Federal Court of Australia

Darnell v Stonehealth Pty Ltd (No 2) [2021] FCA 424

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 24.01 of the Federal Court Rules 2011, the Applicant be granted leave to issue a subpoena in the form of the draft subpoena attached to annexure SMS-C to the affidavit of Steven Michael Stoddart sworn 14 April 2021 limited to categories 2 and 3 of the Schedule to the draft subpoena.

2.    The Applicant is granted leave to file and serve an amended Originating Application in the form of the draft amended Originating Application in annexure SMS-C to the affidavit of Steven Michael Stoddart sworn 14 April 2021.

3.    By 16 April 2021, the Applicant file and serve the amended Originating Application.

4.    By 23 April 2021, the Respondents file and serve any further affidavit material addressing matters occasioned by the amended Originating Application filed in accordance with orders (2) and (3) above.

5.    Liberty to apply on two (2) day’s notice.

6.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    Mr Ross Darnell (Mr Darnell) has sought the judicial review under either or each of s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (AD(JR) Act) or s 39B(1A) of the Judiciary Act 1903 (Cth) of a decision made by the Australian Community Pharmacy Authority (the Authority) on 11 December 2020 to recommend to the Secretary to the Department of Health (Secretary) that an application made by Stonehealth Pty Ltd (Stonehealth) to supply pharmaceutical benefits at premises located at Shops 6 and 7, Flagstone Village Shopping Centre, 6-24 Gates Road, Flagstone, Queensland should be approved, and also the Secretary’s consequential decision to grant Stonehealth such an approval under the National Health Act 1953 (Cth) (National Health Act). The Authority and the Secretary have, as is appropriate, adopted the stance of being a submitting party. Stonehealth is the only active party respondent.

2    At Mr Darnell’s request, the proceeding was listed today for further case management. It has already been set down for trial. The occasion for the listing was twofold:

    to seek leave to amend the originating application; and

    to seek leave for the issuing of a subpoena directed to the proper officer of Coles Group of Property Developments Limited (Coles).

3    The granting of leave to amend proved uncontroversial, although it must necessarily be recorded that although Stonehealth did not oppose the granting of leave to amend, it reserved its rights in respect of the amenability of what appears to be the target of the new ground 6 in the originating application as amended, to judicial review, at least under the AD(JR) Act. The point foreshadowed on behalf of Stonehealth was that ground 6 appeared to be directed not to the decision of the Authority on 11 December 2020 or the Secretary’s consequential decision, but rather to an anterior, procedural decision made by the Authority on 13 November 2020. The point foreshadowed was that such a decision may well be one which lacked the necessary quality of finality to amount to a decision under an enactment for the purposes of the AD(JR) Act.

4    Necessarily, the application for leave to issue the subpoena must be decided by reference to the issues raised in the originating application as amended today. The draft subpoena is annexed to an affidavit of Mr Darnell’s solicitor, Mr Stoddart. It seeks the production by the proper officer of Coles of the following:

1.    Copies of all communications (whether written or electronic) between:

•    Coles Group Property Developments Pty Limited or its servants or agents; and

•    Stonehealth Pty Ltd or its servants or agents, including but not limited to Ann Mihulka and Associates

in respect of:

(a)    the opening of the Coles Supermarket located within the Flagstone Village Shopping Centre (the “Coles Flagstone”); and

(b)    any application by Stonehealth Pty Ltd to supply pharmaceutical benefits from premises within the Flagstone Shopping Centre.

2.    Copies of all communications (whether written or electronic) in relation to the decision to open Coles Flagstone on 20 March 2020 pertaining to, in consideration of or as a result of the COVID-19 pandemic; and

3.    Copies of all Point of Sale data recording sales made by the Coles Flagstone for the period up to and including 20 March 2020. The sales data to include sales made by number and value and what time they occurred.

5    Mr Darnell took the course, which was, in effect, contemplated by case management directions earlier made, of giving notice of the application for leave to issue the subpoena to each of the respondents. Stonehealth, for its part, has opposed the granting of leave. Consistent with their submitting appearance, the Authority and the Secretary have not sought to be heard on the merits of whether or not leave to issue the subpoena should be granted.

