Airservices Australia v Transfield Pty Ltd

Federal Court of Australia|1996-05-24|Before: Lindgren J, Branson J, O'Loughlin J, Act J, Finn J

REASONS FOR JUDGMENT 1 This motion raises the question whether "the advantages of new and developing procedures for the administration of justice": O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 284 - in this instance the forms of preliminary discovery provided by O 15A of the Federal Court Rules- are for constitutional reasons unavailable to this Court, when like procedures are, and are accepted properly to be, available not only to most State courts in this country: see eg O 32 General Rules of Procedure in Civil Proceedings1996 (Vic): see also State Bank of South Australia v Hellaby (1992) 59 SASR 304; but also to courts in other common law countries and in both unitary and federal systems. 2 The reason it is claimed this Court should suffer this singular disability is because its jurisdiction is limited and enlivened by the constitutional requirement that there be a "matter": Constitution s 77(i). Preliminary discovery, it is claimed, does not of its very nature involve a matter in that it does not require that some immediate right, duty or liability be established by the determination of the Court: In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265.

The Federal Court Rules, O 15A 3 For present purposes I need only refer to rules 3 and 6 of O 15A. The former deals with what, for convenience, I will describe as "identity discovery". It provides: "3 (1) Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this rule called "the person concerned") and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had possession of any document or thing, tending to assist in such ascertainment, the Court may make an order under subrule (2). (2) The Court may order that the person, and in the case of a corporation, the corporation by an appropriate officer, shall - (a) attend before the Court to be examined in relation to the description of the person concerned; (b) make discovery to the applicant of all documents which are or have been in the person's or its possession relating to the description of the person concerned. (3) Where the Court makes an order under paragraph (2)(a), it may - (a) order that the person or corporation against whom or which the order is made shall produce to the Court on the examination any document or thing in the person's or its possession relating to the description of the person concerned; (b) direct that the examination be held before a Registrar." 4 Rule 6 which allows for what I will describe as "information discovery" provides: "6 Where - (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision - the Court may order that that person shall make discovery to the applicant or any document of the kind described in paragraph (c)." 5 I would emphasise at the outset the following features of these rules. First, while rule 3 for obvious reasons allows discovery against a person whether or not that person is a possible respondent to the projected proceeding, the discovery available under rule 6 is limited to discovery against the person who is the "prospective respondent". Secondly, as has been emphasised by judges of this Court, rule 6 prescribes significant limiting conditions to be satisfied before an order can be made: see eg Alphapharm Pty Limited v Eli Lilly Australia Pty Limited (Lindgren J, 24 May 1996, unreported); Glowatzky v Insultech Group Pty Ltd (Branson J, 2 October 1997, unreported); Minister for Health & Aged Care v Harrington Associates Ltd [1999] FCA 549. An applicant who can satisfy them, is allowed "to fish" for the purpose of ascertaining whether he has a case against the prospective respondent: Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; Aitken v Neville Jeffress Pidler Pty Limited (1991) 33 FCR 418. But preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves. It does not mandate mere rummaging through another's affairs. Thirdly, while an applicant does not have to make out a prima facie case for the purpose of satisfying the rule 6(a) condition that he or she has reasonable cause to believe he or she has a right to obtain relief: CCA Beverages (Adelaide) Limited v Hansford (O'Loughlin J, 15 November 1991, unreported); an applicant will not necessarily be denied preliminary discovery because he or she "already has available evidence establishing a prima facie case for the granting of relief": Alphapharm Pty Limited v Eli Lilly Australia Pty Limited, above. Fourthly, an order for discovery under rule 6 can properly be characterised as an interlocutory order: Malouf v Malouf [1999] FCA 284 (FC). Fifthly, in Kirella Pty Ltd v Hooper (1999) 161 ALR 447 Tamberlin J held that the provisions of O 15A do not infringe the constitutional requirement that for this court to have jurisdiction in relation to a proceeding there must be a "matter". For the purposes of the present motion the applicant has submitted, variously, that the decision in Kirella is clearly wrong, or that it is only authority for the validity of O 15A r 3. I will return to these submissions below.

