Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd

REASONS FOR DECISION 1 On 4 April 2012, I gave reasons for a decision to decline to require the respondents Quasar Resources Pty Ltd (Quasar) and Heathgate Resources Pty Ltd (Heathgate) to answer interrogatories administered by the applicant Alliance Craton Explorer Pty Ltd (Alliance), but to require Quasar and Heathgate to provide certain further discovery to Alliance: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2012] FCA 290 (the Reasons). 2 I made orders in the following terms on 26 March 2012: 1. No order is made in respect of the proposed interrogatories. 2. The application is stood over to a date to be fixed, with the applicant to have liberty to re-apply for an order that the respondents answer further particular interrogatories. Such application is to be made on 14 days notice. 3. Costs of the application are reserved with liberty to any party to apply for costs of the application to date, by filing and serving within 21 days of publication of reasons for Order 1 hereof a written submission specifying the orders sought and the submissions in support of it and any other party may then within a further period of 21 days file and serve written submissions in response and the party or parties applying for costs may within a further 14 days file and serve written submissions strictly in reply, to the intent that the costs of the application to date will then be determined on the papers. 4. The time within which any application for leave to appeal from Orders 1 to 3 hereof shall run until 2 May 2012. 5. The respondents and each of them within 49 days from the making of this order or such further time as the Court may allow, do make particular further discovery of any documents which they or either of them have not yet discovered which concern the prospectivity of the Paralana Plains area, including in relation to tenements adjacent to the Tenement (EL 2874), and which comprise: 5.1 documents which came into existence between 30 August 2002 and 30 August 2004 recording data which the first respondent considered in determining the nature and extent of its exploratory drilling program to search for sedimentary-hosted uranium mineralisation in the Paralana Plains area including but not limited to ground based surveys; 5.2 documents recording the information obtained by the first respondent as a result of the drilling program conducted by it or the second respondent in the Paralana Plains area in the period of about August 2004; 5.3 documents passing between the first respondent and the second respondent in the period between May 2004 and 13 October 2004 in which one respondent conveyed to the other respondent views about the prospectivity of the Tenement. 6. The respondents have liberty to apply for orders confining the extent in which the documents may be inspected by the applicant or its legal advisors or representatives, provided such application is made by notice given at the time of the provision of the further discovery. 7. Cost of the application are reserved with liberty to any party to apply for costs of the application to date, by filing and serving within 21 days of publication of reasons for Order 5 hereof a written submission specifying the orders sought and the submissions in support of it and any other party may then within a further period of 21 days file and serve written submissions in response and the party or parties applying for costs may within a further 14 days file and serve written submissions strictly in reply, to the intent that the costs of the application to date will then be determined on the papers. 3 Alliance on 30 April 2012, applied to have Order 5 recalled and varied. 4 The power of the Court to do so, and the relevant principles to be applied in considering whether to do so, are not in issue. Rule 39.04 of the Federal Court Rules 2011 (Federal Court Rules) empowers the Court to accede to that application, as the Orders of 26 March 2012 have not formally been entered: Davis v Insolvency and Trustee Service Australia (No 2) (2011) 190 FCR 437 at [4]; Informax International Pty Ltd v Clarius Group Ltd (No 2) (2011) 282 ALR 405 at [11]; Candacal Pty Ltd v Industry Research and Development Board [2005] FCA 1276 at [7] per Lee J. The observations of Lee J indicate the principles applicable are the same, whether the orders sought to be varied are final or interlocutory. 5 Those principles are explained in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 especially per Mason CJ at 301-303. Ultimately, the power may be exercised if it is in the interests of justice to do so. The interests of justice include the desirability for finality of litigation. In Candacal (above) Lee J said at [7]: It is plain that it is in the interests of justice to remove a clear ambiguity in the reasons provided before any order is extracted based on those reasons. … The terms of Order 35 rule 7 of the Federal Court Rules [now Rule 39.04 of the Federal Court Rules 2011] which provides the Court with power to vary or set aside an order or judgment after an order has been made or judgment has been pronounced confirm that there is power so to act before an order is made or judgment pronounced. I am satisfied that it is appropriate to use that power to remove the ambiguity present … 6 In Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 Allsop J exercised the power where the Orders under consideration were doubtful or ambiguous and on one reading did not reflect the intention of the Court and on another reading did do so: at [62]. 7 It is on that basis that Alliance makes the present application. Both Quasar and Heathgate, whilst accepting the power to do so exists, argue that the circumstances for its exercise are not enlivened. 8 Before turning to the terms of Order 5 of the Orders of 26 March 2012, it is necessary to refer briefly to the nature of, and background to, the proceeding itself. It is set out in an earlier decision of the Court: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2010] FCA 1415 and in the Reasons at [5]-[20]. I shall not repeat that material. However, it is worth repeating [63]-[65]: The real contest between the parties lay in what has been pleaded, and in particular whether the Statement of Claim of Alliance, with its Particulars including Schedule C to the Statement of Claim, alleged that information held by Quasar and/or Heathgate in the time leading up to the extension of the earn-in period concerning prospectivity of the tenements adjacent to the Tenement in the Paralana Plains was or should properly have been regarded as relevant to the prospectivity of the Tenement, and hence its value, at that time. For reasons I have given, I have concluded that Alliance has pleaded such a case. The consequence is that, in my view, Quasar and Heathgate have taken a narrower view of what is discoverable because they have taken a narrower view than I consider is correct as to the scope of the pleadings. It then becomes a matter of applying well-settled principles to the particular documents in issue. In the course of submissions, Alliance refined and reduced the extent of its claim for discovery in any event. 