Re WA Pines Pty Ltd v Ronald Moore Bannerman [1980] FCA 79; (1980) 41 FLR 175 (27 June 1980)

FEDERAL COURT OF AUSTRALIA

Re: W.A. PINES PTY. LTD.
And: RONALD MOORE BANNERMAN [1980] FCA 79; (1980) 41 FLR 175
No. W.A. 3 and 4 of 1980
Trade Practices - Practice

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1), Brennan(2) and Lockhart(3) JJ.

CATCHWORDS

Trade Practices - notice pursuant to s. 155 of the Act - Commission's "reason to believe" that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes or may constitute a contravention of the Act."

Practice and Procedure - discovery and interrogatories - "fishing expedition".

Trade Practices Act 1974 (Cth.) s. 155

Trade Practices - Section 155 notice - Whether Chairman had reason to believe referred to therein - Whether in proceedings party challenging validity of notice entitled to discovery and interrogatories as to Chairman's reason to believe - Trade Practices Act 1974 (Cth), ss. 155, 163A.

Practice - Procedure - Discovery and interrogatories - Applicant having no evidence - Fishing. The respondent Chairman of the Trade Practices Commission issued a notice pursuant to s. 155 of the Trade Practices Act 1974 directed to the applicant requiring it to furnish information and produce documents. In the notice the respondent recited, in accordance with the terms of s. 155, that he had reason to believe that the applicant was capable of furnishing information and producing documents relating to a matter "that constitutes or may constitute a contravention" of the Act. By application pursuant to s. 163A of the Act, the applicant sought declarations that the notice was ineffective. Its statement of claim contained an allegation that the respondent did not have the requisite reason to believe the matters referred to in s. 155 and recited in the notice. It also alleged that the lack of definition of the respondent's belief as recited in the notice was inconsistent with the belief required by s. 155. Toohey J. ordered that this last allegation be struck out as disclosing no reasonable cause of action, but refused to order that the allegation of non-existence of the Chairman's reason to believe be struck out. The appellant had sought disovery and leave to interrogate as to this issue. Toohey J. refused to make such orders. On appeal,

Held: dismissing the appeal, and allowing the cross appeal - (1) The allegation in the statement of claim that the Chairman did not have the requisite reason to believe should be struck out as an abuse of the process of the court as an unsubstantiated assertion that could not be substantiated.

(2) No order for discovery should be made in respect of the issue of whether the Chairman had reason to believe because there was no evidence to support the assertion and discovery would have constituted a fishing expedition.

Norwest Holst Ltd. v. Secretary of State for Trade, (1978) 1 Ch 201; Melbourne Home of Ford Pty. Ltd. v. Trade Practices Commission and Bannerman [1979] FCA 15; (1979), 36 FLR 450, followed.

HEARING

Sydney, 1980, May 6-7; June 27. 27:6:1980
APPEAL.

Appeal and cross appeal from orders of Toohey J.

The material facts appear from the judgments.

R. S. French and P. W. Johnston, for the appellant.

C. Carr, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Warren McDonald French & Harrison. Harrison.

Solicitors for the respondent: B. J. O'Donovan (Commonwealth Crown

Solicitor).

C.A. SWEENEY

ORDER

1. The appeals be dismissed.

2. The cross-appeal be allowed, and that the Order of Toohey J. be varied by deleting orders 2 and 3 of his Order and substituting in lieu thereof:

"2. Paragraph 6 of the applicant's Statement of Claim be struck out.

3. The applicant pay to the respondent his costs of the applications by the applicant and by the respondent."

3. The appellant pay to the respondent his costs of the appeals and his costs of the cross-appeal.

Appeal dismissed. Cross appeal allowed with costs.

DECISION

I agree with the conclusion reached by my brothers Brennan and Lockhart that the appeal should be dismissed and the cross appeal allowed with costs. I agree with their reasons and have nothing to add.

The respondent, who is the Chairman of the Trade Practices Commission, caused a notice in writing to be served upon the appellant, a Western Australian corporation, requiring it to furnish certain information and to produce certain documents. The notice was issued in reliance upon s.155 of the Trade Practices Act 1974. The information required related to the dissemination of documents commending as an investment a tree-farming venture of which the appellant was to be the manager. These documents were in the form of advertising brochures. There is no evidence that they had been in fact used in advertising, but the notice enquired whether any of the documents had been supplied to any person.

Section 155(1) provides:

"(1) Where the Commission, the Chairman or the Deputy Chairman has reason to believe that a person is capable of furnishing information, producing documents, or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act, or is relevant to the making of a decision by the Commission under sub-section 93(3), a member of the Commission may, by notice in writing served on that person, require that person -

(a) to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information;

(b) to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or

(c) to appear before the Commission at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents."