The Factual Setting 6 The applicant in this proceeding, Airservices Australia ("AsA"), sought information discovery from the respondent, Transfield Pty Ltd ("Transfield"), under O 15A r 6 of documents relating to tenders submitted by Transfield for the provision to the Department of Defence of rescue and fire-fighting services. AsA alleges it had dealings with Transfield which resulted in the provision of commercial information to Transfield and which ought to have resulted (but did not) in its being engaged as a sub-contractor to Transfield in the event (as was the case) that its tenders were successful. Such substantive proceeding as it is deciding whether to bring against Transfield is an application under the Trade Practices Act 1974 (Cth) ("the TP Act"). 7 For its part, Transfield put on the motion with which I am presently concerned to have AsA's application dismissed on the constitutional ground I have foreshadowed. For the purposes of the motion and in light of the evidence put on by AsA, I proceed on the assumption that AsA is otherwise able to satisfy the requirements of paras (a), (b) and (c) of O 15A r 6.

Discovery 8 Before considering the constitutional question raised in this motion it is necessary, first, to refer more generally to discovery and in particular (a) to the provenance of preliminary discovery and (b) to the discovery mandated by the Federal Court of Australia Act 1976 (Cth). (a) The Bill of Discovery 9 The now distant ancestor of both O 15 (Discovery and Inspection of Documents) and O 15A was the bill of discovery in Chancery - a bill made available in the auxiliary jurisdiction of equity because of the inability of the courts of common law to compel discovery by the parties to a suit, or to compel the production of material documents in the custody or power of the parties: see Snell, Principles of Equity, 12th Ed, 1898 at 694-695. For present purposes the bill was usefully described in Story, Commentaries on Equity Jurisprudence, 1st English Ed, 1884 at s 1483 in these terms: "[T]hat which was emphatically called in equity proceedings a bill of discovery, was a bill which asked no relief, but which simply sought the discovery of facts, resting in the knowledge of the defendant, or the discovery of deeds, or writings, or other things, in the possession or power of the defendant, in order to maintain the right or title of the party asking it, in some suit or proceeding in another court. The sole object of such a bill, then, being a particular discovery, when that discovery was obtained by the answer, there could be no further proceedings thereon. To maintain a bill of discovery it was not necessary that the party should otherwise be without any proof of his case; for he might maintain such a bill, either because he had no proof, or because he wanted it in aid of other proof. But, in general, it was necessary, in order to maintain a bill of discovery, that an action should be already commenced in another court, to which it should be auxiliary. There were exceptions to this rule, as where the object of discovery was to ascertain who was the proper party against whom the suit should be brought. But these were of rare occurrence." See also Mitford, A Treatise on the Pleadings in Suits in the Court of Chancery by English Bill, 5th Ed, 1847 at 64-67; McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 643-646; Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133; Prescott, "Finding Out Who To Sue", (1973) 89 LQR 482. 10 As is noted in Bray, The Principles and Practice of Discovery, 1885at 611 (i) discovery would not be compelled "for the mere gratification of curiosity": see Cardale v Watkins (1820) 5 Madd 18; (ii) it had to be material to a suit "instituted or capable of being instituted"; and (iii) its purpose was "to assist the administration of justice in the prosecution or defence of [that] suit". As to the third of these I would note that a common justification for what I will call auxiliary processes employed in equity to this day is to assist the "administration of justice" in the prosecution of a suit - a characteristic recently emphasised by the High Court in Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 at 308 in relation to Marevaorders against third parties. 11 While the bill all but passed from sight in Commonwealth countries with the advent of Judicature Act systems and modern rules of court, the one use of it to survive has been in admittedly rare applications for preliminary "identity discovery": see Norwich Pharmacal Co v Customs and Excise Commissioners, above. Notably for present purposes the Federal Court of Appeal in Canada in Glaxo Wellcome PLC v Minister of National Revenue (1998) 81 CPR (3d) 372 has recently held that the Canadian Federal Court has, as a court of equity, power to employ the equitable bill for preliminary identity discovery notwithstanding the absence of provision for such discovery in that Court's Rules: see Sgayias QC and others, Federal Court Practice, 1999 at 5. In this country modern use of the bill for any purpose has been rare indeed: but cf Heimann v The Commonwealth (1935) 54 CLR 126; Re Pyne [1997] 1 Qd R 326; though express provision for it remains in the Rules of Court of some jurisdictions: see Supreme Court Rules 1970 (NSW) Pt 1 r 14. Save in Queensland and Tasmania, Rules of Court have obviated the need to resort to the equitable bill both for identity discovery and (excepting New South Wales) for information discovery: see Supreme Court Rules 1970 (NSW) Pt 3 r 1; General Rules of Procedure in Civil Proceedings 1996 (Vic) O 32; Supreme Court Rules (SA) Rule 60; Supreme Court Rules (WA) O 26A; Supreme Court Rules (NT) O 32; Supreme Court Rules (ACT) O 34A; and see Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the Vessel "Alley Cat" (1992) 36 FCR 129 at 130, 138-139; for an example of the bill procedure in Queensland, see Re Pyne, above. 