Alcoa of Australia Ltd v Apache Energy Ltd [No 6]
[2014] WASC 287
•13 AUGUST 2014
ALCOA OF AUSTRALIA LTD -v- APACHE ENERGY LTD [No 6] [2014] WASC 287
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 287 | |
| Case No: | CIV:1481/2011 | 31 JULY 2014 | |
| Coram: | LE MIERE J | 13/08/14 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application granted | ||
| B | |||
| PDF Version |
| Parties: | ALCOA OF AUSTRALIA LTD APACHE ENERGY LTD APACHE NORTHWEST PTY LTD TAP (HARRIET) PTY LTD KUFPEC AUSTRALIA PTY LTD |
Catchwords: | Evidence Application for inspection of documents produced in Magistrates Court proceedings Whether documents are subject to implied undertaking not to be used for collateral purposes Implied obligation does not give rise to privilege Inspection of documents Exercise of discretion Production of the documents is necessary for disposing fairly of the matter |
Legislation: | Petroleum Pipelines Act 1969 (WA), s 38(b) Petroleum Pipelines Regulations 1970 (WA), reg 10 Rules of the Supreme Court 1971 (WA), O 26 r 8(1), O 26 r 9(2), O 26 r 11 |
Case References: | Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd [2009] FCAFC 32; (2009) 254 ALR 198 Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 398 Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 Geneva Finance Ltd (Receiver and Manager Appointed) v Boys [2001] WASC 348 Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 230 Hearne v Street (2008) 235 CLR 125 In the Matter of Clarecastle Pty Ltd (in liq) [2011] NSWSC 553 Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 Taylor v Serious Fraud Squad [1999] 2 AC 177 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
APACHE ENERGY LTD
First Defendant
APACHE NORTHWEST PTY LTD
Second Defendant
TAP (HARRIET) PTY LTD
Third Defendant
KUFPEC AUSTRALIA PTY LTD
Fourth Defendant
Catchwords:
Evidence - Application for inspection of documents produced in Magistrates Court proceedings - Whether documents are subject to implied undertaking not to be used for collateral purposes - Implied obligation does not give rise to privilege - Inspection of documents - Exercise of discretion - Production of the documents is necessary for disposing fairly of the matter
Legislation:
Petroleum Pipelines Act 1969 (WA), s 38(b)
Petroleum Pipelines Regulations 1970 (WA), reg 10
Rules of the Supreme Court 1971 (WA), O 26 r 8(1), O 26 r 9(2), O 26 r 11
Result:
Application granted
Category: B
Representation:
Counsel:
Plaintiff : Mr N J O'Bryan SC & Mr B L Reilly
First Defendant : Mr R Richter QC & Mr C Boyce
Second Defendant : Mr R Richter QC & Mr C Boyce
Third Defendant : Ms A Richmond-Scott
Fourth Defendant : Mr M T McKenna
Solicitors:
Plaintiff : Tottle Partners as agents for Landers & Rogers
First Defendant : K & L Gates
Second Defendant : Clifford Chance
Third Defendant : Lavan Legal
Fourth Defendant : Allens Arthur Robinson
Case(s) referred to in judgment(s):
Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd [2009] FCAFC 32; (2009) 254 ALR 198
Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 398
Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10
Geneva Finance Ltd (Receiver and Manager Appointed) v Boys [2001] WASC 348
Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 230
Hearne v Street (2008) 235 CLR 125
In the Matter of Clarecastle Pty Ltd (in liq) [2011] NSWSC 553
Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436
Taylor v Serious Fraud Squad [1999] 2 AC 177
1 LE MIERE J: The plaintiff, Alcoa of Australia Ltd (Alcoa), seeks orders that the first to fourth defendants, Apache Energy Ltd (Apache Energy), Apache Northwest Pty Ltd (Apache Northwest), Tap Harriet Pty Ltd (Harriet) and Kufpec Australia Pty Ltd (Kufpec) respectively, produce for inspection documents produced to them by the prosecutor in proceedings in the Magistrates Court in which Apache Northwest, Harriet and Kufpec were prosecuted for failing to maintain a pipeline in good condition and repair in breach of Petroleum Pipelines Act 1969 (WA) s 38(b). Alcoa also seeks an order that each of the defendants file and serve an amended list of documents in which each of the documents which the defendants object to producing are described sufficiently to enable them to be identified.
