IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
Commercial Court
GROUP PROCEEDINGS LIST
S ECI 2020 01590

BRETT STALLARD in his capacity as Trustee for the Stallard Superannuation Fund 	First Plaintiff	
		
STEVEN NAPIER	Second Plaintiff 	
		
v		
		
TREASURY WINE ESTATES LTD	Defendant	

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JUDGE:	Nichols J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	7 April 2022	
DATE OF JUDGMENT:	18 May 2022	
CASE MAY BE CITED AS:	Stallard & Anor v Treasury Wine Estates Ltd (No 3)	
MEDIUM NEUTRAL CITATION:	[2022] VSC 246	

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PRACTICE AND PROCEDURE – Production of discovered documents – Inspection of documents – Redaction – Whether justified – Whether parts of discovered documents may be redacted or masked for confidentiality and irrelevance – Supreme Court General Civil Procedure Rules 2015 (Vic) r 29.09 – Gunns Limited & Ors v Marr v Ors [2008] VSC 464 – Octagon Inc  v Hewitt & Anor (No 2) [2011] VSC 373.

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiffs	Mr A Pound SC with
Ms E Levine	Slater and Gordon Lawyers
Maurice Blackburn	
			
For the Defendant	Mr M Garner with
Mr G Kozminsky	Herbert Smith Freehills	

HER HONOUR:
Background and introduction
1	Pursuant to orders made by consent on 2 December 2020 and 18 March 2021, the defendant was permitted to redact parts of documents produced in its initial tranche of discovery.  The orders provided that, ‘parts of the board minutes and papers…that are both confidential and not relevant to the issues raised by the consolidated statement of claim…may be redacted’.  The orders required the defendant to maintain a log documenting the basis for each redaction it applied.  The regime reflected in the orders was proposed by the parties as a means of facilitating discovery without the need to resolve a dispute between them concerning redactions, at least in the first instance.
2	The parties were unable to resolve their dispute and the plaintiffs applied for orders requiring the defendant (Treasury) to produce certain documents in unredacted form.  The dispute was crystalised by reference to sample documents that the parties agreed, exemplified the issues in dispute.  A significant part of the dispute was determined by a ruling given by Steffensen JR, on 5 April 2022.
3	The remining dispute concerns two sample documents (documents 5 and 6) which form part of papers prepared for meetings of the Treasury board in August and October 2018.  The disputed redactions have been made to one page in each document.  The plaintiffs contend that those pages ought be produced without redactions, and that ‘like information’ in documents already discovered be produced without redactions.
4	For completeness I will note that the defendant had, by its written submissions, resisted the plaintiffs’ proposed orders on the ground that the redacted material was irrelevant to the issues in dispute, but separately also on the basis that the plaintiffs’ pursuit of the redacted information was an attempt by the plaintiffs to ‘take advantage’ of an alleged (but not admitted) breach of confidence by the plaintiff Mr Napier and Maurice Blackburn, in respect of which interlocutory relief was granted in this proceeding in May 2020, by consent.  It is unnecessary to set out the substance of that contention here.  It required traversing a convoluted history of earlier litigation, and earlier parts of this case.  On the matter coming on for hearing before me I inquired of Senior Counsel for Treasury whether the beach of confidence point was being pressed.  I did so because it seemed apparent from the argument set out in writing, that if the redacted parts of the discovered documents were relevant to the issues in the proceeding they should be produced and if irrelevant, they ought remain redacted.  The breach of confidence point then, appeared of itself to go nowhere.  Senior Counsel for the defendant indicated that the point was not pressed.  I mention this only to record that although the concession was sensible, the pursuit of the point (which had been addressed in the defendants’ affidavit and submissions) was not a productive use of the Court’s time.  If it were understood by the defendant that the point had no independent utility, it ought not to have been made.
5	Returning to the remaining issue, the character of the disputed material was the subject of affidavit evidence by relevant officers of the defendant, and the fact that the disputed material was properly described as confidential to the defendant, was not contested for the purposes of this application.  That being so, the question is only whether or not the redacted parts of the documents are relevant to the pleaded case.
6	The relevant principles are well established.  They were summarised by Kaye J in Gunns v Marr.  I respectfully adopt Kaye J’s analysis which remains current.  In short:
(a)	Rules 29.02 and 29.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) require a party to a proceeding, upon service of notice on it by another party, to discover all documents which it is required to discover pursuant to r 29.01.  Such discovery is to be in the form of an affidavit of documents pursuant to r 29.04.  A party upon whom an affidavit of documents is served may, by notice to produce served on the party making the affidavit, require that the party produce the documents in that party’s possession referred to in the affidavit (other than any which the party objects to produce) for inspection (r 29.09).
