Alcoa of Australia Ltd v Apache Energy Ltd
[2014] WASCA 148
•15 AUGUST 2014
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: ALCOA OF AUSTRALIA LTD -v- APACHE ENERGY LTD [2014] WASCA 148
CORAM: McLURE P
BUSS JA
NEWNES JA
HEARD: 1 MAY 2014
DELIVERED : 15 AUGUST 2014
FILE NO/S: CACV 122 of 2013
BETWEEN: ALCOA OF AUSTRALIA LTD
Appellant
AND
APACHE ENERGY LTD
First RespondentAPACHE NORTHWEST PTY LTD
Second RespondentHARRIET (ONYX) PTY LTD
Third RespondentKUFPEC AUSTRALIA PTY LTD
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :LE MIERE J
Citation :ALCOA OF AUSTRALIA LTD -v- APACHE ENERGY LTD [No 4] [2013] WASC 377
File No :CIV 1481 of 2011
Catchwords:
Practice and procedure - Leave to appeal from interlocutory orders - Right to inspection of discovered documents - Confidential or commercially sensitive documents - Discretion of court to impose a confidentiality regime restricting access to discovered documents - Case flow management - Open justice - Adequacy of reasons and fact finding by primary judge - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 9A, O 26
Result:
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant: Mr N J O'Bryan SC & Mr B L Reilly
First Respondent : Mr A J Rickarby
Second Respondent : Mr B D Luscombe
Third Respondent : Ms A Richmond-Scott
Fourth Respondent : Mr B Dharmananda SC
Solicitors:
Appellant: Tottle Partners as agents for Lander & Rogers
First Respondent : K & L Gates
Second Respondent : Clifford Chance
Third Respondent : Lavan Legal
Fourth Respondent : Allens
Case(s) referred to in judgment(s):
Apache Energy Ltd v Alcoa of Australia Ltd [No 2] [2013] WASCA 213
Cazaly Pty Ltd v Minister for Resources [2007] WASCA 60
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Hadid v Lenfest Communications (1996) 70 FCR 403
Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316
Harman v Secretary of State, Home Department [1983] 1 AC 280
Hearne v Street [2008] HCA 36; (2008) 235 CLR 125
ICAP Australia v Forrest Moebes [2010] NSWSC 738
Kimberley Mineral Holdings Ltd (in liq) v McEwan [1980] 1 NSWLR 210
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [2010] WASC 217
Middleton v The State of Western Australia (1996) 17 WAR 201
Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 27
Re Hogan; Ex parte West Australian Newspapers Ltd [2009] WASCA 221
SNF (Australia) Pty Ltd v Jones [2008] WASCA 121
The Australian Statistician v Leighton Contractors Pty Ltd [2008] WASCA 34
Wilson v Metaxas [1989] WAR 285
McLURE P: The appellant/plaintiff, Alcoa of Australia Ltd (Alcoa) seeks leave to appeal from interlocutory orders made by the case management judge, Le Miere J, on 16 October 2013. The primary judge ordered the parties to confer regarding the terms of a confidentiality regime that will apply to documents that have been, or will be, discovered by Apache Energy Ltd, the first respondent/first defendant (Apache), Apache Northwest Pty Ltd, the second respondent/second defendant (Apache Northwest), Harriet (Onyx) Pty Ltd, the third respondent/third defendant (Harriet), and Kufpec Australia Pty Ltd, the fourth respondent/fourth defendant (Kufpec).
The primary judge also ordered that until further order, or by agreement between the parties, Alcoa's right to inspect the respondents' documents is limited to inspection by and disclosure to individuals nominated by Alcoa to the respondents comprising only up to four external counsel retained by Alcoa in the proceedings and up to four solicitors or graduates from the solicitors representing Alcoa in the proceedings (Lander & Rogers) who sign a confidentiality undertaking.
The parties were given liberty to apply on three days' notice in writing. Alcoa was ordered to pay the respondents' costs of the application.
