Canstruct Pty Ltd v Project Sea Dragon Pty Ltd

Basis for production 4 The first and third defendants submitted that the documents in issue are relevantly "mentioned" in Mr Cavanagh's affidavit, such that they must be produced pursuant to r 20.31 of the Federal Court Rules 2011 (Cth). That rule provides: (1) A party (the first party) may serve on another party (the second party) a notice to produce, in accordance with Form 39, for the inspection of any document mentioned in a pleading or affidavit filed by the second party. (2) The second party must, within 4 days after being served with the notice to produce, serve the first party with a notice: (a) stating: (i) a time, within 7 days after service of the notice, when the document may be inspected; and (ii) a place where the document may be inspected; or (b) stating: (i) that the document is not in the second party's control; and (ii) to the best of the second party's knowledge - where the document is and in whose control it is; or (c) claiming that the document is privileged and stating the grounds of the privilege. (3) If the second party does not comply with paragraph (2)(a) or (b) or claims that the document is privileged, the first party may apply to the Court for an order for production for inspection of the document.

Are the documents "mentioned" in the affidavit? 5 The substantial issue on the application was whether the documents sought by the first and third defendants were "mentioned" in Mr Cavanagh's affidavit, within the meaning of r 20.31(1). 6 Mr Cavanagh is the CEO of Canstruct. As the plaintiff in these proceedings, it seeks to set aside a Deed of Company Arrangement into which Project Sea Dragon has entered. The hearing of the substantive claim is due to commence in two weeks' time. Mr Cavanagh's affidavit was filed and served on the defendants in accordance with orders made to facilitate the preparation of the parties' evidence in anticipation of that hearing. 7 In his affidavit, Mr Cavanagh gives evidence in general terms as to the nature of the work that he claims that Canstruct undertook pursuant to a contractual arrangement with Project Sea Dragon. By that arrangement, Canstruct was engaged to carry out various construction works at a site in the Northern Territory, at which Project Sea Dragon intended to pursue a major prawn aquaculture project. After giving a general overview of the project, and describing the work that was to be performed by Canstruct along with the various occasions on which he personally attended at the site to inspect that work, Mr Cavanagh stated as follows at paragraphs 13 to 15 of his affidavit: 13 When I was not at the Site, I would: (a) receive from members of Canstruct's project team, weekly and monthly progress reports, detailing the work completed by Canstruct in either the preceding week (or month) and the work that was planned to be completed for the coming week (or month as the case may be); (b) attend monthly meetings with PSD and the Canstruct project team to discuss matters completed in the previous month and the work to be performed in the month ahead. 14 Annexed hereto and marked: (a) "DC-27" is a copy of a weekly site report received by me from Canstruct's project team for the week 11 October 2021 to 17 October 2021; (b) "DC-28" is a copy of a weekly site report received by me from Canstruct's project team for the week 10 January 2022 to 16 January 2022; (c) "DC-29" is a copy of a monthly review report received by me from Canstruct's project team for October 2021. 15 As a result of the matters deposed to at paragraphs 14 to 16 above [sic], I am very familiar with the Site and the work that was performed by Canstruct in accordance with its contractual arrangements with PSD. 8 The immediate difficulty here is that there is no express mention of a "Project Sea Dragon: November Monthly Review" or a "Project Sea Dragon: December Monthly Review" in this passage of the affidavit. Further, whilst in paragraph 13(a) there is reference to "monthly progress reports", paragraph 14(c) seemingly refers to a different type of document called a "monthly review report". 9 It was submitted by the first and third defendants that, when Mr Cavanagh's affidavit is read as a whole, it is apparent that he is giving evidence in paragraph 13(a) of having received particular documents. It was said that these documents include the two in respect of which production is sought and, for that reason, the application for production should succeed. 10 There are several authorities addressing the meaning of the word "mentioned" in r 20.31, and a number of others addressing the wording of cognate rules. These authorities must be considered. 11 As an initial point, it can be accepted that, amongst the various rules to which the authorities refer, there is no meaningful difference between the word "mentioned" and the phrase "refers to". As was observed by Besanko J in Apotex Pty Ltd v ICOS Corporation (No 2) [2017] FCA 589 (Apotex v ICOS Corporation (No 2)) [15], whilst the previous rule applicable in this Court (Federal Court Rules 1979 (Cth) O 15 r 10) used the word "refers" rather than the word "mentioned", there was no material difference between those alternatives. There was no submission in connection with the present application that the change in wording in the rules resulted in a change of meaning. 