12 Whether the bill procedure could have been used for preliminary information discovery alone in England in the nineteenth century seems a matter of controversy - Bray, above at 612 would seem to suggest it could. The modern assumption would seem to be that it could not - and today cannot: Lord Woolf, Access to Justice, Final Report, para 47 ff ("the Woolf Report"). Rather, provision for a limited form of such discovery (the procedure only applied to bodily injury and death claims) was introduced in England by statute in 1969: see Administration of Justice Act 1969 (UK) s 21 and see now Supreme Court Act 1981 (UK) s 33 and Civil Procedure Rules (UK) r 31.16; but cf the Woolf Report, para 48. 13 In the United States in contrast the bill procedure to this day remains in use (inter alia) both for identity and for information discovery: see the extensive treatment of this subject in Barron, "Existence and Nature of Cause of Action for Equitable Bill of Discovery", (1996) 37 ALR (5th) 645; see also Pomerey, Equity Jurisprudence, 5th Ed, 1941, Vol 1 at s 195ff; 23 Am Jur 2d, "Depositions and Discovery" at s 4; and see generally Pressed Steel Car Co v Union Pacific Railway Co 240 F 135 (1917); Sinclair Refining Co v Jenkins Petroleum Process Co 289 US 689 (1933); and for third party information discovery see Wolfe v Massachusetts Port Authority 319 NE 2d 423 (1974). It seems, though, in relation to federal district courts that while the bill procedure has survived the advent of the Federal Rules of Civil Procedure (even in their most recent form: see Barron, above at s 17ff) need to resort to it for preliminary information discovery has been rendered unnecessary by the amplitude of the discovery that can be obtained under the Rules - a "fishing expedition", apparently, is allowed: see generally Wright, Law of Federal Courts, 5th Ed, 1994 at s 81. There is an obvious affinity between the preliminary discovery mandated by this Court's O 15A and that allowed in the United States through the equitable bill: see eg Berger v Cuomo 644 A2d 333 at 337 (1994). 14 The character and purpose that have been attributed to the bill in United States jurisprudence is evidenced, for example, in the observations of Cardozo J in Sinclair Refining Co v Jenkins Petroleum Process Co 289 US 689 at 693 (1933), though not directed specifically at preliminary discovery: "Help for the solution of problems … is not to be looked for in restrictive formulas. Procedure must have the capacity of flexible adjustment to changing groups of facts. The law of discovery has been invested at times with unnecessary mystery. There are few fields where considerations of practical convenience should play a larger rôle. The rationale of the remedy, when used as an auxiliary process in aid of trials at law, is simplicity itself. At times, cases will not be proved, or will be proved clumsily or wastefully, if the litigant is not permitted to gather his evidence in advance. When this necessity is made out with reasonable certainty, a bill in equity is maintainable to give him what he needs. … Today the remedy survives, chiefly, if not wholly, to give facility to proof.": emphasis added. 15 Considered against the background of the bill, it is fair to say (having particular regard to modern English practice) that, of the two forms of preliminary discovery allowed by O 15A, rule 6's information discovery is the more innovative, but (having regard to United States practice) that it is by no means heterodox. (b) Discovery and the Federal Court of Australia Act 1976 "59 (1) The Judges of the Court or a majority of them may make Rules of Court, not inconsistent with this Act, making provision for or in relation to the practice and procedure to be followed in the Court (including the practice and procedure to be followed in Registries of the Court) and for or in relation to all matters and things incidental to any such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business of the Court. (2) In particular, the Rules of Court may make provision for or in relation to: … (c) interrogatories and discovery, production and inspection of documents." 16 In Kirella Tamberlin J held that O 15A is a valid exercise of rule-making power by the judges in accordance with s 59. Considered in isolation from the constitutional question, this conclusion in my respectful view is undoubtedly correct. Though nineteenth century references to the bill procedure can be found that refer to it as a "jurisdiction": see eg Bray, above at 611; discovery, whether preliminary or otherwise, has long been regarded as being related to practice and procedure. I simply note by way of illustration the observations of Cardozo J in the Sinclair Refining Co case set out earlier in these reasons. Significantly for present purposes, when the validity of an arguably even more widely cast preliminary discovery rule was unsuccessfully challenged as being beyond the rule making power of the Supreme Court of South Australia in State Bank of South Australia v Hellaby (1992) 59 SASR 304, the Full Court of that Court (at 310-311) held the rule in question to be "directly related to the purpose of regulating the practice and procedure of the court". 17 Given the limiting conditions imposed by O 15A r 6 before preliminary discovery can be ordered - and I emphasise these conditions as (in common with rule 3) they point up the necessity of the discovery if an applicant's rights are to be vindicated in any subsequent proceedings: cf the US requirement of "necessity" discussed in Barron, above at s 11 - that rule in my view is a proper and appropriate exercise of this Court's rule-making power - and is so unless, as the respondent claims, it is a rule that for constitutional reasons the Court is precluded from making notwithstanding that (a) the power the rule expresses is of a type that has been an accepted characteristic of judicial power in common law courts for many years and (b) has been justified as assisting in the administration of justice in the prosecution or defence of prospective legal proceedings.