6    A helpful summary of principles which generally attend the question of whether or not to grant leave to issue a subpoena is to be found in a judgment of Greenwood J in McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785, at [35]:

35    In relation to the principles governing when leave ought to be granted to issue subpoenas, these principles emerge:

(a)    A writ of subpoena duces tecum is competent against both a party and a stranger to the proceeding: Adelaide Steamship Co v Spalvins (1997) 24 ACSR 536.

(b)    A request for a subpoena cannot be used to disguise an application for discovery of documents, or as an alternative to an application for further and better discovery. It is not permissible to use to a writ of subpoena duces tecum as a substitute for discovery of documents against a party to the proceeding. The subpoena process should not have the effect of discovery against a person who, as a stranger to the proceeding, is not liable to make discovery: Adelaide Steamship Co v Spalvins; Commissioner for Railways v Small (1938) SR (NSW) 564; Diddams v Commonwealth Bank of Australia [1998] FCA 9497. The subpoena process cannot be used to initiate an inquiry as to relevance outside of the time and place identified by the rules for discovery.

(c)    Reference has already been made to the principles identified by Branson J in Diddams v Commonwealth Bank of Australia.

(d)    The documents for production must be identified with reasonable particularity: Commissioner for Railways v Small (1938) SR (NSW) 564 at 574–5 per Jordan CJ. The category of documents must not be so wide as to be oppressive.

(e)    The documents must be relevant to an issue raised on the pleadings and be used to elicit documents to support the applicant’s existing case. It cannot be used for purposes of “fishing” or for the purpose of determining a preliminary question as to whether the party has a supportable case (Hennessy v Wright (1888) 21 QBD 509), or to investigate the character of the opposing party’s evidence (Griebart v Morris [1920] 1 KB 659 at 666).

(f)    The test for relevance does not require that a party demonstrate direct relevance to the contest between the parties. Rather, the documents must have some potential relevance to the pleadings as they stand. In Australian Gas Light Company v Australian Competition and Consumer Commission [2003] FCA 1101, French J summarised the matters which are relevant to the grant of leave:

[8]    It is not appropriate to be overly prescriptive in setting out criteria for the grant of leave to issue a subpoena. Plainly, the documents sought must have at least some apparent potential relevance to the matters in issue in the litigation. The assistance that the requesting party may derive from the production of such documents must be taken into account. Case management considerations are also relevant. A wide-ranging subpoena, seeking documents of doubtful relevance at great inconvenience to, or that risk compromising the commercial privacy of, a third party, may not readily attract the grant of leave. Where the issue of such a subpoena is likely to delay progress to trial because of the legitimate interests of a party in resisting its issue, that may also be a practical factor to be weighed.

(g)    The same notion was expressed in Small (at 575) and Dorajay Pty Ltd v Aristocratic Leisure Ltd [2005] FCA 588 at [34] in requiring the existence of a legitimate forensic purpose for the production of documents.

(h)    In Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306; 88 ALR 90, Beaumont J said that the question of whether a subpoena should go can conveniently be addressed by reference to two questions. First, does the material sought by the subpoena have an apparent relevance in a descriptive or adjectival sense rather than a substantive sense? Does the subpoena have a legitimate forensic purpose to this extent from the perspective of the party issuing the subpoena? Second, does the subpoena cast a serious and unfair burden or prejudice upon the respondent to the subpoena?

(i)    Spender J in Cosco Holdings Pty Ltd v Cmr for Taxation (1997) 37 ATR 432; [1997] FCA 1504 suggested that adjectival relevance looks toward the possibility whether the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings.

(j)    When a party contends material that either is or may be or may have been in the possession, custody or power of a respondent relates to any question or issue raised on the pleadings, they will be taken to mean that the material is relevant in the sense contemplated by s 55(1) of the Evidence Act 1995 (Cth) namely, evidence that if accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings. This is the substantive relevance of the material. The test for the issue of the subpoena is whether the material appears to have relevance in the sense of throwing light on at least some of the issues in the principal proceeding.

(k)    The relevance of the documents must not be disproportional to any benefit that their production might have for the respondent: Dorajay at [34].

(l)    A subpoena ought not issue in circumstances where it would unduly disrupt the conduct of the trial by requiring the court to read documents which could have been obtained at an earlier stage in the proceedings: Diddams v Commonwealth Bank of Australia [1998] FCA 9497.