12 The purpose of r 20.31 and its equivalents is well-recognised and bears repeating in this case. It was explained by Heerey J in Australian Competition and Consumer Commission v Visy Industries (2006) ATPR ¶42-102 (ACCC v Visy) at 44,841 [33] as follows: In contrast to discovery under O 15 rr 1, 5 or 8, production under O 15 r 10 does not depend on any leave being given by the Court. The reason is obvious enough. When a document is directly relied on by an opposing party, basic procedural fairness would require that a party be able to inspect the document, if only to see whether it is what it is alleged to be. … 13 His Honour thus identified that the underlying rationale for the rule is that, where a document is relied upon by a party as forming part of its case, or supporting the evidence that it intends to lead, natural justice and procedural fairness require its immediate production to the other side, who may then ascertain whether it is what it is alleged to be and whether it has the effect that it is said to have. 14 Similar observations were made by Moore J in King v GIO Australia Holdings Ltd [2001] FCA 1487 (King v GIO), where his Honour assayed the English case law after recognising that there was "limited authority" at that time as to the meaning of the word "refers" in O 15 r 10 of the former rules of this Court. In particular, his Honour quoted the judgment of the Court of Appeal in Dubai Bank Ltd v Galadari (No 2) [1990] 1 WLR 731 (Dubai Bank) for the proposition that the relevant test for the purpose of the rule was whether there had been a "direct allusion" to the document or class of documents in question. Against that background, his Honour stated at paragraph [17]: … Having regard to the preceding authorities, it does not appear that the rule is intended simply to enable a party to inspect a document which has, in terms, been incorporated by reference into a pleading or affidavit. That is, it is not restricted to situations where the pleader or deponent refers to the contents of a document on the footing that the text of the document is to be treated as incorporated in the pleading or affidavit. Nonetheless the reference cannot simply be implied. I see no reason to depart from what appears to be a comparatively settled approach adopted in the English courts concerning a rule comparable to O 15 r 10 of the Federal Court Rules. 15 It follows that vague references to the existence of documents, or transactions or information that might imply the existence of documents, will be insufficient to enliven the rule. More is required. 16 In Australian Competition and Consumer Commission v Australialink Pty Ltd (2009) 177 FCR 35 (ACCC v Australialink), Spender J quoted the judgment of Moore J in King v GIO at some length before stating at 40 [20] that: The observations by Moore J in King from [12] to [17] … make it plain that there has to be a direct allusion to a document or documents. It is insufficient to refer to a transaction or information, even though it appears almost certain that the transaction must have been effected by, or the information contained in, a document. 17 In the case before Spender J, there was no express reference in the affidavit in question to the existence of documents, but merely a reference to the ACCC having received a certain number of "complaints" from consumers. His Honour found that, even though there may have been "strong grounds" for thinking that at least some of the complaints would have been in writing, the description in the affidavit was not a sufficient reference to a document for the purpose of O 15 r 10. 18 The foregoing cases were considered by Besanko J in Apotex v ICOS Corporation (No 2). In that case, an expert witness, Professor Polli, stated in an affidavit that he had previously been engaged on behalf of the respondent's parent company to "provide expert evidence" in relation to a certain drug. The applicant sought an order under r 20.31 for production of the expert evidence. His Honour refused the application. After referring to the decisions in ACCC v Australialink, ACCC v Visy and King v GIO, his Honour concluded at paragraph [19] that: … There is no direct allusion to a document in the relevant sense. A reference by inference or an implied reference (if that be different) is not sufficient and the fact that a document almost certainly exists is not sufficient. Another way of approaching the issue leads to the same result. If one considers the matter from the point of view of "basic procedural fairness" there would be no procedural unfairness in this case because the statement appears to have been made to describe Professor Polli's prior involvement with the parties to the proceeding and not with a view to bolstering or supporting in some way his expert opinion. 19 When understood in this way, the rule appears to embrace the notion that, where a party in a pleading or affidavit makes specific reference to a document so as to call it in aid of their case, either for the fact of its existence or for its content, they are required as a matter of basic procedural fairness to produce the document immediately to the other side. In this context, emphasis is appropriately to be placed on the "procedural" nature of the fairness that is to be accorded. A party receiving a pleading or an affidavit is entitled to understand it, and to be able to verify its internal veracity or consistency by reference to both its express words and the documents that it refers to as part of its narrative. That must necessarily be so, given the usual need for parties to respond to pleadings or affidavits prior to the occurrence of discovery in the action. 