(b)	Strictly, a party is required to produce for inspection the whole of a document discovered by it notwithstanding that parts of that document may be irrelevant to the issues in the case.
(c)	That requirement notwithstanding, there is a long-established practice whereby a party making inspection of a discovered document is entitled to seal up or mask parts of the document which are irrelevant to the proceeding and of which the party resists making inspection.  It has been recognised that a party is entitled to redact irrelevant parts of a document discovered by it where the party has a legitimate claim on the basis of confidentiality or the like.
(d)	The Court may inspect a document the subject of a dispute in an unredacted form for the purposes of assessing the claim that the redacted parts are irrelevant and are parts which, by their nature, attract a valid basis for the exclusion from the inspection process.
(e)	It is important to ensure that the redaction of irrelevant parts of a document does not create gaps affecting the intelligibility or meaning of the remaining portions of a document produced on inspection.  As McLelland CJ in Eq said in Telstra Corp v Australis Media Holdings:
There is a serious risk that too assiduous a masking of documents on the grounds of irrelevance will create gaps affecting the ready comprehensibility of the remaining portions of the document and of the context in which those portions appear.  If for this, or any other, reason, masking on the ground of irrelevance would detract from a proper understanding of the meaning and significance of the admittedly relevant parts of the document, then such masking is not justified.
(f)	Where there is a dispute as to the right of a party to redact a discovered document, it is for the court to determine on the material before it whether the party was entitled to redact the document.
(g)	The onus lies on the party resisting production of the whole of the document to establish an appropriate basis for doing so.
(h)	Whether a party is entitled to redact part of a discovered document will turn on what is necessary to ensure the attainment of justice between the parties.  It has been recognised that the court has a discretion to order or not order discovery or inspection and it will endeavour to avoid unnecessary discovery or inspection, guided by what is necessary to ensure justice between the parties.
(i)	The assessment of where justice lies in a particular case must recognise that as a starting point, the public interest in the production of a litigant’s private documents is considered to outweigh the private interest in the maintenance of confidentiality where those documents are relevant to the dispute, and that the fact that documents are confidential will not ordinarily be a sufficient reason to deny inspection by the opposite party.  It must also take into account, however, that discovery is ‘but a tool to be used in the pursuit of justice and the right to discovery and inspection is not without its limits’.  The precise basis upon which a party is entitled to mask or redact irrelevant parts of discovered documents has not been defined in the authorities.  Irrelevance to the issues in dispute and substantial privacy or confidentiality interests have been recognised as bases for redaction.
7	In a context in which a party sought to resist production of documents on the grounds of confidentiality, Hayne JA emphasised in Guina that assessing what is necessary for the attainment of justice in a particular case will turn on the facts of that case and the nature, and content of the disputed documents will ordinarily be of great importance in deciding that question.  In this case the parties did not dispute that I should inspect the documents in their unredacted form for the purposes of determining the issue.
8	Although this point did not arise on this application (in which the parties concentrated upon the question of relevance), for completeness I note that in assessing the necessity or appropriateness of the redaction of documents in order to protect confidentiality in a given case, regard should be paid to the obligations attaching to litigants and other parties in receipt of documents obtained by compulsive court processes.  As the High Court emphasised in Hearne v Street, where one party to litigation is compelled, by reason of a rule of court or a court order or otherwise, to disclose documents or information, the party obtaining the disclosure cannot without leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.  The obligation is an obligation of law, arising from the circumstances in which the material was generated and received, and extends to persons who, knowing that material was generated in legal proceedings, use if for purposes other than those of the proceedings.  By imposing it, the law ensures that there is not placed upon litigants, who in giving discovery are suffering a serious invasion of the privacy and confidentiality of their affairs, ‘any burden that is harsher or more oppressive than is strictly required for the purpose of ensuring that justice is done’.  The purpose of the commonplace practice of requiring persons in receipt of discovered documents and information to give express undertakings against collateral use of the material, is to ‘bring explicitly home to the minds of those giving it how important it is that the documents only be used for the purposes of the proceedings’.
