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[2010] FCA 739
Federal Court of Australia
2010-07-15
Foster J
Original judgment source is linked above.
The Application of the Relevant Principles to the Present Case 39 As is apparent from the facts and matters noted at [9]-[14] above, the arbitration is well advanced. Liability has been determined and the Arbitrator is now moving to hear and determine all questions of damages or compensation. Other remedies may also be under consideration. I have been told that the remedies hearing is likely to take place in early 2011. 40 BlueScope has outlined its case for a stay or summary dismissal, in very broad terms, as follows: (a) CKI and Ironsands brought five counter-claims in the arbitration. One of these claims comprises an allegation that Toward and NZ Steel breached two express warranties given by them in the Share Sale Agreement by failing to disclose to CKI and Ironsands certain information relating to the customers of NZ Mining; (b) The subject matter of the alleged non-disclosure is the same subject matter which underpins the allegations in the proceedings in this Court to the effect that BlueScope (and Merrill Lynch) failed to disclose to CKI and to Ironsands material information concerning the customers of NZ Mining which failure amounted to misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act and s 9 of the Fair Trading Act; (c) The non-disclosures could have been characterised as breaches of the New Zealand Fair Trading Act. Had they been so characterised, damages for those non-disclosures could have and should have been pursued in the arbitration; (d) CKI is seeking to recover in the proceedings in this Court damages for at least some of the loss which it seeks to recover in its counter-claims in the arbitration; and (e) By bringing proceedings in this Court, CKI is undermining the arbitration. It is seeking to re-litigate factual matters dealt with in the arbitration at very considerable cost. The Court should hold CKI to its promise to resolve all disputes in connection with the Share Sale Agreement by arbitration. It should also enforce the confidentiality provisions of the Share Sale Agreement. 41 There is insufficient material before me at the moment for me to assess the strength of BlueScope's contentions in support of its claim for a stay or summary dismissal of the proceedings in this Court. I do not have any documents from the arbitration and I have not been taken to the relevant New Zealand law. It is apparent from CKI's Written Submissions that there will be a vigorous contest when BlueScope and Merrill Lynch seek a stay or summary dismissal of the current proceedings. 42 For present purposes, I propose to assume (without deciding or assessing in any way) that BlueScope has an arguable case for a stay or for summary dismissal. It seems to me that, unless I decide that its case for a stay or summary dismissal is hopeless, this is the approach which I should take. CKI did not submit that I should conclude on the material before me that BlueScope's case for a stay or summary dismissal is hopeless. 43 In its initial Written Submissions, BlueScope described the justification for the Notice to Produce in the following way: 12. The determination of whether these proceedings are an abuse of process involves a precise identification of the issues in each set of proceedings and the nature and significance of the evidence in the earlier proceedings (Rippon v Chilcotin (2001) 53 NSWLR 198 at 204 [32]-[33]). The focus is on the substance of the two proceedings, rather than form, and involves a consideration of the type of evidence which would be called in the later proceedings and its overlap with the first proceedings (Trawl Industries v Effem Foods (1992) 36 FCR 406 at 418 (Gummow J)). 13. By the Amended Notice to Produce, BlueScope calls for production of the witness statements relied on in the arbitration, the transcript of the hearing, the agreed bundle of documents and any other documents tendered in the hearing and the second interim award of the arbitrator by which (it is understood) it was determined that NZS and Toward were not bound by an election to pursue specific performance. 14. A review of the interim award and the closing submissions of the parties reveals that three BlueScope employees (Charlie Elias, Adrian Chng and Matthew Pond), two NZS employees (Martin Hacon and John Hetherington) and two CKI employees (Victor Luk and Eddy Tsang) gave evidence on topics that overlap with the issues raised in these proceedings. 15. It is submitted that production of the statements, transcript and tender documents is necessary so that BlueScope can identify precisely how the evidence given in the arbitration will overlap with the evidence that can be anticipated will be called in these proceedings. Production of the interim award is necessary to understand the basis on which the damages part of the arbitration is proceeding. 44 In Rippon v Chilcotin Pty Ltd 53 NSWLR 198, the purchasers of a business brought an action in the District Court of NSW against accountants who had prepared certain financial statements, claiming damages on the basis that the accountants had made negligent misrepresentations in those statements. 