20 More recently, the scope of the meaning of the word "mentions" in r 20.31 was examined by Jackson J in Koolan Iron Ore Pty Ltd v Infrassure Ltd [2020] FCA 233. That case had some similarities with the present case. It was in issue there whether the rule was enlivened in respect of a passage in a witness statement that proceeded as follows: 8. Infrassure received reports from time to time during the adjusting process but did not itself conduct the loss adjusting process. That was the responsibility of the steering committee. 21 The applicant claimed that the reference to "reports" was sufficient for the purposes of r 20.31, and sought production of all reports received "from time to time during the adjusting process". 22 Justice Jackson commenced by considering the decision of the Court of Appeal in Dubai Bank. He noted that the applicable rule in that case, requiring a "reference to any document", could extend to a compendious reference to a class of documents, as opposed to a reference to an individual document. However, the rule would only apply "if the compendious reference was indeed a reference". It was insufficient for there to be a mere reference by inference; there had to be a "direct allusion" to the documents. 23 His Honour accepted, on the facts of the case before him, that it was "highly likely" that at least some of the "reports" referred to in the witness statement were in writing. Nevertheless, following Moore J's observations in King v GIO, he held that the reference was insufficient. Particular reliance was placed on what Moore J had said at paragraph [18] of his reasons, as follows: Applying that approach in the present case, it has the following consequence. In relation to category 1 ['forecasts and budgets'], there is, in my opinion, no reference to a document other than perhaps an implied reference. It is, in terms, a reference to information in the form of forecasts and budgets of future revenues, expenditures and profits. One would suppose that it is, in the context of the pleadings, almost certainly the case that such information would have been contained in documents provided by GIO to the second respondent. However the pleading does not, in my opinion, involve a reference to a document in the way the authorities contemplate. The same can be said of category 2 ['the opinions and judgement of management of GIO Re']. Categories 5, 6, 7 and 8 are slightly different. In each instance there is a description of a process [i.e. 'review', 'audit', 'advice' and 'analysis, enquiry and review'] involving action by either PricewaterhouseCoopers Securities Pty Ltd, PricewaterhouseCoopers Actuarial Services Pty Ltd or the second respondent itself. Again one can assume that the process involved the use of documents and, indeed, so much is seemingly conceded in correspondence between the solicitors for the applicant and second respondent. However the pre-condition to the operation of O 15 r 10 is that the pleading itself referred to a document. It does not in any of these instances. (Emphasis added). 24 Justice Jackson followed Moore J's observations and held at paragraph [16] that: The reference to 'reports' in the present case is indistinguishable in form to 'complaints', which were the subject of Australian Competition and Consumer Commission v Australialink Pty Ltd [2009] FCA 265; (2009) 177 FCR 35. Both are descriptions of communications which in the circumstances are highly likely to include written communications, that is, documents. Spender J, applying King v GIO and Dubai Bank, held that this fact was not enough to mean that the affidavit referring to 'complaints' made reference to any documents for the purposes of the rule. 25 It was not suggested in the present case that the observations of Jackson J were wrong and ought not to be followed. Indeed, there is every reason to think that they are entirely correct. 26 One final point is that, in Koolan Iron Ore Pty Ltd v Infrassure Ltd, the respondent's solicitors had effectively conceded in correspondence that the "reports" were indeed documents in writing. However, as Jackson J held, this was irrelevant to the outcome of the application under r 20.31. He said at paragraph [19]: Evidence outside the pleading or affidavit which establishes that the allusion is to a document will not mean that the pleading or affidavit 'mentions' the document to the necessary level of direct allusion. It is the pleading or affidavit itself which must do so. 27 This conclusion has immediate effect in the present case, where there was evidence that the two reports referred to in the interlocutory application did in fact exist in writing. Again, for the reasons expressed by Jackson J, that can be of no consequence so far as the operation of r 20.31 is concerned. 28 It is important to keep steadily in mind that r 20.31 is concerned with the delivery of a document or documents for consideration by the opposing party. It is not, in itself, a provision about discovery. Its focus is on the ability of a party to understand the import of a pleading or an affidavit that it has received from its opponent in the litigation. A party receiving a pleading or an affidavit in which mention is made of a document is entitled to have the same advantage as if the document referred to had been set out in full: Quilter v Heatly (1883) 23 Ch D 42, 50 per Lindley LJ.

