BETWEEN : WRIGHT PROSPECTING PTY LIMITED (ACN 69 008 676 417)

HANCOCK PROSPECTING PTY LIMITED (ACN 69 008 676 417)

Practice and procedure - Application to release counsel from confidentiality undertaking - Purpose to take instructions - Proposed proceedings for contempt of court - Re­examination of costs - Turns on own facts

1 MURRAY J: The plaintiff seeks orders releasing counsel acting for it from so much of the undertakings given by them to the court, the defendant and various corporate entities who may be described as the Rio Tinto group of companies, whose interest was such that I permitted them to intervene and be heard in relation to the application, as would prevent counsel from disclosing to the plaintiff and its solicitors the provisions of various clauses of an agreement identified as the Hope Downs Co-operation Agreement dated 1 July 2005. The clauses in question are 4.1, 4.11, 7.6 and Sch 8 and 10.

2 The undertakings given by counsel to which the application refers arose in the following manner. In September 2006, the plaintiff obtained leave to amend the statement of claim. A new cause of action was added. Damages were claimed. The action became more completely, from the plaintiff's point of view, an action concerned with its claimed interest in mining tenements known as Rhodes Ridge, the part allegedly played by the defendant in holding the plaintiff out of that interest, and damages in respect of that conduct.

3 That claim involved the valuation of Rhodes Ridge and at trial much expert evidence has been led on both sides in that connection. None of that need be discussed in these reasons, except to note that for the plaintiff it was alleged that the value attaching to a group of tenements known as Hope Downs, in which the defendant, speaking generally, may be said to hold a 50 per cent interest with companies in the Rio Tinto group, is asserted to be relevant to the valuation of the Rhodes Ridge tenements.

4 As part of the process of managing the litigation to trial, I made an important series of programming orders on 27 September 2006 after the questions at issue were debated generally and at some length by counsel. Included in those orders was par 4 in the following terms:

On or before 30 October 2006 the Defendant shall produce copies of draft or final documents in the following five categories:

4.1 All communications recording negotiations for the tenements known as Hope Downs to be mined pursuant to a joint venture between the defendant or Hancock Mining Ltd ('HPPL Interests') and Rio Tinto ('the Venture').

4.2 Any formal executed documents pursuant to which the Venture was constituted to which either or both the HPPL Interests or Rio Tinto is a party.

4.3 Any document recording the price which Rio Tinto paid the HPPL Interests for its share in the Venture.

4.4 Any valuations concerning the Hope Downs tenements.'

4.5 Documents recording the cost of the exploration of the Hope Downs tenements to date.

Of particular relevance for present purposes is par 4.3.

5 Subpoenas seeking those documents were issued to Mrs Rinehart and companies involved with Hope Downs in the Rio Tinto group. The form in which those subpoenas issued was the subject of contention because, as originally issued, it appeared that they went beyond the documents described in par 4 of the orders originally made. As finally supplied, the documents including the Hope Downs Project Co-operation Agreement, which became exhibit L43 at trial, portions of the document being deleted.

6 The solicitors for the plaintiff sought access to the redacted material. They wrote to the solicitors then acting for the defendant. They were told that nothing had been deleted except that which was irrelevant to the subject matter of the documents as described in the order originally made and subpoenas as they were finally issued. It was suggested that that had been done in consultation with solicitors for Rio Tinto.

7 The plaintiff's application for access to the complete versions of the documents was heard and opposed, the Rio Tinto group of companies intervening by leave on 2 February 2007. I refused the application, with costs, on the ground, shortly put, that such evidence as there was from the defendant's solicitors asserted that the redactions were made in strict compliance with the Court's orders to remove material not covered by the terms of the order (ie, the redactions were of irrelevant material) and there was insufficient evidence to establish the contrary proposition.

8 On 16 April 2007, the plaintiff made a further application seeking to have the defendant, Mrs Rinehart, and Rio Tinto companies produce for inspection an unredacted copy of the Hope Downs Project Co-operation Agreement, unredacted copies of other documents produced pursuant to par 4 of the orders made in September 2006 and copies of documents referred to in the co-operation agreement. The application was advanced on the ground that the plaintiff could establish that the documents in question would remedy a failure to comply with the orders originally made in September 2006.