Alcoa claimed below and in the appeal that it has a right to inspect the documents discovered by the respondents and that the primary judge did not have jurisdiction to make the order for conferral and the interim confidentiality regime.
The factual background to the litigation is detailed in Apache Energy Ltd v Alcoa of Australia Ltd [No 2] [2013] WASCA 213, in which this court dismissed an appeal from the primary judge's dismissal of the respondents' application for summary judgment. Special leave to appeal to the High Court was refused.
It is sufficient for present purposes to note the following. Apache Northwest, Harriet and Kufpec, with other parties, co‑owned the facilities at Varanus Island for the production, processing and transport of gas (the Facilities). They were also the licensees of (inter alia) a 12 inch sales gas pipeline (SGL) that ruptured, causing an explosion and fire at the Facilities on 3 June 2008.
Alcoa is the owner and operator of three alumina refineries in Western Australia that use significant quantities of natural gas. Alcoa entered into two long‑term agreements in writing for the purchase of gas from the Facilities (GSA). One GSA was with three sellers, Apache Northwest, Harriet and Kufpec (the Harriet GSA) and the other with Apache Northwest (the John Brookes GSA).
Apache is the operator of the Facilities pursuant to 'contracts, arrangements or understandings' with Apache Northwest and/or the other parties who co‑owned the Facilities. Apache, the holding company of Apache Northwest, is the representative of all the sellers of the gas under both GSAs.
Alcoa claims in negligence against each respondent for failing to prevent the rupture of the SGL which caused it economic loss. The economic loss claimed is the cost to Alcoa of having to acquire alternative energy supplies at a price exceeding the price payable under the GSAs.
Alcoa also claims in contract for breach of the Harriet GSA, the breach being the individual sellers failure to deliver their percentage interest share of gas under that agreement. Alcoa also claims for breach of the John Brookes GSA, the breach being Apache Northwest's failure to supply gas under that agreement.
Discovery/inspection and the primary judge's reasons
In December 2012 the primary judge determined that the respondents' discovery should be given in stages. The first tranche of documents was discovered by Apache and Apache Northwest (the Apache respondents) on 1 February 2013, being a list of 14 documents comprising a total of around 4,900 pages. The solicitors for the Apache respondents informed Alcoa's solicitors that 12 of the listed documents were confidential or commercially sensitive and that copies of those documents would be made available for inspection once the parties had agreed on a confidentiality regime. Apache's solicitors subsequently provided a proposed confidentiality regime. After an exchange of correspondence on the topic, Alcoa had still not agreed to that, or any, confidentiality regime.
In March 2013 Alcoa applied for an order requiring the Apache respondents to allow Alcoa to inspect the 12 documents the subject of the confidentiality claim in the first tranche. In response to that application, the Apache respondents applied for an interim confidentiality order in relation to the tranche 1 documents, limiting inspection by and disclosure to two external counsel, two solicitors or graduates from Lander & Rogers and three named employees of Alcoa. In the alternative, they sought an order that they produce for inspection the documents the subject of the tranche 1 discovery in accordance with a confidentiality regime that was Schedule 1 to the minute of proposed orders (the Apache confidentiality regime).
The Apache confidentiality regime was lengthy and detailed. It was summarised by the primary judge as follows. A party who produces documents may identify them as a 'confidential document' or a 'restricted confidential document'. Access to confidential documents is restricted to solicitors, law graduates, counsel, experts and three employees nominated by the party. That may be altered by agreement. Access to restricted confidential documents is confined to solicitors, counsel and experts. Those who inspect confidential documents or restricted confidential documents are, in essence, obliged to use them only for the purpose of the proceedings and to keep them confidential. The regime has a mechanism for adding additional nominated persons, a procedure to vary the regime by agreement and a procedure for resolving disputes about confidentiality. It is only after a party has identified a document upon which it intends to rely in the trial of the proceedings that a party may dispute the producing party's assertion of confidentiality over the documents. If, following conferral, the parties are unable to agree on an approach for the treatment of the disputed document, the party wishing to dispute the confidentiality may apply to the court for orders that the disputed document is not confidential.