45 Some time earlier, the same plaintiffs (that is to say, the purchasers of the business) had sued the vendor of the business on the grounds that a warranty as to the accuracy of some of those financial statements had been breached and that, by annexing those statements to the contract for sale of the business, the vendors had misrepresented the true position and thus contravened s 52 of the Trade Practices Act. In the earlier proceedings against the vendor, the purchasers had succeeded in their contract claim but had failed in their claim pursuant to s 52 of the Trade Practices Act. 46 In the proceedings against the vendor, the trial Judge had found that the person who controlled the purchasers had not relied upon the accuracy of any of the figures in the financial statements annexed to the contract for sale of the business but had rather relied upon the contractual warranty to cover the position in the event that the figures turned out to be inaccurate. 47 In Rippon v Chilcotin Pty Ltd 53 NSWLR 198, the accountants who were sued in the District Court moved to have the action in that Court permanently stayed on the basis that it was an abuse of process. The District Court Judge declined to grant the stay. The accountants appealed to the NSW Court of Appeal. 48 It was clear that the defendant parties in the two actions brought by the purchasers were different. It was thought that the doctrine of res judicata did not apply. It also appears that the appellant in Rippon v Chilcotin Pty Ltd 53 NSWLR 198 took the view that the principles explained by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602 did not apply, although the Court of Appeal thought that this apparent concession may have been incorrectly made. 49 In the end, however, the case on appeal in Rippon v Chilcotin Pty Ltd 53 NSWLR 198 was run upon the basis that neither the doctrine of res judicata nor the extended principles explained in Port of Melbourne Authority v Anshun Pty Ltd 147 CLR 589 were applicable. However, the Court of Appeal held that the principles in Reichel v Magrath (1889) 14 App Cas 665 at 668 did apply. 50 In Rippon v Chilcotin Pty Ltd 53 NSWLR 198 at [28]-[33] (pp 203-204), Handley JA said: 28 The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. If they cannot succeed against anyone in respect of the 1991 figures because they did not rely on them, they could hardly succeed in establishing reliance on the earlier figures. 29 The judge also held that the issue of reliance on the expertise of the accountants had not been litigated in the Supreme Court and that a finding of reliance on that expertise would not conflict with the findings of Brownie J. This is true enough but ignored the fundamental fact that the purchasers would first have to prove that they relied upon the figures themselves before the question of reliance on that expertise could even arise. If they did not rely on the figures, they could not possibly have relied on the expertise required for their production. 30 The substance of the matter therefore is clear. The purchasers, disappointed with their bargain, sued their vendor in contract and in misrepresentation. They lost their case in misrepresentation and were disappointed with their modest recovery in contract. A few weeks before the expiration of the limitation period they sued the accountants for what is in substance the same misrepresentations. In the first proceedings they had to prove that they relied upon those misrepresentations. This turned on the evidence of Mr Hoefl, the contemporary documents, and the surrounding circumstances. The purchasers lost that issue and seek to re-litigate it against the accountants on substantially the same evidence in the hope that this time Mr Hoefl will be believed. 31 In Haines v Australian Broadcasting Corporation (at 414), Hunt CJ at CL distilled the following statement of principle from the authorities: "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath ... The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former ... It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that ... the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance ... In normal circumstances, the decision disposing of the issue must have been a final one ... There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice ... all the circumstances of the determination in the earlier case may be considered ... ."
32 In State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports ¶81-423 (64,077) at 64,089, another case involving abuse of process in seeking to re-litigate an issue, Giles CJ Comm D said: "... The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are -
(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and finality of the finding as to the issue; (d) the identity between the relevant issues in the two proceedings; (e) any plea of fresh evidence, including the nature and signifi cance of the evidence and the reason why it was not part of the earlier proceedings; ... (f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and (g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process." 33 These considerations, as Heydon JA pointed out in R v O'Halloran (2000) 159 FLR 260 at 293, "turn on precise identification of the issues". Mason P and Heydon JA (as he then was) agreed with Handley JA. 51 BlueScope will invoke the principles explained in Rippon v Chilcotin Pty Ltd 53 NSWLR 198 in support of its application for a stay or summary dismissal of the proceedings in this Court. 