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[2006] FCA 112
Federal Court of Australia
2006-02-16
Burchett J, Windeyer J, Eve J, Crennan J, Lindgren J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The respondent brings an amended notice of motion seeking further discovery from the applicants. The notice of motion was argued at the same time as other notices of motion the subject of orders made on 14 February 2006. The respondent's remaining notice of motion was the subject of both written and oral submissions. 2 Various categories of documents are sought for discovery, 20 categories in all. Categories 26 and 40 are now conceded. Categories 35 and 37 are not pressed. Additionally, the description of the categories has been in some cases narrowed considerably by amendments to the description of the categories. 3 It is common ground that the Court must approach the respondent's notice of motion having in mind the context of O 15 of the Federal Court Rules ('FCR') and Practice Note No. 14 together with the general approach sanctioned by the common law. 4 In F Hoffmann-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at 296 Burchett J said: '[2] … the court will remember that O 15, r 3 evinces a policy of the rules that discovery should only be ordered to the extent that is necessary for the attainment of the ends of justice. This policy is also expressed in Practice Note No 14. [3] The framework within which discovery may be ordered is fixed by the pleadings: Temmler v Knoll Laboratories (Australia) Pty Ltd (1969) 43 ALJR 363, per Windeyer J; Intalite International NV v Cellular Ceilings Ltd (No 1) [1987] RPC 532 at 535; Avery Ld v Ashworth, Son & Co Ld (1915) 32 RPC 463 at 469-70, per Eve J. They determine the issues, and from the issues may be identified the categories of documents the court should consider when deciding what orders to make in respect of discovery.' 5 It is relevant to note that FCR O 15 r 2(3) provides that the documents required to be disclosed include not only documents on which the party relies but also documents that adversely affect the party's own case. Additionally, it should be noted that Practice Note No. 14 emphasises that any discovery will be moulded to suit the facts of the particular case and that the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely cost of the discovery and its likely benefit. 6 As stated by Crennan J at [14]-[15] in The Shell Petroleum Company Ltd v Commissioner of Taxation (2005) 60 ATR 173: '14. The present regime governing discovery in this court has been described by Lindgren J in Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd[2005] FCA 366 at [17] - [21] and [23]. His Honour there explains the difference between the criteria for discovery under the court's former rules and the more restrictive approach to discovery reflected in the current form of O 15 r 2(3) of the Federal Court Rules and the Practice Note 14, para 3. … The effect of O 15 r 2(3) is to limit discovery, ordinarily, to documents which are directly relevant to the proceedings. This more restrictive approach can be contrasted with the earlier rules permitting discovery of all documents that directly or indirectly "lead to a train of enquiry which would, either advance a party's own case or damage that of an adversary": see Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd(1980) 42 FLR 266 at 269; 29 ALR 261 at 264 and the earlier case there discussed. 15. As to the current test for discovery, Stone J in Nozzi Pty Ltd v FCT (2003) 52 ATR 521 at 523 stated: 'The test for relevance for discovery as traditionally understood is generous and includes not only documents that may provide evidence on an issue but also those that, directly or indirectly, would lead a party to the well-known "train of inquiry" that might advance its own case or damage that of an opponent; Compagnie Financiere du Pacifique v Peruvian Guano Company(1882) 11 QBD 55 at 63 per Brett LJ. This does not however, make the question of relevance otiose. In fact, amendments to the Federal Court Ruleswere made in 1999 "manifesting a quite new and restrictive policy in relation to the discovery to be allowed in this Court".'' 7 I now turn to applying these principles to the following categories.
category 2: 'All documents relating to any of the second and third applicants' conducting business with the first applicant of marketing and selling of wine produced from the Vineyard in the period 1 January 2000 to 31 December 2004.' 8 In the further amended statement of claim the applicants plead that the first applicant carried on business together with the second and third applicants, marketing and selling wines produced from the Vineyard as there defined: [1]. In [2] it is pleaded that that second and third applicants are and at all material times were directors of and sole shareholders in the first applicant. However the preceding pleading in [1] puts in issue the fact whether the first applicant carried the business in issue 'together with the second and third applicants'. 9 I therefore consider that this category, although new, is directed to an issue raised by the pleading and the respondent is entitled to discovery in relation to it.
