Xstrata Mangoola Pty Ltd v Muswellbrook Shire Council

Can the Council Seek an Order for Discovery in Class 3 of the Court's Jurisdiction? 7Xstrata submitted that orders for discovery were neither necessary nor appropriate in merit appeal matters commenced in Class 3 of the Court's jurisdiction. It pointed out that parties seeking documents in Class 3 merit appeals typically issue notices to produce or subpoenas. 8However, as the council properly drew to the Court's attention, this could not presently be done because the documents could not be identified with sufficient precision that would enable a notice to produce be issued. At this early stage in the proceedings this is no doubt correct. 9Rule 21.2 of the Uniform Civil Procedure Rules 2005 ("UCPR") provides as follows: 21.2 Order for discovery (1) The court may order that party B must give discovery to party A of: (a) documents within a class or classes specified in the order, or (b) one or more samples (selected in such manner as the court may specify) of documents within such a class. (2) A class of documents must not be specified in more general terms than the court considers to be justified in the circumstances. (3) Subject to subrule (2), a class of documents may be specified: (a) by relevance to one or more facts in issue, or (b) by description of the nature of the documents and the period within which they were brought into existence, or (c) in such other manner as the court considers appropriate in the circumstances. (4) An order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue. 10Rule 21.1(2) defines "relevant to a fact in issue" in r 21.2(4) as: (2) For the purposes of this Division, a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence. 11Consistent with r 21.2(1)(a), the council identified the categories of documents that it seeks to have discovered. These total 45 categories of documents and do not include three categories which, after discussion at the hearing, the council agreed not to press because of their breadth. 12Orders for discovery in this Court have not been commonly sought or granted in recent times in any Class of its jurisdiction and have rarely been made in respect of Class 3 proceedings (only one case could be found: Darkingung Local Aboriginal Land Council v the Minister Administering the Crown Lands Act, NSW Land and Environment Court, Stein J, 14 February 1991, unreported, where the proceeding effectively involved a judicial review challenge to the validity of a Certificate issued by the Minister under the Aboriginal Land Rights Act 1983). 13In part, this paucity may be explained by the Practice Notes in Class 4 of the Court's jurisdiction that clearly state that an order for discovery will only be made in "exceptional cases" (see paragraph 15). The Practice Notes, therefore, impose an extra limitation on the Court's ability to order discovery in addition to the strictures imposed by r 21.2 of the UCPR (see Ralph Lauren 57 Pty Ltd v Byron Shire Council [2010] NSWLEC 207 at [25] per Craig J) and the principles contained in ss 56-60 of Civil Procedure Act 2005 ("CPA"). 14Curiously, the Practice Notes with respect to Classes 1, 2 and 3 of the Court's jurisdiction are silent in relation to discovery. Whether this is as a result of deliberate or accidental omission cannot be known. Understandably, Xstrata submitted that it would be absurd if a more stringent test was imposed for the imposition of an order for discovery in Class 4 of the Court's jurisdiction than in a merit appeal under Class 3. 15While I do not accept that this result would necessarily be "absurd", I do accept that it would be anomalous. But an anomaly, of itself, cannot in this instance operate to deny the availability of an order for discovery in favour of the council. The implication that Xstrata seeks the Court to draw, namely, that no orders for discovery are permitted in Class 3 proceedings, is simply not available absent clear and express words to this effect in the Land and Environment Court Act 1979, the Land and Environment Court Rules 2007 or the Practice Notes governing Class 3 Proceedings. Accordingly r 21.2 of the UCPR, together with ss 56 - 60 of the CPA, apply to Class 3 of the Court's jurisdiction, and orders for discovery can be made by the Court. 16However, merely because discovery can be ordered by the Court in Class 3 of its jurisdiction, it does not automatically follow that the Court should exercise its discretion in favour of the council and make the order.