This action
2 Alcoa claims, relevantly, damages in negligence against each of the defendants for pure economic loss suffered as a result of the interruption of its gas supply. Alcoa is the owner and operator of alumina refineries in Western Australia. Part of the gas used by Alcoa to fuel its refineries was supplied by Apache Northwest, Harriet and Kufpec under long term gas sales agreements. The gas was produced, processed and transported from facilities at Varanus Island. On 3 June 2008 there was an explosion and fire at the Varanus Island facilities. The explosion and fire resulted from the rupture of a 12 inch sales gas pipeline (the 12 inch SGL). As a result of the explosion and fire, and consequential damage to the facilities, there was an interruption in the supply of gas to Alcoa under the gas sales agreements.
3 Apache Energy was the operator of the facilities and the 12 inch SGL. Apache Northwest, Harriet and Kufpec were the licensees of a licence granted by the State of Western Australia to operate the pipelines in the facilities, including the 12 inch SGL. Regulation 10 of the Petroleum Pipelines Regulations 1970 (WA) required the pipelines, including the 12 inch SGL, to be operated in a proper and workmanlike manner and in accordance with good pipeline operation practice.
4 Alcoa pleads that the fire and explosion occurred as follows. The 12 inch SGL crossed the beach perimeter of Varanus Island on the way from the island to the mainland (Beach Crossing). The 12 inch SGL ruptured at the Beach Crossing. This rupture caused a violent release to the atmosphere of a stream of highly pressurised gas which ignited and resulted in an explosion and fire in the Beach Crossing area. This initial explosion and fire caused consequential ruptures to other pipelines. The initial rupture at the Beach Crossing occurred due to a structural failure of the 12 inch SGL caused by significant corrosion damage to the external surface of the pipe. The fire and explosion damaged part of the facilities which resulted in an immediate and total cessation of the supply of gas to Alcoa.
5 Alcoa claims that Apache Energy failed to exercise reasonable care and skill in operating, maintaining and/or repairing the 12 inch SGL in the area of the Beach Crossing to prevent the rupture of the pipeline, as a result of which the fire and explosion occurred and Alcoa has suffered economic loss. Alcoa alleges that Apache Northwest, Harriet and Kufpec failed to exercise reasonable care and skill in supervising, overseeing and/or monitoring the operation, and maintenance and repair of the 12 inch SGL in the area of the Beach Crossing to prevent rupture of the pipeline. Alcoa alleges that the fire and explosion was caused by Apache Northwest, Harriet and Kufpec's breach of duty, as a result of which Alcoa has suffered economic loss.
The prosecution
6 The Department of Mines and Petroleum prosecuted Apache Northwest, Kufpec and Harriet in the Magistrates Court of Western Australia for the alleged offence that, being the registered holders of a pipeline licence under the Petroleum Pipelines Act, they failed to maintain the pipeline in good condition and repair. Particulars of the offence alleged that the pipeline was not maintained in good condition and repair in that the 12 inch SGL was corroded from a nominal wall thickness of 11.1 mm down to a wall thickness of 3 - 4 mm in the area of the pipeline rupture which occurred at the pipeline beach crossing on Varanus Island on 3 June 2008.
7 In the course of those proceedings the Department produced to Apache Northwest, Harriet and Kufpec documents pursuant to its disclosure obligations. The documents include witness statements and annexures to the statements. The Department subsequently discontinued the prosecution and the witness statements and annexures were not adduced in evidence.
Defendants give discovery and object to production of documents
8 Each of the defendants has given discovery. Apache Energy and Apache Northwest object to producing 'documents relevant to this proceeding produced by the prosecution to Apache Northwest Pty Ltd in [the Magistrates Court proceedings]' on the grounds that: 'the documents are subject to an implied undertaking that they not be used for any purpose other than in the proceedings in which they were produced'.
9 Harriet and Kufpec have each objected to producing documents 'prepared by or for the Department of Mines and Petroleum for the purposes of [the Magistrates Court proceedings]' on the grounds of 'other privilege'. In its list of documents Harriet also objected to producing 'documents prepared by or for [Harriet] for the purposes of [the Magistrates Court proceedings]'. However, counsel for Harriet explained that those documents are merely a subset of the documents which formed part of the prosecution brief served on Harriet in the Magistrates Court proceedings. It is not necessary to give any further attention to that description.
10 In essence, the defendants object to the production of documents contained in the prosecution brief served on Apache Northwest, Harriet and Kufpec in the Magistrates Court proceedings on the ground that the documents are subject to the implied undertaking or obligation that they not be used for any purpose other than in the Magistrates Court proceedings.
Defendants' contentions
11 The defendants resist production of the documents for inspection on two related grounds. First, the defendants say that they are not required, and indeed are unable, to produce the documents because of the implied undertaking or obligation as to discovery. Secondly, the defendants say that the court has a discretion whether to require production and should exercise the discretion against requiring production because the documents are subject to the implied obligation.