(m)    The issue of the subpoena must not, in all the circumstances be oppressive in terms of its impact on the recipient. That is, the issue of the subpoena must not be “seriously unfairly burdensome, prejudicial or damaging” and “productive of serious and unjustified trouble and harassment”: Hamilton v Oades (1989) 166 CLR 486 at 502; 85 ALR 1 at 11; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; 79 ALR 9; Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [12].

(n)    The issue of a subpoena against a stranger to the proceeding is more likely to succeed later in the proceeding. Though there is no formal barrier to a subpoena to produce being returnable prior to the hearing, the document may well be premature where no trial date has been fixed. Where the proceeding is of considerable evidentiary complexity there is stronger force to serving the subpoena at an earlier stage: Hughes v Western Australian Cricket Association Inc (1986) 66 ALR 541.

(o)    In Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 at [17], Stone J noted the observations of Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927, summarising the views of Moffitt P in National Employers’ Mutual General Association Ltd v Waind & Hill [1978] 1 NSWLR 372 to the effect that whether subpoenas are oppressive or an abusive process depends on whether “it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case”. Her Honour said at [18]:

[18]    These authorities show that the criteria by which one determines whether a subpoena should be set aside, in whole or in part, may be expressed in different ways but ultimately, they all come down to whether such action is required to prevent an abuse of the processes of the court to prevent injustice. As Deane and Gaudron JJ recognised [Hamilton v Oades (1989) 85 ALR 1 at 11] in the comments quoted by Beaumont J [in Trade Practices Commission v Arnotts Ltd], various terms may be used in focusing these concerns on the circumstances of a particular case. In this case, whether the documents are relevant (in the sense used by Beaumont J) will determine the issue provided that the requirements of the subpoena are not otherwise oppressive.

7    One of the authorities cited by Greenwood J is Australian Gas Light Company v Australian Competition and Consumer Commission [2003] FCA 1101 (Australian Gas Light) in which French J, then a judge of this Court, summarised at [8] matters which his Honour considered relevant to the grant of leave:

8    It is not appropriate to be overly prescriptive in setting out criteria for the grant of leave to issue a subpoena. Plainly, the documents sought must have at least some apparent potential relevance to the matters in issue in the litigation. The assistance that the requesting party may derive from the production of such documents must be taken into account. Case management considerations are also relevant. A wide-ranging subpoena seeking documents of doubtful relevance at great inconvenience to, or that risk compromising the commercial privacy of, a third party, may not readily attract the grant of leave. Where the issue of such a subpoena is likely to delay progress to trial because of the legitimate interests of a party in resisting its issue, that may also be a practical factor to be weighed.

[emphasis added]

8    His Honour’s observations in Australian Gas Light, and, in particular, the sentence emphasised, have given me much pause for thought about the disposition of this application. It is certainly readily possible to find Authority that the test of apparent or adjectival, as it is sometimes termed, relevance by which one measures whether or not to grant leave to issue a subpoena is a low threshold. The test is not one which entails determining whether it appears that the party seeking the issue of a subpoena could or could probably tender the document in evidence. It is enough to establish the requisite apparent or adjectival relevance if the document or class of documents gives rise to a line of inquiry relevant to the issues before the Court, and that extends also for the purpose of meeting an opposing case by way of cross-examination: see, for example, Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350, at 374 and Stanley v Layne Christensen Co [2004] WASCA 50, at [9].

9    In this particular case, the applicant seeks, in one way or another, to advance, in many of its grounds of review, a case that there was on the day in question just no supermarket, as that word has come to be construed by the Full Court in Stonehealth Pty Ltd v ZAA Ventures Pty Ltd as Trustee for the ZAA Investment Trust [2020] FCAFC 188, at all. It is quite plain, as, indeed, it was at the earlier case management hearing, but certainly as a result of submissions made today on behalf of Stonehealth, that whether or not it is in any way lawfully possible for the Court to embark upon a consideration of whether there was a supermarket on the day in question is very much an issue in the proceedings.