The respondent recited in the notice, and he alleged in these proceedings, that he had reason to believe that the appellant "is capable of furnishing information and producing documents relating to matters that constitute or may constitute contraventions of the Act". The notice specified the "matters" to which he was adverting:

"(a) the company in trade or commerce engaging in conduct that is misleading or deceptive or is likely to mislead or deceive in contravention of the Act, namely the making of . . . statements" appearing in the brochures "in connexion with promotion of investment in pine tree farming";

(b) the company in trade or commerce in connexion with the supply or possible supply of goods or services or in connexion with the promotion of the supply or use of goods or services representing that goods or services have benefits they do not have any contravention of s.53(c) of the Act, namely the making of . . . statements" appearing in the brochures "in connexion with promotion of investment in pine tree farming".

The appellant instituted proceedings under s.163A of the Act claiming a declaration that the respondent's notice "does not oblige the (appellant) to comply with the requirements contained in the notice; and is wholly (or alternatively, partly) without effect in law." The foundation for the relief claimed is set out in a Statement of Claim. Paragraph 4 of the Statement of Claim sets out the respondent's recitation that he has reason to believe that the appellant is capable of furnishing information and producing documents relating to matters that constitute or may constitute contraventions of the Act, and further sets out the matters specified by the notice as the matters that constitute or may constitute contraventions of the Act.

Paragraphs 5,6, 7 and 8 of the Statement of Claim then read as follows:

"5. The lack of definition of the Respondent's state of belief concerning the matters referred to in the notice as disclosed by the abovementioned recitation is inconsistent with the state of belief required to attract the operation of Section 155 of the Trade Practices Act."

The appellant, in answer to a request for particulars of this paragraph, says that the inconsistency alleged is "adequately particularized in paragraph 5 . . . read together with paragraph 4".

"6. Alternatively the notice was issued without the Trade Practices Commission, the Respondent or the Deputy Chairman having reason (or alternatively any legally sufficient reason) to believe any of the matters set out in section 155(1) of the said Act.

7. The notice is in whole (or alternatively in part) vexatious, fishing, too wide, oppressive, unreasonable, too remote, uncertain, unclear and inquires into matters of law or requires the making of judgments of questions of law or alternatively is objectionable upon some or one of such grounds."

The appellant, furnishing particulars of paragraph 7, attributes one or more of the qualities set out in that paragraph to each of the several requirements to be found in the notice.

"8. The requirements of the notice (or some of them) exceed the ambit of and power conferred by section 155 of the said Act."

Particulars of this allegation were furnished:

"Insofar as the matters set forth in the notice do not clearly relate to possible contraventions of Sections 52 or 53 of the Act, and do not involve (?or) specifically relate to conduct engaged in by the company in the course of trade or commerce, they are beyond the ambit of the power conferred by Section 155 of the Act, particularly with respect to questions 5,6,7(a) to 7(o), 8,10(a),10(b),10(e) (iii),10(g),10(h),11,12,13,14,15,16,18,19,20,21,22, 23,24,25,26,28,29,30,31,32,33,34,35,36,37 and 42."

Each allegation contained in paragraphs 5,6,7 and 8 was denied by the respondent. He also denied that the recitation in the notice disclosed any lack of definition in his stated belief concerning the matters referred to in the notice, and by paragraph 3 of his defence, he alleged that he had "duly complied with all the requirements of s.155(1) . . . and such notice is valid in all respects."

The respondent then sought an order that paragraphs 5 and 6 of the Statement of Claim be struck out. That application was heard by Toohey J. On 25 January 1980 Toohey J. made an order that paragraph 5 of the Statement of Claim be struck out as disclosing no reasonable cause of action, but his Honour refused an order to strike out paragraph 6. He also refused the appellant's applications for discovery and interrogatories and for an order by way of particulars that the respondent state the reason to believe any of the matters set out in s.155(1) of the Trade Practices Act. The appellant now appeals against the order striking out paragraph 5 and the refusal of his Honour to order discovery, interrogatories and further particulars, while the respondent cross-appeals against his Honour's refusal to strike out paragraph 6.

The appellant's argument to sustain paragraph 5 of the Statement of Claim took as its foundation the proposition that the power of the Chairman of the Commission to give a notice under s.155 depends upon his belief, inter alia, that a matter "constitutes, or may constitute, a contravention of (the) Act." Upon the foundation of this construction of the section, the appellant's argument submitted that the Chairman could not have, at the same time, both a belief that a matter is a contravention and a belief that the same matter may be a contravention: if a matter may be a contravention then equally it may not be, and that is entirely inconsistent with a belief that it is a contravention.