Implied obligation
12 Where one party to litigation is compelled to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence: Hearne v Street (2008) 235 CLR 125 [96] (Hayne, Heydon, Crennan JJ). However 'the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection': Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 (Mason CJ) [33]. Documents subject to the implied obligation are discoverable in other legal proceedings: Geneva Finance Ltd (Receiver and Manager Appointed) v Boys [2001] WASC 348; Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436; Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 398; Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 230; In the Matter of Clarecastle Pty Ltd (in liq) [2011] NSWSC 553.
13 The implied obligation does not give rise to a privilege from producing documents. In Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd [2009] FCAFC 32; (2009) 254 ALR 198 Mansfield, Kenny and Middleton JJ observed that the rationale for legal professional privilege is quite different from that for the existence of the implied undertaking. Their Honours said:
The doctrine in Harman gives rise to an implied undertaking to the court not to use documents accessed or any information contained in them through the litigation process otherwise than for the legitimate purposes of the litigation. The rationale for the implied undertaking arises because of the coercive nature of the court process and its impact upon the citizen. It is a legal obligation which arises by operation of law. It is an obligation the court has the right to control and can modify or release a party to the litigation or third party therefrom: see Hearne. The court itself enforces the obligation imposed on a party to litigation or third party.
On the other hand, legal professional privilege is a common law right. The rationale for the privilege is quite different from that for the existence of the implied undertaking.
The limits on the use that can be made of the documents accessed or the information obtained through the litigation process do not attract the same confidentiality as those to which legal professional privilege attaches. For instance, documents obtained by discovery from an opposing party may be read in open court, and whether or not the principles of Harman then still apply to the party to the litigation, it is clear that the public can make whatever use they would like of the information so disclosed in open court: see British American Tobacco Australia Services Ltd v Cowell (No 2) (2003) 8 VR 571; [2003] VSCA 43 at [37]. However, if the document is privileged, no disclosure at all of such document can be made in court, and it would remain confidential.
Further, within the principles of Harman, the legitimate purposes of litigation would entitle an opposing litigant to disclose to his or her potential witnesses, or any one assisting in the litigation, the documents provided by the other side. While the 'privacy' of the other party is sought to be protected, it is not the confidentiality of the type sought to be protected by legal professional privilege. The confidentiality relevant to legal professional privilege is that of preventing one's opponent from seeing the confidential communications between a client and his or her legal representative or otherwise brought into existence for the dominant purpose of the litigation [47] - [50].
14 Notwithstanding the implied obligation, the rules of this court apply to a party who has a document in that party's possession by reason of a process in another court and that party is obliged to comply with the processes in this court and make discovery of the document.
Inspection
15 The defendants accept that they are obliged to discover the documents produced to them by the Department notwithstanding the implied obligation. The defendants say that they have done so. However, the defendants say they are not required to produce the documents for inspection because no rule of court requires them to do so and the court has not made any order that they do so. The plaintiff says, in effect, that production follows upon discovery and the defendants having been ordered to give discovery are obliged to produce the documents for inspection.
16 Order 26 r 8(1) of the Rules of the Supreme Court 1971 (WA) provides that a party who has served a list of documents on any other party in compliance with an order must allow the other party to inspect the documents mentioned in the list, other than those which he objects to produce. The defendants have objected to producing the documents they obtained from the Department. It is necessary to decide whether the defendants' objections should be upheld or they should be ordered to produce the documents for inspection.
17 Order 26 r 9(2) provides that the court may order a party to permit the party applying to inspect any documents in possession of the first party relating to any matter in question in the action. Order 26 r 11 provides that no order for production of any documents for inspection shall be made unless the court is of opinion that the order is necessary either for disposing fairly of the matter or for saving costs. Thus, the burden is on the inspecting party to show why he should have inspection. Where an objection on the ground of privilege is established then as a matter of law production cannot be ordered. But other objections are less powerful and go instead to the exercise of the court's discretion. They include objections on the ground of confidentiality and the implied obligation.
Exercise of discretion
18 The confidential nature of documents is not itself a ground for resisting production. Similarly, the implied obligation is not itself a ground for resisting an order for production. However, O 26 r 9 confers a discretion on the court whether to order inspection and O 26 r 11 provides that inspection will only be ordered if the court is of opinion that the order is necessary either for disposing fairly of the matter or for saving costs. Whether or not production for inspection is necessary for disposing fairly of the matter or for saving costs depends on the facts of the case.
