Hartnett Legal Services Pty Ltd v Ballantyne

14 The present applicants contend that his Honour erred by:

1. Misinterpreting s 45 of the Federal Circuit Court of Australia Act 1999 (Cth) ("the FCC Act") and r 14.02 of the FCC Rules.
2. Failing to consider whether the making of an order for discovery would contribute to the fair and expeditious conduct of the proceedings within the meaning of s 45(2) of the FCC Act.
3. Failing to take into account the objects set out in s 3(2) of the FCC Act and r 1.03 of the FCC Rules.
4. Failing to consider whether a less formal and more streamlined procedure was available to achieve the same objective as discovery and whether the expected benefits of ordering discovery outweighed its costs and the resultant delay.
5. Holding that '[t]hese lawyers want to play lawyers and waste all of their money, they're going to do it, so we will make it a general order for disclosure' in circumstances where there was no evidentiary foundation for such a conclusion or it was irrelevant; and also thereby indicating that his Honour acted arbitrarily or unreasonably.
6. Acting on a wrong principle and thereby wrongly concluding that it was appropriate, in the interests of the administration of justice, to allow general discovery.
7. Failing to accord the present applicants a fair hearing.
8. Failing to give adequate reasons.
9. Making directions for inspection of documents by 22 August 2016, directing written submissions by 26 August 2016 and setting the matter down for trial on 2 September 2016 and, in doing so, failing to take account of all relevant considerations and exercising his discretion in an arbitrary, unjust and unreasonable manner. 15 In the course of oral submissions in this application, the present applicants accepted that some form of discovery is appropriate in the Federal Circuit Court proceeding, but indicated that their concern is with the scope of the order for discovery. They submit that the order requires them to make disclosure of the width required by Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 ("Peruvian Guano"). They contend that substantial injustice will result from the order because of the large number of documents that will have to be disclosed within a very limited time. They submit that the order requires them to disclose documents relevant to matters that have been admitted on the pleadings; and to disclose documents that are not in their custody, but are in the custody of the liquidator of Kentgale Pty Ltd, a company named in the pleadings. The present applicants submit that, in these circumstances, the order for discovery is oppressive. 16 In order to assess whether any substantial injustice will result from the orders of the primary judge made on 1 August 2016 (supposing them to be wrongly made), it is necessary to examine their width or scope. The orders are as follows: THE COURT DECLARES THAT:
   1. It is appropriate, in the interests of the administration of justice, to allow discovery pursuant to section 45(1) of the Federal Circuit Court of Australia Act 1999 in this proceeding. THE COURT ORDERS THAT:
   2. The parties make disclosure in accordance with Division (sic) 14.02 of the Federal Circuit Court Rules 2001.
   3. Both parties file and serve an outline of argument setting out all of their arguments that they will run at trial by no later than 4:00pm on 26 August 2016.
   4. The application be adjourned to 2 September 2016 at 10:00am for final hearing (for no more than one (1) day) in the Federal Circuit Court of Australia sitting at Brisbane.