The argument was developed with nicety. First, it was submitted that where a power is conditioned upon a repository of the power having "reason to believe", the condition requires both that the repository believe and that he have reason for his belief, and authorities were cited in support of the submission. Then, it was said, nowadays the law allows (though at one time it may not have allowed) a challenge on the facts to any assertion by the repository of power that he believed and had reason for his belief. And that proposition was supported by reference to authority. Finally, the argument analyzed the respondent's recital in the notice of his reason to believe, and sought to expose what were said to be two contradictory beliefs: that the matter constitutes a contravention and that the matter may constitute a contravention. Thereby the argument sought to expose a kind of schizophrenia in credence which paragraph 5 of the Statement of Claim was intended to raise and which would be fatal to the fulfilment of the condition upon which the respondent's power depended.

The foundation of the argument is, of course, the construction which is placed upon s.155(1). As a matter of grammar, the clause "that constitutes, or may constitute, a contravention" qualifies "matter"; the denotation of "matter" is not affected by a belief held by the Chairman. "Matter", said Franki and Northrop JJ in Melbourne Home of Ford Pty.Ltd. v. Trade Practices Commission (1979) ATPR 18080 at p.18097 "is to be construed in its ordinary sense of an affair or a thing". It refers to a body of facts, a body of facts which "constitute" or "may constitute" a contravention. A contravention is constituted by the conduct of persons (whether corporate or natural) and the factual circumstances attendant upon conduct, so the "matter" to which s.155(1) refers comprehends the conduct of persons and the circumstances attendant upon it. Whether or not the relevant body of facts constitutes a contravention is a matter of law, and that question does not turn upon the perception or knowledge of the facts held by the Chairman or any other person. But when the section speaks of a matter which "may constitute" a contravention, it speaks not of the relevant and entire body of facts as they exist or have existed - for that body of facts either does or does not constitute a contravention - but of a body of facts which are not fully known and which, if and when they are fully known, may reveal themselves as constituting a contravention. A "matter that may constitute a contravention" is the facts being investigated, some of which are not known by the Commission, the Chairman or the Deputy Chairman. However, a "matter that may constitute a contravention" does not take its character from the belief of the Commission, the Chairman or the Deputy Chairman, but from the nature and quality of the facts as they are or have been and as they may reasonably be suspected to be or to have been. A matter which "may constitute" a contravention also encompasses future facts, that is, facts which will occur or the future occurrence of which may reasonably be suspected. The character of the matter is determined objectively, and if it could be shown that a contravention would not be constituted by a concatenation of facts which exist or have existed and facts which might reasonably be suspected to exist or to be about to exist or to have existed, there would be no "matter" relating to which a person could furnish information etc, as provided for by s.155(1). That is not the present case, as will subsequently appear.

Although the character of a "matter" in no way depends upon the belief of the Chairman, his knowledge of a matter (that is, of past present or future facts and of facts the existence or future occurrence of which may reasonably be suspected) is material to the belief which he must form if the power under s.155(1) is to be validly exercised. That belief is that the person to whom the notice is to be given is capable of furnishing information, producing documents or giving evidence relating to the facts known or suspected. It is not necessary that he should believe that the information documents or evidence will establish or tend to establish a contravention, but merely that they relate to the matter. Information documents and evidence which tend to negative a suspected contravention or liability to conviction or which tend to exculpate a person suspected to be a party to a contravention or offence are as much within the ambit of s.155(1) as information documents or evidence which tend in the other direction. Thus, an enquiry under s.155 may relate to a defence or possible defence under s.85. This is because

"the Commission is concerned with contraventions or possible contraventions of the Act and must consider them not only from the point of view of possible civil proceedings, but also from the point of view whether a prosecution should be brought",

as Bowen C.J. said in Riley McKay v. Bannerman [1977] FCA 7; (1977) 15 ALR 561 at p.566. The power conferred by s.155 is clearly in aid of the performance of the Commission's functions, and,

"(b)ecause it is part of the Commission's function to be concerned with investigation of contraventions or possible contraventions and to be concerned with determining whether any proceedings, civil or criminal, should be brought in respect of a contravention, the Commission will, quite properly, be interested to know whether there is a possible defence under s.85(1)." (ibid.)

There is a simple symmetry between the condition of the power and the result of its exercise.

If the person to whom the notice is directed can furnish information etc. relating to the matter, a reason to believe that the person was capable of doing so proves to be well-founded; but if the person is not capable of complying with the notice, his failure to do so does not contravene the section (see sub-s.5(a)) and the fallacy of the belief that he was so capable gives rise to no criminal liability. In substance, the condition of the Chairman's power is his having reason to believe and believing that the person to whom the notice is to be given can provide assistance in the investigation which the Commission has in hand, being an investigation of a contravention or of what reasonably can be suspected to be a contravention. That being the purpose and effect of s.155(1), the difficulty which a recipient of a notice has in challenging the validity of the notice is substantial. Paragraph 5 was not so framed as to raise the appropriate challenge, and it was right to strike it out.

We heard no argument to suggest that paragraph 6 was inapposite to raise a challenge, though the difficulty of supporting a challenge is formidable indeed. That is not to say that it is impossible to challenge the validity of a notice for non-fulfilment of the condition of the power. The modern authorities are uniform in favour of judicial review of powers which are conditioned upon the existence of reasons for a specified belief: see Nakkuda Ali v. Jayaratne (1951) A.C.66; Registrar of Restrictive Trading Agreements v. Smith (1969) 1 W.L.R.1460; Bradley v. Commonwealth (1972) 128 C.L.R.557 at pp.574-5 per Barwick C.J. and Gibbs J; Inland Revenue Commissioners v. Rossminster Ltd. (1980) 1 All E.R.80. But such a challenge requires the applicant to show that the Chairman has no reason to believe that the person to whom the notice is given is capable of furnishing information, producing documents or giving evidence relating to the investigation which the Commission has in hand, being an investigation of a contravention or what reasonably can be suspected to be or to be about to be a contravention.

To make the challenge good, the appellant sought discovery but it was refused. On appeal, it was argued that the respondent as a party to the proceedings may be required the respondent as a party to the proceedings may be required under O.15 r.1 to give discovery "unless the Court otherwise appellant the benefit of the discovery to which it is thus prima facie entitled. In proceedings for judicial review of administrative action, Order 15 appears to go further than O.53 r.8 of the English rules recently introduced in order to overcome the long practice of generally denying discovery in applications for prerogative writs, a practice to which the Law Commission ("Report on Remedies in Administrative Law" 1976, Cmnd.6407, para 15) had drawn attention.

Though the power to require discovery be acknowledged, how should it be exercised? It depends upon the nature of the case and the stage of the proceedings at which the discovery is sought. In the present case, discovery is sought before there is a tittle of evidence to suggest that the Chairman did not have the requisite cause to believe which paragraph 6 of the Statement of Claim would put in issue. Some assistance was sought to be derived from cases where discovery had been given to a party before he was required to give particulars of his claim: cases such as Ross v. Blake's Motors (1951) 2 All E.R.689, but in cases of that kind there is either an anterior relationship between the parties which entitles one to obtain information from the other, or 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. This is not such a case. This is a case where a bare allegation is made by paragraph 6 of the Statement of Claim and, the paragraph being denied, the applicant seeks to interrogate the Chairman and ransack his documents in the hope of making a case. That is mere fishing. As Smithers J. said in Melbourne Home of Ford Pty.Ltd. v. Trade Practices Commission, supra, at p.18,087:

"In the absence of such evidence the proceeding is essentially speculative in nature. In such circumstances for the Court to assist the applicants by making available to them the processes of interrogatories and discovery would be to assist them in an essentially fishing exercise and from this the Court on established principles should refrain."

His Honour's refusal of discovery was right and it ought not to be disturbed.

Some argument was based on paragraph 3 of the respondent's Defence which set up positively the Chairman's requisite state of mind, and it was submitted that issue had been joined on this paragraph and discovery should be allowed to impeach the case so set up. The answer is simply that no issue additional to those which arose upon the denial of the relevant paragraphs of the Statement of Claim arose out of paragraph 3 of the Defence. It repeated the issue already joined when paragraph 6 of the Statement of Claim was denied. It was incapable of reversing the onus of proof of that issue which lies upon the applicant.

That onus is most difficult to discharge. In Norwest Holst Ltd. v. Secretary of State for Trade (1978) 1 Ch 201, the Court of Appeal upheld an order of Foster J. striking out proceedings for a declaration that the appointment of inspectors to investigate the affairs of the company was unlawful and ultra vires on the grounds that the condition precedent to the exercise of the power to appoint inspectors was not fulfilled. The statute (Companies Act 1948, s.165) empowered the Board of Trade to appoint inspectors "if it appears to the board that there are circumstances suggesting" certain kinds of misconduct in the company's affairs. The company complained that no grounds had been furnished to show that any misconduct was suspected, but that argument failed. Then Ormrod L.J. said (at p.228):

" So far as the appellants' other contention is concerned, that they are entitled in the circumstances to go on with this action in order to obtain a judicial review of the exercise of the minister's discretion, I can only say that that argument seems to me capable of being disposed of in about two sentences. Once it is held that the minister is not obliged in accordance with the ordinary principles of justice to disclose the information upon which he has exercised his discretion, it must follow that the company cannot establish a prima facie case for reviewing the discretion unless, of course, the minister has already disclosed all the material upon which he based his decision, which he clearly has not done."

In the present case, the Chairman is not to be compelled to discover information to the appellant, and on the other material before his Honour, the case was a hopeless one. The brochures contained statements for which the appellant, on the face of the documents, appears to be responsible. They were statements the truth of which would be material in determining whether publication of them constituted a contravention of s.52 or of s.53(c). The appellant is the person who prima facie appears to be responsible for the statements, and the notice to it enquires as to the truth of the statements and as to the dissemination of the brochures containing them. On the face of the documents, the appellant appears to be the person most likely to be able to furnish that information. The Chairman deposed that at the relevant time he held the belief that the appellant was capable of furnishing that information; and the contents of the brochures furnished manifestly reasonable grounds for that belief. There was nothing to suggest that that was incorrect; nor was the Court given any intimation that the course of litigation might throw up evidence suggesting that the Chairman did not have the relevant belief and the grounds for that belief. It is a case where, once s.155(1) is properly construed, the bankruptcy of the appellant's case based on paragraph 6 of the Statement of Claim is manifest.

