Supreme Court of WA|2010-08-16|Before: Murphy JA

LAMPSON (AUSTRALIA) PTY LTD -v- FORTESCUE METALS GROUP LTD [No 2] [2010] WASC 217 (16 August 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAMPSON (AUSTRALIA) PTY LTD -v- FORTESCUE METALS GROUP LTD [No 2] [2010] WASC 217

BETWEEN : LAMPSON (AUSTRALIA) PTY LTD (ACN 003 919 051)

Discovery - Inspection - Privilege - Onus of proof - Admission of relevance - Masking - Confidentiality - Application for discovery of particular documents

Application for discovery of particular documents dismissed

Alba Nominees Pty Ltd v Cecil Bros Pty Ltd (Unreported, WASC, Library No 970698, 12 December 1997)

Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 3] [2009] WASC 67

Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2000] FCA 1086

Boase v Seven Network (Operations) Ltd [2005] WASC 174

Brookfield v Yevad Products Pty Ltd [2002] FCA 1376

Brookfield v Yevad Products Pty Ltd [2004] FCA 1164

Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121

Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60

Commonwealth Bank of Australia v Quade [1991] HCA 61; (1991) 178 CLR 134

Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1

CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48

Fieldturf Inc v Balsam Pacific Pty Ltd [2003] FCA 809

Hadid v Lenfest Communications Inc (1996) 70 FCR 403

Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316

Hongkong Bank of Australia Ltd v Murphy [1993] VicRp 83; [1993] 2 VR 419

Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410

Mackay Sugar Co-operative Association Ltd v CSR Ltd (1996) 63 FCR 408; (1996) 137 ALR 183

Middleton v Western Australia (1996) 17 WAR 201

Mulley & Marney v Manifold [1959] HCA 23; (1959) 103 CLR 341

Pulitano v Ginbey [1999] WASC 5

Rayney v AW [2009] WASCA 203

Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 260 ALR 139

The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543

Transpacific Cleanaway Pty Ltd v Wilson [2009] WASC 306

Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354

Water Authority of Western Australia v AIL Holdings Pty Ltd (1991) 7 WAR 135

Westpoint Corp Pty Ltd v Marsh [2005] WASC 127

Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

1 The plaintiff has applied, by summons, for, inter alia, inspection of 10 notebooks of a Mr Tregea (the Tregea notebooks) which the defendant has discovered in these proceedings. The Tregea notebooks span the period covering the events the subject of these proceedings.

2 The defendant had claimed privilege over the Tregea notebooks in its affidavit of discovery. More recently, the defendant also claims that the documents are irrelevant and are confidential, and resists inspection (or in the latter case also seeks restricted inspection) on those bases too. The defendant also raised an issue about conferral but, in my view, there is nothing in that complaint.

3 The plaintiff also sought leave at the hearing to amend its summons to seek discovery of other documents under O 26 r 6 of the Rules of the Supreme Court 1971 (WA). That application was allowed, programming orders were made and the parties invited me to deal with that application on the papers.

4 These reasons deal, first, with the application for inspection of the Tregea notebooks and, second, with the application under O 26 r 6.

5 In these proceedings the plaintiff alleges that it was requested, in late September 2006, to carry out work, including the provision of cranage and transport services, to the defendant at its mine site at Cloudbreak in the Pilbara. The plaintiff alleges that it subsequently carried out the work in October 2006 to June 2007 and that the defendant accepted the benefit of the work. It also alleges that in December 2006 the defendant represented to the plaintiff that it would enter into a contract for the work on a costs-plus 15% basis, on which the defendant relied in connection with the performance of the work. The plaintiff alleges that it has been paid some money, but that it has not been fully paid either a reasonable sum, or a sum calculated in accordance with an estoppel allegedly arising from the defendant's representation on which it relied.

6 The defendant denies that it requested the performance of the work and says, alternatively, that if a request was made, it was made by Mr Tregea. It also pleads, inter alia, that:

(a) Mr Tregea was employed by WorleyParsons Services Pty Ltd and acted as the mine site project manager for 'a team of employees of the defendant and WorleyParsons Services Pty Ltd, who used the name "Team 45"' in relation to the Cloudbreak project;

(b) up to the end of December 2006 or January 2007, 'Team 45' acted as agent for The Pilbara Infrastructure Pty Ltd (TPI);

(c) from January or February 2007, 'Team 45' acted as agent for TPI and Fortescue Metals Group Chichester Pty Ltd (Chichester);

(d) certain moneys paid by the defendant to the plaintiff were paid for and on behalf of Chichester; and

(e) in July 2007, Chichester entered into a contract with other members of a consortium of contractors, of which the plaintiff used to be, but after 20 April 2007 ceased to be, a member, and that accordingly the plaintiff elected not to enter into a written contract with Chichester.

7 The defendant does not admit that the plaintiff carried out the work alleged, denies that it accepted the benefit of the work, and denies that the plaintiff has not been fully paid.

Mr Tregea and Team 45 - the defendant's evidence

8 By way of background, Mr Tregea was the deponent who swore an affidavit, on 27 November 2008, to set aside a default judgment that had been entered against the defendant in these proceedings. Mr Tregea said (par 11) that as mine site manager, he was the 'main person from Team 45 who liaised with the consortium [of contractors]' in the period from late August/early September 2006, to September 2007.