9	The defendant submitted that it was not incumbent on it to establish the irrelevance of the redacted materials because, unlike in the circumstances considered in the decided cases, it had not unilaterally redacted the documents but had done so pursuant to a court-ordered regime.  The circumstances of this case do not require the application of principles different from those set out above.  Here, the redactions were made pursuant to a regime established by the Court’s orders of December 2020 and March 2021, by which the defendant was permitted to redact parts of documents that were ‘both confidential and not relevant to the issues raised by the consolidated statement of claim’.  It is implicit in the language of the orders that redactions were not to be permitted unless the relevant parts of the documents were both confidential and not relevant to the pleaded issues; otherwise, the documents were to be produced in unredacted form.  The orders were made on a consent basis, in order to facilitate the discovery process.  They were permissive in a procedural sense but they did not relieve the defendant of the obligation of establishing that the redacted parts of the documents were both confidential and irrelevant, in the event of any dispute.
Analysis
10	As noted, the documents in issue form part of the papers prepared for meetings of Treasury’s board in August and October 2018 respectively.  The disputed redactions have been made to one page in each document.  Each page is in substantially the same form, and each is entitled, ‘US Trade TWE … Shipments vs.  Depletions’.
11	In each case, on the un-redacted left hand side of the page is a table containing data on ‘shipments’ and ‘depletions’ for various Treasury wine brands.  For example,  the table set out in document 6 begins as follows:
Brand Tier	F19 YTD August	
	Shipments	Depletions	Delta	
Brand 1	XXX	XXX	XXX	
Brand 2	XXX	XXX	XXX	
12	The right-hand side of the page is in each case redacted.  That page in each case contains information concerning Treasury’s ‘US Distributor Inventory’ and comprises a box headed ‘commentary’ and a graph.  In the course of argument the defendant accepted that the second and third bullet points, and part of the first bullet point (which refers to depletions and shipments) in the commentary box in document 6 should be unredacted.  The defendant maintained that the commentary box in document 5 should remain redacted, but emphasised in each the graph appearing below the commentary.
13	Described in the broad, the plaintiffs allege that Treasury did not comply with its continuous disclosure obligations and engaged in misleading or deceptive conduct in making representations to the market about its financial performance.  Among other things, it is alleged that at five points in time (between June 2018 and October 2019) numerous ‘market conditions’ (affecting Treasury’s US market and US wine markets more generally) were likely to adversely affect Treasury’s performance in the Americas in future financial periods.  Those conditions are said to have included (in June 2018, for example) the fact that Treasury had experienced reduced growth in sales of its wine in the US, and that since 2015 Treasury had experienced ‘an ongoing decline in US distributor depletions’ in respect of all but two of its top selling brands.  The market conditions are said to have been likely to create downward pressure on prices for Treasury’s wines in the US going forward, and to be likely to materially adversely impact on Treasury’s performance in Treasury’s America’s division in future financial periods.  The alleged market conditions are repeated in substantially similar terms but with variations and elaboration for the four other relevant time periods.  It is alleged that Treasury did not disclose information about the pleaded market conditions (and related information) that it knew, and ought to have disclosed.  It is also alleged that the information was not taken into account in Treasury’s announcements to the market and by reference to that information, certain of Treasury’s statements to the markets were misleading or deceptive.
14	With that context, it suffices to note that the following matters (among others) are alleged:
(a)	Treasury carried on a vertically integrated global wine business which included the production, marketing, sale and distribution of wine in the ‘US wine market’.  The sales in issue were of bottled wine sold under Treasury brands in the US.
(b)	Before January 2018, Treasury had sold its wine into the US market to licensed distributors who in turn sold that wine through consumer channels.  From that time Treasury adopted a new model which included direct sales to key national retail partners, ‘indirect’ sales to distributors for on-sale to wine retailers, and combinations thereof (hybrid distribution models).
(c)	Treasury recorded sales revenue and booked profits for its indirect wine sales (i.e.  sales to distributors) upon acceptance by the distributors of wine sale to them (defined as ‘shipments’).  It did not book revenue or profit upon sales from distributors to retailers, which transactions are defined as ‘depletions’.
(d)	As noted earlier, during the specified periods, Treasury experienced conditions including declining sales in certain brands of wine and decline in US distributor depletions in respect of its top-selling brands (i.e.  declining sales from distributors to retailers).  These conditions were likely to create downward pressure on prices for Treasury’s wine and material adversely affect Treasury’s future financial performance.
