Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd

Federal Court of Australia|2011-12-07|Before: Mr J, Collier J

REASONS FOR JUDGMENT 1 The substantive trial in this proceeding is listed for hearing on 6 February 2012. On 1 December 2011 the applicant Construction, Forestry, Mining and Energy Union ("CFMEU") filed an amended interlocutory application in which it seeks the following orders: 1. The Respondent make discovery, in accordance with Rule 20.17, of any and all documents falling within the following categories: a. any and all documents, including but not limited to emails, meeting notes and/or statements, relating to District Court proceedings 2188/09; and b. any and all documents, including but not limited to emails, meeting notes and/or statements relating to, or discussing, the following matters in respect of the taking of protected industrial action by members of the Applicant at the Peak Downs Mine Site on 18 June 2011, 26 June 2011, 1 July 2011, 2 July 2011, 3 July 2011, 4 July 2011, 14 July 2011, 15 July 2011, 21 July 2011, 6 August 2011, 7 August 2011 and 8 August 2011 ("the protected industrial action"): i. the reasons for the protected industrial action ii. the persons responsible for organising and/or promoting the protected industrial action; iii. the effect of the protected industrial action, but excluding documents the sole content of which deal with the financial impact of the protected industrial action; and iv. Steps to be taken to minimise the effect of the protected industrial action; and iv. v) steps to be taken to deal with the applicant and/or its officers and/or its members at the mine to minimise the effect of, or to prevent further occurrences of the protected industrial action in respect of a new enterprise agreement. 2. Any further order the Court considers appropriate. (Tracking in original.)

Relevant Federal Court Rules 21 This interlocutory application has been commenced under the Federal Court Rules, which themselves commenced on 1 August 2011. As has been pointed out elsewhere (Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063 at [7], Coca-Cola Company v Pepsico Inc [2011] FCA 1069 at [33], [34])), r 20.11 of the Federal Court Rules provides that a party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. This, in turn, reflects the overarching purpose referred to in s 37M(1) of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"), which is in similar language. 22 It is clear from filed written submissions, and oral submissions made by Counsel yesterday, that the CFMEU relies on both r 20.14 and r 20.15 in seeking discovery. These rules are as follows: 20.14 Standard discovery (1) If the Court orders a party to give standard discovery, the party must give discovery of documents: (a) that are directly relevant to the issues raised by the pleadings or in the affidavits; and (b) of which, after a reasonable search, the party is aware; and (c) that are, or have been, in the party's control. (2) For paragraph (1) (a), the documents must meet at least one of the following criteria: (a) the documents are those on which the party intends to rely; (b) the documents adversely affect the party's own case; (c) the documents support another party's case; (d) the documents adversely affect another party's case. (3) For paragraph (1) (b), in making a reasonable search, a party may take into account the following: (a) the nature and complexity of the proceeding; (b) the number of documents involved; (c) the ease and cost of retrieving a document; (d) the significance of any document likely to be found; (e) any other relevant matter. (4) In this rule, a reference to an affidavit is a reference to: (a) an affidavit accompanying an originating application; and (b) an affidavit in response to the affidavit accompanying the originating application. Note Control is defined in the Dictionary. 20.15 Non-standard and more extensive discovery (1) A party seeking an order for discovery (other than standard discovery) must identify the following: (a) any criteria mentioned in rules 20.14 (1) and (2) that should not apply; (b) any other criteria that should apply; (c) whether the party seeks the use of categories of documents in the list of documents; (d) whether discovery should be given in an electronic format; (e) whether discovery should be given in accordance with a discovery plan. (2) An application by a party under subrule (1) must be accompanied by the following: (a) if categories of documents are sought - a list of the proposed categories; and (b) if discovery is sought by an electronic format - the proposed format; and (c) if a discovery plan is sought to be used - a draft of the discovery plan. (3) An application by a party seeking more extensive discovery than is required under rule 20.14 must be accompanied by an affidavit stating why the order should be made. (4) For this Division: category of documents includes documents, or a bundle of documents, of the same or a similar type of character.

