions, was not denied by Telstra.  Order 15 rule 2(4) provides that a document is not required to be disclosed if the party giving discovery reasonably believes that he document is already in the possession, custody or control of the party to whom discovery is given.  Pursuant to O 15 r 15 the Court will not order the production of any document unless satisfied that the order is necessary.  If Telstra wishes a verified list of the documents in category (d) documents, it should provide a basis for such an order.

32                  A subcategory of (d) is documents ‘by which the Commission addressed any of the questions posed by Telstra in its facsimile to the Commission dated 20 January 2006’.  The Commission states that it did not provide Telstra with any such document, other than those cited in the statement of claim.  To the extent that that statement satisfies the request of a document sent to Telstra, it is probably sufficient, unless Telstra requires formal verification of that fact.  If the category is not limited to documents provided to Telstra, the Commission is not liable to give discovery of its internal documents for the reasons discussed.

Conclusion

33                  Telstra is not entitled to the orders sought for discovery of the categories (a) and (b) and (c) of documents set out in the notice of motion.  There is no present basis for discovery of category (d) documents.  The notice of motion should be dismissed.  Telstra should pay the costs of the motion.

Associate:

Dated:              14 June 2006