   5. The costs of today be reserved. 17 Section 45 of the Federal Circuit Court of Australia Act 1999 (Cth) provides: 45 Interrogatories and discovery (1) Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery. (2) In deciding whether to make a declaration under subsection (1), the Federal Circuit Court of Australia or a Judge must have regard to: (a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and (b) such other matters (if any) as the Federal Circuit Court of Australia or the Judge considers relevant. 18 Division 14.2 of the FCC Rules provides, relevantly: 14.02 Declaration to allow discovery (1) A declaration may be made under subsection 45(1) of the Act to allow discovery on the application of a party or on the Court's own motion. … (2) If a declaration is made, the Court or a Registrar may make an order for disclosure: (a) generally; or (b) in relation to particular classes of documents; or (c) in relation to particular issues; or (d) by a specified date. 14.03 Affidavit of documents A party who is ordered to disclose documents must file an affidavit of documents. 14.04 Production of documents to Court The Court may order a party to a proceeding to produce to it a document in the possession, custody or control of the party. … 14.06 Order for particular disclosure If, at any stage of a proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed, that some document or class of document relating to a matter in question in the proceeding may be, or may have been, in the possession, custody or control of a party, the Court may order the party: (a) to file an affidavit stating: (i) whether the document, or a document of that class, is or has been in the possession, custody or control of the party; and (ii) if it has been but is not then in the possession, custody or control of the party, when the party parted with it and what has become of it; and (b) to serve the affidavit on another party. 19 It may be noted that r 14.02 of the FCC Rules refers to both "discovery" and "disclosure". It is unclear whether some nuance in meaning is intended. If there is a difference, it does not affect the present case. 20 Order 2 of the orders made by the primary judge requires the parties to "make disclosure in accordance with Division (sic) 14.02 of the Federal Circuit Court Rules 2011". It seems to be common ground that his Honour intended to refer to r 14.02 of the FCC Rules, which appears within Div 14.2. 21 The parties interpret Order 2 as an "order for disclosure or for disclosure…generally", within r 14.02(2)(a) of the FCC Rules. I agree with that interpretation. An order for "disclosure generally" may be understood, by reference to rr 14.02(2)(b) and (c), to be an order for disclosure of documents that is not confined to particular classes of documents or to particular issues. The question that must be resolved concerns the width or scope of such an order. 22 There are gaps in r 14.02 of the FCC Rules. The rule does not expressly state that "disclosure generally" is limited to the matters in issue between the parties. It does not indicate whether the Peruvian Guano test of relevance is to apply, or whether disclosure is limited to documents directly relevant to the matters in issue. It does not state whether discovery is to be made of documents in the custody, possession or control of a party, or whether some other test is to be applied. I will proceed to consider each of these issues. 23 Rule 14.04 of the FCC Rules allows the Court to make an order that a party produce to the Court a document in its "possession, custody or control". Rule 14.06 allows the Court to order a party to file an affidavit stating "whether the document…is or has been in the possession, custody or control of the party". The presence of these rules indicates that an order for "disclosure generally" should be construed as limited to disclosure of documents that are or have been in the possession, custody or control of the party making disclosure. 24 Section 45(1) of the FCC Act provides that discovery is not allowed unless a judge considers it is in the interests of justice to allow discovery. Section 45(2)(a) requires the judge to have regard to whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the proceedings. It could hardly be thought that these provisions would be satisfied by ordering disclosure of documents relevant only to matters not in dispute between the parties. Accordingly, an order for "disclosure generally" under r 14.02(2)(a) of the FCC Rules must be interpreted as requiring disclosure of documents relevant to a matter in issue raised by the pleadings or in the affidavits exchanged by the parties. 25 The next issue is whether an order for disclosure generally requires application of the Peruvian Guano test of relevance. Under that test, every document which may - not will - either directly or indirectly enable the opposite party to either advance its own case or damage the case of the discovering party must be discovered: Peruvian Guano at 64. That test requires discovery of any document which may fairly lead to a train of inquiry having either of those consequences: Peruvian Guano at 64. 