9 Mr Barclay, a solicitor engaged by the defendant since March 2007, has sworn an affidavit dated 18 June 2010 in opposition to the plaintiff's application. He says (par 7) that:

(a) TPI and Chichester are subsidiaries of the defendant;

(b) the project at Cloudbreak was being 'undertaken variously by the defendant and its subsidiaries'; and

(c) 'Team 45' was the project team made up of staff of contractors and staff of the defendant's subsidiaries (including TPI and Chichester) who were involved in the Cloudbreak project being undertaken by the defendant and its subsidiaries.

Essentially day books, the Tregea notebooks contain a range of records, notations, minutes of meetings together with lists of attendees, telephone notes etcetera.

11 For some reason unexplained, only part of Mr Barclay's affidavit was filed, being the text and part of the first annexure. The plaintiff has taken no point about its apparent incompleteness.

The defendant's affidavit of discovery and the Tregea notebooks

12 On 25 June 2009 the defendant, by its company secretary Mr Campbell, swore an affidavit of documents. The affidavit was prepared by the solicitors for the defendant. Mr Campbell's affidavit was witnessed by Mr Barclay.

13 Mr Campbell swore, relevantly, that the documents enumerated in the first schedule of his affidavit relate to the matters in question in these proceedings and that he objects to producing, on the grounds of privilege, the documents enumerated in pt 2 of the first schedule. Schedule 1, pt 2, lists the Tregea notebooks.

14 Although Mr Campbell stated that the defendant objected to producing the notebooks on the grounds of privilege, Mr Campbell did not depose to any matters which would support a proper claim for privilege.

Discovery, verification and claims for privilege

15 There is no strict entitlement to discovery. The discretion to order discovery is to be exercised having regard to the timely and cost-effective disposal of litigation: Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1 [7]; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [6].

16 Nevertheless, as Finkelstein J observed in Fieldturf Inc v Balsam Pacific Pty Ltd [2003] FCA 809:

[T]he overriding objective of civil procedure is to enable the court to deal with cases justly. ... to ensure that the system operates fairly, each party must disclose the facts that are within his knowledge and on which the case of the other depends. In our system an attempt is made to satisfy the need for efficiency and fairness by pleadings and discovery [1] - [2].

17 Also, in Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, Ipp J said:

There is a strong public interest in permitting the invasion of privacy and confidentiality constituted by discovery: see Harman v Secretary of State for the Home Department (at 308). That is because discovery promotes the ascertainment of truth in litigation and is therefore an essential part of the proper administration of justice. But, while achieving this end, it is obviously desirable that the interference with individual rights brought about by discovery be limited as far as reasonably possible. The appropriate balance is achieved by restricting the use of the discovered material to the litigation in which it is discovered. This restriction is crucial to the discovery process as without it there would be a greater reluctance on the part of parties to make full disclosure and litigants would have a greater temptation to destroy or conceal the existence of relevant documents. Thus, the restriction prevents the public interest in discovering the truth from being undermine (321).

18 Documents may be discoverable even though they may not be admissible in evidence. Their importance may be, for example, that they indicate a useful line of investigation, or that they contain information which could affect the manner in which a party may decide to conduct proceedings: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [19].

19 The discovery process is very important in ensuring that the parties are accorded a fair trial. Litigants will lose confidence in the courts' processes and decisions if they think that a party might avoid giving proper discovery and not be later held to account: Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 [394].

20 A failure to give proper discovery affects both the demands of justice in the individual case, and the public interest in the administration of justice generally: Commonwealth Bank of Australia v Quade [1991] HCA 61; (1991) 178 CLR 134, 141 - 142.

21 If available, relevant evidence is withheld from a court, the fact finding task of the court will be seriously compromised and there is a real possibility of the court being misled: Hongkong Bank of Australia Ltd v Murphy [1993] VicRp 83; [1993] 2 VR 419, 439.

22 Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation': Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121, 128 (Brennan J).

23 In relation to legal professional privilege, in The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 the High Court said:

It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings [9].

24 Also, in Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 260 ALR 139 Buss JA (McLure P concurring) said:

Legal professional privilege comprises two categories, namely, legal advice privilege and litigation privilege. Legal advice privilege can be claimed in respect of information or documents which contain or reveal confidential communications between a client and his or her lawyer made for the dominant purpose of giving or receiving legal advice, whether or not litigation is subsisting or within the reasonable contemplation of the client. Litigation privilege can be claimed where litigation is subsisting or within the reasonable contemplation of the client, and applies to confidential communications passing between a lawyer and his or her client or between the lawyer and third parties, and confidential information or documents brought into existence, for the dominant purpose of preparing for the litigation [59].

25 The purpose of verification of a list of documents is to ensure that the court is provided with a reliable list of documents. The responsibility of providing a reliable list of documents is a heavy one: Brookfield v Yevad Products Pty Ltd [2002] FCA 1376 [21].

26 The swearing of an affidavit of discovery is a solemn occasion, and for a purpose which requires careful deliberation, both by the client giving discovery and its solicitors. Lander J in Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 said:

The integrity of the discovery process must be maintained. The discovery process in many ways depends upon the honesty of the parties and their legal advisers.