9 In addition, there are three general comments to make. 10 First, it is important to note that the application for particular discovery was a complex one. It had an extensive background. It was evolutionary in its content. It is not necessary to set out the detail of its evolution, save to note that the order finally made was to require specific discovery of more generic and confined categories of documents, limited in point of time, than those that Alliance sought. That course of action was a deliberate one, as explained in [67] of the Reasons. 11 Secondly, it is clear that a discovery order is discretionary: Rule 20.12, 20.14 and 20.15 of the Federal Court Rules and previously Order 15 r 1 and r 2 of the former Federal Court Rules. There are many judicial and extra-judicial observations about the need for controlling the extent of discovery in proceedings because of the time required to give full discovery, the cost of doing so, the other procedures available for the acquisition of information and documents (such as through witness statements and books of documents), and overall the necessity for discovery - whether standard or particular - is in the interests of justice in the particular case. That is why it is desirable in any matter to comprehend the particular issues in the proceeding. The Reasons at [63]-[65] were intended to identify the critical dispute. The submissions on this application did not seek to challenge that brief description, or to go beyond it; it probably would have been inappropriate to do so. However, it informs the content of Order 5. Order 5 was not intended to operate as an order for general discovery of documents which might have been seen as being capable of informing the prospectivity of the Tenement at any time up to the extension of the "earn-in" period, on the assumption that information about the prospectivity of the adjacent tenements all had that character. It was more confined than that, to require particular discovery on the basis that - if that particular discovery were given and was capable of advancing the case of Alliance - the subsequent course of pre-trial preparation would reveal further potentially helpful material. At the point of the exchange of witness statements, it could be expected that the background to the decisions of Quasar and Heathgate about their drilling program in late 2004 would be more fully exposed. 12 Thirdly, by Order 7 there was preserved to any partly liberty to apply to have determined whether the particular documents specified by Alliance in its submissions in reply (the ultimate expression of what it sought) fell within the terms of Order 5. Order 5, as the Reasons at [67] said, was to describe and limit by time the documents to be discovered having regard to the matters referred to in the Reasons, in particular, the real foundation for Alliance's case (as found to have been pleaded) and the need for particular discovery bearing in mind the normal considerations in the making of such an order. That material was to identify sufficiently to Alliance whether, in the period leading up to the exercise of the extension of the "earn-in" period, there was information available to Heathgate and Quasar as to the prospectivity of tenements adjacent to the Tenement in the Paralana Plains area which was, or should have been, regarded as relevant to the prospectivity of the Tenement. If there was, the Alliance case is that that information was not, but should have been, disclosed to it. 13 Order 7 was intended to preserve the opportunity to Alliance, for example, to seek further particular discovery of the documents informing the decision to undertake the particular drilling program which was the subject of the application for works approval on 20 August 2004 if Quasar and Heathgate did not discover it (despite Order 5.1), including the additional drill hole AK 019, to the extent that there was data informing the detail of that drilling program available to Quasar and Heathgate up to 30 August 2004. From the submissions on this application, it seems unlikely that Quasar and Heathgate are taking such a narrow view of Order 5.1 as to exclude that material, but if that transpires to be the case Alliance can exercise that liberty to apply. 14 It is also convenient at this point to address one matter raised by Alliance. It concerned the date 30 August 2004 in Order 5.1. The "earn-in" period was to be, and was, extended on 5 August 2004 but the formal documentation was not effected until 13 October 2004. The documents encompassed by Order 5.3 reflect the later date. The date 30 August 2004 was inserted deliberately. It was to allow a few weeks after the date by which the option period was to be extended, simply as a precaution, in case there was evolving data anticipated but not by then formally recorded. Counsel for Alliance contended that the date 30 August 2004 was in error because it was not until 13 October 2004 that the extension of the "earn-in" period was formally granted. There is a basis for saying that 13 October 2004 may have been a better date to choose (as was done in Order 5.3), but as the date 30 August 2004 was deliberately chosen, I do not think that the application of the principles discussed above should lead to the substitution of the later date. There is no ambiguity and the date reflects the intention of the Court when the Orders were made. 15 There are two other matters which, in the light of submissions, it is not necessary to address further. 16 The first is about the tenements "adjacent" to the Tenement. The meaning of "adjacent" is clear: next to. The evidence showed, and Quasar and Heathgate understood, that was a reference to those tenements whose area abutted the area of the Tenement. That includes EL 2633, EL 3001, EL 3002 and EL 3012. It does not include EL 3078, which is north-east of the Tenement. It was not the intention to include EL 3078 within the scope of the tenements adjacent to the Tenement. 