By the time of the hearing before the primary judge, the Apache respondents had provided discovery of the tranche 2 documents. The lists comprised 2,689 documents, 2,608 of which the Apache respondents claimed should be covered by the confidentiality regime. A third and fourth tranche of discovered documents from the Apache respondents (the third relating to the duty of care issue) were still outstanding.
Harriet and Kufpec supported the Apache respondents' application. In August 2013 the respondents had, after conferral, agreed to a revised Apache confidentiality regime. Kufpec's discovery contains approximately 4,178 documents of which 1,830 are subject to a confidentiality claim.
The central issue before the primary judge was Alcoa's claim that he did not have jurisdiction to make the orders sought by the Apache respondents. The appropriateness of the terms of the Apache confidentiality regime was not the focus of argument. Indeed, at no stage up to and including the appeal did Alcoa move from its position of total opposition to any confidentiality regime.
Alcoa's position below and in the appeal is that (1) it has a prima facie right to inspect the documents discovered by the respondents; (2) it is incumbent upon the parties seeking to displace that prima facie right to explain fully how and why the relevant information ought to be excluded from inspection in the ordinary way and that must be done by demonstrating, in relation to each document, exactly what it is in the document that justifies restrictions upon access; (3) as a result of the Apache respondents failure to comply with (2), the primary judge lacked the jurisdiction to make the orders sought by them.
The Apache respondents' application for confidentiality orders was supported by affidavits sworn by Mr Ben Luscombe, a partner of the solicitors for the second respondent, on 30 April 2013, 23 May 2013 and 30 May 2013. Based on his review of that evidence, the primary judge concluded:
The evidence is not sufficient to establish that each part of each of the 12 documents which [Alcoa] seeks to inspect is relevantly confidential. However, I am satisfied that each of the documents contain at least some confidential or commercially sensitive material and it would take substantial time and therefore costs to examine them sufficiently to identify each part of the document that is confidential or commercially sensitive [16].
The primary judge rejected Alcoa's claim that he was required to deal with claims of confidentiality on a document‑by‑document basis. He said:
I am satisfied that the court has power and discretion to tailor-make orders for inspection which orders involve a confidentiality regime restricting access to documents. That power and discretion arises from O 26 r 9 and r 11 and O 1 r 4A and r 4B of the Rules of the Supreme Court.
In the circumstances of this case the imposition of a confidentiality regime will advance the objects set out in O 1 r 4B(1)(a) to (d). Those circumstances include that this is substantial commercial litigation, there are a large number of documents involved, a substantial number of documents contain confidential or commercially sensitive information and discovery is to be in stages. If claims to confidentiality are to be made, argued and determined by the court on a document by document basis that is likely to be time consuming, expensive and involve substantial court resources. A regime of the sort proposed by the defendants in effect delays any contest over the confidentiality of individual documents until the parties have determined that it is necessary to determine whether or not the document is confidential. That process will save substantial costs to the parties and significant court resources [22] ‑ [23].
Grounds of appeal
Alcoa claims the primary judge erred in law:
(1)in holding that all discovered documents produced by the respondents for inspection should be produced subject to the imposition of a confidentiality regime required by the respondents but not otherwise;
(2)in failing to give reasons for dismissing Alcoa's application for inspection of the tranche 1 documents;
(3)in holding that each of the 12 documents which Alcoa sought to inspect contained confidential or commercially sensitive information which justified the Apache respondents refusing inspection absent the imposition of a confidentiality regime;
(4)in failing to make sufficient findings and give sufficient reasons for his conclusions that each of the 12 documents contained confidential or commercially sensitive information which justified refusing inspection without a confidentiality regime;
(5)in failing to make sufficient findings and give sufficient reasons for his conclusion that a substantial number of documents discovered by the respondents contained confidential or commercially sensitive information which justified the Apache respondents refusing inspection absent the imposition of a confidentiality regime.