Though the jurisdiction conferred by O.20 r.2 to strike out a proceeding as an abuse of the process of the Court should be sparingly used (General Steel Industries Inc. v. Commr. for Rlys (NSW) (1964) 112 C.L.R.125 at pp. 128,129; Tampion v. Anderson (1973) V.R.321 at pp.325,326), this is a case where the proceedings based on paragraph 6 appear clearly to be no more than an unsubstantiated assertion which will not be substantiated, and that paragraph should be struck out. Despite the careful argument to the contrary, I would allow the cross-appeal and I would dismiss the appeal with costs.

I have had the advantage of reading the reasons for judgment of Brennan J. The relevant facts and the background to the appeal are stated by him. I need not repeat them.

The respondent seeks to strike out paragraphs 5 and 6 of the statement of claim and for this purpose calls in aid O.11 r.16 and O.20 r.2 of the Rules of this Court and its inherent jurisdiction to prevent an abuse of its process.

It has been said often that it is only in a very clear case that a summary order should be made which prevents a plaintiff from pursuing his case before the customary tribunal. The tests to be applied, all indicating the considerable caution with which the power should be exercised, are referred to by Barwick C.J. in General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; 1964 112 C.L.R. 125 at pp. 129 and 130.

Paragraph 5 of the statement of claim

The appellant's basic proposition to support paragraph 5 was that the words

"that constitute, or may constitute, a contravention of the Act" qualify the words "has reason to believe"; so that the Commission (or Chairman or Deputy Chairman, as the case may be), when issuing a notice under s. 155, must have "reason to believe" that a matter "constitutes or may constitute a contravention of the Act".

Counsel for the appellant submitted that, for the respondent to have "reason to believe", requires both that he holds the belief and that his belief is reasonably supportable. He must believe either that the matter constitutes a contravention or that it may do so; but he cannot believe both, as they are necessarily inconsistent with each other. As the notice itself recites that the respondent has reason to believe that the appellant "is capable of furnishing information and producing documents relating to matters that constitute or may constitute contraventions of the Act" it is said to be bad.

In my opinion, the words "that constitute, or may constitute, a contravention of this Act" qualify the word "matter" and not the words "has reason to believe". That is the literal and grammatical meaning of these words in their context. I see no reason to take a different view.

The difficulty arises in part because s. 155 makes use of what was described by Higgins J. in Lloyd v. Wallach [1915] HCA 60; (1915) 20 C.L.R. 299 at p. 313 as "the awkward phrase 'has reason to believe'". It has been construed in a number of cases in various ways. I will refer to some of them.

In Lloyd v. Wallach (supra) sub-r. 55 (1) of the War Precautions Regulations 1915 provided that where the Minister for Defence: -

"has reason to believe that any naturalised person is disaffected or disloyal, he may, by warrant under his hand, order him to be detained in military custody in such place as he thinks fit during the continuance of the present state of war".

Griffiths C.J. construed the phrase "has reason to believe" as meaning that the Minister was the sole judge of what circumstances were material and sufficient (p. 308). Isaacs J. took a similar view. Higgins, Gavan Duffy and Rich JJ. did not decide the question.

In Moreau v. F.C. of T. [1926] HCA 28; (1926) 39 C.L.R. 65 Isaacs J. considered s. 37 of the Income Tax Assessment Act 1922, which provided that the Commissioner may at any time make such alterations or additions to any assessment as he thinks necessary to ensure its completeness and accuracy, provided that an alteration or addition shall not be made in or to an assessment after the expiration of three years from the date when the tax payable on the assessment was originally due and payable, unless the Commissioner "has reason to believe that there has been an avoidance of tax owing to fraud or attempted evasion". His Honour said at p. 68: -

"Unless the ground or material on which his belief is based is found to be so irrational as not to be worthy of being called a reason by any honest man, his conclusion that it constitutes a sufficient reason cannot be overriden."