category 4: 'All documents brought into existence prior to 31 December 2004 relating to any feasibility studies, budgets and projections prepared by or on behalf of any of the applicants relating to the carrying on of any business of growing grapes, producing, marketing and selling of wines from vineyards in Western Australia for export to the United Kingdom.' 10 I consider discovery addressed to this category would be extending discovery too far, contrary to the above applicable principles.
category 6: 'All documents relating to the undertaking of services on behalf of any of the applicants by South Winds Viticultural Services in the period 1 January 2000 to 31 December 2004.' 11 The respondent apprehends that South Winds Viticultural Services ('South Winds') managed the vineyard in issue and that Mr Edwards of South Winds may have applied the Tokuthion which the applicants alleged caused them the loss. Therefore the respondent says that the issues of reliance on representations alleged, causation and damages all concern the involvement of South Winds in the business of the Vineyard and the nature and extent of its communications with the applicants. 12 Discovery to date comprises invoices, a few spray records, two costs quotes and three communications concerning the Vineyard in 2001, two in 2002 and one in 2003. There are no documents evidencing any directions to South Winds, any requests for information, any working notes, any reports of progress or other communications with the applicants evidencing any steps taken, any matters on which decisions are sought or the like. The respondent submits this paucity of documents is inconsistent with the business of the Vineyard being run by a manager reporting to the second and third applicants. 13 The applicants contend that the only matters of relevance are the agency of South Winds and the fact of the application of Tokuthion. It is submitted that matter is addressed by documents showing the first applicant's engagement of South Winds and documents showing that the Tokuthion was applied. 14 The effect of the category would be to entitle the respondent to advance discovery in relation to the general viticultural practices of the Vineyard. 15 In my view neither the issues in the further amended statement of claim nor the principles relating to discovery and its confinement, particularly the avoidance of fishing, entitles the respondent to so expand the range of discovery. For that reason I would not allow discovery in relation to this category.
category 8: 'All documents relating to any viticultural practices employed at the Vineyard in the period 1 August 2000 to 30 June 2004.' 16 For the reasons given in relation to category 6, I would not allow discovery in relation to category 8.
category 9: 'All documents relating to the harvesting of grapes at the Vineyard in: (a) 2002; (b) 2003; (c) 2004; not being primary records of payslips made to grape pickers.' 17 For the reasons given in relation to category 6, I would not allow discovery in relation to category 9.
category 10: 'All documents relating to the production of Wine in each [sic] 2004.' 18 For the reasons given in respect of category 6, discovery is not allowed in respect of this category.
category 17: 'All documents relating to any decision to leave all or any part of any crop of grapes on the vines at the Vineyard in: (d) 2004' 19 For the reasons given in respect of category 6, discovery is not allowed in respect of this category.
category 18: 'All documents relating to any of [sic] instructions to dispose of and disposal, whether by sales, supply, destruction or abandonment or otherwise, of any Wine and/or any grapes grown at the Vineyard, in each of: (a) … (b) 2002; (c) 2003; (d) 2004' 20 For the reasons given in respect of category 6, discovery is not allowed in respect of this category.
category 19: 'All documents relating to the making of any decision to purchase Tokuthion, being the Tokuthion alleged applied to the grapevines at the Vineyard in about 10 January 2002.' 21 The applicants state they have provided discovery in the respects previously ordered and oppose particular discovery in the terms of this category. However in my view, if there are any documents in existence relating to the making of any decision to purchase Tokuthion, they should be discovered because they are relevant to the pleaded issues of reliance.
category 20: 'All documents relating to the application of Tokuthion to grapevines at the Vineyard: (a) on or about 10 January 2002; (b) in 2003, including without limitation, all spray records, and all records of equipment used, tested and/or calibrated.' 22 Paragraph 11 of the further amended statement of claim alleges that the applicants caused Tokuthion to be applied to the grapevines on the Vineyard on or about 10 January 2002. The applicants say that the only fact in issue is whether the application occurred. The respondent seeks to discover documents in relation to the manner of application. Having in mind the provisions of FCR O 15 r 2(3)(b), I consider that discovery should be allowed under this category, at least in relation to 10 January 2002. 23 2003 is included because the respondent wishes to have evidence on the presence or absence of chlorophenols and 2,4 DCP in the wines produced in 2003 to test the applicants' claim that Tokuthion applied in January 2002 was the cause of the presence of those substances in the 2002 wines. In my view that is an issue which arises under category 21 and the application in 2003 of Tokuthion is not a fact in issue in the pleadings so that category 20(b) should not be the subject of discovery.
