reasoning on THE QUESTION OF inspection by the court
17 In deciding whether to grant the application for discovery of the letter and whether to make an order for further discovery it is necessary for this Court to weigh a number of competing considerations.
18 Among the factors to be considered on the application for further discovery is the important public interest in protecting the integrity of the discovery process by ensuring that full and frank discovery is made on the basis that documents discovered by a party to an action will not be used in other proceedings. It must also be kept in mind that the Court which has the power to punish in respect of breach of the undertaking is the County Court in this case and not the Federal Court. There is some force in this submission.
19 On the other hand, there is the competing consideration that this Court must ensure that its orders are obeyed and that full and frank discovery is made so that litigation in this Court can be conducted in a fair and just manner. The interests of justice require that full and proper discovery be made to this Court in proceedings before it. Otherwise, parties will be disadvantaged in the litigation and the real issues may not be addressed on their merits. When the existence of a document, which is potentially relevant, and which has not been disclosed, comes to the attention of this Court, then the Court should not ignore it or refuse to inspect but should consider its terms and effect. This requires that the Court should examine the contents of the document in order to make a determination. In the present case there is no doubt as to the existence of the document or as to its date or the parties between whom it has been communicated.
20 As noted earlier, reliance is placed by the respondents on the observations of Moore J and it is contended that those principles which apply to an application to cross-examine a deponent on the contents of an affidavit verifying discovery are applicable to this application. However, the circumstances in the present case are out of the "ordinary" in that they raise an issue as to failure to comply with discovery obligations in this Court. That element was not present in the case before Moore J. I do not consider that the decision of Moore J is in point on this application. I note the reference by his Honour to the view that an affidavit should ordinarily be treated as conclusive and that cross-examination should be permitted only in order to do justice between the parties or to prevent an abuse of the Court's processes. Those latter considerations arise in the present case, because the circumstances can be described as out of the ordinary and because it is contended that the letter should be looked at in order to enable this Court to administer justice between the parties and prevent an abuse of the Court's process in the light of alleged non-compliance with the respondents' discovery obligations.
21 Counsel for OCBC also referred to the case of Spire v Cuddles 'N' Mum (Franchise) Pty Ltd (No 3) [2002] FCA 1563 which Lindgren J took it as well established that an affidavit verifying discovery will be accepted as conclusive as to the adequacy of discovery but qualified it by emphasising that this was ordinarily the case.
22 In view of the need in the present case to carefully balance the competing interests raised in this application, in my view, it is essential and appropriate that I should look at the contents of the letter for the purposes of hearing argument on an informed basis as to its potential relevance or irrelevance to this proceeding. The unattractive alternative is to proceed to attempt to determine relevance without addressing the terms of the document solely by resort to the limited information presently before me as to the possible contents of the letter. This strikes me as unrealistic.
23 The position is broadly analogous to the circumstances where the Court is asked to inspect a document in order to decide whether privilege can be properly claimed in relation to it. This Court is not to be precluded from examining the letter in the present proceedings on the basis of an expression of opinion by legal representatives of the fifth respondent that the document is not discoverable. In the course of the hearing of the application for further discovery, as noted above, counsel for the applicant both in oral and affidavit evidence and by his actions has indicated that he considers the document to be of "central importance" to the main proceeding. That is not to say that this opinion must necessarily prevail but it provides support for the view that the discoverability of the letter is genuinely in issue and that therefore it is appropriate to examine the contents and consider any arguments which may be advanced as to its relevance and importance having regard to its specific terms.
24 In Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49, the High Court majority judgement (Gleeson CJ, Gaudron and Gummow JJ) said, at 70, in relation to the appropriateness of the Court examining the contents of a document where a claim for privilege arose:
" A claim for privilege is not conclusively established by the use of a verbal formula. A court has power to examine documents in cases where there is a disputed claim, and it should not be hesitant to exercise such a power. In appropriate cases, there is also a power to allow cross-examination of a deponent of an affidavit claiming privilege." (Emphasis added)
25 Their Honours referred to the Full Court decision in Trade Practices Commission v Sterling (1979) 36 FLR 244 and National Crime Authority v S (1991) 29 FCR 203.
26 The inspection by the Court of documents the subject of a privilege claim was considered in Grant v Downs (1976) 135 CLR 674 at 689 in the joint judgment of Stephen, Mason and Murphy JJ where their Honours said:
"The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence." (Emphasis added)
27 For these reasons, and in the light of those authorities, I do not consider it appropriate as a matter of either power or discretion to ignore the contents of the letter and proceed to a determination of the application without referring to its contents and hearing submissions directed to its relevance.
28 Accordingly, I have decided to inspect and consider the terms of the letter and I will hear any further submissions by the parties on the further discovery application which are considered appropriate in the light of this determination.