In order to obtain leave to appeal Alcoa must establish that the primary judge's decision was wrong or at least attended with sufficient doubt to justify the grant of leave and that substantial injustice would occur if the decision was left unreversed: Wilson v Metaxas [1989] WAR 285, 294.
Additional evidence
Alcoa had not inspected the tranche 1 or other discovered documents prior to the hearing before the primary judge. That was the case notwithstanding advice from the Apache respondents' solicitors that they would produce copies of the documents to two nominated solicitors from Lander & Rogers and two counsel retained by Alcoa subject to a signed undertaking not to provide copies to anyone else (G1/233). However, Alcoa's failure to inspect did not prevent its senior counsel from making submissions to the primary judge that many documents in the tranche 1 list were demonstrably not confidential.
Alcoa obtained a stay of the conferral order pending the determination of this appeal. However, after signing a confidentiality undertaking, an Alcoa legal representative inspected a sample of the type of documents referred to in Alcoa's submissions to the primary judge.
The additional evidence sought to be admitted in the appeal are the sample documents reviewed by the Alcoa legal representative (the sample documents), his opinion as to their confidentiality and minutes of consent orders relating to confidentiality in the special leave application.
The sample documents comprise six documents sent to or by Alcoa that form part of one or more of the 12 tranche 1 documents the subject of the claim of confidentiality.
The respondents oppose the application to adduce additional evidence. As to the sample documents, they say Alcoa could and should have put them in evidence at the hearing below or they could be the subject of a further application to the primary judge pursuant to the liberty to apply order. There is merit in the respondents' submission. However, the sample documents add flesh to the skeleton of Alcoa's repeated assertion in the appeal that the general confidentiality claim is 'absurd' or 'crazy' (ts 10, 11, 30, 95). I would grant leave to adduce the additional evidence.
The evidence
The evidence relied on by the Apache respondents is at a relatively high level of generality. It did not permit the primary judge (or this court) to rule on the specific content of any part of the tranche 1 or other discovered documents.
However, evidence in Mr Luscombe's 23 May 2013 affidavit is to the effect that the tranche 1 documents contain information relating to:
(a)the operation and design of the gas processing plant and facilities on Varanus Island and offshore operations, said to be the product of Apache's know‑how obtained over several years;
(b)the operating conditions of various pipelines within the Varanus Island and offshore operations which differ from the publicly known design conditions, said to be valuable information for a competitor of Apache;
(c)the details of production and processing operations conducted on Varanus Island and offshore operations, said to be information which may assist Apache's competitors or customers because they may become aware of the precise capacity that the facilities have to produce gas;
(d)Apache's proprietary information contained in two specified documents, said to represent valuable know‑how which could give a competitor a competitive advantage;
(e)safety and operational know‑how developed by Apache over a number of years, also said to represent valuable know‑how for Apache;
(f)the details of security procedures and security precautions taken by the respondents on Varanus Island and offshore operations; it is said that if the security of the gas field were compromised, it would fundamentally affect the ability of Apache to operate the gas field.
There is also evidence that the Australian Government regards Australia's offshore oil and gas infrastructure, including that of the respondents, as critical infrastructure of national significance and is closely involved in ensuring the formulation and implementation of preventative security and risk reduction strategies.
Based on my review of the affidavits filed by the Apache respondents in support of their application, I have concluded that it was open to the primary judge to be satisfied that each of the 12 documents in the tranche 1 discovery contain at least some confidential or commercially sensitive material and that it would take substantial time and costs to examine them sufficiently to identify each part of the document that is confidential or commercially sensitive.
Other relevant matters
In addition to the claims of confidentiality and/or commercial sensitivity, the Apache respondents relied on the following matters in support of the need for a confidentiality regime.