(e)	Relevant Treasury officers knew or ought to have known of the market conditions and related information.  Their knowledge (actual or constructive) is said to have been founded on a combination of publicly available information, Treasury’s ‘monitoring systems’ and information that would have come into their possession in the proper performance of their duties.
(f)	As to ‘monitoring systems’, Treasury had in place systems comprising, among other things, a system for inventory management which entailed a discipline of close monitoring of stock levels of its wholesale and retail partners including with respect to the US wine market, receipt of detailed ‘inventory and deletions data’ from most of its distributor partners in the US wine market and teams which compiled and reviewed ‘the inventory and depletion data’.
(g)	Treasury did not disclose the information that it knew or ought to have known, contrary to its legal obligations.
15	The plaintiffs submitted that US distributor inventory information is relevant to allegations concerning market conditions which are said to have impacted Treasury’s financial performance in the US wine market, and that the connection between the pleaded market conditions and US distributor inventory are apparent from unredacted parts of the discovered documents themselves.
16	The defendant submitted that the US distributor inventory information is not relevant to the pleaded case.  Broadly speaking, the case concerns market conditions that are alleged to have impacted Treasury’s financial performance in the US wine market, and the characteristics of or circumstances concerning US distributor inventory are not alleged as relevant element of, or a factor affecting, the pleaded market conditions, or otherwise made relevant to the pleaded claim.   In effect the defendant characterised ‘US distributor inventory’ as a discrete topic which bears no demonstrable connection to the pleaded facts.
17	Treasury accepted that the plaintiff alleges that Treasury monitored ‘inventory and depletions data’ from most of its US distributor partners, but said that the allegations ‘went nowhere’ in that they were not picked up as facts bearing on the market conditions or otherwise said to inform Treasury’s financial performance (or in any other relevant sense), and in any event, Treasury has admitted the allegations that it had in place the alleged monitoring systems.
18	As to the latter point, it is true that Treasury admits that it had in place the alleged monitoring systems including the monitoring of US distributor inventory data.  However, it denies that as a result of those systems or otherwise, its officers knew or ought to have known of the relevant information.  In other words, what was or ought to have been gleaned from the monitoring of distributor inventory data (and from other sources of information) is in contest.
19	Treasury was right to submit that the plaintiff does not otherwise allege any fact concerning the state of ‘US distributor inventory’ and relatedly, does not allege that any particular aspect of distributor inventory at any particular point in time was itself a characteristic of the alleged market conditions.
20	However, as the plaintiff submitted, it does not necessarily follow that the subject of distributor inventory is a wholly discrete subject that must be taken to have no relationship to the alleged market conditions or other facts said to be relevant to Treasury’s financial performance.  The plaintiff submitted that as a matter of common sense, the pleaded allegations concerning reduced distributor depletions (that is, reduced sales of Treasury wines by distributors to retailers) could be capable of being established by reference to a range of evidence including data on inventory held by Treasury’s distributors, and not just by information directly concerning sales volumes.  There is some force in that submission, although it suffers from its obvious generality.  Whether or not data concerning US distributor inventory is relevant in this way requires further consideration by reference to the discovered documents in issue.
21	Separately, the plaintiffs submitted that generally speaking, the level of inventory of Treasury-branded wines held by Treasury distributors could itself be capable of affecting sales growth by creating pressure on prices.  However, that is not a pleaded allegation.  It is too speculative a basis on which to conclude that information concerning US distributor inventory is relevant to the pleaded case.
22	Returning to the posited relationship between the pleaded market conditions (and related facts) and US distributor inventory, it will be recalled that the pleaded claim connects the concept of shipments and depletions, defining shipments as the wine sold to distributors by Treasury and depletions as sales of wine by distributors to retailers.  Shipments and depletions then, comprise two stages of the indirect sales model said to have been employed by Treasury for sales of its wine in the US market.
23	Contextually, ‘US distributor inventory’, should be understood as stocks of Treasury branded bottled wine held by distributors to whom Treasury sold wine.  The term is not defined in the pleading.  For the purposes of the pleaded case, however, ‘inventory’ is used in the pleading in its ordinary sense, meaning the goods held by a business for sale or resale.   The goods in issue here are Treasury’s bottled wine brands sold in the ‘US market’.  The term ‘distributor’, in this context, means a third party or agent who supplies goods to retailers.  The statement of claim refers to both ‘distributors’ and ‘wholesale partner(s)’ in relation to Treasury’s sales model in the US.  The plaintiff submitted, and it was not contested, that those terms are used  interchangeably in the context of the pleaded claim.