(a) Kirella's case 18 While the application made in Kirella was primarily for identity discovery under O 15A r 3 it sought by way of further order discovery of any document "relating to the question whether the applicant has the right to obtain relief from the court": above at 448-449. And Tamberlin J clearly regarded both rule 3 and rule 6 as being under challenge before him: at 449. The projected cause of action in respect of which the discovery was sought was, as here, under the TP Act. 19 As in the present case, the respondent contended that at the preliminary discovery stage there was no "matter" hence the court lacked jurisdiction to order the discovery sought. Tamberlin J rejected this argument. His Honour (i) noted that a liberal connotation should be given the term "matter"; (ii) indicated the discovery application was related to the substantive claim under the TP Act, that claim was not advisory or hypothetical (it concerned an "existing right"), and the mechanism of preliminary discovery enabled the court to determine and enforce that claim; and (iv) "[I]f the court is found not to have jurisdiction to enable a claimant to determine the identity and facts necessary to assist in the enforcement of the [substantive claim of right presently existing under the TP Act] then the conferral of that right and of the remedies provided for in Pt VI of the TPA may reasonably be perceived as otiose": above at 454. In relation to the power of the Court to grant preliminary discovery Tamberlin J observed: "It is consistent with the creation of the Federal Court as a superior court that it should have both jurisdiction and power to make orders to assist in the identification of a wrong-doer against whom there are reasonable grounds to claim relief. In the present circumstances the preliminary discovery machinery is necessary to enable the applicant to proceed with what appears prima facie to be a bona fide claim under the TPA. The administration of justice would be otherwise frustrated": above at 455. 20 In the event His Honour concluded that the preliminary discovery sought involved an exercise of power in relation to a matter arising under the TP Act and was within jurisdiction because it was closely related to determination of the underlying TP Act dispute. (b) The Present Motion 21 The respondent's submissions are in the alternative. First it is asserted that I should not follow Kirella as a matter of comity as it is "clearly wrong": on comity see Bank of Western Australia Limited v Commissioner of Taxation (1994) 55 FCR 233 at 255. The error so ascribed to Kirella is founded on the propositions: (i) there can be no "matter" within the meaning of that term for present purposes unless there is some immediate right, duty or liability to be established by the determination of the Court: In re Judiciary and Navigation Acts, above; Crouch v Commissioner for Railways (Queensland) (1985) 159 CLR 22 at 37; (ii) O 15A can have application only before the commencement of proceedings to vindicate, enforce or establish any right, duty or liability; (iii) a "matter" for present purposes requires a controversy between the parties - it refers to a substantive dispute that has been commenced in a juridical sense, but does not include processes prior thereto. 22 Secondly, in the alternative, it is submitted that Kirella in substance related only to O 15A r 3 and even if correct in relation to that rule, does not justify rule 6. In the case of rule 3 identity discovery, it is asserted, the applicant has a cause of action (albeit not commenced for want of an identified respondent). In the case of rule 6 information discovery the object of the application is to ascertain whether there is a cause of action at all. 23 The applicant submits that Kirella is both correct and not distinguishable from the present case and that there is jurisdiction to entertain the application. 