Under O 9A of the Rules of the Supreme Court 1971 (WA) (Rules), a party to a case must notify the principal registrar and each other party of the identity of any person who is an 'interested non‑party' in relation to the notifying party. An interested non‑party is a person, other than a legal practitioner for the party, who provides funding or other financial assistance to the party for the purposes of conducting the case and exercises direct or indirect control or influence over the way in which the party conducts the case.
Alcoa lists 20 interested non‑parties in its O 9A certificate, all of whom are insurance companies. Twelve of the insurers are not registered foreign companies in Australia and do not have a registered office in Australia.
At the hearing of the appeal, counsel for Apache Northwest informed the court, without objection, that the interested non‑parties (or some of them) and Alcoa's solicitors, Lander & Rogers, act for other persons who are claiming losses from the respondents arising out of the Varanus Island explosion on 3 June 2008. Around six other actions were commenced in this court prior to 3 June 2014. There is no evidence that the insurers or Lander & Rogers have this court's leave to use the respondents' documents discovered in these proceedings in the other actions.
The Harriet GSA and the John Brookes GSA each impose obligations of confidentiality on their respective parties relating to, inter alia, the price and volume of gas supplied under the GSAs. In compliance with its contractual obligations, Alcoa filed separate statements of claim in the action against the respondents, with confidential information redacted and placed in a confidential attachment.
As I understand the position, the Apache respondents support their claim of confidentiality in relation to the sample documents on the basis of the GSA obligations of confidentiality. That obligation would also prevent the parties to the John Brookes GSA (Alcoa and Apache Northwest) from supplying confidential information relating to that GSA to Harriet and Kufpec.
Finally, there is evidence that Alcoa has invested $25 million in the construction of the Red Gully gas and condensate plant as part of a forward sales component of a gas sale agreement with Empire Oil and Gas NL. It also has an interest in the Warro gas project in the Perth Basin, said to be one of the largest undeveloped onshore gas fields in Australia.
The Rules and the case law
Actions in this court are managed in accordance with a system of positive case flow management with the objects of, inter alia, disposing efficiently of the business of the court, facilitating the timely disposal of business and maximising the efficient use of available judicial resources, all whilst promoting the just determination of litigation: O 1 r 4B(1). The Rules are to be construed and applied and the processes and procedures of the court conducted so as best to ensure the attainment of those objects: O 1 r 4B(2).
Order 26 r 8(1) relevantly provides:
A party who has served a list of documents on any other party in compliance with rule 1 or with an order under rule 7 must allow the other party to inspect the documents mentioned in the list, other than any which he objects to produce, and must when serving the list on the other party also serve on him a notice stating a time within 7 days after the service thereof at which the said documents may be inspected at the place specified in the notice. (emphasis added)
Order 26 r 9(1) relevantly provides:
Where a party who is required by rule 8(1) to serve the notice therein mentioned … ‑
(a)fails to serve the notice under rule 8(1) … ; or
(b)objects to produce any document for inspection; or
(c)offers inspection at a time or place which in the opinion of the Court is unreasonable for such purpose,
the Court may on the application of the party entitled to inspection make an order for production of the documents in question for inspection at such time and place, and in such manner as it thinks fit.
On the proper construction of O 26 r 9(1) the court has a discretion, not a duty, to order production of discovered documents, even on the application of a party 'entitled to inspection', and a power to impose restrictions or conditions on any order for production. This construction is consistent with O 26 r 11 and O 1 r 4B and the approach to the equivalent rule in New South Wales: Kimberley Mineral Holdings Ltd (in liq) v McEwan [1980] 1 NSWLR 210, 214.
At any stage of the proceedings in any cause or matter the court may, subject to r 11 order any party to produce to the court any document in his possession, custody or power, relating to any matter in question: O 26 r 10.
Order 26 r 11 provides:
No order for production of any documents for inspection or to the Court shall be made unless the Court is of opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.