In Boucaut Bay Co. Limited (In Liquidation) v. The Commonwealth [1927] HCA 59; (1927) 40 C.L.R. 98 an agreement between the Commonwealth and the appellant contained a provision that if the Minister for Homes and Territory should "have reason to believe" that the agreement was not being carried out by the appellant in accordance with the agreement, the Minister might determine the agreement. Starke J. said at p. 101: -

"In my opinion, the belief of the Minister is 'the sole condition of his authority'; he is the sole judge of the sufficiency of the materials on which he forms it" . . . If a man is to form a belief and his belief is to govern, he must form it himself on such reasons and grounds as seem good to him . . . He must not act dishonestly, capriciously or arbitrarily: that would be contrary to the implication of the agreement and so establish a want of the belief stipulated for as a condition of the exercise of the power of the determination. So long, however, as the Minister acts upon circumstances appearing to him to bear upon the case and giving him a rational ground for the belief entertained, then, in my opinion, the courts of law cannot and ought not to interfere with his discretion."

The phrase "has reasonable cause to believe" was considered by the House of Lords in Liversidge v. Sir John Anderson [1941] UKHL 1; 1942 A.C. 206. That case related to a claim for damages for false imprisonment which was brought about by an order made by the Home Secretary under the Defence (General) Regulations 1939 (Reg. 18B) of the United Kingdom. It involved a question as to the meaning of the words "if the Secretary of State has reasonable cause to believe any person to be of hostile origin or associations". The majority of the House held that those words in their context meant simply that the Secretary of State had honestly to suppose that he had reasonable cause to believe the requisite matter. Provided he acted in good faith he was the only judge of the conditions of his own jurisdiction.

In Nakkuda Ali v. M.F. De S. Jayaratne 1951 A.C. 66 Lord Radcliffe, who wrote the opinion of the Board, said that Liversidge v. Anderson should be regarded as an authority for the meaning of that phrase in that particular regulation alone. His Lordship said at p. 77: -

"Their Lordships therefore treat the words in regulation 62" (i.e. of the Defence (Control of Textiles) Regulations 1945) "'where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer' as imposing a condition that there must in fact exist such reasonable grounds, known to the Controller, before he can validly exercise the power of cancellation."

In I.R.C. v. Rossminster Limited [1979] UKHL 5; 1980 1 All E.R. 80 Lord Diplock considered the power of an officer of the Board of Inland Revenue to seize and remove the things that he found on premises which the warrant authorised him to enter and search; but where the source of the power limited the power of seizure and removal to things "which he has reasonable cause to believe may be required as evidence for the purpose of proceedings" for an offence involving a tax fraud. His Lordship said at p. 92: -

"These words appearing in a Statute do not make conclusive the officer's own honest opinion that he has reasonable cause for the prescribed belief. The grounds on which the officer acted must be sufficient to induce in a reasonable person the required belief before he can validly seize and remove anything under the sub-section."

His Lordship went on to say: -

"For my part I think the time has come to acknowledge openly that the majority of this House is Liversidge v. Anderson were expediently and, at that time, perhaps, excusably, wrong and the dissenting speech of Lord Atkin was right".

In my opinion, the words "has reason to believe" in sub-s.155 (1) imply actual belief: see Boucaut Bay Co. Limited (In Liquidation) v. The Commonwealth (supra) per Isaacs A.C.J. at p. 106; but do not make conclusive the Commission's (also the Chairman's or Deputy Chairman's) own opinion that it has reason for the requisite belief. Words such as these are found frequently in legislation or regulations conferring powers on Ministers of the Crown or public servants. They must be read as limiting otherwise arbitrary powers. If they are to be read as empowering the person in whom the power is vested, to determine conclusively whether the limitation has been satisfied, the value of the intended limitation is nugatory.

Plainly, the power must not be exercised dishonestly or in bad faith (see Boucaut Bay Co. Limited (In Liquidation) v. The Commonwealth (supra) per Starke J. at p. 101); but if that were the sole restraint upon the exercise of the power it would apply only in a very small number of cases, leaving the power arbitrary and unfettered in the great majority of cases.

In my opinion the words in s. 155 "has reason to believe . . ." mean that the Commission must believe that a person is capable of furnishing information, producing documents or giving evidence; and there must be reasonable grounds or cause for that belief, before the powers conferred by sub-s. 155 (1) may be exercised.

Turning to the word "matter". In Melbourne Home of Ford Pty. Limited v. T.P.C. 1979 A.T.P.R. 40-107 Franki and Northrop JJ. said at p. 18,097: -

"There is no warrant for giving the word 'matter' in s. 155 (1) any technical meaning. That word is to be construed in its ordinary sense of an affair or a thing."

I respectfully agree; but would add for my part that the affair or thing that is the "matter" is itself a complex of facts which together answer the description of the "matter" that "constitutes" or "may constitute" a contravention of the Act.