9 I heard the application on 23 April 2007. An outline of submissions had been filed by the plaintiff. It is dated 20 April, and the authors are identified as being counsel for the plaintiff. I was also provided with an outline of submissions dated 22 April on behalf of the defendant, opposing the application. The document is said to have been prepared by the defendant's then solicitors. It is unsigned.

10 Because of the perceived commercial sensitivity and having regard to confidentiality orders made by the Court to which I shall shortly return, the application was substantially argued in closed court. Again, the Rio Tinto group of companies sought leave to intervene and appeared by counsel, who told me that they would wish to oppose the application and, in doing so, would propose to substantially adopt the arguments presented in outline by the defendant's solicitors.

11 Relative to this matter, the defendant's outline of submissions comments on Order 4.3 and the obligation to produce, in draft or final form, 'any document recording the price which Rio Tinto paid the HPPL Interests for its share in the Venture'. The submission would appear to accept that the word 'price' means the consideration in money or money's worth provided by Rio Tinto to the defendant for its 50% share in the joint venture, but the submission foreshadowed was that the word 'paid' meant such consideration 'that has already been transferred'. In other words, the point was to be made that there was no obligation to disclose payments made or promised to be made for the benefit of the defendant during the course of the operation of the joint venture. It was implicit in that proposed submission that that was the basis upon which reference to various financial matters had been redacted.

12 In the end, no such submission was made or explored. During the morning of 23 April 2007, I heard submissions by senior counsel for the plaintiff and evidence by the plaintiff's expert valuation witness, Mr Cole, as to why he thought the redacted portions of the documents, particularly the co-operation agreement, would contain material relevant to the valuation of the Hope Downs interest and therefore, in his view, relevant to his valuation of the Rhodes Ridge interest.

13 Mr Dharmananda, who appeared for the defendant, said he was in difficulty if he was required to cross-examine Mr Cole, and I foreshadowed a view that cross-examination might not be of assistance, because unless I was able to conclude that Mr Cole's expert opinion about relevance could not be accepted, I would be bound to rely upon his evidence.

14 Further, there was considerable debate about what, on any view, was the abject failure of the solicitors for the parties, yet again, to comply with their obligations under the Rules of the Supreme Court 1971 (WA), O 59 r 9, to confer, in a meaningful way, in an endeavour to resolve the dispute without the need to pursue the application before the court, despite the fact that the application was foreshadowed on 3 April 2007, and it was then directed to be listed on 23 April.

15 In those circumstances, the hearing having reached the point described above when the court adjourned for luncheon at 1.10 pm, I was told when I returned to the court that counsel desired more time before the hearing resumed. They were in the process of conferral in an endeavour to settle the application. And so it proved to be that when the Court was asked to resume at about 3.30 pm, I was presented with the agreement of the parties relative to the present application, that the Hope Downs Co-operation Agreement, dated 1 July 2005, was to be made available in unredacted form to counsel for the plaintiff and to Mr Cole upon the basis, for the benefit of the defendant and Rio Tinto, that what were described as the 'super confidential undertakings' entered into by those individuals would apply to the document in question.

16 In other words, the complete document was provided to counsel involved in the presentation of the plaintiff's case and to the plaintiff's expert witness for the purpose of his evidence, subject to confidentiality arrangements by which the content of the document, in its unredacted form, would be shielded from exposure to the plaintiff, its officers and solicitors on the ground of its commercial sensitivity.

17 As I say, the case and arguments to be presented on the application by counsel for the defendant and the Rio Tinto group were not presented, and the Court was not required to make a ruling on this part of the application. The complete form of the co-operation agreement was ultimately received in evidence as exhibit L43A.