17 The second is whether, having regard to the relationship between Quasar and Heathgate, the wording of Order 5 is sufficient to catch all pertinent communications between them. The concern of Alliance is that because, at least nominally, Quasar had no operating staff because the work was done by Heathgate on behalf of Quasar and both Heathgate and Quasar might take the view that Order 5 literally did not refer to internal communications of either of them. If Order 5 was ambiguous in that way, counsel on behalf of Quasar and Heathgate have both indicated that those entities are giving discovery in accordance with Order 5 to encompass "internal" communications between their staff, whether strictly speaking they are Quasar or Heathgate employees. 18 It is now necessary to address the other matters raised by counsel for Alliance. 19 The present application is one which, on its face, seems to suggest more than the resolution of ambiguity or the clarification of the intention of the Court. The proposed substituted order now nominates the "adjacent" tenements by their EL number, and then substitutes seven detailed subparagraphs for the existing Order 5. Its terms are more suitable to a widely expressed order, requiring generally the discovery of all documents concerning the prospectivity of the Paralana Plains area. 20 As to Order 5.1, it is contended that there is some doubt whether the order is confined to Quasar's drilling program within the Tenement or its drilling program undertaken on Adjacent Tenements. In my view, there is no such uncertainty. The Order extends to the drilling program on the wider Paralana Plains areas and is not confined to the drilling program on the Tenement. 21 Next, it is contended that the term "data" is ambiguous, as it may exclude documents which refer to any analysis, assessment or interpretation of the results of any form of exploration activity to which the Order otherwise may relate. The term "data" was chosen for that Order, having regard to the terms of Order 5.3. Any document recording data, whether a primary document or a secondary document (that is, a document which is not the first record of that data but which contains or records data) even as a starting point for some further analysis or assessment is covered by Order 5.1, providing it has the additional character specified. Order 5.3 was intended to catch documents which had a slightly different character: those containing views about the prospectivity of the Tenement itself. It would cover documents in which there is analysis, assessment or interpretation of data by either Quasar or Heathgate, but only where a focus of the document concerned the prospectivity of the Tenement. That extends to 13 October 2004. 22 Finally, as to Order 5.1, Alliance contends that the specification of the starting date for its operation, which excludes documents that existed before the joint venture at all, was an error. It was not. It was to confine the extent of the particular discovery ordered. That feature, too, is complemented by Order 5.3. If there are documents covered by Order 5.3, it is likely that they would identify the material on which those views were based. In that event, if that material included material which existed prior to the joint venture, the further earlier material might be the subject of a further particular discovery order. I regarded it as appropriate to place a starting, as well as a closing date, in Order 5.1 in that light. 23 As to Order 5.2, Alliance points out that the scope of the documents covered is limited to one drilling program, and is confined to Quasar (the latter point is not necessary to address because, as noted above, both Quasar and Heathgate accept that it would be wrong to confine the Order and are giving discovery as if it applied to them both). As was acknowledged in submissions, the focus of the Order is the drilling program undertaken in the July-September 2004 period in the Paralana Plains area. Alliance contends that the Order is ambiguous, or does not reflect the intention of the Court, because it does not include many documents which record information obtained from other exploratory drilling or geophysical surveys undertaken concerning the prospectivity of any adjacent tenement. 24 I do not accept that Order 5.2 is in terms which warrant the further intervention of the Court. The Order was intended to focus on the most temporally proximate information to the extension of the "earn-in" period, rather than to extend to other more extensive information generally concerning the prospectivity of any adjacent tenements to the Tenement. That is so even though it may be arguable that that more extensive information may be probative of an assessment of the prospectivity of that part of the Tenement within the Paralana Plains area. If the Order should have been more extensive, that is a matter for Alliance to pursue by its application for leave to appeal. The Order as it is expressed is clear, and is intended to operate in its terms. As with Order 5.1, this Order also is complemented by the scope of Order 5.3: the focus moves from the consideration of Quasar and Heathgate about exploratory drilling programs, to the objective data procured by that program, to their subjective views about the prospectivity of the Tenement evolving over firstly a wider period of time to the more focused period up to the extension of the "earn-in" period. 25 As to Order 5.3, Alliance expressed concern about the time period specified and about whether internal communications of Quasar and Heathgate were captured. The time period is clear and, for the reasons given, reflects the intention of the Court. The internal communications of Quasar and of Heathgate are accepted by them as being captured, so that issue need not be addressed. 26 For those reasons, the application is refused. Alliance should pay the costs of Quasar and Heathgate of the application. 27 I note that Alliance did not, on their application seek to rely on the affidavit of Evan Anthony Stents sworn on 30 April 2012, but sought to use EAS-51 to that affidavit as a summary of its case. Quasar objected to its use, on the basis that the summary was not precisely accurate. To the extent necessary, I have referred to materials filed in support of the application for particular discovery to confirm matters which appear in that summary to which I have had regard for the purposes of this decision. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.