Submissions of the parties 23 In these proceedings the direct relevance (or otherwise) of the documents sought is the key question for consideration by the Court in respect of the CFMEU's application for standard discovery under r 20.14. Rule 20.15 is only at issue where direct relevance is neither claimed nor apparent. 24 In summary, the CFMEU claims that the documents it seeks are directly relevant to the issues raised by the pleadings. Notwithstanding Mr Reed's submission that the CFMEU sought to rely on both r 20.14 and r 20.15, it was clear at the hearing yesterday that the applicant claimed direct relevance of all documents to the issues raised by the pleadings or in the affidavits. 25 In contrast, BHP Coal submits, in summary, that some or all of the documents sought: are not, and could not, be directly relevant to any disputed issues in the proceeding; are reflective of a fishing expedition by the CFMEU; particularly in relation to the categories of documents listed in paragraphs 1(b)(iii) and (iv) of the interlocutory application - are confidential and/or commercially sensitive, particularly as between BHP Coal and the CFMEU in the context of the current enterprise agreement negotiations (affidavit of Mr Brandon Craig filed on 16 November 2011). Under the Fair Work Act the parties are obliged to disclose relevant information in the course of negotiations in a timely manner, but they are not required to disclose information which is confidential or commercially sensitive (s 228(1)(b)); are so broadly defined that an order requiring their discovery would be oppressive to BHP Coal; should not be the subject of an order for discovery pursuant to r 20.15 in the absence of a supporting affidavit setting out a proper basis for each of the categories of documents. 26 In relation to the submission concerning r 20.15, Counsel for BHP Coal directed my attention to r 20.15(3) which provides: (3) An application by a party seeking more extensive discovery than is required under rule 20.14 must be accompanied by an affidavit stating why the order should be made. 27 In reply, I note in particular that, at the hearing, Counsel for the CFMEU submitted: in respect of r 20.15, the CFMEU relied upon the affidavit of Mr Charles Massy, the solicitor for the CFMEU, filed 30 September 2011; and in relation to the potentially sensitive nature of any documents sought - the solicitors on the record for the applicant were prepared to undertake to keep, in their possession, any documents identified as commercially or industrially sensitive and not to provide any access to the CFMEU, its servants or agents (other than their legal representatives) without the leave of the Court. 28 I am not persuaded that the affidavit of Mr Massy is of particular assistance to the CFMEU in respect of its reliance on r 20.15, outside the fact of being an affidavit filed on behalf of the CFMEU in these proceedings. Certainly no reference was made by Counsel for the CFMEU during the course of yesterday's hearing to specific material in that affidavit. 29 I shall now turn to consideration of each category of documents sought by the CFMEU. It is not in dispute that the CFMEU bears the onus of proof in establishing that the relevant documents are discoverable in accordance with the Federal Court Rules.