18 The confidentiality regime to which I refer above has been in place throughout the trial process. I was moved for its introduction not only by the parties, but by the Rio Tinto group. The regime has been varied as required, but it has remained substantially in place. For example, a minor variation was made on the application of the defendant on 29 March 2007. I published short reasons delivered ex tempore to take the opportunity of briefly setting out the considerations of principle by which I was guided in settling proposed confidentiality orders submitted by the Rio Tinto group of companies: Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 2) [2007] WASC 81.

19 Nothing has changed in relation to the commercial confidentiality of the co-operation agreement the subject of this application. It is, in short, the agreement by which the Hope Downs joint venture was established and which sets the terms of its operation and the management of the project. Without worrying about the particular identities of the corporations involved, for present purposes it is sufficient to describe them as corporate entities within groups of companies which include the defendant and Rio Tinto, each having a 50% share in the unincorporated joint venture established for the development of the Hope Downs tenements and mine. So the document deals with terms of acquisition and the financial and other arrangements made for the operation of the joint venture.

20 It is abundantly clear that if the plaintiff or others with whom Rio Tinto and the defendant might deal in commercial negotiations and transactions of a related kind, knew of the commercial terms of this agreement there would be an undoubted capacity to interfere with negotiations and dealings between the corporate entities. In other words, there is a commercial confidentiality attaching to the document, for which it itself provides, which, although it was necessarily required to be compromised for the purpose of this litigation, deserved to be protected so far as that could be achieved.

21 The compromise reflected in the agreed position upon which disclosure was made was that the complete terms of the agreement were available to counsel for the plaintiff and Mr Cole, but were not otherwise to be disclosed except to the court for the purposes of the litigation, and therefore were not to be disclosed to the plaintiff's solicitors, the plaintiff's officers or other advisers. The relevant confidentiality regime makes it clear that it was upon the undertaking of counsel and Mr Cole to be bound by that confidentiality regime set out in an executed document that disclosure was made. It is that undertaking in respect of this document from which counsel now desire to be released so far as is necessary to enable them to inform their instructing solicitors and, through them, the plaintiff, of the terms of the co-operation agreement, including the nominated redacted clauses.

22 I approach the matter at issue upon the basis that I have the power to release counsel for the plaintiff from the reach of the undertakings given. No argument to the contrary was presented to me, but I think the question is not necessarily free from doubt. Presumably, although the submissions made to me did not address this question, what I am being asked to do is to revisit and amend the orders made by consent upon the agreement of the affected parties following the proceedings on 23 April 2007 by confining the reach of the confidentiality undertaking Annexure E, effectively by deleting its application to the whole or at least a substantial portion of the co-operation agreement. I should say that nothing is put before me to indicate precisely in what terms the plaintiff would seek to have me make orders if I was to grant the application.

23 The orders in question are interlocutory orders. The authorities would generally support the view that at least to the extent necessary to remedy evident injustice, the Court retains an inherent power to revisit and set aside or amend such orders. I need not, I think, expressly decide the point, but should proceed, having regard to the argument before me, upon the basis that I should consider whether it would be appropriate or necessary to remedy injustice, that I should make an order substantially in the terms described above: cf the review of authority and consideration of the question in Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 by Steytler P at [23] - [28] and Pullin JA at [70] - [73].

24 Putting that to one side, specifically in respect of the question when a party or individual should be released from an undertaking, I think the position is the same whether one was concerned with an express undertaking to keep material confidential or the implied undertaking against the collateral use of documents, discovered or otherwise produced for inspection in the course of litigation. In Minister for Education v Bailey [2000] WASCA 377; (2000) 23 WAR 149, Steytler J, with whom Parker J agreed, reviewed relevant authorities and discussed the applicable principles at 153 - 157 [18] - [28]. I considered relevant authorities and discussed the principles involved in the variation of the confidentiality undertaking in my earlier judgment, Wright v Hancock (No 2).