For the purposes of O 26 r 11, once the existence and relevance of documents has been demonstrated, and inclusion in an affidavit of discovery will satisfy that requirement, the party seeking production has ordinarily done enough to establish that access to the documents is necessary: Middleton v The State of Western Australia (1996) 17 WAR 201, 213 ‑ 215. The use of the word 'ordinarily' connotes that this is a general rule.
Grounds to resist production of discovered documents include legal professional privilege, privilege against self‑incrimination and public interest immunity. These are rules of substantive law, the first two of which are absolute, unless waived by the person entitled to privilege. Public interest immunity is of a different character. It cannot be waived but is not absolute; it has to be weighed in the balance with the competing public interest in the due administration of justice: The Australian Statistician v Leighton Contractors Pty Ltd [2008] WASCA 34 [30] ‑ [32].
A party who is entitled to privilege or public interest immunity in relation to a discovered document (whether by reason of content or class) has a positive substantive right to withhold that document from production and inspection. Confidentiality or commercial sensitivity gives rise to no such positive right. The respondents do not suggest otherwise. They seek a confidentiality regime, not as a claim of right to withhold production but to secure the performance of Alcoa's substantive obligation in relation to discovered documents.
In relation to documents produced by one party to another in the course of discovery in court proceedings, there is an implied undertaking that the party will not (i) make the contents of discovered documents public, (ii) communicate the contents of such documents to any stranger to the suit, or (iii) use the documents or copies of them for any purpose that is collateral to the purpose which production of the documents is intended to serve: Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 334; Harman v Secretary of State, Home Department [1983] 1 AC 280, 304, 306, 308, 327; Hearne v Street (2008) 235 CLR 125.
The implied undertaking is binding upon anyone into whose hands the discovered documents come, if he knows that they were obtained by way of discovery: Hamersley Iron (334 ‑ 335), Hearne [123] ‑ [125].
The implied undertaking is an obligation of substantive law arising from the circumstances in which the material was generated and received: Hearne [102]. It comes to an end if and when a discovered document is received into evidence: Hearne [96]. A breach of the implied undertaking is a contempt of court: Hearne; Hamersley Iron.
An irrelevant consideration - open justice
In recent years, the notion of 'open justice' has had strong winds beneath its wings taking it some distance from its roots and resulting in something that can come close to unrestricted third party access to documents filed in court and documents referred to or tendered in evidence in court proceedings. The federal courts have led the charge in their rules and judicial resistance is now both unfashionable and largely unsuccessful.
However, as noted in Re Hogan; Ex parte West Australian Newspapers Ltd [2009] WASCA 221 [33], one area on the leeside of the winds of change in the court system has been confidential commercial information. That may be due in part to the secrecy associated with private dispute resolution, where much of the high end commercial litigation now goes.
On further reflection, I have departed from my preliminary assessment that the current approach to open justice may be relevant to the determination of the issues in this appeal. The principle of open justice is not to be confused with the right to procedural fairness. Although courts at the trial stage may in the future be more reluctant to suppress confidential commercial information and to redact their reasons to protect the parties commercial interests, the principle of open justice does not apply at the production/inspection stage (cf Hadid v Lenfest Communications (1996) 70 FCR 403, 406).
It does not apply because the existence and scope of the substantive implied obligation relating to discovered documents is positively inconsistent with an extension of the principle of open justice into this area. Although that doctrine will or may affect the fate of discovered documents adduced in evidence at trial, that is usually only a small proportion of the discovered documents.
The nature and scope of the challenged orders
The orders made by the primary judge are interim and of a case management nature. However, to get to that point the primary judge had to reject Alcoa's jurisdictional argument and to accept that a confidentiality regime for discovered documents was appropriate in this case. The primary judge left the scope and terms of any confidentiality regime to the parties in the first instance. Moreover, the primary judge has not made any ruling affecting individual discovered documents.
