Evans Deakin Pty Limited v Sebel Furniture Limited

REASONS FOR JUDGMENT 1 There is a notice of motion before me which was filed on 5 December, seeking third party discovery under Order 15A rule 8 of the Federal Court Rules. 2 The discovery was sought by the respondent to the proceedings, Sebel Furniture Limited (Sebel) against the parent of the applicant. 3 The proceedings concern complaints by the applicant, Evans Deakin Pty Limited, about the failure of Sebel to live up to commercial intentions expressed in a tender document and in communications surrounding a tender document for the supply of seating in railway carriages. Evans Deakin Pty Limited, the applicant, tendered to the State of New South Wales, through the State Rail Authority, for the supply of rail carriages for what is known as the Fourth Generation Train Project. 4 The dispute on the pleadings is between the applicant and the respondent, Sebel. The applicant is a subsidiary of Evans Deakin Industries Pty Limited. I will refer, hereafter, to Evans Deakin Pty Limited as the applicant and Evans Deakin Industries Pty Limited as the parent. The matter has been pleaded in some detail by the applicant and the respondent. Issues will arise between the applicant and the respondent in the proceedings as to the decision-making process at various stages which governed how the applicant dealt with and proposed to deal with the tender of Sebel and the news of Sebel's withdrawal from the tender. 5 Evidence has been filed for the purposes of the motion which would indicate, at least at some points, that the parent had some involvement, or at least some power of involvement, in the commercial decision-making processes of the applicant. From what counsel have indicated to me this morning, the parent has, and at all relevant times has had, a commercial and legal power of control over the applicant. That is not to say, of course, that the applicant is not the proper party to the proceedings and that any relevant decision was not a decision of the applicant. 6 Orders for discovery have been made in these proceedings but in November 2001 the respondent apparently become concerned as to the existence of documents within the power, custody and control of the parent and which were not within the power, custody and control of the applicant. Since mid-November there has been correspondence between the parties about the production of these documents by the parent. That correspondence ranged over the question of the entitlement of the respondent to seek the documents, the appropriate scope of the request for the documents but not, it would appear, the relevance of the documents or any question of oppression in the sense that that expression is usually used in this context. 7 The respondent filed the notice of motion seeking documents set out in subparagraphs 2(a) and (b) of the notice of motion which was listed for hearing today. In that notice of motion, in order 3, the respondent sought an order that it, that is the respondent, pay the costs and expenses of the parent in complying with the third party discovery order requested in the notice of motion. It also, in order 4, accepted that the costs of the applicant and the respondent of the notice of motion would be costs in the cause. Written submissions were filed by the parties, which I have read. 8 When the matter was called on for hearing today, the respondent, through its counsel, indicated that one of the concerns which had been expressed by the solicitors for the applicant and for the parent, they being the same solicitors, was that a more appropriate procedural vehicle for the disposition of the problem was a subpoena, rather than an order for third party discovery, and that this had led to the agreement of the parties that such debate as there was between them should be resolved by reference to the terms of a draft subpoena which was handed up to me. I am content to deal with the matter on the basis of the subpoena. 9 Before me, represented by Mr Pike, are I take it both the applicant and the parent. The applicant has an entitlement to be present at this debate about the subpoena and the parent is present, having been served with the notice of motion, and it opposes the terms of the draft subpoena, though it does not oppose the terms of a subpoena as reflected in the four numbered paragraphs in a letter of Gilbert & Tobin to Clayton Utz, dated 7 December 2001. 10 I think it appropriate if I make some comments about the form of the procedure, given that there have been submissions by the parties on this. 11 Order 15A rule 8 has been said, in some cases, to be an order of an exceptional nature. It has also been said on occasions that the exercise of the power should be made only with caution. I refer in particular to, in the latter respect, a decision of Keviris Pty Limited v Capitol Building Society, (unreported, Supreme Court of Victoria, 9 February 1988). In the former respect, that is, the exceptional nature of the order, I refer to what Burchett J said in Richardson Pacific v Fielding (1990) 26 FCR 188, which decision has been followed in a number of decisions of this Court, eg McLernon Group Insurances v Biron Corporation [1995] FCA 500 and Re La Rosa [1992] FCA 797. I do not disagree with what Burchett