10    Stonehealth’s submission can hardly, with respect, be dismissed as idle or frivolous, having regard to the language employed in item 130 of Pt 2 of Sch 1 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (the Rules) made relevant to the Authority’s deliberation by s 99K of the National Health Act. That item provides:

11    Stonehealth drew attention to the qualification found in item 130(b) of the Rules, “the Authority is satisfied”, to the end of advancing a submission that categories 2 and 3 of the documents sought to be produced by Coles could not even be apparently or adjectivally relevant. That was because it was for the Authority, not the Court, to be satisfied, and it was the Authority to be satisfied on the basis of the material before it at the time when it made its final or operative decision, not otherwise. In Municipality of Bankstown v Fripp (1919) 26 CLR 385, at 403, Isaacs and Rich JJ stated in their joint judgment:

With regard to sec. 154 we should add this:- In differentiating between specific special rates which do, and those which do not, in fact, confer special benefit on a locality, and as to the extent of that locality, various opinions may be held. To prevent litigation on that question of fact (see, for instance, Borough of Alexandria v Cooper, Parliament has described the services which may be the subject of a local rate as those “which in the opinion of the council” would be of such limited benefit. Provided only the service is one which is reasonably capable of being so considered, the question of whether it “would be” of such benefit is concluded by the council’s opinion.

[footnote reference omitted]

12    The analogy with item 130(b) of the Rules is an obvious one. Further authorities in relation to this type of provision are helpfully discussed by Gummow J in his judgment in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611, at [127] – [136], inclusive. The difficulty about the point taken on behalf of Stonehealth is it entails, in effect, a final adjudication on a quite fundamental question in respect of which neither party has made or had the opportunity to make full submissions. That said, the observation made by French J to which I have referred does, it seems to me, envisage that on some occasions even doubtful relevance in a particular case management context in a particular case may lead the Court to refuse to grant leave for the issuing of a subpoena.

13    One Authority called in aid by Mr Darnell was the judgment given in the original jurisdiction in ZAA Ventures Pty Ltd as Trustee for the ZAA Investment Trust v Australian Community Pharmacy Authority [2020] FCA 1227. The orders made in the original jurisdiction were reversed by the Full Court on appeal. That, with respect, lends something of an interrogative note as to the enduring Authority of what was stated in the original jurisdiction. In the original jurisdiction at [64] – [65], it was stated:

64    The Authority was required to be satisfied as to the existence of a supermarket before it could exercise its power under s 90 of the NH Act. In my opinion, the Authority has improperly construed the definition of “supermarket”. It therefore formed its state of non-satisfaction as to the existence of a supermarket on an erroneous basis. This error infected its purported exercise of power – the jurisdictional fact on which the power was conditioned did not exist and so vitiated the state of mind (non-satisfaction) of the Authority on which the power was conditioned. As was said by Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; (1949) 78 CLR 353 at 360, in relation to the range of errors which might vitiate a claimed state of mind:

If he does not address himself to the question which the [statute] formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law.

65    For these reasons, the Decision was not authorised by the enactment in pursuance of which it was purported to be made within the meaning of s 5(1)(d) of the ADJR Act. Accordingly, ZAA has made good this ground of judicial review, albeit not precisely on the basis of the particulars to the grounds of application contained in the Originating Application.

14    Mr Darnell seized upon her Honour’s statement:

It therefore formed its state of non-satisfaction as to the existence of a supermarket on an erroneous basis

and the following sentence:

This error infected its purported exercise of power – the jurisdictional fact on which the power was conditioned did not exist and so vitiated the state of mind (non-satisfaction) of the Authority on which the power was conditioned

as providing something of an entrée card for the materials sought pursuant to the subpoena. That, in my view, involves a misreading of the point her Honour sought to make. In my view, her Honour was doing no more than highlighting that if the Authority had, indeed, misconstrued the term “supermarket”, then the reference base for its state of satisfaction was necessarily legally flawed. To cite it for more than that is, in my view, to give it more weight than it can bear. That said, there is a live question, which, in my view, is better adjudicated at trial, as to the meaning and effect of r 130(b) of the Rules.

15    In terms of whether what is sought in categories 2 and 3 is relevant to an issue on the pleadings, if Mr Darnell’s case as pleaded is correct in law, then those two categories are relevant to that issue in the sense required for the issuing of a subpoena. I must observe that I have, for all of the reasons, developed succinctly on behalf of Stonehealth today, very real reservations as to whether the documents sought are relevant at trial, but that is a question the determination of which must await the trial. That particular reservation, though, is, as I shall later highlight, relevant in relation to costs. Thus far, then, it seems to me that categories 2 and 3 meet, albeit with the reservations that I have voiced, the requirements for the granting of leave for the issuing of a subpoena to seek their production.