25 Having regard to that, it seems to me that the approach to be taken to this application, involving as it does a variation in some form effectively relaxing or lifting the full force and effect of the confidentiality undertaking, is for the court to start from the point that the nature and purpose of the undertakings is to protect commercially sensitive information which is private and which the parties to it are entitled to keep private, subject only to the requirements of the interests of justice in the particular litigation before the court. If it is sought to relax such an undertaking, the court should only accede to such an application if there are particular or, as it is sometimes put, exceptional circumstances which provide reasons to hold that the interests of the parties who have that prima facie right to keep the information confidential are overridden by the necessity to serve the interests of justice by varying or dispensing with the undertaking.

26 What then are the reasons advanced and the arguments presented to persuade the court to that view?

27 In the first place, it is put that the parties to this litigation have long been and remain partners, having interests in various mining tenements and projects. On 12 June 1987 they made an agreement to vary the terms of their partnership By c. 1 of their agreement, the partners agreed that as from 12 April 1987:

(a) neither HPPL in respect of the HPPL interests nor WPPL in respect of the WPPL interests shall be entitled to conclude any negotiations or make any agreement having the effect of reducing or disposing of any royalties to which the Partnership shall otherwise be entitled for the purpose of proceeding with any relevant mining venture;

...

(e) royalties received from third parties by the Partnership in respect of iron ore produced and sold by them from the following tenements or projects shall be divided equally between the partners, namely:

(i) Rhodes Ridge;

(ii) Hope Downs;

28 The plaintiff also relies upon the terms of cl 7 of a 1983 partnership agreement made on 24 May 1983 by which the partners agreed that:

Each Partner shall be just and faithful to the other Partner in all transactions relating to the Partnership business and shall give a true account of the same when and so often as the same shall be reasonably required without any concealment or suppression.

29 It is submitted that the Hope Downs joint venture or its interest therein is an interest of the defendant as a partner, but so far as the defendant is entitled to receive royalties in relation to the Hope Downs joint venture it may not contract to reduce or dispose completely (which as I understand it the plaintiff would interpret as including a failure to negotiate to obtain a royalty) of its entitlement to a royalty in respect of the mining venture, but indeed any such entitlement is one in respect of which it must account to the plaintiff and any royalties received must be shared equally between the plaintiff and the defendant.

30 It is argued that the plaintiff must be entitled to complete access to the co-operation agreement so that it may determine whether the redacted portions of the agreement are concerned with royalties, in which case it is argued the plaintiff is entitled to know the terms of those provisions or alternatively it is argued that the plaintiff is entitled to see the full co-operation agreement, if indeed it makes no provision for the defendant to receive income by way of royalties in respect of the joint venture. That, of course, ignores the interests of the Rio Tinto group, having regard to any commercial relationship between companies in that group and the plaintiff.

31 The plaintiff went into evidence on this topic in an affidavit sworn on 4 May 2007 and supplemented by an affidavit sworn on 24 August 2007, by Mr Brandli, a director of the plaintiff. Acting for the plaintiff, on 24 April 2007, immediately after the settlement of the proceedings on 23 April, Mr Brandli wrote to a Mr Watroba, a director of the defendant. He referred to 'publicly available information' that the defendant or associated entities had formed a joint venture with Rio Tinto in respect of Hope Downs. He asked for full particulars of the royalty arrangements payable to the partnership in that regard. In fact, Mr Brandli explains, the information to which he referred was a public announcement made by Rio Tinto Ltd on 1 July 2005. Mr Brandli says that consideration had been given to whether or not to write in terms of that letter since that time, but he did not think it appropriate to send the letter until 24 April 2007. Mr Watroba responded on 2 May 2007. He said the letter had been referred to the Hope Downs joint venture partners.

32 There was further correspondence of an inconclusive kind which seems to me to have culminated in a letter dated 3 August 2007 from a Mr Wood to Mr Brandli. Mr Wood says he is counsel (commercial) employed by the defendant. In that letter he says:

The arrangements Hope Downs Iron Ore Pty Ltd has with Hamersley WA Pty Ltd in respect of the Hope Downs Project is a confidential arrangement between those two companies.

