Anglo Coal (Dawson Management) Pty Ltd v Greig

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FEDERAL COURT OF AUSTRALIA

Anglo Coal (Dawson Management) Pty Ltd v Greig [2011] FCA 941

Citation: Anglo Coal (Dawson Management) Pty Ltd v Greig [2011] FCA 941
Parties: ANGLO COAL (DAWSON MANAGEMENT) PTY LTD (ACN 006 746 701) v JOHN LETHBRIDGE GREIG and NICHOLAS HARWOOD
File number: QUD 37 of 2011
Judge: COLLIER J
Date of judgment: 18 August 2011
Catchwords: PRACTICE AND PROCEDURE – Order 15A rule 6 Federal Court Rules – application for pre-action discovery – possible claim against liquidators of company for involvement in breach of section 52(1) Trade Practices Act 1974 (Cth) – rental agreement between applicant and company for lease of excavator to applicant – excavator on mining site – contractual provision for demobilisation of excavator by company – payment of demobilisation charge by applicant – failure of company to demobilise excavator – whether applicant satisfies criteria required by Order 15A rule 6(a), (b) and (c) – relevant principles – extent of order
Legislation: Corporations Act 2001 (Cth) Pt 5.3A, s 477
Trade Practices Act 1974 (Cth) ss 52, 82
Federal Court Rules O 15A r 6
Cases cited: Aitken v Neville Jeffress Pidler Ltd (1991) 33 FCR 418 cited
Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 1500 cited
Benchmark Certification Pty Ltd v Standards Australia International Ltd (2004) 212 ALR 464 cited
C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 cited
Caltex Refining Co Pty Limited v Amalgamated Metal Workers Union [1990] FCA 483 cited
CCA Beverages (Adelaide) Ltd v Hansford (unreported, O’Loughlin J, 15 November 1991) cited
Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215 cited
Hooper v Kirella Pty Ltd [1999] FCA 1584 cited
MacDonald v Department of Employment and Workplace Relations [2003] FCA 631 cited
Minister for Health & Aged Care v Harrington Associates Ltd [1999] FCA 549 cited
Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 cited
St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 cited
Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64 cited
WR Pateman Pty Limited v Walker Corporation Pty Limited [1990] FCA 26 cited
Date of hearing: 11 May 2011
Place: Brisbane
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 41
Counsel for the Applicant: Mr CA Wilkins
Solicitor for the Applicant: Clayton Utz
Counsel for the First and Second Respondents: Mr GA Thompson SC
Solicitor for the First and Second Respondents: HWL Ebsworth

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 37 of 2011
BETWEEN:

ANGLO COAL (DAWSON MANAGEMENT) PTY LTD (ACN 006 746 701)
Applicant
AND:

JOHN LETHBRIDGE GREIG
First Respondent

NICHOLAS HARWOOD
Second Respondent

JUDGE:

COLLIER J

DATE OF ORDER:

18 AUGUST 2011

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

The respondents make discovery to the applicant of the following documents in their possession, custody or control by producing those documents for inspection by the solicitors for the applicant within 14 days:

(a)all…

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Details
Case
[2011] FCA 941
Decision Date

CaseChat Overview and Summary

Anglo Coal (Dawson Management) Pty Ltd has applied to the Federal Court for an order under Order 15A rule 6 of the Federal Court Rules 2011, requiring the respondents to make discovery of certain documents relevant to a possible claim against the liquidators of HMP Constructions Pty Ltd for their involvement in an alleged breach of section 52(1) of the Trade Practices Act 1974 (Cth). The applicant leased a Hitachi EX5500 Hydraulic Excavator from HMP under a rental agreement which included a provision for demobilisation of the excavator by HMP. The applicant paid a demobilisation charge for the excavator but HMP failed to demobilise it. The applicant seeks to inspect documents held by the respondents that may assist it in determining whether to commence proceedings against them.

The legal issues before the court were whether the applicant satisfied the criteria required by Order 15A rule 6(a), (b) and (c) in order to obtain an order for discovery of documents. In particular, the court considered whether there was reason to believe that the applicant has or may have the right to obtain relief, whether the applicant was lacking information reasonably necessary to decide whether to commence proceedings, and whether it was likely that the respondents have or have had documents necessary for the applicant to evaluate any right to relief.

The court found that the applicant had satisfied all three criteria required by Order 15A rule 6. It was reasonable to believe that the applicant may have a right to obtain relief from the respondents, and that the applicant lacked information reasonably necessary to decide whether to commence proceedings. Furthermore, it was likely that the respondents had documents relevant to the applicant’s potential claim. The orders sought by the applicant fell within the parameters of Order 15A rule 6.

The court made the orders sought by the applicant, requiring the respondents to make discovery of the specified documents within 14 days. The court will hear submissions as to costs.