It is essential for the administration of justice that the parties' legal advisers properly instruct their clients as to their responsibilities in the discovery process. The parties must be instructed on the issues in the litigation, including the issues raised by their opponents' pleadings. They must be instructed as to what documents are relevant for the purposes of discovery. They must be encouraged to open up their documents for assessment by their own legal advisers. If the parties are not mindful of the heavy responsibility that lies upon them, including the responsibility to discover and provide production of documents which might be destructive of their own case, then it is likely that the parties might fail to discover those documents [368] - [369].

27 Generally, and subject to limited exceptions, a party's affidavit of discovery is 'conclusive', as against the other party, including on the question of whether the party giving discovery has or has had in its possession, custody or power any relevant documents other than those discovered: Mulley & Marney v Manifold [1959] HCA 23; (1959) 103 CLR 341. With respect to the party giving discovery, the affidavit of discovery is an admission, on oath, of such matters.

28 The admission operates, in my view, as, or in the nature of, a formal admission for the purposes of the litigation. Accordingly, if a party wishes to correct an affidavit of documents, he or she must obtain leave to file a correcting affidavit. The party has no right to supersede or replace the original affidavit of documents by filing a substituted affidavit: Pulitano v Ginbey [1999] WASC 5 [9]; Westpoint Corp Pty Ltd v Marsh [2005] WASC 127 [27]. See Heydon JD, Cross on Evidence (8th Australian ed, 2009) [3165], [33420] - [33445] as to formal and informal admissions.

29 In Rayney v AW [2009] WASCA 203, McLure P said (Buss JA & Newnes JA concurring) [42]:

Ordinarily, the person claiming and carrying the onus of establishing legal professional privilege is required to (a) list each communication the subject of the claim for privilege; (b) state the form in which each communication is contained, stored or recorded, whether it is an original or a copy and the date when each was made; (c) identify the persons between whom the communication or communications were made; and (d) provide evidence as to the basis of the claim for legal professional privilege: National Crime Authority v S (1991) 29 FCR 203, 212; Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 [13].

30 In Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185, Black CJ and Emmett J said:

The appellant's decision to base his claim for privilege in this way was attended with considerable risk since, as Lockhart J observed in National Crime Authority v S (1991) 29 FCR 203 at 211, it is not sufficient for a party merely to assert a claim for privilege nor will an affidavit asserting the purpose for which a document was brought into existence followed by a statement about the category of legal professional privilege to which the document is said to belong necessarily be sufficient. Moreover, in the leading case of Grant v Downes [1976] HCA 63; (1976) 135 CLR 674, Stephen, Mason and Murphy JJ warned against the erroneous view that the privilege is 'necessarily or conclusively established by resort to any verbal formula or ritual' (at 689). In the same case, their Honours also observed that whatever the facts may be, it is always for the party claiming privilege to show that the documents for which the claim is made are in fact privileged [13].

31 In Schreuder v Murray Buss JA (McLure P concurring) said [60] - [63]:

The person claiming legal professional privilege must prove that the information or documents in question are privileged. See Grant v Downs [1976] HCA 63; (1976) 135 CLR 674, 689 (Stephen, Mason & Murphy JJ).

A claim of legal professional privilege is not established conclusively by the use of a verbal formula. See Esso [52]. A court may examine documents where there is a disputed claim. It should not be hesitant to exercise the power. Also, in appropriate cases, a court may permit cross-examination of a deponent of an affidavit claiming privilege. See Esso [52]; Grant, 689.

However, a party who claims legal professional privilege must properly identify the basis on which the privilege is claimed. It is not appropriate for the party merely to assert the existence of the privilege, deliver the documents to the presiding judicial officer and request him or her to analyse them and determine whether there is a proper basis for the claim. In the present case, the learned judge, appropriately, refused the invitation of counsel for the appellant to embark on this task.

Order 26 r 4(2) provides, in the context of discovery and inspection between parties to litigation, that if it is claimed that any documents are privileged from production, the claim must be made in the list of documents made in compliance with O 26 r 1, and with a sufficient statement of the grounds of the privilege. The list of documents must be verified by an affidavit in form no 18. The purpose of the requirement in the rule for identification and description of documents in respect of which privilege is claimed, is explained in Kendall C and Curthoys J, Civil Procedure Western Australia (at 2 July 2009):

'Where a claim of privilege is made, it is necessary that any documents for which privilege is claimed be properly described. Unless such documents are sufficiently described, it will be impossible for the other party to discern whether the claim of privilege is properly made. It is not sufficient merely to assert that the documents are privileged, which is a statement of law. The facts relied upon as giving rise to the privilege must be set out so the claim for privilege can be tested, although the facts should not be set out in such detail as would enable the contents of the documents to be ascertained indirectly: Gardiner v Irvine [1879] 4 Ex D 49 at 53. That is, an adequate description is required of each of the documents for which privilege is claimed, but not one which indirectly reveals its contents: Buttes Gas & Oil Co v Hammer (No 3) [1981] QB 223 at 265; [1980] 3 All ER 475; [1980] 3 WLR 668 [26.4.6].'

See also Water Authority of Western Australia v AIL Holdings Pty Ltd (1991) 7 WAR 135, 140; Boase v Seven Network (Operations) Ltd [2005] WASC 174 [24] - [28]; Alba Nominees Pty Ltd v Cecil Bros Pty Ltd (Unreported, WASC, Library No 970698, 12 December 1997) 14.