Paragraph 1(a) 30 The CFMEU has sought discovery of documents relating to the defamation proceedings initiated by Mr Adams in the District Court of Queensland. In particular, the CFMEU points to the affidavit of Mr Craig, where Mr Craig deposes that he merely adopted the findings of fact of McGill DCJ. The CFMEU claims that documents held by BHP Coal, particularly documents concerning any participation by BHP Coal in the defamation proceedings and any knowledge by it of the material adduced by or on behalf of the defendant in the defamation proceedings, are directly relevant to and bear upon BHP Coal's assertions as to the reasons for the dismissals of Mr Adams and Mr Winter. Further, the CFMEU claims that disclosure of such documents is necessary to allow the CFMEU to assess the "bona fides" of the reasons given by BHP Coal for the termination decisions. 31 BHP Coal submits that such documents can only be relevant to the extent that they also relate to its decision to terminate Mr Adams and Mr Winter, and that such documents have already been discovered as part of categories e. and f. Accordingly, BHP Coal submits that an order for discovery of the documents sought in paragraph 1(a) would be unnecessary. 32 It may well be that BHP Coal has disclosed all documents it considers directly relevant to the dismissal of Mr Adams and Mr Winter. However I accept the submission of Mr Reed that, as a general proposition, the scope of discovery is governed by the principle that discovery ought be made of documents which will efficiently assist the Court and not those documents the respondent considers important. 33 Traditionally, of course, conceptualisation of documents as being "directly relevant" was contrasted with the approach of permitting discovery of all documents that directly or indirectly lead to a train of inquiry either advancing the case or damaging that of an adversary (cf comments of Crennan J in The Shell Petroleum Company Ltd v Commissioner of Taxation [2005] FCA 982 at [14]). 34 Other than in respect of this approach, however, there appear to have been few cases where the phrase "directly relevant" has been given more than cursory attention. Obvious explanations for the absence of judicial scrutiny are that the phrase "directly relevant" is well understood in general use, and whether documents are "directly relevant" to issues raised by pleadings is invariably a question of fact in the circumstances of a particular case. Nonetheless, the phrase has been considered in a number of decisions. In Robson v Reb Engineering Pty Ltd [1997] 2 Qd R 102 at 105 Demack J, in the context of a consideration of a comparable rule of the Supreme Court of Queensland, observed that "directly relevant" means something which tends to prove or disprove the allegation in issue. In Re New World Alliance Pty Ltd (rec & mrg apptd); Sycotex Pty Limited v Lutz Clemens Wolfgang Baseler (1993) 47 FCR 90 at [49] Sheppard J referred to documents "thought to be directly relevant to the issues in question and probative of the applicant's case". Bleby J in Southern Equities Corporation Ltd (In Liquidation) v Arthur Andersen & Co (No 5) [2001] SASC 335, concurred with the earlier observations of Demack J in Robson and said in relation to "directly relevant": [10] …it cannot mean, if the document is not itself proof of a fact in issue but is merely a piece of circumstantial evidence tending, along with other evidence, to prove the fact in issue, that it is not discoverable. Many a case is provable and in fact proved by circumstantial evidence, including documents. 35 Doyle CJ in Quenchy Crusta Sales Pty Ltd v Logi-Tech Pty Ltd [2002] SASC 374 at [11] observed: It is not wise to attempt to state in comprehensive terms the effect of the requirement that the document be 'directly relevant'. The adverb 'directly' is probably intended to emphasise the requirement of relevance, and to be used in the sense of requiring that the document be directly in point, excluding as sufficient indirect relevance which might be established through another linking circumstance. That is not to say, as I have already said, that a document is not directly relevant if it is merely a piece of circumstantial evidence. The point is that a document will not be directly relevant if, rather than tending to prove an issue on the pleadings, it merely tends to prove something that may be relevant to an issue. 36 Similar points were made by his Honour in Rehn v Australian Football League and Ors [2003] SASC 159 at [24]. 37 I note further that a number of these authorities to which I have referred were discussed in some detail by the Full Court of the Supreme Court of South Australia in Channel Seven Adelaide Pty Ltd v Lane & Hurley [2004] SASC 177. 38 Taking these principles into account, I consider that the documents sought by the CFMEU in paragraph 1(a) are directly relevant to the issues pleaded. An aspect of the case pleaded by the CFMEU is that whereas prior to the commencement of the defamation proceedings by Mr Adams no action was proposed by BHP Coal against either Mr Adams or Mr Winter, the approach of BHP Coal appeared to change dramatically prior to the publication of the decision of the District Court in the defamation proceedings. Categories e. and f. are narrower and more specific than the documents described in paragraph 1(a). Where the key issue in the substantive proceedings is the state of mind of the employer in terminating the employment of these workers, documents falling within the scope of paragraph 1(a) bear upon BHP Coal's assertions as to the reasons for those terminations. Such documents tend to prove or disprove the allegations in issue, and are directly relevant to that issue. 39 I am not satisfied that there is complete overlap between the categories of documents described in paragraph 1(a) of the interlocutory application and categories e. and f. In my view documents described in paragraph 1(a) of the interlocutory application are discoverable.

Paragraphs 1(b)(i) and (ii) 40 In submissions the CFMEU addressed paragraphs 1(b)(i) and 1(b)(ii) together. The applicant claims that there ought be no dispute as to the relevance of documents sought by those paragraphs because: such documents bear upon the identification by BHP Coal of the purposes of the industrial action and those officers or members of the CFMEU who were the prime movers behind the action; and such documents bear upon any animus held by BHP Coal towards those persons. 41 I am not persuaded, however, as to the direct relevance of documents in these categories to issues pleaded, beyond those documents which have already been discovered. 42 In relation to paragraph 1(b)(i), I accept the submission of BHP Coal that documents relating to or discussing the reasons for the protected industrial action are not of direct relevance because: Reasons for the protected industrial action on the dates outlined in paragraph 1(b) ("the relevant dates") clearly relate to the support or advancement of the claims of the CFMEU in the process of bargaining with BHP Coal for a new enterprise agreement, to the detriment of BHP Coal. I accept the proposition that any other explanation for the protected industrial action by the CFMEU would be fanciful; Reasons for the protected industrial action on the relevant dates is not a live issue in the substantive proceedings; and BHP Coal submits that paragraph 1(b)(i) bears the attribute of "fishing" - I agree. 43 In relation to paragraph 1(b)(ii), I accept the submission of BHP Coal that its documents relating to or discussing the reasons for the protected industrial action are of no direct relevance because: Clearly the CFMEU would be aware of persons responsible for organising and/or promoting the protected industrial action at the Peak Downs Mine Site on the relevant dates. To that extent it is unnecessary that information available to BHP Coal as to the identity of those persons be discovered to the CFMEU. More precisely, I am unable to identify the probity of documents of BHP Coal relating to all persons responsible for organising and/or promoting the protected industrial action, beyond Mr Adams and Mr Winter. The breadth of this category is, in my view, indicative of a "fishing" expedition. Documents already discovered include BHP Coal's personnel files in relation to Mr Adams and Mr Winter, as well as all documents relating to their termination. In light of such documents already discovered I am unable to identify the probity of discovery of the broader class of documents described in paragraph 1(b)(ii). 44 Finally, and following these observations, I am unable to identify how an order requiring BHP Coal to discover documents described by paragraphs 1(b)(i) and (ii) would facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible, as required by r 20.11 and s 37M. 45 I am not prepared to make an order in the terms sought by paragraph 1(b)(i) or (ii).