19 The prosecution alleged in the Magistrates Court proceedings that the pipeline was not maintained in good condition and repair in that the 12 inch SGL was corroded to a substantial extent in the area of the pipeline rupture which occurred at the Beach Crossing. I infer that the documents produced by the Department, which the defendants acknowledge to be relevant to the matters in issue in this action, relate to the failure of Apache Northwest, Harriet and Kufpec to maintain and repair the 12 inch SGL, the corrosion of the 12 inch SGL and its rupture at the Beach Crossing. The documents are directly relevant to important issues in this action.
20 Compulsory discovery and production of documents for inspection ensures that the parties are able to obtain all relevant documents and other information and thus to find evidence supporting their own case and undermining that of their opponent. Discovery and inspection enables a party to obtain the best possible evidence or admissions from his opponent and to evaluate the strength of the opponent's case and thus tends to shorten and thus lessen the cost of litigation. The discovery and inspection process facilitates fairness to both sides, playing 'with all the cards face up on the table', clarifying the issues between the parties, reducing surprises at trial and encouraging settlement. Production of relevant documents for inspection should be ordered unless there is some countervailing disadvantage.
21 The principal reason advanced by the defendants for resisting inspection is that they obtained the documents from the Department by the compulsory process of the Magistrates Court and thus are subject to the implied obligation. The primary rationale for the imposition of the implied obligation is the protection of privacy. Production of documents under compulsory court process is an invasion of the right of the individual to keep his own documents to himself. The purpose of the obligation has been to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party's documents. It is in general wrong that a party who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. It has been said that the implied obligation is a matter of justice and fairness, to ensure that a person's privacy and confidentiality are not invaded more than is necessary for the purposes of justice: Taylor v Serious Fraud Squad [1999] 2 AC 177, 210.
22 The party who produced the documents, the Department, does not object to the documents being produced for inspection by Alcoa. The Department has advised Alcoa that 'the Department of Mines and Petroleum and through it the State of Western Australia has no objection to the production of the Disputed Documents by Apache or its lawyers to Alcoa or its lawyers for inspection'. Accordingly, the primary rationale for the imposition of the implied obligation does not apply in this case to provide a reason for denying Alcoa inspection of the documents.
23 Senior counsel for the Apache parties, Mr Richter QC, submitted that an order for production for inspection should not be made because Alcoa has not established that the order is necessary for disposing fairly of the cause or matter or for saving costs and hence the condition for making an order under O 26 r 11 has not been met. That is because Alcoa could obtain the documents from the Department, or at least has not established that it cannot, and therefore it is not necessary to require the defendants to produce them for inspection.
24 Alcoa informed the Department of the present application for inspection. Alcoa asked:
In view of the above, we would be grateful if you could let us know, in general terms, what the DMP's position is in relation to the potential disclosure by the Defendants to Alcoa in the Proceeding of documents provided to the Defendants by the DMP in the Criminal Prosecution. This issue may be relevant to the Court's discretion to allow a party's objection to producing for inspection certain discovered documents.
If the DMP's position is that it does not object to the production of such documents for inspection by Alcoa, it may also wish to consider:
(a) allowing us inspection of those documents at the DMP's offices; and/or
(b) providing us with a list or description of the documents or type of documents provided to the Defendants by the DMP in the Criminal Prosecution.
- In response the Department advised that it has no objection to the production of the documents by the defendants. Alcoa has asked the Department to consider allowing it to inspect the documents at the Department's offices. The Department has failed to accede to Alcoa's request. Production of the documents for inspection by the defendants is necessary for disposing fairly of the action.
25 Senior counsel for the Apache parties submitted that Alcoa's request had been made to the Department and not to the State Solicitor's Office, which represented the Department in the proceedings in the Magistrates Court. Senior counsel submitted that the State Solicitors Office may have regard to matters such as public interest immunity which may have not been considered by the Department. That does not provide a reason for declining to order production. Alcoa's request has been responded to by the Department through the General Counsel of its Legal Services Branch. General Counsel said that the Department 'and through it the State of Western Australia' has no objection to the production of the documents. There is no force in the point made by senior counsel for the Apache parties.
Conclusion
26 Production of the disputed documents is necessary for disposing fairly of the matter and will facilitate saving costs. Inspecting the documents in the possession of the defendants is the simplest, quickest and cheapest way of enabling Alcoa to inspect the documents. The appropriate exercise of discretion is to order the defendants to produce the documents for inspection. Each of the defendants should make the disputed documents available for inspection by Alcoa. Furthermore, each of the defendants should file and serve an amended list of documents in which each of the documents referred to as documents produced by the prosecution in the Magistrates Court proceedings is described sufficiently to enable it to be identified.
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