52 Those principles require the Court to focus upon the issues which are said to be in common between the two sets of proceedings under consideration. It is the re-litigation of issues that is the focus of the Court's consideration. 53 In order to determine BlueScope's application for a stay, the Court is required to compare the issues raised in the arbitration with those raised in the proceedings in this Court. In most cases, it would be inappropriate for the Court to look at the evidence in the earlier proceeding. There may be cases where looking at that evidence may be appropriate: For example, if there are no pleadings or no clear definition of the issues in the earlier proceedings; or if there are allegations that the case was conducted in a way which departed substantially from the pleadings; or if some exploration of the evidence was required in order to explain the judgment or the issues dealt with in the judgment. Even then, it is unlikely that evidence should be examined in any detail. Rather, it is most likely that the most that would be required is a relatively cursory examination of the evidence for the purpose of casting light on and clarifying the issues. 54 Neither party to the present application has placed before me for the purposes of this application any of the documents from the arbitration. In particular, BlueScope has not sought to persuade me that, by reference to the documents which it already has, those documents do not enable it to present fairly and adequately its case that the proceedings in this Court should be stayed or summarily dismissed. Indeed, BlueScope did not put its case on the basis that it needed the contentious documents in order to identify the issues in the arbitration. Rather, its submission was that it needed those documents in order to identify and understand where the evidence led in the arbitration might overlap with evidence likely to be led in the proceedings in this Court and that this was a legitimate purpose which justified the issue and service of the Notice to Produce. 55 If BlueScope wished to persuade me that it truly required the contentious documents in order to understand the issues raised in the arbitration, it should have tendered in evidence on the present application the documents which it already has and demonstrated to my satisfaction that those documents did not enable it fairly to present its case for a stay or summary dismissal. In that way it may have been able to persuade me that the evidentiary material which it seeks is reasonably likely to add, in the end, in some way or other, to the relevant evidence to be adduced in support of the relief which it claims in its Motion. It did not take this course. The onus was on BlueScope to establish the apparent relevance of the contentious documents in the sense explained by Sackville J in Seven Network Ltd v News Ltd (No 11) [2006] FCA 174 at [6]. It has failed to discharge that onus. It does not contend that it requires the contentious documents for the purposes of understanding the issues in the arbitration. It confined its attention to potential overlaps in the evidence. On the evidence before me, the Notice to Produce cannot be supported on the grounds upon which BlueScope seeks to support it. 56 The Notice to Produce is probably also oppressive or vexatious in the sense in which the High Court explained those expressions in Hamilton v Oades 166 CLR 486. Whilst it may readily be accepted that, for a large corporation such as CKI, arranging for the contentious documents to be photocopied and produced to BlueScope would not be unduly burdensome, the requirement that they be produced for a purpose which has not been sustained on the evidence before me constitutes oppression in the relevant sense. 57 I do not think that CKI has established that production would be unduly burdensome. Oppression in that sense has not been proven. Nor do I think that the description of the documents to be produced is imprecise, ambiguous or unlikely to be understood by CKI. The contentious documents are adequately described. 58 There are two classes of documents required to be produced under the Notice to Produce. The first class comprises evidence in the arbitration (pars 1 to 3). The document called for by par 4 (the Interim Award or Ruling made on 28 June 2010) is different in character from those documents which comprise the first group. In my view, that document should be produced because it is very likely to add to the relevant evidence to be adduced at the hearing of BlueScope's application that the proceedings in this Court be stayed or summarily dismissed. 59 Accordingly, for these reasons, I propose to set aside pars 1 to 3 of the Notice to Produce but not par 4. Costs should follow the event. 60 In the circumstances, I do not need to consider how the various contractual and statutory confidentiality requirements imposed upon the parties to the arbitration and the parties to the proceedings in this Court might impact upon CKI's capacity and willingness to produce the contentious documents. 61 I have also expressly refrained in these Reasons for Judgment from expressing any views as to whether NZ Steel and Toward might lawfully provide to BlueScope a copy of the documents described in pars 1 to 3 of the Notice to Produce in light of the clear terms of the letter from the lawyers from CKI to the lawyers for BlueScope dated 9 July 2010 (extracted at [13] above). I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.