32 Whilst the ultimate legal onus remains on the party claiming privilege, under O 26 r 12(1)(a) an evidential onus is cast upon the party seeking inspection if the claim for privilege is 'apparently proper': CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48 [33] - [34]. In that case the party claiming the privilege had, in affidavits, 'clearly address[ed] all the issues required for such a claim'. The court is not confined to considering a contentious affidavit of the party seeking inspection, and is entitled to look at any evidence before the court which may be capable of raising doubts as to the authenticity of the privilege claim: CTC v Australian Stock Exchange [39].

33 What is required, for the purposes of a privilege claim, in properly describing discovered documents will vary depending on the nature of the document and the particular ground on which privilege is claimed: Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410, 415. Thus, for example, a description of a document as a confidential communication from the lawyer to the client would be, prima facie, readily capable of sustaining a claim for legal professional privilege on the ground that it was made for the dominant purpose of giving legal advice. On the other hand, eg, a claim would not be apparently proper if it involved a bare assertion of a protected dominant purpose in relation to a document which is given a description which, prima facie, would be inconsistent with it having been created for any such purpose. Each claim will need to be considered on its merits. Also, the sufficiency of the evidence relied on by a party disputing the claim for privilege for the purpose of meeting its evidential onus will no doubt vary according to the ground of privilege claimed and the description of the document given.

34 Since writing the above, my attention has come to the decision of Le Miere J in Transpacific Cleanaway Pty Ltd v Wilson [2009] WASC 306, in which his Honour said that:

The proposition that documents in respect of which privilege is claimed must be described sufficiently to enable the claim for privilege to be tested is not supported by the terms of O 26 r 4 and the preponderance of authority. It is sufficient if the documents are described sufficiently to enable each of them to be identified and the claim for privilege contains a sufficient statement of the grounds of the privilege [22].

35 That was a case of a claim of privilege against self-incrimination. His Honour's attention was apparently not drawn to, and his Honour made no reference to, the Court of Appeal's decisions, and the authorities to which they refer, in relation to legal professional privilege to which I have referred in [29] and [31] above. Whether or not there is any relevant distinction between the two bases of privilege, it seems to me that for present purposes, I should seek to apply what I understand to be the effect of such authority in relation to legal professional privilege.

Whether the claim for privilege in respect of the Tregea notebooks has been made out

36 As noted above, and accepted in this application by the defendant, Mr Campbell did not depose to the facts which would properly ground a claim of privilege in respect of the Tregea notebooks.

37 Nevertheless, the defendant says that the omission is cured by Mr Barclay's affidavit.

(a) he has recently inspected the Tregea notebooks;

(b) in notebook 7 (of 10) there are certain pages marked 'Legal privilege' across the top of the page, in Mr Tregea's handwriting, and he is informed by Jackson McDonald and believes that there are over 30 such pages;

(c) these entries were made at the time a tropical cyclone crossed the Pilbara and the project mine site in early March 2007 (the Cyclone);

(d) he was aware that on or about 8 March 2007 external legal advice was sought on behalf of 'the defendant and its subsidiaries' in respect of the Cyclone;

(e) he believes 'that the entries in the Tregea notebooks from this date came into existence for the dominant purpose of the defendant obtaining legal advice in relation to the Cyclone, at a time when litigation was in reasonable contemplation given the events and damage caused by the Cyclone'. He also says that litigation subsequently ensued (presumably in relation to the Cyclone);

(f) notebook 4 (covering a period prior to the Cyclone) contains references to cyclone procedures; and

(g) notebook 8 contains references to 'matters related to the Cyclone'.

39 Mr Barclay's evidence, as I understand it, is to the effect that there is:

(a) a claim for privilege over those pages in notebook 7 which are marked across the top of the page 'Legal privilege';

(b) a claim for privilege over the pages in notebook 4 which contain references to cyclone procedures; and

(c) a claim for privilege over notebook 8 in so far as it contains references to matters related to the Cyclone after 8 March 2007.

40 It is convenient to deal with the last two claims first. The documents referring to cyclone procedures (particularly, in the context of Mr Barclay's evidence, cyclone procedures prior to the Cyclone) are manifestly not privileged. The claim in relation to notebook 8, concerning documents which contain references 'to matters related to the Cyclone' also provides no indication of whether any, and if so which, of the documents in notebook 8 might be privileged. There may be many reasons why records are created of events concerning the impact of a cyclone on a mining project. Mr Barclay's evidence that notebook 8 contains references to matters 'related to the Cyclone' says nothing about whether the documents bear the quality of legal professional privilege. These claims as formulated tend to suggest a misconception of the nature and scope of legal professional privilege.

41 In relation to the documents headed 'Legal privilege' in notebook 7, again, in my view, no proper claim for privilege has been established. My reasons are as follows. First, the evidence is in the form of Mr Barclay's belief. His belief affords no benefit to the defendant and carries no weight in this context. There is no underlying evidence of the nature of the documents or the purpose for which they were brought into existence (see also [44] below). The fact that they were headed 'Legal privilege' in Mr Tregea's handwriting might, perhaps, be evidence that Mr Tregea had a subjective belief, or lay opinion, when he came to write those words, that such documents were privileged. However, Mr Tregea's subjective belief cannot either by itself (or in combination with Mr Barclay's stated belief) properly ground a claim for privilege.

42 Secondly, and related to the last point, Mr Barclay's stated belief, in the circumstances, is no more than resort to verbal formulae and ritual.