The Commission is charged by the Act with the performance of many and varied functions. In Riley McKay Pty. Limited v. Bannerman [1977] FCA 7; (1977) 31 F.L.R. 129 Bowen C.J. said at pp. 133 and 134: -

"The powers conferred on the Commission, the chairman and deputy chairman by s. 155 are given for the purpose of enabling the Commission to perform its functions under the Act. The Commission's functions include the dissemination of information, law reform and research (s. 28). In respect of contraventions of the Act, the Commission has power to institute civil proceedings for penalty under s. 76; to seek an injunction under s. 80; to seek an order requiring the disclosure of information or the publication of a correcting advertisement under s. 80A; or in respect of a breach of s. 50 to seek an order for divesiture under s. 81. The Commission also has power to give authorisations under s. 88 or clearances under s. 93. Where a party seeks a declaration under s. 163A, the Commission is entitled to intervene (s. 163A (3)) . . . . However, the Commission is concerned with contraventions or possible contraventions of the Act and must consider them not only from the point of view of possible civil proceedings, but also from the point of view whether a prosecution should be brought . . . . Because it is part of the Commission's function to be concerned with investigation of contraventions or possible contraventions and to be concerned with determining whether any proceedings, civil or criminal, should be brought in respect of a contravention, the Commission will, quite properly, be interested to know whether there is a possible defence under s. 85 (1). If satisfied there would be a good defence under that section, presumably the Commission would not expend public moneys on a prosecution. The effect of this is to render the ambit of the Commission's proper inquiries under s. 155 (1) wider than they otherwise would be. In my opinion the power of giving a notice requiring information under s. 155 (1) must be exercised for the purposes for which it is given and not otherwise; that is, to assist the Commission in the exercise of its functions."

In Melbourne Home of Ford Pty. Limited v. T.P.C. (supra) Smithers J. said at p. 18,084: -

"Part XII is obviously designed by Parliament to confer upon the Commission the authority to seek and obtain information from Corporations and others for the purpose of facilitating the enforcement of the Act by legal process. So important did Parliament consider this function that it authorised the Commission to seek and obtain such information even from those suspected of contraventions of the Act and even where in supplying it the persons concerned may make incriminating admissions."

A like power conferred by s. 3 of the Antitrust Civil Process Act 1962(U.S.) upon the Attorney General or the Assistant Attorney General in charge of the Antitrust Division of the Department of Justice was described in U.S. v. Consolidated Foods Corporation 455 Fed. Supp. (1978) 142 at p. 146 as "broad pre-complaint discovery rights that Congress has bestowed upon the Justice Department in antitrust cases."

The Commission is empowered by s. 155 to obtain information, documents and evidence, not relating to anything it wishes; but necessarily relating to matters relevant to the Act, namely matters that constitute or may constitute contraventions. Thus the power is circumscribed.

The Commission is given the powers conferred by sub-s. 155 (1) because Parliament has entrusted to it the task of investigating contraventions or possible contraventions of the Act. Armed with the powers of sub-s. 155 (1) the Commission will be able to determine whether prosecutions would be likely to succeed or fail. The Commission is part of the Commonwealth's law enforcement machinery. It is not for it to determine contravention or no; that is for the courts. The belief of the Commission whether there has been or may be a contravention is not necessary for the valid exercise of the powers of the Commission; but it must have a well-founded belief that the recipient of the notice is capable of providing information, producing documents or giving evidence that may assist in determining whether a contravention has occurred or may occur.

The Commission may seek to exercise its powers under s. 155 to obtain information or documents that may be exculpatory rather than inculpatory. Surely this must be a proper exercise of the power conferred by s. 155; in which case plainly it is unnecessary for the Commission to have the belief that there has been or may be a contravention of the Act.

The words "that constitutes or may constitute" a contravention do not govern or qualify the Commission's belief. Probably they are intended to draw a distinction between existing or past contraventions "(that constitutes") and prospective contraventions ("may constitute"); for example a proposed merger under s. 50 that may be a contravention if it occurs. Support to this approach is given by the United States experience of the Antitrust Civil Process Act 1962 (U.S.), s. 3 of which provided for the issue of a Civil Investigative Demand, a notice serving a similar purpose to a notice under sub-s. 155 (1). It was held in U.S. v. Union Oil Co. [1965] USCA9 101; 343 F. 2d 29 (9th Cir. 1965) by the Court of Appeals for the Ninth Circuit that a civil investigative demand could not properly be issued under the 1962 Act to obtain documents relating to an investigation of a proposed acquisition as no violation of the law had yet occurred and the 1962 Act was limited to investigations of existing or past violations. The Act was amended to overcome this difficulty in 1976 by the HartScott-Rodino Antitrust Improvements Act of 1976 (ss. 101 and 102)

It is not necessary for a valid exercise of the Commission's powers of investigation that a contravention be ultimately proved before the courts. Informations may be laid, yet subsequently dismissed. It does not follow that the exercise of the Commission's powers under sub-s. 155(1) is invalid. The words "that constitutes or may constitute a contravention of this Act" are merely descriptive of the topic or subject matter of investigation by the Commission. The Commission must believe that a person is capable of furnishing information, producing documents or giving evidence that relates to that topic or subject matter. There is no necessity for the Commission to believe that there has been or may be a contravention.