Cheung Kong Infrastructure Holdings Limited
BlueScope Steel Limited
The Submissions Made on Behalf of CKI 21 It was submitted on behalf of CKI that: (a) The Court should apply an appropriate test of relevance in determining whether or not the Notice to Produce should be set aside. That test is "… whether the documents sought in the Notice are reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case" (Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [5]-[12]; and Seven Network Ltd v News Ltd (No 11) [2006] FCA 174); (b) In the circumstances of the present case, the documents are not likely, in the end, to add to the relevant evidence in the case. The "case" to which the documents must be relevant is the claim for relief made by BlueScope in its Notice of Motion filed on 7 July 2010. In other words, the documents must be likely to add relevantly to BlueScope's claim that the proceedings should be stayed or summarily dismissed; (c) The contentious documents are not necessary in order to enable BlueScope fairly to present its case for summary relief nor are they likely to add in any meaningful way to the relevant material which the Court will be called upon to consider when dealing with BlueScope's claim that the proceedings should be stayed or summarily dismissed. This is because: (i) BlueScope already has more than enough relevant material to mount its case for a stay or summary dismissal. It has all of the pleadings in the arbitration, all of the Written Submissions in the arbitration and the Interim Award dated 30 April 2010. This body of material arms BlueScope with more than enough evidence for it to prove the nature and extent of the issues in the arbitration and the nature, source and extent of the evidence tendered in the arbitration in order to enable it fairly and adequately to press its claims that the proceedings should be stayed or summarily dismissed; (ii) In circumstances where the claim for a stay or summary dismissal is based upon the proposition that the present proceedings in this Court constitute an attempt to re-litigate issues litigated in the arbitration, it is the issues and the substance of the evidence going to those issues that are the relevant matters. Given the material which it already has, BlueScope is more than able to mount its case for a stay or summary dismissal without adding further to the material which it already has by gathering in the contentious documents; and (iii) It is neither necessary nor desirable for the Court, when considering BlueScope's application for a stay or summary dismissal, to undertake a detailed examination of all or a significant portion of the evidence tendered in the arbitration. (d) The Notice to Produce is oppressive. In the Notice, BlueScope makes no attempt to target the additional material which BlueScope truly might require and, on the evidence before me, requires the production of a large body of irrelevant or marginally relevant material; and (e) The Notice to Produce is vexatious given that CKI is content for BlueScope's wholly owned subsidiary, NZ Steel and/or NZ Steel's wholly owned subsidiary, Toward, to provide to BlueScope all of the documents deployed in the arbitration (which, of course, includes the contentious documents).
Hamilton involved a challenge to the exercise by the Supreme Court of New South Wales of its power to order a company director to be examined on any matters relating to the affairs of that company under s 541(3) of the Companies Code (NSW). Their Honours' dicta is nevertheless descriptive of the inherent power of this court to set aside subpoenas that are abusive or oppressive: see Arnotts at ALR 102; Trade Practices Commission v Kimberley Homes Pty Ltd (1989) 217 ALR 110 at 114 (Hill J); Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 (Stone J).
His Honour observed (at 926) that it is difficult to formulate more precise criteria and that each case must depend on its own circumstances. In my view, this is the test that should be applied on the present motion: see Liberty Financial Pty Ltd v Scott [2004] VSC 382 at [32], per Smith J. 33 In my view, Sackville J expressed the relevance test which is to be applied when the Court is considering whether or not to set aside a subpoena for production or Notice to Produce as being whether the documents sought are of apparent relevance to the issues in the proceedings. His Honour fleshed out the concept of "apparent relevance" in this context by citing with approval and applying the remarks made by Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927. 34 In Seven Network Ltd v News Ltd (No 11) [2006] FCA 174 at [6], his Honour said: 6. It is now established that lack of apparent relevance is a ground for setting aside a subpoena or notice to produce: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 101-103, per Beaumont J. In an earlier interlocutory judgment delivered in these proceedings, I said that the test of apparent relevance is whether the documents are 'reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case': Seven Network Ltd v News Ltd (No 5), at [10], citing Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927, per Waddell J. Neither party disputes that this is the appropriate test. 35 His Honour added that the onus of demonstrating the apparent relevance of the documents required to be produced was on the party who issued the Notice to Produce. 36 The concept of oppression in this context was also helpfully summarised by Beaumont J in Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 at 101-102. In particular, at 102, his Honour cited and applied the passage from the joint judgment of Deane and Gaudron JJ in Hamilton v Oades (1989) 166 CLR 486 at 502 which was also cited by Conti J in Mandic v Phillis 225 ALR 76 at [34] (pp 772-773). 37 The application of the remarks of Deane and Gaudron JJ in Hamilton v Oades 166 CLR 486 requires that the Court ascertain the true purpose of the party issuing the subpoena or Notice to Produce and that the Court examine the impact of the subpoena or Notice to Produce upon the recipient. 38 The fundamental principle which drives all of the above statements of principle is that the Court should not permit its processes to be abused and should guard against the use of its compulsive powers as an instrument of oppression.
(1995) 43 NSWLR 404
(1989) 166 CLR 486
(2005) 225 ALR 76
(2002) 116 FCR 372
(1981) 147 CLR 589
(2001) 53 NSWLR 198
(2005) 216 ALR 147
(1994) 52 FCR 96
(1989) 88 ALR 90
(1992) 36 FCR 406
(2005) 225 ALR 760
(1988) 165 CLR 197
(1989) 217 ALR 110
(2000) 159 FLR 260