43 Thirdly, there is more reason than usual to be suspicious of verbal formulae here where, as the matters referred to in [40] above tend to indicate, there appears to be a misconception of the nature and scope of legal professional privilege.

44 Fourthly, putting aside Mr Barclay's belief, the following facts deposed to by Mr Barclay, viz the Cyclone in early March 2007, the defendant and its subsidiaries seeking legal advice on 8 March 2007, the damage said to give rise to litigation being in reasonable contemplation, and various pages of Mr Tregea's notes marked 'Legal privilege' do not, severally or in combination, lead me to conclude that the defendant has discharged the onus on it. There are two reasons for this. One is that the first three matters (the fact of the Cyclone, the fact that legal advice was sought, and the asserted reasonable apprehension of litigation) cannot, in themselves, separately or in conjunction, sustain a claim for privilege over the documents in notebook 7. Those matters could provide context for evidence that specified documents were created for the dominant purpose of legal advice, or for use in legal proceedings, but there remains no evidence that these (or any other documents) were created for such purposes. The fourth matter (Mr Tregea's description at the top of the page) is at most a matter reflecting his opinion, rather than the provision of '[f]ocused and specific evidence demonstrating the dominant purpose' (Cross on Evidence [25240]). The total effect of this evidence cannot rise above the sum of its parts. The second reason is that if, as Mr Barclay deposes, the subsidiaries also sought legal advice, there is nothing objectively to show that the documents were not created for the dominant purpose of the subsidiaries obtaining legal advice. This omission has added significance where the defendant's pleaded case is that Mr Tregea was the agent of the defendant's subsidiaries, and not of the defendant. (I would add that there has been no claim of joint or common interest privilege.)

45 Fifthly, the absence of evidence is not explicable by reference to the fact that Mr Tregea is, apparently, no longer working on the project. The plaintiff has adduced evidence, which is undisputed, that Mr Tregea is working in Perth and is contactable.

46 For these reasons, in my view, the Tregea notebooks have not been shown to be privileged from production. The plaintiff also alleged that if the documents were privileged, there was a waiver of the privilege. It is unnecessary to deal with that argument.

47 Mr Barclay also deposes that in his recent inspection of the Tregea notebooks, he formed the view that the vast majority of the entries were irrelevant. He said:

It was readily apparent to me during my inspection of the Tregea notebooks that the vast majority of the entries were irrelevant to the matters at issue in these proceedings.

48 However, the defendant company's secretary, in an affidavit of discovery prepared by the defendant's solicitors and witnessed by Mr Barclay, has sworn to the documents' relevance. By the inclusion of the documents in a verified list of documents, the party giving discovery thereby acknowledges their relevance to an issue or issues in litigation: Middleton v Western Australia (1996) 17 WAR 201, 215 (Steytler J, Murray & Anderson JJ concurring).

49 As I have indicated, in my view, Mr Campbell's affidavit operates as, or is in the nature of, a formal admission. There has been no attempt to withdraw or correct the affidavit of discovery. Mr Barclay's stated opinion cannot operate as a withdrawal of the admission.

50 In any event, even if the matters deposed to by Mr Campbell only operated as an informal admission, capable of being displaced by other evidence, there is still no explanation as to how and on what basis Mr Campbell was in error when he swore his affidavit. Mr Campbell has not deposed to any error in that regard. Accordingly, even if Mr Campbell's evidence were treated as an informal admission, Mr Barclay's expression of opinion would, in my view, be insufficient to displace the effect of the admission.

51 Accordingly, I do not accept that inspection should be refused on the ground that the notebooks are irrelevant to an issue or issues in the proceedings.

52 It remains, then, to consider the claim for confidentiality.

53 Mr Campbell made no mention of confidentiality, but Mr Barclay has said:

I believe that much of this ... material relates to commercially sensitive and confidential matters pertaining to the Project such as contractual arrangements and contractual negotiations with third parties (including terms and conditions and identities) together with other confidential financial information such as operational costings.

54 The basis for Mr Barclay's belief is not stated. As noted earlier, Mr Barclay says that the Tregea notebooks contain a range of records, notations, minutes of meetings, and telephone notes. They span the period of the events the subject of this litigation.

55 In Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60, Buss JA said:

The Court has inherent jurisdiction to refuse to make an order for the production of discovered documents if production would be unnecessary or oppressive. See Attorney-General v North Metropolitan Tramways Company [1892] 3 Ch 70 at 74. As Lord Keith of Kinkel said in Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 308:

'Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant's affairs. It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done.'

A party who obtains discovery and inspection of documents, and the legal representatives of that party, impliedly undertake to the Court and the party giving discovery and inspection, that the documents in question will be used solely for the purpose of the litigation in which they are produced, and not for any collateral or improper purpose. The implied undertaking is required because 'the public interest in privacy and confidence demands that this compulsion [to disclose documents on discovery] should not be pressed further than the course of justice requires' (Riddick v Thames Board Mills Ltd [1977] QB 881 at 896) and to encourage full and frank disclosure of those documents which are relevant to the litigation. See Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34 per Hayne JA (with whom Winneke P and Phillips JA agreed) at 37 - 38; British American Tobacco Australia Services Ltd v Cowell [2003] VSCA 43; (2003) 8 VR 571 at 580 [20].

