Bengalla Mining Co. Pty. Ltd. v. Barclay Mowlem Construction Ltd. [2001] NSWSC 93

Judgment (9 paragraphs)

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CITATION : Bengalla Mining Co. Pty. Ltd. v. Barclay Mowlem Construction Ltd. [2001] NSWSC 93 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1388/01 HEARING DATE(S) : 22/02/01 JUDGMENT DATE : 28 February 2001

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PARTIES : Bengalla Mining Company Pty. Ltd. - plaintiff Barclay Mowlem Construction Pty. Ltd. - defendant JUDGMENT OF : Hodgson CJinEq at 1

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COUNSEL : Mr. R. McKeand for plaintiff Mr. M. Rudge SC for defendant SOLICITORS : Freehills, Sydney for plaintiff Clayton Utz, Sydney for defendant CATCHWORDS : ARBITRATION - PRACTICE - Subpoenas - Subpoenas to produce documents - Whether tantamount to discovery - Whether oppressive - Issued in connection with arbitration - Whether artibrator should deal with application to set them aside - Interest of party to make such application, where recipient of subpoena willing to comply. LEGISLATION CITED : Commercial Arbitration Act ss.14, 17, 18 National Employers' Mutual General Association Ltd. v. Waind & Hill (1978) 1 NSWLR 372 at 382 The Ritz Hotel Limited v. Charles of the Ritz Ltd. (No.17), McLelland, J., 11/2/88, p.6 Lakatoi Universal Pty. Ltd. v. Walker, Rolfe, J., 31/7/98 Arnhill Pty. Ltd. v. General Terminal Co. Pty. Ltd. (1990) 23 NSWLR 545 CASES CITED : National Australia Bank Ltd. v. Idoport Pty. Ltd. (2000) NSWCA 8. Compsyd Pty. Ltd. v. Streamline Travel Service Pty. Ltd. (1987) 10 NSWLR 648 Commissioner of Railways v. Small (1938) SR 564 Commonwealth of Australia v. Cockatoo Dockyard Pty. Ltd. (1994) 35 NSWLR 704 Commonwealth of Australia v. Cockatoo Dockyard Pty. Ltd. (1995) 36 NSWLR 662 DECISION : See end of judgment

SUBMISSIONS 8 Mr. McKeand for Bengalla has provided a written outline of submissions, which I will leave with the papers. He submitted that the Commercial Arbitration Act gave the arbitrator a broad power to direct discovery, and to direct the parties and outsiders to produce documents: see ss.14 and 18. In the event of non-compliance with such a direction, the Supreme Court may, on application, order production to the Court: s.18. The Court may issue subpoenas for documents to be produced before the Arbitrator, but only to the extent that production could be compelled on a trial in the Court: s.17. The arbitrator had power, following the discovery that was given, to order further discovery. Mr. McKeand submitted that the subpoenas were attempts to pursue further discovery, which was an impermissible use of subpoenas: see Practice Note 63, par.6; National Employers' Mutual General Association Ltd. v. Waind & Hill (1978) 1 NSWLR 372 at 382; The Ritz Hotel Limited v. Charles of the Ritz Ltd. (No.17), McLelland, J., 11/2/88, p.6. 9 Next, Mr. McKeand submitted that the subpoenas were too wide. The legitimate width of subpoenas is subject to a similar test as discovery, that is, relevance, excluding credibility and excluding matters which "may fairly lead to a train of enquiry": see Arnhill Pty. Ltd. v.General Terminal Co. Pty. Ltd. (1990) 23 NSWLR 545, Lakatoi Universal Pty. Ltd. v. Walker, Rolfe, J., 31/7/98; Evidence Act 1995, s.55, Supreme Court Rules, Pt.33 r.1(d), r.2(1)(b), r.3(3)(a); National Australia Bank Ltd. v. Idoport Pty. Ltd. (2000) NSWCA 8. 10 Mr. McKeand submitted that the subpoenas were too wide, particularly because of the effect of three definitions. First, the definition of "documents": it included records of communications "from, to or between" Sedgman, Barclay, Bengalla, the six companies named in the definition of "Begalla Joint Venture", and any other person. Next, the definition of "project": it included work performed by all contractors, whether related to any of Barclay's works or not. Third, the definition of "vendor supplier": it named ten companies that were suppliers of equipment alleged in Barclay's points of claim to have been delivered later than promised, nine further companies that were suppliers of equipment as subcontracted to some of those ten companies, and thirty-three other companies that were not involved in the supply of that equipment at all. 11 Finally, Mr. McKeand submitted that Bengalla had a sufficient interest, within Pt.37 r.8, to seek to have Sedgman's subpoena set aside: see Compsyd Pty.Ltd. v. Streamline Travel Service Pty. Ltd. (1987) 10 NSWLR 648, and also Lakatoi. That interest was the one identified in Lakatoi, namely an interest that the hearing should not be allowed to expand beyond a trial of the issues raised by the pleadings and matters necessarily ancillary thereto. 12 Mr. Rudge SC for Barclay relied on submissions set out in paragraph 21 of an affidavit of Philip Dawson sworn 20th February 2001, which was rejected as evidence. He submitted that, at least when concessions set out in that submissions were made, the subpoenas were not too wide. 13 Mr. Rudge submitted that the subpoenas were not seeking discovery. They did not require a judgment as to what documents were relevant to issues between the parties: see Commissioner for Railways v. Small (1938) SR 564 at 574-5. It was permissible to serve subpoenas on parties: see Pt.37 r.7(4). 14 In any event, Mr. Rudge submitted that this Court should leave it to the arbitrator to decide on the validity of the subpoenas. The parties had referred all matters relating to their dispute to the arbitrator: see Commercial Arbitration Act, s.18(3); Commonwealth of Australia v. Cockatoo Dockyard Pty. Ltd. (1994) 35 NSWLR 704 at 706; Commonwealth of Australia v. Cockatoo Dockyard Pty. Ltd. (1995) 36 NSWLR 662 at 674-5.