33 In his affidavit sworn on 24 August 2007, Mr Brandli deposes that the present application was brought on his instructions because he regarded the communications on this subject from the defendant 'as evincing an intention to avoid answering the question which WPPL has repeatedly asked'. In his affidavit sworn on 4 May 2007 he makes the plaintiff's purpose clear. He takes the view that under the partnership arrangements the plaintiff is entitled to 'a full and frank response' to its inquiry of the defendant. If royalties are payable he considers that the plaintiff is entitled to know that fact and the terms on which they are payable. If those terms are deficient he says the plaintiff is entitled to know. If no royalty is payable, again he considers that the plaintiff is entitled to know so that it may consider its position. He says that the enforcement of the plaintiff's rights 'may involve litigation'.

34 All that is clear enough, but it is equally clear that whatever may be the position simply as between the plaintiff and the defendant in the context of this litigation and the purpose for which the undertakings were imposed, the reasons why the plaintiff wishes to have access to an unredacted copy of the Hope Downs Co-operation Agreement must be regarded as collateral and can, in my view, provide no ground upon which I would be entitled to accede to the present application. The interests of justice in this context require no such result on this ground.

35 For the plaintiff it is submitted, in addition, that those acting for the defendant have misled the Court in asserting the reason for the redactions. As I understand the argument, it is put that had the true position been known when the matter was before the court on 2 February 2007, whether or not the application succeeded, the court would not have ordered the plaintiff to pay the costs of the application. As to that, I would comment, without in any way entering upon the question, that a ground for dismissal of the application was that the plaintiff did not go into evidence capable of supporting the application. Any application to reopen the order as to costs would also, of course, need to address the power of the court to do so after a final order was made.

36 Similarly, it is argued that counsel should be released from the undertaking and be able to inform their instructing solicitors and, through them, the plaintiff, of the terms of the agreement which were subject to redaction so that the plaintiff might have the opportunity to give its informed instructions to take proceedings for contempt of court against those responsible for the redactions. It is argued that the asserted ground for those redactions is plainly specious and without merit. It is not necessary for these reasons that I enter upon the debate whether, having regard to the relevant portion of Order 4, the ground for redaction to which I have referred above was properly maintainable.

37 There is no doubt, of course, that to breach an order of the court may constitute a contempt and render the contemnor liable to punishment on a motion for contempt of court. But the breach must be intentional and deliberate in the sense that what was done was known to be a failure to comply with the order made. It is sometimes put that to constitute a contempt of court, the breach of the order or the failure to comply with it must be an act or omission which is wilful and contumelious, a deliberate, knowing, failure to comply. Relevant authorities are usefully discussed by Martin CJ in International Land Developments Pty Ltd v Diamo Nominees Pty Ltd [2007] WASC 96; (2007) 34 WAR 201.

38 Again, it seems to me that for the purpose of dealing with this application it is unnecessary that I have regard to whether there might be an arguable case of contempt of court, the evidence in respect of which achieves no greater height than a statement attributable to a firm of solicitors contained in an outline of submissions, which proposition was never advanced to the Court in respect of an application which was finally settled, leading to orders by consent.

39 In my opinion, neither of these matters raises a ground of sufficient cogency to lead me to the conclusion that the interests of justice would require an order which would have the effect of relieving counsel from the undertakings into which they have entered.

40 Nor, in my view, does that conclusion lead to any injustice so far as the plaintiff is concerned. I accept the submissions put to me by counsel for the defendant and for the Rio Tinto group of companies to that effect. I see no reason why, without resiling from the confidentiality undertaking, counsel may not advise, in respect of costs, that in their view, the Court was misled as to the considerations which led to the adverse costs order and, if such a course be open, that they advise that an application to set the costs order aside may have reasonable prospects of success.

41 Similarly, I see no reason why, without setting aside the confidentiality undertakings, counsel may not advise the plaintiff, through their instructing solicitors, that the circumstances attendant upon the redactions made, not only show a breach of the orders of 27 September 2006, but may constitute a wilful and contumelious flouting of the order in question in circumstances where a motion for contempt leading to the punishment of those responsible may have reasonable prospects of success.

42 For those reasons this application should be dismissed, with costs.