24	The plaintiffs did not have the benefit of the unredacted documents, but referred to those parts of the documents that they did have in unredacted from, in order to submit that Treasury’s own documents disclose a relationship between shipments (acceptance by distributors of sales of wine to them by Treasury), depletions (sales of Treasury wine by distributors to retailers) and distributor inventory.  I accept that submission.
25	An examination of the documents in dispute reveals that ‘distributor inventory’ is understood as an integer in the chain of Treasury’s indirect sales model, at least in the documents in issue.  A study of Document 5 demonstrates this relationship, disclosing that distributor inventory represents the ‘delta’ or difference between shipments and depletions, taking into account the inventory already held by a distributor at the point at which those integers are measured.  It may be inferred that after wine is shipped to a distributor, it then holds that wine as stock or inventory before it on-sells (or ‘depletes’) that wine.  That process is demonstrated by the following parts of the disputed page of document 5:
(a)	The unredacted table on the left hand side of the page comprises data on FY18 shipments and depletions for each Treasury wine brand, and ‘delta’ or difference  between those two integers.  The table provides a total for each of shipments, depletions and delta.
(b)	The content of the disputed text (presently redacted) in the commentary box makes plain that it is commentary directly upon the unredacted part of the document that Treasury has accepted as relevant.  Although I will not set out the content here, the commentary plainly connects the data in the unredacted table and US distributor inventory.
(c)	The redacted graph represents US distributor inventory over the course of the period identified in unredacted heading of the document.  That it concerns this subject matter was apparent and discussed in argument on this application.  Again, although I will not set out its content here, reading the figures set out in the graph makes plain their relationship with the unredacted part of the document.
26	Like observations can be made about Document 6.
27	Documents 5 and 6 themselves then, disclose that Treasury considered the subject of US distributor inventory to be directly relevant to its assessment of depletions and shipments, at least in the context addressed by those documents.  A relationship between distributor inventories, depletions and shipments is also apparent elsewhere in document 6, of which the disputed page forms part.
28	Accordingly, the presently redacted parts of the documents are contextually relevant to the unredacted parts.  Treasury has sought to characterise the subject of ‘distributor inventory’ as a wholly discrete subject and then to submit that it is an irrelevant subject because no facts are pleaded in respect of distributor inventory (save as to the monitoring of distributor inventory data).  That analysis is misconceived because it fails to take into account what the documents themselves disclose.   Once attention is paid to the content of the documents, it is apparent that the proposed redactions would detract from a proper understanding of the meaning and significance of the admittedly relevant parts of the document.  That is so, notwithstanding that the unredacted parts of the document are by themselves comprehensible.  The redacted parts evidently inform the meaning and significance of the redacted parts.
29	Treasury submitted that it does not appear possible to ‘back-calculate’ shipments or depletions from the monthly inventories shown in the redacted graph.  That appears to be correct – additional data points would be required.  However, it is unnecessary to establish the metes and bounds of the relationship between distributor inventory, shipments and depletions, in order to reach the conclusion that the disputed documents themselves make the linkages discussed.
30	It is also beside the point that, as Treasury submitted, the plaintiffs may adequately work out precise figures of depletions and shipments from the information already provided.  That does not go to the question of relevance of the redacted material and is not a basis on which Treasury is entitled to mask the material.  The question is not whether the plaintiffs already have or could otherwise obtain the information in dispute, but whether Treasury is entitled to redact the disputed parts of the documents already discovered, on the ground that they are irrelevant.
31	I do not express any view about the ultimate significance of ‘distributor inventory’ to the issues raised in the case, and say only that the disputed documents plainly link that measure or integer in Treasury’s sales model, with the circumstances concerning its business (volumes of shipments and depletions) that are accepted to be relevant on the pleaded case.  As a result, the redactions of these documents are not justified.
32	Documents 5 and 6 should be produced in unredacted form.  I will make orders in the form sought by the plaintiff, noting that the orders only provide for ‘like information’ to be unredacted in documents that have already been discovered.