Parliament has armed the Commission with powers of investigation to determine whether contraventions have occurred or may occur. A fortiori these powers must be exercised before courts hold that there has been or has not been a contravention. No-one knows whether a contravention has occurred until a court says so. It is erroneous to suggest that the validity of the power of investigation is determined by the subsequent findings of courts of law. Indeed, informations may never be laid because the very exercise by the Commission of its powers may reveal that there is not or will not be a contravention.

In the result the appellant's attack on the findings of Toohey J. fails.

Paragraph 6 of the statement of claim

As to paragraph 6 I agree with the reasons for judgment of Brennan J. and

his conclusion that paragraph 6 should be struck out.

Discovery, inspection and interrogatories

Having reached the conclusion that paragraphs 5 and 6 of the statement of

claim should be struck out, it is strictly not necessary to consider the appellant's challenge to Toohey J.'s refusal of the appellant's application for discovery and interrogatories and for an order by way of particulars that the respondent state his reason to believe any of the matters set out in sub-s. 155 (1). As this question was canvassed fully in argument, I shall say something about it, additionally to what was said by Brennan J.

There are four objects of interrogatories: -

1. To obtain admissions as to facts which will support the case of the interrogating party;

2. To obtain admissions which will destroy or damage the case of the party interrogated;

3. Interrogatories which are in the nature of a request for further and better particulars; and

4. Interrogatories which seek to obtain accounts from a party occupying a fiduciary position.

However, among the well established limitations upon the power to interrogate and to discovery of documents is the rule that this power cannot be used for the purpose of "fishing".

In Hennessy v. Wright (No. 2) (1888) 24 Q.B. 445 (reported as a note to Parnell v. Walter (1890) 24 Q.B.D. 441) Lord Esher M.R. said at p. 448: -

"In other words, the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present. If that is the effect of the interrogatories, it seems to me that they come within the description of 'fishing' interrogatories, and on that ground cannot be allowed. The moment it appears that questions are asked and answers insisted upon in order to enable the party to see if he can find a case, either of complaint or defence, of which at present he knows nothing, and which will be a different case from that which he now makes, the rule against 'fishing' interrogatories applies."

In Lane v. Gray 1873 L.R. 16 Eq. Cas. 552 Sir Richard Malins, V.C. held that the court's power to make an order for discovery was a discretionary power to order production when it shall appear to the court to be right to do so. His Lordship refused the application until the case had proceeded further and the plaintiff made out a prima facie case in support of her claim. The plaintiff had brought a suit claiming to be entitled to a share in the estate of an intestate as an alleged next of kin. It appears that discovery was refused because all that the plaintiff had done at that stage of the case was to allege that she was next of kin of the intestate and there was no evidence to support her assertion. The estate of intestates were frequently claimed by persons of whom many had no foundation for their claims; but by obtaining on discovery production of documents belonging to the intestate they obtained information by means of which fresh fictitious cases were in many instances manufactured.

In Associated Dominion Assurance Society Pty. Limited v. Sir John Fairfax & Sons Limited (1952) 72 W.N. (N.S.W.) 250, Owen J. said at p. 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."

See also Bray on Discovery (1885) at pp. 13, 16, 98 and 461.

In the present case the appellant seeks discovery and leave to interrogate before there is any evidence that the respondent did not have the belief required by sub-s. 155(1). There are the barest allegations in paragraphs 5 and 6 of the statement of claim. They are denied by the respondent in his defence who, in addition, swore an affidavit that he held the relevant belief required by the section. Brochures which were published obviously by, or with the concurrence of, the appellant contain statements which at the very least are not inconsistent with the respondent's statement of belief. Together with the form of the notice under the section that is all the material on which this Court is asked to act and to permit discovery and administration of interrogatories.

"This is not merely clutching at a non-existent straw, but expecting to be carried by it.": per Menzies J. in Mulley v. Manifold [1959] HCA 23; (1959) 103 C.L.R. 341 at p. 345.

I have no doubt that the appellant is seeking to use the weapons of discovery and interrogatories to find out if it has a case of which it presently knows nothing. It is a fishing expedition to which this Court will not lend its aid. I respectfully agree with the following passage from the reasons for judgment of Smithers J. in Melbourne Home of Ford Pty. Limited v. T.P.C. (supra) at p. 18-087: -

"Accordingly in a proceeding pursuant to s. 163A (1), certainly in the absence of satisfactory evidence that the chairman did not have the relevant reason to believe, the applicants are faced with the prima facie validity of the notice. In the absence of such evidence the proceeding is essentially speculative in nature. In such circumstances for the court to assist the applicants by making available to them the processes of interrogatories and discovery would be to assist them in an essentially fishing exercise and from this the court on established principle should refrain."

The appellant's challenge to Toohey J.'s refusal to allow discovery, interrogatories and particulars fails.

I would dismiss the appeals and allow the cross appeal with costs.