Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd

Introduction 1 The applicant, Mayfield Development Corporation Pty Ltd, seeks leave to appeal from an order made by the primary judge dismissing its application for non-party discovery. The circumstances in which the application was made to the primary judge are as follows. 2 On 10 December 2018, the Australian Competition and Consumer Commission (the ACCC) commenced proceedings against the respondents alleging contravention of s 45(2)(a)(ii) of the Competition and Consumer Act 2010 (Cth) (the CCA) (the ACCC proceeding). 3 On 31 May 2019, the applicant commenced the primary proceeding against the respondents seeking a declaration to the same effect as that sought by the ACCC in the ACCC proceeding, and an order for damages pursuant to s 82 of the CCA. 4 On 15 July 2019, the respondents filed an amended interlocutory application seeking an order that the primary proceeding be stayed until determination of the ACCC proceeding or, in the alternative, an order that the applicant provide security for the respondents' costs of the proceeding. 5 Prior to the determination of the amended interlocutory application, the parties came to an agreement that the primary proceeding should be stayed on the basis that the ACCC proceeding involved several issues for determination that were threshold issues for the primary proceeding, with significant overlap in the factual allegations. Noting this reason, the primary judge made an order on 19 August 2019 that the primary proceeding be stayed until further order. It is appropriate that I set out the terms in which the stay order was actually made: THE COURT ORDERS THAT: 1. In respect of the amended Interlocutory Application by the Respondents dated 15 July 2019: a. The proceeding (NSD862 of 2019) be stayed until further order. b. There be liberty to apply. c. No order as to costs. THE COURT NOTES THAT: 1. The Respondents sought and have accepted the Applicant's revised consent orders for a stay of NSD862/2019 (Mayfield proceeding) pending determination of proceeding NSD2289/2018 (ACCC proceeding). 2. The parties have agreed to stay the Mayfield proceeding on the basis that the ACCC proceeding involves several issues for determination that are threshold issues with respect to the Mayfield proceedings, with significant overlap in the factual allegations. 6 The explanation for the notes accompanying the stay order is that, on being informed by the parties that they had reached agreement on a stay being granted, the primary judge requested that they provide a statement of reasons for their agreement. Obviously, the primary judge thought it important to record those reasons when making the stay order. Given the record that the primary judge made, there can be no doubt about the basis on which the stay was proposed and granted. There can also be no doubt that, in proposing the stay, the parties, and consequently the Court, contemplated that it would remain in force until the determination of the ACCC proceeding, subject to the liberty that had also been granted enabling the parties to make further application to the Court. 7 On 3 February 2020, the applicant filed an interlocutory application seeking an order that the stay be lifted. Its motivation for doing so was that it had funding to conduct the primary proceeding, which it did not have at the time the stay was granted. Importantly, until that time the absence of funding had not been advanced by the applicant as a reason for granting the stay. 8 On 5 March 2020, the primary judge dismissed the application to lift the stay: Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 260. In refusing to lift the stay, the primary judge said that there would have been much to be said in favour of the ACCC proceeding and the primary proceeding being heard together. There was, however, no realistic prospect of that happening given that the preparation of the ACCC proceeding had, by then, advanced considerably and had been set down for hearing to commence on 12 October 2020. The primary judge said: 23 … If concurrent hearings are unachievable (which I consider probable) then no case management advantage is to be achieved by subjecting the respondents to the burden of separate but parallel case management procedures for the two proceedings. That is, the stay should be maintained so as to relieve the respondent of that undue burden which would prejudice their preparation for the ACCC proceeding, which should be heard and determined before the MDC proceeding. 9 On 18 May 2020, the applicant filed a further interlocutory application seeking an order varying the stay so as to permit it to file an amended originating application and an amended statement of claim. It also sought a variation to permit it to obtain orders for non-party discovery by the ACCC, the State of New South Wales and the Port Authority of New South Wales, and by Port of Newcastle Operations Pty Ltd, Port of Newcastle Investments (Property) Pty Ltd and Port of Newcastle Investments Pty Ltd (the Newcastle Respondents) (together, the Interested Parties). 10 On 22 May 2020, the primary judge made an order varying the stay to permit the applicant to file an amended originating application and an amended statement of claim. The primary judge otherwise dismissed the interlocutory application, with costs: Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd (No 2) [2020] FCA 745. The primary judge found that the applicant's application for non-party discovery was profoundly premature. Her Honour gave three reasons for that finding: 3 First, I accept the submission for the Newcastle Respondents that the just, quick and cheap way of disposing of the current proceeding once the stay expires is for the parties to rely on as many as possible of the factual findings made in the civil penalty proceedings. However, the current application for discovery by non-parties assumes that all of the issues raised by the applicant's pleading will remain in dispute and will need to be proved by documentary or testimonial evidence at the trial, even after judgment has been delivered in the civil penalty proceedings. For this reason, I consider the present application inconsistent with the statutory purpose which is evident from s 83 of the CCA. 4 Secondly, but equally importantly, given the stay of these proceedings, no defence has yet been filed in this proceeding. Accordingly, issue has not been joined. It necessarily follows that the application for discovery by non-parties cannot meet the objective of r 20.11 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) that an order for discovery will only be made to "facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible". In the absence of a defence, and having regard to the context set by s 83 of the CCA, it cannot be said that any of the parties to the present proceeding are in a position to know which issues are or are not in dispute, so as to evaluate the appropriateness of the documents sought to be discovered. 5 Thirdly, I accept also the submission for the Newcastle Respondents that this application does not meet the requirements of r 20.23 of the Federal Court Rules which provides that an application may only be made for documents that are "directly relevant to an issue raised on the pleadings or affidavits". As has been submitted, in circumstances where no defence has been filed, there has been no joinder of any issue on the pleadings, and, accordingly, there is no circumstance against which the criterion of direct relevance can be assessed. 11 It is important to bear in mind the context in which those findings were made. By agreement, the proceeding had been stayed on a particular basis. An application to lift the stay generally had been refused. The stay therefore remained in place on the same basis on which it had been granted. There had been no further change in circumstances. The matter in contest before the primary judge was whether, in those circumstances, non-party discovery should be ordered. If that application were to succeed, it would inevitably require the partial lifting of the stay. However, even if the stay were partially lifted for that particular purpose, it would otherwise remain in place. 12 It is also important to bear in mind that the primary judge's reasons for dismissing the application for non-party discovery were expressed cumulatively.

The application for leave to appeal 13 The applicant seeks leave to appeal from the primary judge's judgment. Its proposed grounds of appeal are: 1. In dismissing the Applicant's application for an order for non-party discovery by reason that an order for non-party discovery would be inconsistent with the statutory purpose of section 83 of the Competition and Consumer Act 2010 (CCA), namely to ensure that damages claims which are essentially parasitic on (related) civil penalty proceedings may be heard and determined after the civil penalty proceedings, the trial Judge erred in law by misinterpreting section 83 CCA. 2. In dismissing the Applicant's application for an order for non-party discovery by reason that, in the absence of a filed defence and in the context of section 83 CCA, the objective of rule 20.11 of the Federal Court Rules (FCR) cannot be met, the trial Judge: (a) erred in law in relying upon the misinterpretation of section 83 CCA which is the subject of Ground 1; (b) erred in law by failing to give reasons why the objective of rule 20.11 would not be met if non-party discovery were ordered; (c) erred in law by failing to address and assess the Applicant's evidence and submissions on the question of the efficient and just resolution of these proceedings in the particular circumstances, which circumstances include: (i) the statement of claim in NSD2289/2018 alleges facts similar to those alleged in the statement of claim in this proceeding; (ii) a defence has been filed in NSD2289/2018; (iii) the respondents in NSD2289/2018 are the respondents in this proceeding; (iv) most documents sought by the Applicant from respondents in NSD2289/2018 are described by reference to documents already produced by parties in NSD2289/2018 following a statement of claim and defence, and the other documents sought were produced, before a defence, upon Notices to Produce and subpoenas; (v) the Ports Authority of NSW is not a party to proceedings NSD2289/2018; (vi) in the absence of non-party discovery, the Applicant is practically unable to prepare its case while NSD2289/2018 is unresolved; and (vii) by their access within NSD2289/2018 to all documents that are sought by the Applicants, the respondents at the termination of NSD2289/2018 may be better prepared for an early hearing of this proceeding than the Applicant will be. (d) erred in fact by failing to hold that non-party discovery as sought would facilitate the resolution of these proceedings in as quick, efficient and inexpensive manner as would occur if non-party discovery is deferred until the termination of NSD2289/2018. 3. In dismissing the Applicant's application for an order for non-party discovery by reason that, for the purposes of rule 20.23 FCR, the documents sought cannot be assessed to be "directly relevant to an issue raised on the pleadings", the trial Judge erred in law by: (a) misinterpreting rule 20.23 to preclude non-party discovery before a defence is filed, when on its proper interpretation a court retains a discretion to order non­party discovery at any time; (b) misinterpreting the expression "an issue raised on the pleadings" in rule 20.23 to mean an issue extant at the close of pleadings, when on its proper construction rule 20.23 is engaged also when the pleadings are not closed; and (c) failing to exercise her Honour's discretion in the circumstances of the case, which circumstances include those set out in paragraph (c)(iv) of ground 2. 14 In order to succeed in the present application, the applicant must demonstrate that the judgment given on 22 May 2020 is attended by sufficient doubt to warrant reconsideration by a Full Court and that it would suffer substantial injustice if leave to appeal were to be refused, supposing the judgment below to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 - 399. 15 The primary judgment was, quintessentially, one giving effect to a case management decision, nothing more. It is well-established that appellate courts should exercise particular caution in reviewing decisions pertaining to practice and procedure: see, for example, the observations in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; 252 FCR 1 (MCI) at [41]. As noted in MCI (at [41]), the Full Court has often referred to the importance of keeping a "short leash" on appeals relating to questions of practice and procedure. Further, the decision reflected in the primary judgment involved the exercise of a discretion. A party who seeks leave to appeal in relation to an exercise of discretion on a matter of practice and procedure faces a formidable task and has a heavy burden: MCI at [42]. 16 In oral submissions, the applicant argued that the primary judge approached the application for non-party discovery as if she were effectively bound by the FCR and s 83(1) of the CCA to refuse the application, with no discretion to exercise in the matter. I do not accept that submission. The terms in which the primary judge expressed her reasons for refusing non-party discovery plainly reveal her Honour's awareness that she was being called upon to exercise a discretionary power and that she exercised that power accordingly.

Ground 1 17 The applicant's case is that the primary judge misconstrued s 83(1) of the CCA when considering its application for non-party discovery. Section 83(1) provides: (1) In a proceeding against a person under section 82 or in an application under subsection 51ADB(1) or 87(1A) for an order against a person, a finding of any fact made by a court, or an admission of any fact made by the person, is prima facie evidence of that fact if the finding or admission is made in proceedings: (a) that are proceedings: (i) under section 77, 80, 81, 86C, 86D or 86E; or (ii) for an offence against section 45AF or 45AG or subsection 56BN(1) or 56CC(1); and (b) in which that person has been found to have contravened, or to have been involved in a contravention of: (i) a provision of Part IV or IVB; or (ii) section 55B, 60C or 60K; or (iii) subsection 56BO(1) or 56BU(1), section 56CD or a civil penalty provision of the consumer data rules. 18 I am not persuaded that it can be argued cogently that the primary judge misconstrued s 83(1) of the CCA. 19 In [3] of her reasons, the primary judge considered the implications of s 83(1) of the CCA for the exercise of the Court's discretion to vary the stay for the purpose of making orders for non-party discovery, even though the stay of the proceeding would otherwise remain in place. It is clear from that paragraph of the reasons that the primary judge considered those implications from the standpoint of s 37M of the Federal Court of Australia Act 1976 (Cth) (the Federal Court of Australia Act), as she was required to do - namely, to interpret and apply the Court's civil practice and procedure provisions, and any power conferred or duty imposed by them, in a way that best promotes the overarching purpose specified in subsection (1) thereof: (1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible. 20 It is true, as the applicant contends, that s 83(1) does not require or compel a party in other proceedings for, say, damages under s 82 of the CCA, to await the findings that might be made for the purposes of s 83. Still less does it require the other proceeding to be stayed pending the making of any relevant s 83 findings. But the primary judge did not construe s 83(1) as if it compelled either of those outcomes. All the primary judge did was to observe that s 83(1) provided a facility with potential application in the primary proceeding. That potential application might render non-party discovery completely unnecessary or appropriate only to a limited extent. That is the underlying reason why the primary judge observed that the applicant's application for non-party discovery assumed that, even after judgment is given in the ACCC proceeding, all the issues raised in the applicant's pleading will remain in dispute, requiring subsequent proof by documentary or testimonial evidence at trial. That assumption simply could not be made. 21 The implications of s 83(1) for the primary proceeding was clearly a relevant consideration for the primary judge to take into account in exercising the discretion she was asked to exercise. As I have said, in taking those implications into account, I am not persuaded that it can be argued cogently that her Honour misconstrued the provision. 22 In oral submissions the applicant argued that any decision to use the facility provided by s 83(1) rested with a party in its position. Such a party was not obliged to use s 83(1) and the primary judge erred by approaching the question of whether non-party discovery should be ordered as if the applicant were obliged to call in aid that provision. 23 In terms, s 83(1) does not provide for any such election by a party to proceedings. It simply declares a state of affairs - a finding of fact or the admission of a fact in one proceeding is prima facie evidence of that fact in another proceeding - if certain requirements are satisfied. I accept nonetheless that a party to whom s 83(1) is available is not confined to proof by the instrumentality of s 83(1) alone. However, it would be wrong to view the case management decision made by the primary judge as if, in arriving at that decision, her Honour was confined to a consideration of the applicant's position alone. As its terms make clear, s 37M of the Federal Court of Australia Act required the primary judge to take a broader perspective when considering whether non-party discovery should be ordered at the present time. 24 I am not satisfied that proposed Ground 1 has sufficient prospects of success to warrant a grant of leave to appeal.

Ground 2 25 This proposed ground concerns the primary judge's findings with respect to the objectives of r 20.11 of the Federal Court Rules 2011 (Cth) (FCR), which provides that a party must not apply for an order for discovery unless the making of the order that is sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. This rule imposes a threshold requirement that applies whether discovery is sought against a party or a non-party. This is the rule that the primary judge addressed in [4] of her reasons. 26 The applicant's case is that [4] of her Honour's reasons incorporates a finding that non-party discovery should be disallowed because defences had not been filed so as to (in the applicant's words) "crystallise relevance". The applicant submits that this "ruling" is wrong. It advances three submissions. 27 First, the applicant submits that the primary judge did not address the substance of its application for non-party discovery. In its written submissions the applicant argues that, by its interlocutory application, it was contending for a discretionary exception to the "usual rule", which exception the primary judge did not address. By the "usual rule" I take the applicant to mean that, usually, an order for discovery will not be made until the issues in dispute are appropriately identified. 28 Secondly and relatedly, the applicant submits that the FCR provide for discovery in the absence of a defence. The applicant points to the facility of ordering preliminary discovery under Div 7.3 FCR. It also argues that the FCR do not explicitly require that discovery must await a defence. 29 Thirdly, the applicant submits that the respondents have filed defences in the ACCC proceeding (in which, generally speaking, they make no admissions) and that the only discovery order it sought before the primary judge was limited to documents already discovered in the ACCC proceeding. 30 I do not think that these submissions squarely engage with the primary judge's finding with respect to r 20.11. 31 It is true that the primary judge placed significance on the fact that the respondents had not filed defences and that, for that reason, issue had not been joined. That finding is correct and unexceptionable. However, the fact that the respondents had not filed defences in this proceeding is only one aspect of her Honour's reasoning. As I have noted, in [4] of her reasons the primary judge was addressing r 20.11, not r 20.23(1) FCR, which provides: (1) If a party believes that a person who is not a party has or is likely to have, or has had or is likely to have had, in the person's control, documents that are directly relevant to an issue raised on the pleadings or affidavits, the party may apply to the Court for an order that the person make discovery of the documents to the party. 32 The primary judge was not satisfied that the threshold requirement of r 20.11 would be satisfied for two reasons. First, issue had not been joined (because pleadings had not closed) and, secondly, the facility provided by s 83(1) of the CCA was in play. As the primary judge said, given these two circumstances it cannot be said that any of the parties to the primary proceeding were in a position to know which issues are or are not in dispute, and therefore in a position to evaluate the appropriateness of the documents sought to be discovered. 33 Contrary to the first submission made by the applicant, I do not accept that it can be realistically contended that her Honour was not mindful of the fact that she was being asked, in effect, to order non-party discovery outside the "usual rule" (i.e., to order non-party discovery when pleadings had not closed). Clearly, her Honour was mindful of that fact. There is no other way to read [4] of her reasons. Plainly, her Honour was not persuaded that there should be a departure from the "usual rule". 34 As to the applicant's second submission, the question her Honour was addressing was not whether discovery can be ordered before pleadings are closed but whether, in the circumstances of this case, the threshold requirement of r 20.11 would be satisfied by ordering non-party discovery at the present time, when issue had not been joined and the proceeding would otherwise continue to be stayed. 35 As to the applicant's third submissions, the fact that the respondents have filed defences in the ACCC proceeding is neither here nor there. This proceeding and the ACCC proceeding are, in legal form and substance, completely distinct and separate proceedings. It is simply not known how the respondents will plead to the applicant's amended statement of claim, particularly given that, at the present time, it is not contemplated that the respondents will be required to plead in this proceeding until after findings of fact are made, and judgment is given, in the ACCC proceeding. 36 I would add that the fact that discovery might have been given in the ACCC proceeding is equally beside the point. The applicant accepts that discovery will only be ordered in respect of documents that are adjectivally relevant. Adjectival relevance is addressed by considering, primarily, the issues raised by the pleadings: F Hoffmann-La Roche AG v Chiron Corporation [2000] FCA 346; 171 ALR 295 at [2]-[3]; Bailey v Beagle Management Pty Ltd [2001] FCA 60; 105 FCR 136 at [28]; McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233; 221 ALR 785 at [35]; Dorajay Pty Ltd v Aristocrat Leisure Limited [2005] FCA 588 at [34]; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) [2010] FCA 398; 269 ALR 76 at [40]. In the case of non-party discovery under r 20.23, adjectival relevance is addressed by the further limiting requirement of "direct" relevance. It cannot possibly be known at the present time whether the documents that are adjectivally relevant in the ACCC proceeding will also be directly relevant in the primary proceeding until issue is joined. 37 I am not satisfied that proposed Ground 2 has sufficient prospects of success to warrant a grant of leave to appeal.

Ground 3 38 The primary judge found at [5] of her reasons that, where no defences have been filed and there is no joinder of issue, there is no circumstance against which the criterion of "direct relevance" in r 20.23 can be assessed. Thus, one of the specific requirements of non-party discovery was not capable of being satisfied. 39 As articulated by the applicant in its written submissions, the primary judge erred because she did not address the meaning of "directly relevant". 40 I am not satisfied that this proposed ground has sufficient prospects of success to warrant a grant of leave to appeal. Discovery under r 20.23 is expressed to be limited to documents that are "directly relevant to an issue raised on the pleading or affidavits". It was not necessary for the primary judge to engage in any analysis of the meaning of "directly relevant". The obvious reason for that is that, whatever "directly relevant" means, it must be gauged by reference to the issues raised on the pleadings or affidavits. That was the primary judge's point. Her Honour could not even get to the point of considering direct relevance absent the joinder of issue. And, as I have remarked above, plainly her Honour was not persuaded that there should be any departure from the requirements of r 20.23. 41 In oral submissions, the applicant advanced an argument that the requirement of direct relevance is to be assessed by the reference to the state of belief of the party seeking non-party discovery. I doubt that that is a correct reading of the rule. The reference in r 20.23 to the party's belief is to the existence of documents. Whether the documents in the party's contemplation are directly relevant to an issue raised on the pleadings or affidavits is an objective determination against a legal standard, not a subjective determination based on the idiosyncratic views of a party. If the applicant wishes to contend for the contrary construction, it can do so at a later time, if need be. A refusal of leave now will not preclude it from raising that issue for determination, should it arise in the future. 42 Before passing from this proposed ground, I note that the applicant submits that the third reason advanced by the primary judge added nothing to her Honour's second reason. I do not accept that submission. As I have explained, the primary judge's second reason was directed to whether the threshold requirement of r 20.11 would be satisfied by ordering non-party discovery now. Her Honour's third reason was directed to whether one of the specific requirements for non-party discovery in r 20.23 was capable of being satisfied at the present time.

Substantial injustice? 43 The applicant submits that leave to appeal is warranted because, unless the dismissal of its interlocutory application is set aside and the non-party discovery it seeks is ordered, the progress of the present case will be prevented for an indeterminately long period for no counterbalancing advantage. It submits that, at the present time, the respondents "will enter the eventual litigation process much better prepared than the applicant". 44 I do not accept that submission. The applicant consented to a stay of the proceeding on a stated basis. It can be taken that the applicant considered the stay to be warranted on that basis. It has not contested, nor could it reasonably contest, that the stay was not justified on that basis alone. That being so, the fact that it now has funding (which it did not have previously) is not to the point. Further, as I have already noted, even if the stay were to be partially lifted to permit non-party discovery, it would otherwise remain in place in respect of all other interlocutory steps. 45 In these circumstances, I cannot see what substantial injustice the applicant has suffered by reason of the primary judge's refusal to order non-party discovery now or what injustice it would suffer if leave to appeal were to be refused. 46 First, the applicant has not lost the opportunity to apply for non-party discovery once the stay is lifted, as presumably it will be when judgment is given in the ACCC proceeding. Whether it would be entitled to such discovery is a question to be determined at that time. 47 Secondly, the primary proceeding has already been delayed because of the stay to which the applicant agreed. I cannot see how, by not ordering non-party discovery now, the course of the proceeding would be furthered delayed given that it will be necessary for many other interlocutory steps to be taken to bring the proceeding into readiness for hearing. 48 Thirdly, the fact that the respondents "will enter the eventual litigation process much better prepared than the applicant" is without consequence. The fact that the ACCC proceeding would run its course to judgment while the primary proceeding was stayed is the obvious and inevitable consequence of the applicant agreeing to the stay in the first place. However, there is no reason whatsoever to think that the applicant will be denied a proper opportunity to use the processes of the Court that are available to it to prepare its case in due course. 49 Therefore, even if the applicant's proposed grounds of appeal had sufficient merit to warrant a grant of leave to appeal, I would not grant that leave. The applicant has not demonstrated that a denial of leave will result in it suffering substantial injustice (assuming the primary judge's decision to be wrong).

Disposition 50 The application for leave to appeal will be dismissed. The applicant is to pay the costs of the respondents and the Interested Parties. The respondents have asked to be heard on the question of how costs should be assessed. I will give the respondents that opportunity. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.