Should an Order for Discovery be Made? 17The council relied on an affidavit of Ms Amanda Farmer affirmed 24 February 2011. Ms Farmer is the employed solicitor of Lawyers Central Pty Ltd, the council's legal representatives. The Court rejected the affidavit in its entirety because it did no more than state that on 4 February 2011, the Court "ordered the Defendant to file a Notice of Motion should it determine to apply for an order of discovery" and that "the Defendant seeks the orders set out in the Notice of Motion filed together with this Affidavit". Affidavits in this form are meaningless. While an affidavit may be required to file an application in the Registry, there is no requirement that it be read. 18Xstrata relied on two affidavits in resisting the application. First, an affidavit of Mr Ian Gough sworn 9 March 2011. Mr Gough is the commercial manager employed by Xstrata. In his affidavit he estimated that it would take 523.5 hours to find, collate and provide to Sparke Helmore Lawyers, Xstrata's legal representatives, the material sought pursuant to the application. He further estimated that the cost of doing so would be $28,524.25. Mr Gough attached a schedule prepared by him to his affidavit that dealt with each of the 45 categories of the documents to be discovered and indicated the time it would take to prepare these documents and the estimated cost. It was this schedule that formed the basis of the two estimates referred to above. 19Mr Gough stated that in his opinion the documents requested at 4a, 4b, 4ff, 4hh, 4ii, 4jj, 4kk, 4ll, 4nn, 4oo, 4pp, 4qq and 4rr of the categories of documents to be discovered were commercially sensitive. This was not disputed by the council. 20Mr Gough was cross-examined. The cross-examination revealed the following: (a) that the time estimated to prepare six of the 45 categories of discoverable documents required further clarification, which had not been carried out; (b) that where the estimate of four weeks was given in respect of category 4a, he could not recall whether that estimate was based on a 35 hour week; (c) that some of the matters denied by Xstrata in their statement of facts and contentions were in fact true. For example, there were bund walls constructed on the land for the purpose of mining; and (d) that Xstrata could pay the amount estimated to give discovery of the documents sought. 21Second, Xstrata relied on an affidavit of Ms Kelly O'Mullane affirmed 9 March 2011. Ms O'Mullane is a lawyer employed by Sparke Helmore Lawyers. Ms O'Mullane deposed that in relation to the documents in Sparke Helmore's possession, Sparke Helmore held 110 files that may contain documents or information that would answer the council's categories of discoverable documents. It was her estimate that it would take one hour to review each of the 110 files, and at $305.00 per hour, she estimated Sparke Helmore's fees in reviewing the information to be $30,500.00 (exclusive of GST and photocopying charges). Ms O'Mullane also estimated that it would take up to 20 hours to review, supervise, collate and copy the information that Xstrata would provide to Sparke Helmore Lawyers, and that this would result in fees being charged for those services of approximately $6,100.00. 22Ms O'Mullane was also cross-examined by the council, during which she conceded that she had not taken any steps to identify the volume of material contained in the 110 files. That is to say, she accepted that some of the files could be single sheet of paper, whereas others could span several lever arch folders. 23From the cross-examination of both witnesses, the Court accepts the submission of the council that the time and cost likely to be incurred in discovering the documents has been overestimated by Xstrata. Having said this, the extent of the overestimation is, in the Court's opinion, relatively immaterial, and furthermore, the Court accepts that given the extensive nature of the categories of documents sought to be discovered that the cost and time involved will not be inconsiderable. 24The council's arguments in support of its application for discovery may be summarised as threefold: (a) first, that the council required verified discovery in order to prove its case; (b) second, that the documents sought were all relevant to facts in issue in the proceedings, premised as they were on denials contained in Xstrata's statement of facts and contentions; and (c) third, the council submitted that leaving aside the evidence with respect to costs, there was no evidence that the categories sought were oppressive. 25I found none of these arguments persuasive. First, not only is this Court not a court of strict pleading ( Gray v Macquarie Generation (No 3) [2011] NSWLEC 3 at [56] per Pain J), but as Xstrata notes, the notice of motion seeking discovery was filed and served at the same time that its statement of facts and contentions was filed and served. It cannot, therefore, be said that the need for discovery emanated from Xstrata's statement of facts and contentions. 26Second, although Xstrata accepted that insofar as each party asserted that the land should be assessed in a particular way, each party bore an onus of proof in relation to the assessment claim, Xstrata also submitted that it would be content to file and serve its evidence first, thereby potentially reducing the scope of the documents required by the council. 27Third, Xstrata argued that given that the council had previously assessed the land as farm land, but had now altered the assessment to categorise the land as mining, the council must already have in its possession the documents required to justify the change in assessment and thus to prove its case. In my view, there is considerable force in this submission. 