Application in the present case 29 The first and third defendants in this case place primary reliance on the words appearing in paragraph 13(a) of the affidavit of Mr Cavanagh. There, a general reference is made to "weekly and monthly progress reports" with nothing to indicate whether the reports in question were in writing or otherwise. They are not said expressly to be written reports, or oral reports, or reports conveyed by a combination of both writing and speaking. In this way, there may well be nothing to distinguish this case from the circumstances in Koolan Iron Ore Pty Ltd v Infrassure Ltd. 30 A conceivable point of distinction is raised by paragraph 14 of Mr Cavanagh's affidavit, in which three documents are specifically identified and produced. Two documents are described as a "weekly site report" for certain specified weeks, and the third is described as a "monthly review report". Importantly, however, there is no specific indication that the former documents are the "weekly progress reports" referred to in paragraph 13(a), nor is there any indication that the latter document is necessarily one of the "monthly progress reports" referred to in that paragraph. Although there is force in the submission that, by paragraph 14, Mr Cavanagh was apparently offering some examples of the reports that he had referred to in the preceding paragraph 13, that understanding of the relevant passage is not so obvious as to make the reference to "reports" in the earlier paragraph a direct allusion to documents. The fact that different descriptors are used in two neighbouring paragraphs can plausibly be taken to suggest that those descriptors do not refer to the same things. It is particularly notable that the wording of paragraph 13(a) does not make clear whether or not all of the "reports" were in writing. They may be or they may not be, and it is that lack of clarity, resulting from the generality of the language used, that poses the most pressing difficulty for the defendants. 31 It should also be acknowledged that the real question here is whether the affidavit of Mr Cavanagh "mentions" the two specific documents now sought in the application, being the report styled "Project Sea Dragon: November Monthly Review" and the report styled "Project Sea Dragon: December Monthly Review". There is no explicit reference in the affidavit to any document bearing either title, nor is it apparent that the generalised reference to "monthly progress reports" in paragraph 13(a) is a reference to a class that would include documents bearing either title. From the information in the affidavit, it might be regarded as quite likely that the "reports" in paragraph 13(a) exist as written documents. It might also be considered likely that those "reports" are of the same kind as the documents specifically identified in paragraph 14. It might then be assumed that, because paragraph 14(c) refers to a "monthly review report" for October 2021, there must exist equivalent reports for November 2021 and December 2021. However, the element of uncertainty in each of these steps, even if it is considered relatively slight, is enough to require the conclusion that the documents sought in this application do not fall within r 20.31(1). As no "mention" is made of them in Mr Cavanagh's affidavit, there is no procedural unfairness in the defendants being required to consider the affidavit without them having been provided. 32 It is true that, by paragraph 15 of his affidavit, Mr Cavanagh refers to the matters in the preceding paragraphs (which are mistakenly identified as paragraphs 14 to 16) as according him knowledge of the site and the work performed by Canstruct, which he subsequently relies upon in a substantive way to opine on certain topics in the remainder of his affidavit. However, acceptance of that fact, and of the correlative fact that the sources of his information are important, does not alter the previous conclusion that the documents sought by this application are not "mentioned" in the affidavit. 33 In the course of the hearing, it was submitted on behalf of Canstruct that, even if the documents were captured by r 20.31(1), their production could successfully be resisted on the basis that they are irrelevant to the issues to be determined in these proceedings. As a result of the conclusions reached above, there is no need to consider that question.

Result 34 It follows that the interlocutory application filed on 31 July 2023 must be dismissed. 35 Despite the foregoing, mere hours before judgment was due to be delivered in this matter, and after the parties had been advised of the same, it was agreed as between the plaintiff and the first and third defendants that the application ought to be resolved by consent on certain terms. Accordingly, it is to be ordered that: (a) The plaintiff produce forthwith to the first and third defendants the documents described at paragraph 1(a) and (b) of the first and third defendants' application filed 31 July 2023. (b) The costs of the application be reserved. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.