26 The present applicants have drawn my attention to a judgment of Lucev FM (as his Honour was then) in Abrahams v Qantas Airways Limited (No 2) (2007) 210 FLR 314 ("Abrahams"). His Honour noted at [22]: …Relevance alone cannot be the test. Relevance is the essence of the traditional test for discovery. Traditionally, discovery is confined to the issues on the pleadings, and a party is entitled to discovery of documents related to the issues, meaning that a document is relevant where it may (not must) advance a party's own case or damage the opponent's case, or lead to a course of inquiry which might do so…But in this Court traditional discovery is prohibited by s 45(1) of the FM Act, unless the interests of the administration of justice, to be assessed having regard to the fair and expeditious conduct of the proceedings, and any other factor which the Court considers relevant, warrant the lifting of the prohibition. Relevance is clearly therefore a factor in determining whether it is in the interests of the administration of justice to lift the prohibition and may be a factor in determining whether discovery will be likely to contribute to the fair and expeditious conduct of proceedings, and may be an independent factor which the Court considers relevant under s 45(2)(b) of the FM Act. Relevance alone would not however appear to be sufficient to warrant a declaration under s 45(1) of the FM Act and a consequent order under r 14.02 of the FMC Rules for discovery... (Citations omitted.) 27 The present applicants submit that this passage provides authority for the proposition that "discovery generally" is Peruvian Guano discovery. I do not read the passage in that way. Rather, the passage explains the traditional conception of the width of discovery and explains that discovery of that type is generally prohibited in the Federal Magistrates Court. Lucev FM concluded that relevance is an essential requirement for an order for discovery, but may not of itself be sufficient to warrant such an order. His Honour said nothing about the scope of an order for "discovery generally" under r 14.02(2)(a) of the FCC Rules. 28 The present applicants also rely on Director of the Fair Work Building Inspectorate v CFMEU [2016] FCCA 1569 where Judge Manousaridis referred to the Peruvian Guano test and then said at [15]: In my opinion, that is the intended scope of "discovery" to which s 45 of the FCC Act and r 14.02 of the FCC Rules refer; the traditional meaning of "discovery" is the disclosure of documents that relate to a matter in question. This is supported by r 14.06 of the FCC Rules that refers to a document or class of documents "relating to a matter in question". It is also supported by Abrahams v Qantas Airways Ltd (No.2) where Lucev FM (as his Honour then was) said that "discovery is confined to the issues on the pleadings, and a party is entitled to discovery of documents related to the issues, meaning that a document is relevant where it may (not must) advance a party's own case or damage the opponents case, or lead to a course of inquiry which might do so". (Citation omitted.) 29 There are several difficulties with the application of this passage. Firstly, it is not clear that his Honour was discussing "discovery generally" under of r 14.02(2)(a). The application before his Honour was for disclosure of specified documents under paragraph r 14.02(2)(c). His Honour may only have been saying that, applying the Peruvian Guano test, it was open to the Court to order disclosure of specified documents. That interpretation of his Honour's reasons is supported by the reference to r 14.06 of the FCC Rules which deals with disclosure of particular documents. 30 Secondly, if it is assumed that his Honour did intend to refer to the scope of "discovery generally", the relevance of r 20.14 of the Federal Court Rules 2011 (Cth) was apparently overlooked. Rule 1.05 of the FCC Rules provides: (1) It is intended that the practice and procedure of the Court be governed principally by these Rules. (2) However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules, in whole or in part and modified or dispensed with, as necessary. … 31 The FCC Rules do not state whether a direct relevance test or the Peruvian Guano test is to apply to "discovery generally". It is appropriate to apply r 20.14(1) of the Federal Court Rules in deciding that issue. Rule 20.14 of the Federal Court Rules states that standard discovery refers to discovery of documents "that are directly relevant to the issue raised by the pleadings or the affidavits". 32 Thirdly, I consider that his Honour misconstrued the judgment of Lucev FM in Abrahams. That judgment does not support the application of the Peruvian Guano test to discovery in the Federal Circuit Court. 33 Fourthly, it would be quite inconsistent with s 45 of the FCC Act to construe "disclosure generally" as importing a wide test of relevance. The Peruvian Guano test was formulated on the basis of a desire to "make the rule as large as we can with due regard to propriety": Peruvian Guano at 63. In contrast, s 45 operates to cut down the circumstances in which discovery may be ordered. It would be inconsistent with s 45 to interpret "discovery generally" as referring to the traditional test for discovery when, as Lucev FM observed in Abrahams, traditional discovery is generally prohibited in the Federal Circuit Court. 34 In summary, an order for "disclosure generally" under r 14.02(2)(a) of the FCC Rules is: (a) limited to disclosure of documents that are, or have been, in the disclosing party's possession, custody or control; and (b) limited to documents that are directly relevant to the issues raised by the pleadings or in the affidavits. 35 That is not to say that it is beyond the power of the Court to make a more expansive order where it is in the interests of the administration of justice to do so, but no such order was made in this case. 36 The order for disclosure made by the primary judge should be interpreted in the way described in [34]. The present applicants accept that upon this construction the order for discovery is not oppressive. In these circumstances, I am satisfied that the order will not cause the present applicants substantial injustice, assuming that the order was wrongly made. The application for leave to appeal should be refused for that reason alone. 37 The conclusion I have reached makes it unnecessary for me to address the merits of the proposed appeal. The application for leave to appeal will be dismissed. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.