24 For my own part, I consider the respondent's motion to be misconceived. The events giving rise to the prospective claim have occurred and they provide reasonable cause to believe that AsA has or may have a right to obtain relief against Transfield under the TP Act. This Court clearly has jurisdiction to determine whether those events actually have given rise to a right in AsA, a liability in Transfield, under the TP Act these being questions arising under a law made by the Commonwealth Parliament: Constitution, s 76(ii). A claim properly initiated with that object in mind would be one seeking the establishment of an actual right and liability by the Court and not merely an advisory opinion: cf In re Judiciary and Navigation Acts, above; it would relate to an apprehended wrong for which the law provides a remedy: cf Abebe v Commonwealth of Australia (1999) 162 ALR 1 at 11-12; it would not involve merely a hypothetical question: cf Bass v Permanent Trustee Co Ltd (1999) 161 ALR 399 at 413ff. I would add that the Court's jurisdiction in relation to that matter would not depend upon the applicant actually being successful in establishing its right - or for that matter in commencing a proceeding that disclosed a reasonable cause of action: cf O 20 r 2 of the Federal Court Rules. 25 Accepting as I must that the "term 'matter' has meaning only in the context of a legal proceeding": Abebe v Commonwealth of Australia, above at 11; the subject of AsA's inquiry and complaint has the capacity to constitute a matter. The real question in the present case, in my view is not whether there is a matter, but how the jurisdiction of the Court in respect of that matter can properly be enlivened. That involves a question of judicial power. In this particular setting the answer to that question depends upon whether preliminary discovery of the type envisaged by O 15A r 6 is an incident of the exercise of judicial power in relation to the matter: cf Re Wakim; Ex parte McNally (1999) 163 ALR 270 at 307-308. In my view it clearly is. 26 Ordinarily a court's jurisdiction is enlivened by an initiating process seeking a determination of the substantive claim one party alleges it has against another. But as I indicated earlier in these reasons such need not necessarily be the case. Necessity may require otherwise if a person's right is to be vindicated in a substantive claim. Preliminary discovery of the types provided in O 15A r 3 and r 6 have long been accepted as a proper and appropriate precursor to the making of a substantive claim - and appropriate because it assists in the administration of justice in relation to the making of the claim itself. There is no reason for present purposes to distinguish between the two types of discovery. Each reflects a different necessity. 27 Though in form a discrete proceeding (as was the old bill of discovery: see the quotation from Story, above) preliminary discovery is, as a matter of substance, properly to be regarded as interlocutory in character in that it does not, nor is it intended to, determine finally the rights inter se of the parties to the substantive application: cf Malouf v Malouf, above. Its function rather is to assist in that determination when or if the substantive application is brought consequent upon what is revealed in the preliminary discovery itself. 28 In consequence I consider an O 15A order for preliminary discovery to be an unexceptionable exercise of judicial power when made in relation to the matter necessitating the making of the order. Though I have approached the question in a slightly different way to Tamberlin J in Kirella,I respectfully agree with his Honour's reasons and conclusions in relation to O 15A. 29 I would dismiss the respondent's motion with costs. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate: Dated: 1 July 1999 Counsel for the Applicant: Mr J Hammond

Solicitor for the Applicant: Freehill Hollingdale & Page

Trade Practices Act 1974(Cth)

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