16    Category 1 is in a very different position. It seeks, in effect, production of an exchange of correspondence between Stonehealth and the Authority. It is, in my view, a classic fishing exercise. It is said to be relevant to ground 6, but the material before the decision-maker at the time when the decision was made is already produced pursuant to earlier case management direction. Quite what might be in that correspondence exchange is entirely moot. At one stage, it seemed as if there was some suggestion on behalf of Mr Darnell that collusion between the Authority and Stonehealth might be revealed, but I am not sitting as an inquisitor, and there is nothing otherwise which would suggest that.

17    The purpose of a subpoena is not to assist what one might term “forensic voyeurism”.

18    It was put in support of the application as to category 1 that an observation made by Brereton J in Liristis v Gadelrabb [2009] NSWSC 441, at [5], was pertinent. His Honour then stated, with respect, prosaically, but with characteristic precision:

5    … It is not fishing to seek documents when there are reasonable grounds to think that fish of the relevant type are in the pond or, as it has been expressed in other cases, that it is “on the cards” that relevant documents (even if they are relevant only to credit) will be elicited by the subpoena.

19    With all of that, I respectfully agree. It is just that in the present case, in my view, Mr Darnell has not established that there are reasonable grounds to think that there are any fish in the pond constituted by category 1. Equally of use in his Honour’s judgment is the following statement, at [7]:

7    It is not necessary for a party called upon to sustain the relevance or the propriety of a subpoena to show that there is likely to be a document in every category of that called for by the subpoena. Were it otherwise, the pursuit of relevant evidence would be unduly constrained by a requirement to craft subpoenas which were so narrow in their scope that relevant documents easily escape its reach. In short, there is reason in this case to think there are documents relating to convictions for dishonesty, and in particular perjury, in relation to Mr Tony Liristis; and there is a legitimate forensic purpose for the issue of the subpoena in the terms in which it is expressed in that respect.

I have particularly taken into account, in relation to categories 2 and 3, which certainly have that generality, the observation made by his Honour in this paragraph that it is not necessary for a party called upon to sustain the relevance or propriety of a subpoena to show that there is likely to be a document in every category of that called for by the subpoena.

20    It seems to me inherently likely from the description which has been offered in the draft subpoena in categories 2 and 3, that there are documents of that type, and that it would not be possible to give greater precision. I have taken into account whether there may be an element of oppression or commercial confidentiality in relation to the documents sought in categories 2 and 3. However, I consider it best in relation to those particular types of concerns to await whatever point, if any, may be taken by Coles that, in turn, may follow, as it should, discussions between Mr Darnell and Coles in relation to compliance by Coles with the subpoena.

21    The Federal Court Rules 2011 (Cth) provide by r 24.22 that the Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena. There was no dissention on the part of Mr Darnell that such an order ought to be made in relation to the amount of any reasonable loss or expense on the part of Coles in complying with the subpoena.

22    Rule 24.22(2) contemplates that the Court may either fix the reasonable costs amount or direct that it be fixed in accordance with the Court’s usual procedure in relation to costs. I consider that the latter is the more appropriate way to proceed. In this instance, I have no basis for assessing what might be Coles’ reasonable loss or expense incurred in complying with the subpoena at this stage.

23    What follows then is that there will be a grant of leave to Mr Darnell to issue a subpoena requiring the production of categories 2 and 3 only of the draft. Further, that grant of leave is on terms that Mr Darnell pay the amount of any reasonable loss or expense incurred in complying with the subpoena as fixed in accordance with the Court’s usual practice in relation to costs.

24    As to the costs of the present application, each party has to some extent succeeded. That in itself might be thought, and, indeed, I consider it to be appropriate, for that reason alone to reserve the costs such that they will follow the ultimate event in the proceeding. But there is another reason, and that reason flows from the case management reservation voiced by French J. It may well be the case in this particular proceeding that today is ultimately shown to have been an interesting but nonetheless futile use of judicial time and at the expense of Stonehealth. On the other hand, if there is truly merit in the construction of item 130 of the Rules which underpins most of the grounds in the originating application as amended, then today will not at all have been an exercise in futility. As to which is the appropriate classification, that must await the hearing and determination of the proceeding. There will be orders accordingly.

Associate:    

Dated:    20 May 2021