J said to the extent that his Honour was saying that the imposition upon third parties of the rigour, discipline and obligation of discovery should be a matter not taken lightly and will not regularly occur. I think that the fact that it will not regularly occur is something to be understood and expected from an appreciation of the content of the obligation as provided by the rule. I do not understand anything his Honour said or anything said in any other judgment in this Court to engraft on to Order 15A rule 8, any qualification not present in the words of the rule. I appreciate that it is not a statute, rather it is a rule of court. However, it is a rule of Court made under statutory power. Provisions conferring judicial power upon courts should be construed liberally, eschewing limitations and implications not found in the words. There are too many High Court decisions of the last ten years to list exhaustively in support of that proposition. I only refer to, by way of example, The Owners of the Ship 'Shin Kobe Maru' v The Empire Shipping Company Inc (1994) 181 CLR 404, 421, PMT Partners Pty Limited (in Liquidation) v Australian National Parks and Wildlife Services (1995) 184 CLR 301, 313 and 316, Knight v F.P. Special Assets (1992) 174 CLR 178, 205, Eastman v R [2000] HCA 29, 81, Australian Memory v Brien [2000] HCA 30, 17, Abebe v the Commonwealth (1999) 197 CLR 510, 586-87, and Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at 201. 12 That principle does not lead to the conclusion that orders under Order 15A rule 8 would be made as a matter of course, but it does indicate that when phrases seeking to elucidate such as 'exceptional' or 'with caution' are used, they are not to be taken as fettering an otherwise clearly expressed power under Order 15A rule 8, or engrafting on it a requirement not found in the words, when the circumstances for its exercise are called for. 13 In these proceedings the parent company, on the evidence, had the power, and on at least one occasion was prepared to exercise the power, of participation in the decision-making process the subject of the litigation. I would have expected, subject to questions of oppression and the like, commercial litigation to have been disposed of in these circumstances on the basis that if there was a real and not fanciful suggestion that the parent company was involved in the decision-making process and it had documents which the subsidiary did not, that the parent company would produce those documents without the need for formality. 14 That may be qualified by the details of ownership of the subsidiary and the degree of arm's length distance between the operations of the two. I do not have those matters in front of me. As a matter of general practice, the efficient and cost effective disposition of commercial litigation between parties who are members of a wider group will in the ordinary course require common sense and co-operation between the parties themselves such that documents that are in the custody possession, custody or control of a parent, should ordinarily be made available if they bear upon the suit which that parent causes its subsidiary to bring, if they are requested in a responsible fashion. 15 There may be a good reason for this not to occur in some cases but, in circumstances where cooperation is not forthcoming and in circumstances where there is a real conformity between the commercial interests and aims of a parent company and its subsidiary, I do not see any difficulty in the application of Order 15A rule 8 to such circumstances. 16 The parties do not wish this matter disposed of on the basis of Order 15A rule 8. However, my views about it affect the way I approach the subpoena. No oppression is claimed in the terms of a subpoena sought by the respondent. The documents are not said to be irrelevant. A more narrowly drafted suggestion is put forward by the applicant and its parent. In the absence of any compelling reason why the drafting put forward by the respondent is inappropriate by way of causing unnecessary and inappropriate expense or dislocation I see no reason to narrow the scope of the subpoena in accordance with the terms set out in paragraphs 1 to 4 in the letter of Gilbert and Tobin of 7 December. 17 Therefore I grant leave to the respondent to serve upon Evans Deakin Industries Proprietary Limited a subpoena in the form of the draft handed to me and before me on the argument today. I do not need to make an order about the costs and expenses of the recipient of the subpoena in the light of the rules. 18 I order the applicant through its officers or solicitors to take such steps as are reasonably necessary to assist Evans Deakin Industries Proprietary Limited, that is the parent, to ascertain and produce the documents called for by the subpoena. Any legal costs of the applicant in complying with that order are to be its costs in the cause. 19 As to the motion before me today, I dismiss the motion in the terms that it was sought. I have made the order about the subpoena and the costs of the applicant and the costs of the respondent of this notice of motion are to be costs in the cause. The parent should pay its own costs (if any) of the motion. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop .