BETWEEN : NORTH KALGURLI MINES PTY LTD (ACN 008 747 886)

NORMANDY GRPL PTY LTD formerly GOLD RESOURCES PTY LTD (ACN 008 976 958)

Practice and procedure - Discovery - Application for discovery of documents in related proceedings - Application for discovery of insurance documents - Extension of time granted for filing defence - Turns on own facts

Fair Trading Act 1987 (WA), s 10

Rules of the Supreme Court 1971, O 26 r 6, O 26 r 7, O 26A

Australian Dairy Corporation v Murray Goulburn Co-Op Ltd [1990] VicRp 33; [1990] VR 355

Commonwealth of Australia v Temwood Holdings Pty Ltd [2001] WASC 282; (2001) 25 WAR 31

Commonwealth v Northern Land Council [1993] HCA 24; (1993) 176 CLR 604

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55

Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10

Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316

Lonrho Exports Ltd v Export Credit Guarantee Department [1999] Ch 158

North Kalgurli Mines Ltd & Ors v FEE Minerals Australia Pty Ltd [2000] WASC 218

Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd (2002) ATPR (Digest) 46-220

Schlam v WA Trustee Executor & Agency Co Ltd [1964] WAR 178

1 HASLUCK J: The defendant, GRD Minproc Ltd, has applied for certain orders by chamber summons dated 6 November 2002.

"1. Paragraph 1 of the case management directions before Acting Registrar Rayney be amended to state that the defendant file and serve a defence to the plaintiffs' statement of claim on or before 29 November 2002.

2. Pursuant to Order 26 rule 7, the plaintiffs provide further and better discovery and inspection of documents requested by the defendant within seven days, in particular:

(a) all documents in the plaintiffs' possession, custody or power relating to the plaintiffs' claim against FFE Minerals Australia Pty Ltd in consolidated actions CIV 2129 of 1998 and CIV 2068 of 2001 ("Consolidated Actions") including all pleadings relating to the Consolidated Actions;

(b) all insurance policies under which the plaintiffs are indemnified for any loss arising in relation to the Fimiston Expansion Project including any project specific policies.

3. The plaintiffs pay the defendant's costs of this application."

3 I note in passing that O 26 r 7 of the Rules of the Supreme Court 1971 provides that an application for an order under this rule may be made at any time by a party whose request for discovery has not been satisfied.

4 The incident underlying the claim being advanced in these proceedings has also given rise to the claim which is now the subject of the consolidated actions.

5 It seems that certain mining companies came together in the form of a joint enterprise. They appointed Kalgoorlie Consolidated Gold Mines Pty Ltd, known as KCGM, as manager of a joint venture. That company, assisted by expert advice from Minproc engineers, engaged FFE Minerals Australia Pty Ltd to establish a semi-autogenous grinding mill, or SAG mill, on a site at Fimiston in the West Australian goldfields. This mill was to be in substitution for an existing ore crusher. Until 5 March 1998 FFE Minerals Australia Pty Ltd was known as Fuller-F.L. Smidth (Pacific) Pty Ltd.

6 In October 1995 and again in July 1996 the SAG mill broke down and thus the joint venturers complain of financial loss as a consequence of the cessation of operations on each occasion.

7 The plaintiffs in the consolidated actions claim that the defendant in that matter, FFE, is liable to them under and by virtue of s 52 of the Trade Practices Act, and by virtue of s 10 of the Fair Trading Act 1987 (WA), as a result of certain misrepresentations allegedly made by or on behalf of the defendant FFE prior to the mill being handed over.

8 The plaintiffs say further, and in any event, that the conduct of FFE in the design, supply, installation and commissioning of the mill was negligent and in breach of a duty of care owed to the plaintiffs. FFE contends that the breakdown occurred because of the way in which the mill was being operated.

9 The present action is a claim being advanced by some of the mining companies as plaintiffs against Minproc. The central assertion is that Minproc, in its supervisory role, has a responsibility for the loss that is said to have occurred.

10 Counsel for the plaintiffs in the present action contends that there is a significant difference between the two proceedings. For ease of reference, I will refer to the proceedings before me this morning, that is to say CIV 2564 of 2001, as the Minproc proceedings. I will refer to the proceedings the subject of the consolidated actions as the Fuller proceedings.

11 Counsel for the plaintiffs in the Minproc proceedings suggests that in the Fuller proceedings a central, and perhaps decisive issue, is the question of whether Fuller failed to properly align a certain trunnion bearing. This is said to have caused the breakdown of the SAG mill. In the Minproc proceedings, he argues, the bone of contention is the question of Minproc's responsibility to supervise Fuller and to properly advise the plaintiffs.

12 Nonetheless, the fact remains that both proceedings have a common origin in the incident I have described. Counsel for the defendant in the Minproc proceedings puts it this way in his written submissions:

"It is beyond argument that the proceedings and the Other Proceedings relate to the semi-autogenous grinding mill ("SAG mill") and allegations as to its breaking down and liability following from it. The claim against the defendant in these proceedings is for breach of duty while the claim against the defendants and in the Other Proceedings is for breach of the Trade Practices Act, Fair Trading Act and for breach of duty."

13 It is against this background that the application in the chamber summons dated 6 November 2002 comes before me. Essentially, the defendant, who has not yet filed a statement of defence, seeks discovery of certain documents allegedly held by the plaintiffs. A number of the documents relate to matters and documentary evidence which may have a bearing upon the matters in controversy in the Fuller proceedings.

14 The application for an extension of time is affected by the discovery issue. It is said by the defendant that, if it is able to obtain access to the documents in question, further time is required in order to assess the documents, and to formulate the statement of defence. I note in passing that some of the documents in respect of which discovery is sought are insurance documents. I will come to them in a moment.

15 In seeking to establish the framework within which the application before me must be considered, it will be useful to look at certain matters of chronology which are reflected in the evidentiary materials before me this morning, that is to say, the affidavit of Christopher Ryder sworn 6 November 2002, which is filed on behalf of the defendant, and, on the plaintiffs' side, the two affidavits of Catherine McIntosh sworn 7 and 12 November 2002.

16 The writ of summons in the Minproc proceedings was issued on 10 October 2001. Various other events have occurred but, importantly, on 21 August 2002, a lengthy statement of claim was filed on behalf of the plaintiffs. I pause here to say that a comparison between the statement of claim in the Minproc proceedings and the statement of claim in the Fuller proceedings confirms that the disputes reflected in the pleadings have a common origin.

17 It is apparent from my earlier observations that a statement of defence in the Minproc proceedings has not yet been filed in response to the statement of claim dated 21 August 2002. It seems that on 18 September 2002 the defendant was ordered to file and serve a defence on or before 25 October 2002 as a consequence of an order made by the Acting Registrar. It is in respect of that order that the defendant seeks an order for extension of time.

18 There have been various exchanges between the parties bearing on the question of discovery. One is conscious that the usual practice is for discovery not to be effected until after the pleadings are closed, by which time the issues are defined and it is possible for the parties and their legal advisers to determine what documents may be relevant and should be discovered.

19 However, in this case, bearing in mind the presence of the Fuller proceedings, it seems that the plaintiffs agreed to file an affidavit of discovery at this stage. I am referring to the affidavit of discovery of Mario Royendra Almeida sworn 29 October 2002. It is an extremely lengthy document and comprises some 2,332 items.

20 I will not traverse the full measure of what is included in the list of documents. I understand from what has been put to me by counsel that the list includes various documents discovered by the plaintiffs in the Fuller proceedings. However, it does not include a collection of documents which might be broadly described as the Court documents in the Fuller proceedings. Further, the Almeida affidavit of discovery does not include documents bearing upon the insurance arrangements of the plaintiffs.

21 A controversy has now developed between the parties as to whether there ought to have been discovery in respect of two categories of documents, namely, the Court documents in the Fuller proceedings and what I will call in general terms the insurance documents.

22 The affidavit of Christopher Ryder draws attention to this aspect of the matter. One finds at pages 84 and 85 of his affidavit a document described as Schedule 2 which purports to be a list of Court documents filed in the consolidated or Fuller proceedings. I understand from the way in which argument has progressed this morning that those are the Court documents in question. They were not included in the affidavit of discovery provided by the plaintiffs.

23 It is apparent from par (2)(a) of the chamber summons dated 6 November 2002 that the order sought is couched in very general terms: that discovery be provided of all documents in the plaintiffs' possession relating to the Fuller proceedings.

24 However, counsel for the defendant has narrowed the area of dispute by acknowledging in the course of argument that he does not seek to obtain discovery of the various documents discovered by FFE in the Fuller proceedings. Many of these documents, or copies of the same, may now be in the possession of the plaintiffs in the Minproc proceedings, but the controversy before me this morning relates simply to the Court documents and the insurance documents.

25 It will be useful to look briefly at a number of principles bearing upon the controversy before me. I have described the nature of O 26 r 7. I must keep in mind that O 26 r 6 is an avenue whereby discovery can be obtained of particular documents. This will have a bearing upon the exercise of powers under O 26 r 7.

26 It is said in Seaman: Civil Procedure, at par 26.1.1A that the general rule was that discovery was not normally ordered before the close of pleadings. That general rule applied to prevent fishing expeditions and because the matters in question should then be defined. However, fishing expeditions are envisaged when discovery is sought pursuant to O 26A. Order 26 rule 7(3) now gives the court the widest powers, having regard to the principles of positive case flow management, to determine the stage at which and the extent to which discovery shall be ordered. The general rule will give way to the demands of justice in particular instances, and in particular where the application is not a fishing expedition and the nature of the claim has been made clear.

27 It is said further by the learned author at par 26.6.4 that in an application to the court's inherent jurisdiction, the applicant, when seeking to displace the conclusive nature of the affidavit of discovery, is confined to information emanating from the opponent's affidavit, the documents the opponent discloses and the opponent's admissions, and may not rely upon a contentious affidavit. Limited to those materials, the court may make an order if it has reasonable grounds for being fairly certain that the party making the affidavit has misconceived his or her case and that, if he or she had acted upon a proper view of the law, he or she would have disclosed the further documents.

28 The learned author affirms at par 26.7.2 that an application for an order for discovery under r 7 may be made at any time by a party who has made a request under r 1.1 which has not been satisfied.

29 Counsel for the defendant seeks to persuade me that there are special features of the present case which should satisfy the court that it is appropriate to go beyond the usual precept that discovery is not provided until the pleadings have closed. He seeks to persuade me that the plaintiffs' affidavit of discovery sworn 29 October 2002 should not be regarded as conclusive, bearing in mind the presence of the Fuller proceedings and the Court documents filed in those proceedings.

30 It is important to understand that there are special rules concerning the disclosure of discovered documents. The principles in that regard are summarised in Mead Corporation v Carbonless Papers (Australia) Pty Ltd [2002] WASC 237. The point is made between pars 37 and 45 of the Mead decision that those who disclose documents are entitled to the court's protection against any use of the documents otherwise than in the action in which they are disclosed, for discovery is essentially an invasion of a private right to keep one's documents to oneself. The jurisdiction to restrain publication is based not so much on property or on contract as on the duty to be of good faith.

31 The Court has the power to release a party from the implied undertaking not to make use of any documents discovered otherwise than in the proceedings to which they relate. It is apparent from a review of the decided case bearing upon this issue, including the decision of the Full Court in this State in Minister for Education v Bailey [2000] WASCA 377; (2000) 23 WAR 149, that the release from the implied undertaking can be given if there is a special feature of the case which affords a reason for modifying or releasing the undertaking. The matter then becomes one of the proper exercise of the Court's discretion. Various factors bear upon the discretion, including the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain.

32 I note also, as I review the factors to be taken into account, the matter referred to in Springfield Nominees Pty Ltd v Bridgelands Securities (1992) 38 FCR 217, namely that one is entitled to have regard to the likely contribution of the document to achieving justice in the second proceedings. In Geneva Finance Ltd, (Receiver and Manager Appointed) v Boys [2001] WASC 348, McLure J was of the view that the undertaking concerning discovery does not prevent compulsory disclosure. The undertaking restricts the disclosure of documents, not the listing of documents.

33 Let me now return to the circumstances of the present case, bearing in mind the principles I have just described. I will turn firstly to the Court documents.

34 It appears from the chronology that the pleadings in the present case have not closed. There is, therefore, some force in the contention that the plaintiffs should not be obliged to provide the further discovery which is sought. However, I consider that there are some special features in the circumstances of the present case which weigh against such an argument.

35 It is apparent from the background I have described that the Court documents relate to an incident which is common to both proceedings. I consider that in these special circumstances there is a power available to me in O 26 r 7 to make an order of the kind sought.

36 It was said by the plaintiffs that what is being sought is in the nature of more particular discovery and therefore the appropriate avenue of relief is O 26 r 6. Ultimately I am not persuaded to that view having regard to the special features of the case I have mentioned. I am in a position to compare the two statements of claim and to draw certain conclusions as to whether the affidavit of discovery that has been provided is sufficient. I am of the view that it is not sufficient.

37 When I turn to the exercise of the discretionary power, it seems to me, having regard to the decided cases, that the implied undertaking concerning the provision of discovery in the Fuller proceedings should not be thought to stand in the way of discovery of the Court documents in the Minproc proceedings. It is true that pleadings have not closed in the Minproc proceedings. However, as the parties themselves have recognised in their exchanges, the parties have a basic knowledge of what is likely to be in issue.

38 The Court documents in issue are not of an especially private or confidential nature. It therefore seems to follow from the decided cases I have reviewed that there are special features in the case before me which suggest that the implied undertaking should not stand in the way of discovery of the Court documents.

39 I take account also of case management principles which suggest that one should pay some attention to what is likely to be the most efficient interlocutory procedural process. I consider that there should be discovery of the Court documents within the framework I have described because that is likely to be productive of greater efficiency in defining and advancing the presentation of the respective cases of the parties to the litigation.

40 It was put to me forcefully by counsel for the plaintiffs that no order should be made of the kind proposed in the absence of the defendant FFE to the Fuller proceedings. I see force in that contention if the documents in issue were of an especially confidential kind. There might then be a case for allowing an opportunity for FFE to be heard before an order is made.

41 However, the documents in issue are essentially documents forming part of the court file. I see them as having a prima facie relevance in that the disputes in each case have the common origin I have described.

42 The general principle concerning relevance is that described by Menzies J in the well known case of Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 at 345. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of inquiry which would, either advance a party's own case or damage the case of his adversary.

43 Accordingly, for these reasons I am of the view that the Court documents are relevant and should be the subject of an order of the kind proposed.

44 When I turn to the question of the insurance documents, as I have broadly described them, I consider that different considerations apply. Counsel for the plaintiffs said in respect of these documents, as he said in respect of the other category, that it was premature and misconceived to bring such an application before the pleadings had closed. I see force in this line of argument as to the insurance documents.

45 Essentially, the defendants are seeking to find provisions in the insurance documents which may extend the insurance cover to the defendant. Particular reference is made to the presence of a Business Interruption Policy.

46 It seems to me, however, that, essentially, the defendant is making a speculative attempt to obtain discovery. It is in the nature of a fishing expedition. The defendant has not demonstrated to me clearly that documents of the kind contended for exist or that they have a bearing upon the issues. In any event, the matters in issue have not yet been fully crystallised by the pleadings. I am therefore not persuaded that there should be discovery of the kind sought in respect of the insurance policies.

47 I will not express a concluded view, but it may be that the appropriate avenue for relief in respect of the insurance documents is an application for discovery of particular documents pursuant to O 26 r 6, rather than the avenue presently relied upon under O 26 r 7.

48 The other factor that bears upon my reasoning is that it is immediately apparent that the insurance documents are not like the documents in the previous category. The Court documents were brought into existence by legal advisers in the course of current proceedings. Most of them are on the Court file. There may be elements of confidentiality involved, but they are in the nature of public documents. They have been prepared by skilled advisers with an eye to various legal implications. I cannot see that the insurance policies are quite of the same order. That is a further basis as to why the order sought should not be allowed in respect of the insurance documents.

49 In summary, then, I will allow the order sought for discovery in respect of the Court documents but not in respect of the insurance documents.

50 This brings me to the question of the extension of time. The application for relief in that regard is affected by the ruling concerning discovery.

51 I have already noted that the effect of the Registrar's order was to require service of a defence on or before 25 October 2002. The order sought is for an extension of time so that the statement of defence would be filed on or before 29 November 2002.

52 The grounds upon which the extension is sought are reflected in a letter dated 24 October 2002 from the defendant's solicitors to the plaintiffs' solicitors which is exhibited to the affidavit of Christopher Ryder.

53 The defendant's solicitors say that the agreement to provide a defence within a strict time frame was based on an understanding concerning discovery. They say that as the plaintiffs' discovery has proved to be insufficient in respect of the issues that I have just described, this should mean that further time is allowed. Reference is made to the need to brief Queen's Counsel. They say that the delay is unlikely to cause any real prejudice when one has regard to the chronology, bearing in mind that the proceedings were commenced on 10 October 2001 and the statement of claim was filed on 21 August 2002.

54 It is said further in a letter from the defendant's solicitors to the plaintiffs' solicitors dated 9 September 2002 that it will be necessary for the defendants to obtain preliminary expert advice and to interview a number of witnesses. Reference is made to a witness who is presently engaged on other projects. I do not give particular weight to that aspect of the matter because a significant period of time has passed since the letter was written. I assume that the defendant and its advisers have been active in preparing to file and serve a statement of defence in response to the statement of claim.

55 In dealing with this matter also, I am conscious of case management principles. It is desirable that pleadings in a matter of complexity such as this, which has been entered in the long causes list, are not formulated in haste. The defendant must be afforded an opportunity to take account of all relevant documentation.

56 As it turns out, against the background of the ruling I have made concerning the Court documents, the defendant in the formulation of its defence will be able to take account not only of documents disclosed in the plaintiffs' affidavit of discovery but also of the Court documents. It therefore seems to me that the extension of time which is sought should be allowed.

57 Against the background of the matter and chronology I have described, I am not persuaded that there will be undue prejudice to the plaintiffs as a consequence of some further period of delay. Accordingly, I consider that orders should be made as asked in pars 1 and 2 of the chamber summons dated 6 November 2002 save that par 2(a) is to be amended by inserting the word "Court" after the word "all" in line 1 and par 2(b) is to be deleted. There will be no order as to costs.