Paragraph 1 (b)(iii) 46 In paragraph 1(b)(iii) the CFMEU seeks documents of BHP Coal in respect of protected industrial action on the relevant dates in relation to the effect of that action, but excluding documents the sole content of which deals with the financial impact of that action. 47 The CFMEU submits that such documents are directly relevant for similar reasons to those relating to paragraphs 1(b)(i) and (ii) - namely that: Documents which, for example, discuss negative effects on the respondent's business caused by the industrial action, and which attribute blame to, or express or imply criticism of, the CFMEU or specific officers or members of the CFMEU, go to the issue of the state of mind of decision-makers in BHP Coal with respect to Mr Adams and Mr Winter at or about the time of the dismissals; and Such documents at least are important to the CFMEU's capacity to test assertions made by Mr Craig in circumstances where the "reverse onus" under the Fair Work Act applies. 48 These submissions at first blush appear reasonable. Indeed, documents which discuss the negative effects on BHP Coal's business and attribute blame to the CFMEU or specific officers may go to the issue of the state of mind of decision-makers with respect to the dismissal of Mr Adams and Mr Winter. However the documents sought in paragraph 1(b)(iii) go well beyond this description. 49 During the course of the hearing the parties have referred me to comments of McKerracher J in Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063. In that decision at [7] his Honour said: I recognise that the proceedings are commercially significant to the parties and potentially complex but it appears to me that the discovery sought goes well beyond that which is necessary. 50 His Honour may well have been referring to the discovery sought in paragraph 1(b)(iii) currently before me. 51 I take this view because: "The effect of the protected industrial action" clearly contemplates a much broader category of documents than documents which (as submitted by the CFMEU) discuss the negative effects on BHP Coal of the protected industrial action and which attribute blame to or express or imply criticism of the CFMEU or anyone else involved in these proceedings. I can identify direct relevance to issues pleaded in respect of the category of documents described by the CFMEU in its submissions - but that is not the category of documents described by paragraph1(b)(iii). Proposed classes of discovery need to be stated with precision: KGL Health Pty Ltd v Mechtler [2008] FCA 273 at [9], Austal Ships Pty Ltd v Incat Australia Pty Ltd [2009] FCA 368 at [150]. At the hearing yesterday in respect of this category of documents, Mr Murdoch SC submitted as follows: Your Honour, the arrangements between our client and a host of external bodies fall within the ambit of the effect of the protected industrial action as steps to be taken to minimise the effect. For example, your Honour, if there are stoppages my client would be expected to have discussions with the railways to reschedule trains. One would expect my client would have dealings with the port or the ports where the coal is loaded to reschedule the bookings at the unloading points to book further or different stockpiling arrangements. Then there are the ships that arrive on schedules, sometimes made a long time in advance, sometimes made a short time in advance, which arrive at berths which are booked for the ships to be loaded. Now, is it to be that all of those arrangements fall to be discoverable because the need to potentially have contact, dealings, communications with those outside agencies falls within the way in which you may seek to manage the effects of industrial action. Then, of course, there are the ultimate customers. If you have discussions with a customer in relation to potential force majeure, if you have discussions with a customer in relation to inability or potential inability to make a shipment of coking coal to a blast furnace or steaming coal to a powerhouse the category is incredibly broad. Additionally, your Honour, and again in a dispute such as this, if you own five mines as my clients do and you're affected at this mine in relation to supply you may choose to source coal to make up what you can't mine because of stoppages at this mine from another mine. Again, is all that planning, evaluating, potential sourcing to be discoverable because all of it falls within what you do to minimise or potentially minimise the effects of industrial action… (Transcript 6 December 2011 p 13 ll 5-29) No objections as to the evidentiary value of this submission were taken by the CFMEU at the hearing yesterday. In the circumstances I am prepared to accept this submission, and accept that the broad range of arrangements described by Mr Murdoch SC is, indeed, potentially contemplated by paragraph 1(b)(iii). Such arrangements, and related documents, are not directly relevant to issues pleaded. Further, in my view an obligation to discover such a broad range of documents of marginal - and, perhaps, of no - relevance to issues in this proceeding would be oppressive to BHP Coal in terms explained by Mummery J in Molnlycke AB v Procter & Gamble Ltd (No 3) [1990] RPC 498 at 503, and more recently by McKerracher J in Austal Ships Pty Ltd v Incat Australia Pty Ltd [2009] FCA 368 at [150]-[154]. I am fortified in reaching this view by reference to the fact that documents are sought as to the effect of protected industrial action on twelve separate occasions, thus potentially multiplying the complexity of documentation discoverable. I am not persuaded that the qualification to paragraph 1(b)(iii) in respect of the financial impact of the protected industrial action in any way improves the relevance of the documents contemplated, or alleviates the potential oppression to BHP Coal from an order in the terms sought. Indeed, in light of what appears to be the large number of documents contemplated by paragraph 1(b)(iii), the process necessary to sort documents dealing solely with the financial impact of the protected industrial action, from discoverable documents in this category, could itself be an oppressive task. It does not appear to be in serious dispute that documents which would be discoverable pursuant to paragraph 1(b)(iii) would be confidential and commercially sensitive. While the solicitors for the CFMEU have offered undertakings as to confidentiality in relation to such documents, in light of my other findings this offer does not assist the applicant in respect of this category of documents. I am unable to identify how an order in these terms would facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible, as required by r 20.11 and s 37M. 52 I am not prepared to make an order in the terms sought by paragraph 1(b)(iii).