categories 21 and 22: '21 All documents relating to the presence or absence of any chlorophenols or 2,4 DCP in Wine produced from grapes harvested in: (a) 2002; (b) 2003.' '22 All documents tending to disprove and/or evidence that Tokuthion caused the presence of chlorophenols or 2,4 DCP in Wine in: (a) 2002; (b) 2003.' 24 The respondent has identified 15 documents relating to testing carried out by Labmark. One of these documents is DISC.O83, a redacted copy of a report by the Australian Wine Research Institute with a facsimile transmission date of 6 September 2002. The redactions are, on the applicants' submission, because the material referred to was irrelevant. In that respect reliance is placed on GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172 at 176 per Hoffmann LJ. As was there stated an irrelevant part may be covered up provided it does not destroy the sense of the rest or make it misleading. I do not consider that the redaction in the Australian Wine Research Institute Report on the Porongurup Winery is in that precluded character. 25 Additionally the respondent relies on particulars in (b), (c), (e), (h), (o) and (p) to [20.1(2)] in the further amended statement of claim. Paragraph 20 states that in the premises the applicants have suffered loss and damage by the conduct of the respondent which is recoverable under s 82 of the Trade Practices Act 1974 (Cth). Paragraph 20.1 pleads that in the case of the first applicant, this includes lost revenue resulting from contamination. In [20.1(2)] it is pleaded that it also includes costs incurred in conducting investigations and making enquiries 'which costs were aggravated by the conduct of the respondent between in or about June 2002 and the issue of these proceedings'. Further, by email dated 24 January 2003 to D Gregor of Bayer CropScience (applicants' discovered document DISC.102), the second applicant asserted that there had been trials implemented using Tokuthion. The respondent says that it has not been able to identify the documents that evidence such testing, apart from the Labmark report. 26 Given the nature of the pleadings in respect of these matters I consider that discovery should be allowed in terms of these categories provided it is directed to the issues identified in [55]-[58] of the outline of respondent's submissions on this notice of motion filed on 4 October 2005. Further, the discovery is not applicable to documents falling within category 26.
categories, 25, 25A and 25B: '25 All documents relating to any losses associated with any delay in the production of marketable Wine from any of the 2002 and 2003 vintages.' '25A All documents relating to any of the applicants inability to sell the 2002 and 2003 vintages from the Vineyard, not being documents falling within other categories for discovery.' '25B All documents evidencing any of: (a) lost revenue alleged suffered in paragraph 20.1 of the Further Amended Statement of Claim; (b) variable production costs incurred by the first applicant in the period 1 January 2000 to 31 December 2004.' 27 The statement of claim was amended to remove the claim head of damages 'losses associated in delaying the production of marketable wines from the Vineyard by 2 vintages, being the 2002 and 2003 vintages'. Therefore, the respondent's proposed category 25 is now irrelevant. 28 Categories 25A and 25B address the terms of the pleadings in [20.1]. Category 25A should be addressed so as to not include the applicants' inability to sell the wine in the relevant period because of the contamination alleged.
category 26: 'All documents relating to any of: (a) the conduct of investigations and the making of inquiries undertaken in the period May 2000 to June 2004 by or on behalf of any of the applicants as to any cause of any presence of chlorophenols and 2,4 DCP in the Wine; (b) costs incurred by or on behalf of any of the applicants in conducting those investigations and making those inquiries.' Conceded.
CATEGORY 28: 'All documents relating to income foregone in obtaining alternative employment whilst any of the second and third applicants undertook investigations allegedly required to identify the source of the Contamination (as defined in the Further Amended Statement of Claim).' 29 It is appropriate on the pleadings considered in the light of the applicable principles that discovery be given to this category.
category 40: 'All documents relating to any move or relocation in the period 1 January 2000 to 31 December 2004: (a) to Perth, Western Australia from Scotland by any of the second and third applicants, including without limitation all documents relating to any decision taken to move, the purpose of such move and the movement.' Conceded. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.
Associate: Dated: 16 February 2006 Counsel for the Applicant: G Abbott
Solicitor for the Respondent: Pigott Stinson Ratner Thom
Golden Hill Vineyard Pty Ltd
Bayer Australia Ltd