Although the confidential character of a party's discovered documents will not usually justify denying inspection by another party, the existence of trade rivalry between the party giving discovery and the party seeking inspection is a relevant consideration in determining whether the Court should impose any restrictions upon inspection. In Mobil Oil, Hayne JA referred to this issue, at 38:

'While it may readily be accepted that a party is ordinarily entitled to discovery and inspection of all discoverable documents in the possession or control of the opposite party ... it is important to bear steadily in mind that discovery is but a tool to be used in the pursuit of justice and that the right to discovery and inspection is not without its limits ...

Where it is said that the documents are confidential, it may be accepted that the fact that the documents are confidential will not ordinarily be a sufficient reason to deny inspection by the opposite party. In most cases, the fact that the documents may not be used except for the purposes of the litigation concerned will be sufficient protection to the party producing them. But where, as here, the party obtaining discovery is a trade rival of the person whose secrets it is proposed should be revealed by discovery and inspection, other considerations arise.

Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed. Is that necessary for the attainment of justice in the particular case?'

Other considerations in determining whether to impose restrictions upon the inspection of discovered documents include:

(a) The concern of the Court to promote and ensure open justice. See Russell v Russell (1976) 134 CLR 495 at 520; Hadid v Lenfest Communications Inc (1996) 70 FCR 403 at 406.

(b) A party has a prima facie right, as a matter of procedural fairness, to inspect discovered documents for the purpose of ensuring that he or she is able properly to present his or her case at the trial or other hearing. See Hadid at 406.

(c) The effect, in the particular litigation, of the proposed restrictions upon a party's capacity properly to present his or her case. As Kiefel J noted in Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 at [8], 'much may turn upon what it is necessary for that party to prove or disprove'. Similarly, it may be significant whether the litigation involves a dispute as to the facts or is confined to issues of law on facts which are agreed or not disputed.

(d) Whether an undertaking as to confidentiality is offered by the party seeking unrestricted or less restrictive access to the discovered documents [7] - [10].

56 The prima facie right in a party to inspect its opponent's discovered documents is important both for the proper conduct of the trial, as well as for informed prospective settlement negotiations: Hadid v Lenfest Communications Inc (1996) 70 FCR 403, 410. Also, 'it is in the interests of justice that the parties, and ultimately the Court, do not proceed in very difficult litigation in a half-light without adequate instructions': Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2000] FCA 1086 [17].

57 The party claiming to displace the prima facie right must prove the existence and degree of confidentiality involved in relation to the particular documents which are sought to be withheld from inspection: Hadid (410).

58 In deciding whether further protection is required beyond the protection provided by the implied obligation, regard will be had to the degree of commercial sensitivity involved and the extent, if any, of prejudice to the person interested in keeping the document confidential: Hadid (411).

59 Even in cases concerning direct trade rivals, a reasonable and proportionate response to confidentiality concerns has frequently involved confining inspection to a particular officer, or officers of a party, accompanied by an express undertaking of confidentiality from that person. See, for example, Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354, 360 - 361; and Mackay Sugar Co-operative Association Ltd v CSR Ltd (1996) 63 FCR 408; (1996) 137 ALR 183.

60 The starting point is that inspection by a party is a significant aspect of procedural fairness, and is an inseparable part of the process of discovery. In this case there are no material admissions in the defence, and the onus is on the plaintiff to prove the entirety of its case. The defendant does not contend that the plaintiff is a trade rival.

61 Also, the very brief description of confidentiality, and the generality of that description, in Mr Barclay's affidavit do not illuminate, in any cogent way, the degree and importance of the confidentiality claimed. The lack of cogency is underscored by the absence of evidence deposing to the grounds of the belief asserted. There is no evidence of prejudice.

62 In these circumstances, I am not persuaded by the defendant that anything further is required beyond the current implied undertaking of confidentiality. I do not see the need to make any express orders of confidentiality.

63 That conclusion is reinforced by the fact that the plaintiff, in its written submissions, offered a process respecting confidentiality which, in my view, went beyond what was reasonable having regard to the sparse nature of the defendant's evidence. That offer was not accepted by the defendant.

64 There is a related matter which has arisen concerning masking of documents.

65 The question of masking was comprehensively discussed by the Chief Justice in Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 3] [2009] WASC 67. The Chief Justice said:

[I]f a document has been listed in a list of documents attached to an affidavit of discovery, in such a way as to connote the entirety of a document, O 26 r 8 appears to provide a presumptive entitlement to inspect the entire document, but on the other hand appears to reserve a capacity in the party giving discovery to object to production.

It therefore seems to me that the general provisions of the Rules of the Supreme Court found in O 1 r 4A and r 4B, provide greater guidance to the resolution of these issues than the express provisions of O 26 and O 37 to which I have referred ...

... In summary, the practice should be that while it is open to a party providing inspection of documents to mask a document provided, in the event of contention, that party will carry the onus of satisfying the court that masking the document was appropriate. An affidavit of that party or its solicitor will not be regarded by the court as conclusive, and in cases of doubt, the court may itself inspect the document in its entirety in order to evaluate the objection. In making its determination, the court will not be confined to an assessment of the relevance of the portion of the document masked, but will take into account broader considerations of the kind enunciated in O 1 r 4A and r 4B of the Rules of the Supreme Court, and will adopt the course which is best designed to achieve those objectives and the attainment of justice between the parties [36] - [38].

Should the Court be minded to order production for inspection forthwith, the defendant seeks that the order permits the masking of the:

(a) irrelevant;

(b) commercially sensitive; and

(c) legally professionally privileged,

67 There is no evidence that at the time of the hearing of this application, the defendant has masked any documents. It appears to contemplate that it should be given a general opportunity to mask documents after the hearing of this application.

68 I have found that the claim to legal professional privilege has not been established. In relation to the other two bases upon which masking in the future is sought, and bearing in mind my findings and reasons in [47] - [54] and [60] - [63] above, the observations of the Chief Justice in Areva [40] - [42], [44] are, in my view, equally applicable in the matter before me. The evidence does not go beyond, in substance, assertions of confidentiality and irrelevance. There is no evidence of prejudice.

69 As the issues have been fully argued, and been the subject of evidence, the interests of justice, including the efficient running of this litigation, would not be served by further delay in the defendant now undertaking an exercise in masking documents, and then returning for the next round to debate whether the masking is properly justified.

Conclusion on the application to inspect the Tregea notebooks

70 For these reasons, I would order the defendant to produce for inspection to the plaintiff the Tregea notebooks.

The application under O 26 r 6 of the Rules of the Supreme Court

71 The plaintiff also applies, under O 26 r 6, for discovery of various categories of documents set out in the attached schedule.

72 It was common ground that the test is whether the court has reasonable grounds for being fairly certain that there are relevant documents which ought to have been discovered.

73 In the application, the plaintiff relies on two affidavits, one sworn by Mr Hewitt on 26 March 2010 and another sworn by him on 8 July 2010. As a general observation, the affidavits seem to me to contain a range of disparate material the significance of which with respect to each of the 15 categories of documents for which discovery is now sought, was not explained or at least not adequately explained. Accordingly, as a general observation, the affidavits in support did not offer 'substantial assistance' in establishing whether the documents to which the application refers exist and relate to a matter in question in the proceedings. To that extent, the affidavits were deficient: Mulley & Marney v Manifold [1959] HCA 23; (1959) 103 CLR 341, 344.

74 By way of further preliminary observation, the plaintiff says that in a conversation between the plaintiff's solicitor and the defendant's solicitor, the defendant's solicitor said that any remaining documents were in the possession of a third party. The third party was not identified. The plaintiff says that 'this conversation serves to evidence an admissions [sic] by the Defendant that it has or has had other relevant documents in its possession'. I do not accept that that is the effect of the conversation referred to.

75 It is convenient to attempt to group the categories of documents in the schedule in the following way:

communications and documents relating to communications from and to the defendant (categories a and b);
communications and documents relating to communications between TPI, WorleyParsons and Chichester (categories c and d);
documents relating to the payment by the defendant to the plaintiff, the practice of the defendant paying invoices on behalf of its subsidiaries and documents that the defendant would be required to maintain for accounting purposes (categories e, f, g and o);
documents relating to the defendant guaranteeing the performance of its subsidiaries' contracts (categories h and i);
documents concerning the transfer of assets from the defendant to its subsidiaries (categories j and k);
documents regarding the defendant's authorisation of the acceptance of materials and the admission of the plaintiff's agents and employees on to the Cloudbreak mine site (categories l and m); and
documents relating to the utilisation of the materials and employees supplied by the plaintiff to the defendant for use on the Cloudbreak mine site (category n).

76 As to groups 1 and 2, the plaintiff's evidence is to the effect that Mr Tregea was involved in communicating with consortium members, and that the plaintiff has discovered only four emails emanating from Mr Tregea, although 588 emails were sent to him or copied to him. The defendant, in its evidence, disputes that. I am unable to resolve that dispute on the papers before me. The plaintiff also annexes nine emails from Mr Tregea which it says the defendant had not discovered. The defendant says that three of these have been discovered as part of an email chain of other emails discovered by the defendant. I understand that the plaintiff now accepts that proposition. That still leaves six emails from Mr Tregea which, the plaintiff says, the defendant has not discovered. However, it is not clear to me whether it is said that the evidence (and, if so, which evidence) indicated that these six emails were, or are likely to have been, in the defendant's possession, custody or power. Absent evidence that they were, or are likely to have been, in the defendant's possession, custody or power, I am unable to see the significance of these emails for the purposes of the plaintiff's application. The affidavits in support provide no substantial assistance in this regard.

77 The plaintiff also says, in effect, that the defendant has discovered few, if any, emails in the categories in group 1. It says, as best I understand it, that the defendant has not discovered emails in group 1 because it has misconceived the nature of the plaintiff's claim and misunderstood that the plaintiff's claim is for quantum meruit. The plaintiff says that the defendant has not understood that documents relating to the defendant requesting the provision of the services, and the defendant accepting the benefit of the services, are relevant to these proceedings. There is, in my view, nothing in the materials which indicates that the defendant has misconceived the plaintiff's case in this way. (However, as discussed below, a separate misconception has arisen in relation to category f in group 3 - see below.)

78 Overall, I am not satisfied that there are reasonable grounds for being fairly certain that there are documents in groups 1 and 2 which the defendant ought to have discovered, but which it failed to discover. In any event, the scope is too wide, as those categories are not limited by reference to the work at the Cloudbreak mine site.