Paragraph 1(b)(iv) 53 In relation to this category, the CFMEU submits that the class of documents sought is relevant to, or bears upon, the issue of BHP Coal's views of the CFMEU and the part played by individual officers or members of the CFMEU in undertaking or encouraging the industrial action, and how those parties might be dealt with in the future to ameliorate the risks of further damaging industrial action. 54 Notwithstanding this submission I do not consider that an order ought be made in terms of paragraph 1(b)(iv). I take this view for the following reasons: Paragraph 1(b)(iv) is drafted in such broad terms that documents contemplated are not directly relevant to the issues pleaded. In particular, documents relating to the steps to be taken to minimise the effect of the protected industrial action, or to prevent further occurrences of the industrial action, do not directly relate to the reasons for BHP Coal's decisions to terminate the employment of Mr Adams and Mr Winter. Neither the applicant nor the respondent has pleaded anything in relation to such steps. The breadth of documents contemplated by paragraph 1(b)(iv) is suggestive of a fishing expedition by the applicant. Such an inference is strengthened by the absence of any reference to either Mr Adams or Mr Winter in paragraph 1(b)(iv). As is the case in relation to paragraph 1(b)(iii), it does not appear to be in serious dispute that documents (if any) which would be discoverable pursuant to paragraph 1(b)(iv) would be confidential and commercially sensitive. While the solicitors for the applicant are again prepared to offer an undertaking as to confidentiality, I am not persuaded that such an undertaking addresses the serious flaws in this category of documents. I accept the submission of the respondent that aspects of paragraph 1(b)(iv) lack precision, including the use of the words "deal with", which is ambiguous. I am unable to identify how an order in these terms would facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible, as required by r 20.11 and s 37M. 55 I am not prepared to make an order in the terms sought by paragraph 1(b)(iv).

Conclusion 56 As I noted earlier in this judgment, while at the hearing Counsel for the CFMEU submitted that documents sought were covered both by r 20.14 and r 20.15 (Transcript 6 December 2011 p 15 ll 5-6, pp 23-24) this submission was not expanded beyond general reference to the supporting affidavit of Mr Massy and the correspondence between solicitors annexed thereto. I have also referred to this affidavit earlier in this judgment. 57 In substance, both written and oral submissions of the applicant in support of the interlocutory application before me fell squarely within the parameters of r 20.14. I have dealt in detail with issues of direct relevance of documents sought made discoverable by that interlocutory application. 58 The appropriate order is that documents falling within paragraph 1(a) be ordered discovered, but otherwise the interlocutory application be dismissed. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Fair Work Act 2009(Cth)ss 228(1)(b), 346

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