DECISION 15 In my opinion, this Court should not simply leave it to the arbitrator to decide whether compliance with the subpoenas should be required. The subpoenas are orders of this Court, and a breach of those orders could involve contempt of this Court. If the order contained in the subpoenas is such that it should not have been made, this Court should correct the situation. It may be that, if this Court took the view that certain details of the subpoena were appropriate to be worked out by the arbitrator, then the Court could make an order staying compliance with that aspect of the subpoena, and leaving it to the arbitrator to determine the extent to which that aspect should be complied with. However, subject to that possible exception, in my opinion this Court is responsible for the orders which it makes, and should itself deal with applications such as this. 16 Turning to the question whether these subpoenas are an abuse of process because they are being used to obtain discovery, in my opinion the correct test is that set out in Waind at p.382, namely whether or not the subpoena requires the recipient to make a judgment as to which documents relate to issues joined in the proceedings. In my opinion, if the subpoena does not do this, and if it is not otherwise oppressive, it does not matter that the party issuing it has the motive or purpose of supplementing or correcting what that party believes to have been inadequate discovery by the party to whom the subpoena is issued. Nor, in my opinion, does it matter that the subpoena is issued well in advance of the hearing. In so far as the decision in Botany Bay Instrumentation & Control Pty. Ltd. v. Stewart (1984) 3 NSWLR 98 may suggest the contrary, I would prefer the decision in Southern Pacific Motel Services Inc. v. Southern Pacific Motel Corporation Ltd. (1984) 1 NSWLR 710, as did Rolfe, J. in Lakatoi. 17 Turning to the question of the oppressiveness of the subpoena, I approach this matter on the basis that subpoenaed documents must be reasonably likely to contain material relevant to issues in the case, and that the likelihood and relevance must be sufficient to justify the imposition of the obligation to produce documents, having regard to the burden involved. In assessing the burden, one would have regard to the clarity and certainty of the description of the documents, the difficulty in deciding what documents fall within that description, the width and generality of the categories generally, and the time and physical burden involved in obtaining and selecting and producing the documents. 18 In general terms, what should be allowed on that basis is what is reasonably necessary to enable a fair resolution of the dispute between the parties. 19 Looking now at the Bengalla subpoena, I would strike out the definition of "documents". Although the application of the definition is limited in the paragraphs in which it appears by the context of those paragraphs, I see no need to include all copies and all drafts, unless the copies and drafts themselves satisfy the description in the paragraph. 20 Barclay concedes that it would be appropriate to omit from the definition of "vendor supplier" twenty-three of the thirty-three companies set out in paragraph 12 of the affidavit of Ross Hammond sworn 14th February 2001. Barclay gives no reason why the other ten suppliers in that paragraph should be included, and I would strike them out of the definition also. The definition should be read as indicating that "vendor supplier" means any one or more of the remaining named companies and does not extend further. 21 Turning to the particular paragraphs, in my opinion paragraph 1 should be limited to files, records and Register relating to Barclay and/or vendor suppliers. Paragraphs 2, 3 and 4 are too wide, except in relation to work done pursuant to the contract between Barclay and Bengalla. Paragraphs 5-10 are in my opinion satisfactory. Paragraph 11 should be altered by adding, after "documents" where it appears second, the words "between the Respondent and Sedgman". Paragraphs 12 and 13 are in my opinion too wide and too unclear. 22 Turning to the Sedgman's subpoena, I accept that Bengalla has an interest sufficient for it to make the application, but I have regard to the limited nature of that interest in dealing with the application. Having regard to Sedgman's willingness to adopt a procedure acceptable to Barclay to deal with the subpoena, I am not minded to set it aside in whole or in part. I would however order that it will be a sufficient compliance with the subpoena for Sedgman to adopt the procedure which it has agreed to. I would leave it up to Sedgman whether it produces or does not produce documents relating to vendor suppliers removed from the Bengalla subpoena. I would make it clear that it will be open to Bengalla to participate in the production of documents, so that it can separate out privileged documents, documents which it claims relate only to the excluded vendor suppliers, and confidential documents. Confidential documents should be made available to Barclay's solicitors on an appropriate lawyer's undertaking to maintain confidentiality. My tentative view is that the reasonable costs of Bengalla's supervision, as well as of Sedgman's compliance, should be met in the first instance by Barclay, although the ultimate responsibility for those costs will be a matter for the arbitrator. 23 At present, my tentative view is that the costs of this application should be costs in the arbitration. *********

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