In his reasons, the primary judge ruled that the interim confidentiality order sought by the respondents, which allowed for inspection by, inter alia, three employees of Alcoa, was appropriate. When the respondents moved for orders on 16 October 2013, the reference to Alcoa's employees was removed with the agreement of Alcoa's counsel (ts 498).
Grounds 1 and 3
Alcoa says its claim that the primary judge lacked jurisdiction is supported by Civic Video Pty Ltd v Paterson [2013] WASCA 107, Cazaly Pty Ltd v Minister for Resources [2007] WASCA 60, Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, 37 ‑ 38 and Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [2010] WASC 217.
The following propositions are established by authority and are uncontroversial.
1.a party to an action has a prima facie entitlement to inspect discovered documents, save in cases where the party giving discovery has a positive substantive right to withhold a document from production;
2.the prima facie entitlement to inspect extends to discovered documents containing confidential and/or commercially sensitive information;
3.inspection of discovered documents by or on behalf of a party gives rise to a substantive legal obligation to use the discovered documents solely for the purpose of the action in which they were discovered. The obligation extends to all persons who deal with the discovered documents with knowledge that they were obtained by way of discovery. A breach of this substantive obligation is a contempt of court;
4.ordinarily, the implied undertaking sufficiently protects the party giving discovery;
5.the court has a discretion under O 26 r 9(1) to make an order for production or inspection and a power to impose restrictions and/or conditions on inspection;
6.the court may exercise its power to impose limitations, restrictions or conditions for the purpose of protecting the efficacy of the implied undertaking;
7.the implied undertaking may be insufficient protection in a variety of circumstances, including but not limited to, cases where discovered documents are relevant to a trade rivalry between the parties to the action; and
8.the exercise of the discretion in O 26 r 9(1) will be informed by the nature and scope of the proposed limitations, restrictions or conditions on the inspection of discovered documents.
Hayne JA (as he then was) said in Mobil Oil (p 39 ‑ 40) that it is usually only upon a consideration of exactly what is in the documents that a decision can be made about what orders should be made for inspection by or on behalf of a party and that it will be appropriate for the judge to inspect the documents concerned. However, these comments have to be understood in their factual context. The parties to the litigation were trade rivals. The question in issue was the precise terms of the confidentiality regime that should apply to particular documents. The appellant contended that the primary judge had erred in allowing a party (the plaintiff) to inspect discovered documents subject to an undertaking not to disclose or discuss their contents with anyone other than its lawyers and experts. Prohibiting personal inspection by a party is the restriction of last resort. The appeal was allowed and remitted to the primary judge to determine whether the action could proceed without the relevant information being revealed to anyone beyond counsel, solicitors and nominated experts on suitable terms of maintaining confidentiality.
The exclusion of a party, who was a trade rival, from personally inspecting specified discovered documents was also the issue in Civic Video, Cazaly Iron and Hadid.
Hadid, a decision of a single judge of the Federal Court (Hill J), was relied on in Lampson. In Hadid, the plaintiff made an application for personal access to specified discovered documents that were the subject of confidentiality orders restricting inspection to lawyers and experts. Hill J granted the application, stating that the party to litigation will often be the person best placed to form an assessment of the real significance of documents produced.
In Lampson, the defendant claimed legal professional privilege over 10 identified discovered documents and also resisted production of those documents on the basis that they were confidential. The claim for legal professional privilege was dismissed by the primary judge (Murphy JA). As to the confidentiality claim, it would appear the defendant was under the misapprehension that confidentiality was a ground for withholding production rather than limiting inspection. The primary judge, relying on Hadid, said that the party seeking to displace the prima facie right to inspection 'must prove the existence and degree of confidentiality involved in relation to the particular documents which are sought to be withheld from inspection' [57] (emphasis added).