79 In relation to group 3, the plaintiff in its submission says, with respect to categories e and o, that there have been no documents produced to evidence the payment by the defendant to the plaintiff. There is, however, no evidence to that effect in the plaintiff's affidavits. Insofar as group 3 contains the broader category g, which seeks all documents that a public company would be required to maintain for accounting purposes, the category is too wide and its relevance has not been shown. Overall, I am not satisfied that there are reasonable grounds for being fairly certain that there are documents which ought to have been discovered in categories e, g and o in group 3.

80 That leaves for consideration category f in group 3. The plaintiff in its first affidavit says that no documents have been produced in relation to the practice of the defendant in paying invoices on behalf of its subsidiaries. The plaintiff pleads that the defendant paid it the amounts invoiced in relation to the provision of the materials and the services. The defendant pleads that the payments were made 'for and on behalf of Chichester'. Further, Mr Hooper, the financial controller for the defendant, in an affidavit sworn 28 November 2008 in support of the defendant's application to set aside judgment by default, stated:

The amount referred to in the remittance advice was paid for by Fortescue Metals Group Ltd on behalf of FMG Chichester Pty Ltd.
It is the practice of Fortescue Metals Group Limited to pay all invoices on behalf of its subsidiaries. However, payments are then recorded as expenses of the relevant subsidiary. In this case, the amount paid as evidenced by the remittance advice, was recorded as an expense of FMG Chichester Pty Ltd.

81 The effect of Mr Hooper's evidence is that the defendant did not act as principal in the payment of the plaintiff because there was in existence a practice of the defendant to pay 'all invoices on behalf of its subsidiaries'. The defendant, in its submissions, has said, in effect, that documents relating to the practice are irrelevant. This, in my view, is a misconception of its discovery obligation. In my view, documents referring to or recording such a practice are relevant for this reason. If the practice were not shown to exist, it may be possible for the plaintiff to argue that the court should more readily draw an inference that the payments to the plaintiff were made by the defendant as principal. I infer that a public company such as the defendant would have a record of such a practice deposed to by its financial controller. Accordingly, I would allow the application with respect to category f, save that the words 'constitute, relate to, or refer to' should be deleted and substituted with the words 'record or refer to'.

82 In relation to groups 4 and 5, the relevance of the categories in these groups has not been demonstrated.

83 In relation to groups 6 and 7, I am not satisfied on the evidence that there are reasonable grounds for being fairly certain that there are documents in those categories which ought to have been, but have not been, discovered by the defendant.

84 Accordingly, save as indicated in [81] above, I would dismiss the application under O 26 r 6.

85 In relation to the plaintiff's chamber summons dated 12 March 2010, as amended 7 July 2010, I would:

(b) make orders in terms of par 3 with respect to category f of schedule A to the summons, amended to read: 'Documents that record or refer to the practice of the defendant set out in the affidavit of Quentin Patrick Hooper sworn 28 November 2008 at par 7'; and

constitute, relate to or refer to any correspondence from the defendant to Team 45, The Pilbara Infrastructure Pty Ltd, WorleyParsons or FMG Chichester Pty Ltd;
constitute, relate to or refer to any correspondence between any of The Pilbara Infrastructure Pty Ltd, WorleyParsons or FMG Chichester to the defendant;

constitute, relate to or refer to any correspondence between any of The Pilbara Infrastructure Pty Ltd, WorleyParsons or FMG Chichester;

constitute, relate to or refer to any reference to either 'FMGC' or 'fmgc', being a reference to FMG Chichester Pty Ltd;
constitute, relate to or refer to the payment made by the defendant to the plaintiff on 28 July 2007,
constitute, relate to or refer to the practice of the defendant set out in the affidavit of Quentin Patrick Hooper sworn 28th November 2008 at [7], reproduced at PAH-7 of PAH-1;
the defendant, as a public company would be required to maintain for the purposes of auditing both the defendant's accounts and the consolidated group accounts;
constitute, relate to or refer to the decisions of the board of directors and/or its delegate authorising the defendant to guarantee the performance of the subsidiaries in contracts either between one or more subsidiaries and external parties;
constitute, relate to or refer to the decisions of the board of directors and/or its delegate authorising the defendant to guarantee the performance of the subsidiaries in contracts between one or more subsidiaries;
constitute, relate to or refer to the decisions of the board of directors and/or its delegate authorising the various transactions undertaken by the defendant and/or its subsidiaries in relation to the transfer of the assets and undertaking of the defendant to its subsidiaries;
constitute, relate to or refer to the decisions of the board of directors and/or its delegate and/or the defendant's management implementing the directions of the board of directors in relation to the transfer of the assets and undertaking of the defendant to its subsidiaries;

constitute, relate to or refer to the decisions of the board of directors and/or its delegate and/or the defendant's management authorising acceptance of materials onto the Cloudbreak mine site;

constitute, relate to or refer to authorisation given by the defendant, its servants or agents of the employees of the plaintiff onto the Cloudbreak mine site;
constitute, relate to or refer to the utilisation of materials and employees supplied by the plaintiff to the defendant for use on the Cloudbreak mine site; and
constitute, relate to or refer to the authorisation and/or rejection of the payment of the plaintiff's accounts issued by it for work done, materials supplied and/or delivered by the plaintiff to the Cloudbreak mine site.

Alba Nominees Pty Ltd v Cecil Bros Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (173 paragraphs)

LAMPSON (AUSTRALIA) PTY LTD -v- FORTESCUE METALS GROUP LTD [No 2] [2010] WASC 217 (16 August 2010)