28Fourth, Xstrata emphasised the fact that because costs in this Class of proceedings are not ordered unless it is fair and reasonable to do so (see r 3.7(1) and (2) of the Land and Environment Court Rules), there is a very real likelihood that the costs involved in having to give verified discovery would never be recovered by it, even if it was wholly successful. I accept this submission. 29Fifth, significantly, Xstrata accepted that many of the categories of discovery sought by the council, if obtained by issuing a notice to produce, could not be resisted. These were the documents described in categories 4b, 4d, 4e, 4g, 4i, 4n, 4p, 4q, 4r, 4s, 4u, 4v, 4w, 4x, 4y, 4aa, 4cc, 4dd, 4ee, 4ff, 4gg, 4hh, 4ii, 4ll, 4mm, 4nn and 4rr. 30I am of the view that the documents properly and fairly conceded by Xstrata to be relevant to facts in issue in the proceedings should be produced by Xstrata to the council. However, I do not accept there is any reason why Xstrata should be compelled to give verified discovery in respect of these documents pursuant to r 21.4 of the UCPR, or to provide a list pursuant to r 21.3. The fact that Mr Gough's cross-examination revealed that some of the facts previously in contention may now be agreed is not sufficient, particularly when the cost involved in providing a verified list would, in my opinion, be disproportionate to the importance of the subject matter of the dispute (s 60 CPA). And that Xstrata can afford to pay these costs, while probably relevant, is not determinative. The documents are, therefore, more appropriately to be produced pursuant to an order for informal discovery. 31To order Xstrata to complete a verified list of these documents would not, in my opinion, facilitate the overriding purpose of the "just, quick and cheap" resolution of the real issues for determination in the proceedings (s 56 of the CPA, and see also ss 57-59 of that Act which are applicable). 32This leaves the remaining categories of documents over which there is real dispute as to their relevance, namely, 4a, 4c, 4f, 4h, 4j, 4k, 4l, 4m, 4o, 4t, 4jj, 4kk, 400, 4pp, 4qq and 4ss. 33Category 4a seeks discovery of the reports considered by, the meeting agendas, the records of deliberation and the resolutions of Xstrata concerning its purchase of the land. I agree with Xstrata that insofar as these documents demonstrate the state of mind of Xstrata prior to or at the time of the purchase of the land, they are not relevant to the dominant use of the land at the time of the reassessment by the council. No order is, therefore, made in relation to these documents. 34Categories 4c, 4h, 4o, 4jj, 4oo, 4pp, 4qq and 4ss all seek documents recording budgets or estimates of income. To the extent that these documents relate to a potential future use of the land, Xstrata submits that they are not relevant to a fact in issue. By contrast, the council states that budgetary and forecast material relating to expenditure may be relevant to demonstrate the use to which the land was put in the relevant assessment year. 35The definition given to the expression "relevant to a fact in issue" in r 21.1(2) of the UCPR is as long as it is wide. Having regard to its breadth, I accept that budgets and forecasts from 1 July 2009 onwards could demonstrate the use to which the land was put in the relevant assessment year. Accordingly, these documents should be provided to the council, but production is limited to the period 1 July 2009 to date. 36The documents described in categories 4j and 4w concern records of data taken from dust gages and explosion impact measurements. The council submitted that this information was needed in order to assess whether the land was fit for the purpose for which Xstrata claimed the land was being used. But, in my opinion, the fitness for purpose of the land is irrelevant. It is the actual dominant use of the land that is in issue between the parties. No orders are, therefore, made in relation to these categories of documents. 37Categories 4f and 4t were resisted by Xstrata on the basis that documents were sought in respect of proposed or intended bund walls to be constructed on the land and the proposed or intended exploration holes to be drilled on the land. I agree. What is proposed or intended to be constructed or drilled can have no bearing to a reassessment of the land that has already taken place. No orders are to be made in relation to these two categories of documents. 38Finally, categories 4k, 4l and 4m concern documents in respect of the offset strategy on or for the land. Absent any further clarification from the council, I do not understand how, at this stage at least, these documents are relevant to a fact in issue in the proceedings. Consequently, no orders are made in relation to these categories of documents. 39It should be noted that to the extent that the Court has refused to make orders in respect of the categories of documents identified above, this will not preclude the council from seeking to obtain these documents at a later stage during the proceedings, assuming their relevance can be demonstrated.

Orders 40Because no further submissions were made in respect of the documents claimed to be commercially sensitive and because further timetabling of these proceedings will be necessary consequent upon the resolution of this application, the parties are requested to bring in short minutes of order in conformity with these reasons within 24 hours.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 March 2011