The cases on which Alcoa relies provide no support for its claim that the primary judge lacked jurisdiction to make the challenged orders without first ruling on the confidentiality claims in the Apache respondents' discovery on a document‑by‑document basis. Whether or not and how any confidentiality regime affects individual discovered documents has yet to arise for judicial determination in this case.
The primary judge relied on the decision of Ball J in ICAP Australia v Forrest Moebes [2010] NSWSC 738 that:
It is not uncommon in proceedings involving a substantial number of documents in respect of which a special claim of confidentiality is made for the parties, or in some cases the court, to develop regimes to avoid the necessity and expense of having to deal with claims of confidentiality on a document- by- document basis [10].
ICAP Australia is consistent with Kimberley Mineral Holdings (212, 213).
Disposition
Alcoa's claim that the primary judge's jurisdiction to make the challenged orders is conditioned on the Apache respondents establishing their confidentiality claims on a document‑by‑document basis is wrong. It finds no support in the text or purpose of O 26 r 9, either alone or when read with O 1 r 4B, or in the authorities. To erect such a jurisdictional requirement would be to deprive the court of the flexibility that is essential to achieving the case management objectives that enable this court to retain control of its processes, procedures and limited resources even when (or perhaps especially when) litigants with deep pockets may see strategic or other advantages in giving no quarter and hotly contesting interlocutory issues.
It was open on the evidence to conclude that the implied obligation relating to discovered documents would not sufficiently protect a significant proportion of the respondents' confidential discovered documents and that a confidentiality regime was appropriate in this case, leaving the details of that regime to the parties.
The implied obligation is insufficient for a number of reasons. First, having regard to the size, scope and complexity of the litigation, the discovered documents are likely to be widely distributed within Alcoa, its solicitors Lander & Rogers and its multiple insurers. Wide distribution creates a significant risk that not all recipients will be aware of the status of the documents as discovered documents or the restrictions that apply to the use of discovered documents and the information they contain.
Second, in circumstances where, as in this case, unauthorised disclosure of some documents may have adverse security implications for critical infrastructure, that risk should be managed by an express confidentiality regime.
Third, it would be difficult if not impossible for Alcoa's solicitors and insurers not to use the knowledge they have gained from the discovered documents in these proceedings to further the interests of the other plaintiffs they represent in the actions commenced against the respondents relating to loss resulting from the Varanus Island explosion on 3 June 2008.
Fourth, there will be no effective remedy against those of Alcoa's insurers who are not registered foreign companies, and do not have a registered office, in Australia for misuse of the discovered documents.
Fifth, there is a risk that the information in the discovered documents may, unconsciously or unknowingly, be used to advance Alcoa's interests in disputes that may arise in the future under the long term GSAs or in its financial investments on the supply side of the gas industry.
Finally, the contractual obligations of confidentiality in the GSAs may justify inspection of a limited number of discovered documents being confined to the lawyers and experts for the parties.
I would dismiss grounds 1 and 3.
Grounds 2, 4 and 5
These grounds allege insufficient reasons and fact finding by the primary judge. Grounds of this nature are ordinarily unproductive in an interlocutory appeal. The relevant legal principles are summarised in SNF (Australia) Pty Ltd v Jones [2008] WASCA 121, [31] ‑ [34].
The reasoning process which led to the result in this case is disclosed with sufficient certainty to enable Alcoa to know why it is that the result ensued and to ensure the statutory right of appeal. Moreover, notwithstanding some inadequacy in the fact finding relating to the insufficiency of the implied undertaking, this court is entitled to consider and decide the matter for itself: Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 [29]. It has done so above. I would dismiss grounds 2, 4 and 5.
Conclusion
Leave to appeal should be refused and the appeal dismissed. Alcoa has not established that the primary judge's decision is wrong. It has also fallen well short of demonstrating that substantial injustice would occur if the primary judge's decision was left unreversed. Alcoa should pay the respondents' costs of the appeal to be taxed.
BUSS JA: I agree with McLure P.
NEWNES JA: I agree with McLure P.
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