Orders

Orders of the court

The respondents make discovery to the applicant of the following documents in their possession, custody or control by producing those documents for inspection by the solicitors for the applicant within 14 days:

(a) all correspondence, emails, file notes and memoranda created on or after 30 March 2009 referring to, or constituting, communications passing between:

(i) the first respondent and the second respondent;

(ii) the first or second respondent on the one hand and employees of Deloitte Touche Tohmatsu on the other;

(iii) the first respondent, second respondent or any employee of Deloitte Touche Tohmatsu on the one hand and any officer or employee of HMP Constructions Pty Ltd (HMP) on the other;

(iv) the first or second respondent on the one hand and a receiver and manager of HMP’s property on the other; or

(v) the first or second respondent on the one hand and a creditor of HMP having security over a Hitachi EX5500 hydraulic excavator having serial number 18B00V00000534 (the Excavator) on the other;

and which relate to:

(vi) the first respondent’s or second respondent’s intentions to cause HMP to make use of the Excavator;

(vii) demobilisation of the Excavator;

(viii) obtaining payment from the applicant of a demobilisation charge for the Excavator;

(ix) the approach to be taken in the event the applicant did not pay the demobilisation charge;

(x) a sale, or possible sale, of the Excavator; or

(xi) the obtaining or taking of possession of the Excavator from the applicant;

(b) any document having a tendency to prove or disprove the proposition that from 6 to 10 April 2009 there were reasonable grounds for the respondents to believe that HMP was ready, willing and able to demobilise the Excavator;

(c) any document having a tendency to prove or disprove the proposition that from 6 to 10 April 2009 there were reasonable grounds for the respondents to believe that HMP would demobilise the Excavator.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Anglo Coal (Dawson Management) Pty Ltd (“the applicant”) seeks the following orders and documents:1.An order that the respondents make discovery to the applicant of the following documents in their possession, custody or control by producing those documents for inspection by the solicitors for the applicant within 14 days:a.All correspondence, emails, file notes and memoranda created on or after 30 March 2009 referring to, or constituting, communications passing between:i. The first respondent and the second respondent;ii.The first or second respondent on the one hand and employees of Deloitte Touche Tohmatsu on the other;iii.The first respondent, second respondent or any employee of Deloitte Touche Tohmatsu on the one hand and any officer or employee of HMP Constructions Pty Ltd (HMP) on the otheriv.The first or second respondent on the one hand and a receiver and manager of HMP’s property on the other; orv.The first or second respondent on the one hand and a creditor of HMP having security over a Hitachi EX5500 hydraulic excavator having serial number 18B00V00000534 (the Excavator) on the otherand which relate tovi.The first respondent’s or second respondent’s intentions to cause HMP to make use of the Excavator;vii. Demobilisation of the Excavatorviii.Obtaining payment from the applicant of a demobilisation charge for the Excavatorix.The approach to be taken in the event the applicant did not pay the demobilisation charge’x.A sale, or possible sale, of the Excavator; orxi.The obtaining or taking of possession of the Excavator from the applicant.b.Any document having a tendency to prove or disprove the proposition that from 6 to 10 April 2009 there were reasonable grounds for the respondents to believe that HMP was ready, willing and able to demobilise the Excavator.c.Any document having a tendency to prove or disprove the proposition that from 6 to 10 April 2009 there were reasonable grounds for the respondents to believe that HMP would demobilise the Excavator.Background The background facts to this application are not in dispute. I take many of the following facts from the affidavit filed 18 February 2011 of Ms Regina Allison, an employee of the applicant. The applicant operates a coal mine in the Dawson Valley in central Queensland. At all material times HMP Constructions Pty Ltd (“HMP”) owned a Hitachi EX5500 Hydraulic Excavator (“the Excavator”). Since 16 September 2009 the respondents have been liquidators of HMP. Prior to that date they were administrators of HMP pursuant to Pt 5.3A of the Corporations Act 2001 (Cth) (“the Corporations Act”). On 9 August 2007 the applicant and HMP entered into an Equipment Rental Agreement (“the rental agreement”) whereby the applicant leased the Excavator from HMP. Clause 6 of the rental agreement provided for a demobilisation charge of $355,000 plus GST in respect of the Excavator. Clause 6 also provided that the applicant nominate the locations on the relevant site where HMP would mobilise and demobilise the Excavator.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Finally, in my view there is reasonable cause to believe that the respondents have or are likely to have or have had possession of any document relating to the question whether the applicant has the right to obtain the relief, and that inspection of the document by the applicant would assist in making the decision. Given the authority of the respondents as liquidators (and previously, administrators) of HMP in respect of custody of company documentation, and the possibility of a claim against the respondents for involvement in a breach by HMP of s 52(1) of the Trade Practices Act, it could scarcely be in dispute that it is likely that the respondents have or have had documents necessary for the applicant to evaluate any right to relief, and that inspection would assist the applicant in making the decision to commence proceedings.Conclusion The respondents have submitted that, if an order for preliminary discovery is made in these proceedings, it should be limited to the extent of information that is necessary, but no more than that which is necessary, to overcome the insufficiency of information possessed by the applicant to enable a decision to be made whether to commence a proceeding against the them. I accept this submission – indeed it is consistent with comments of the Full Court of the Federal Court in Telstra Corporation to which I have referred earlier in this judgment. In my view the orders sought by the applicant fall within the parameters of O 15A r 6. I am prepared to make those orders. I will hear submissions as to costs.

Ratio Decidendi

Legal Principle Established

In turn, the respondents submit that the applicant’s argument is fundamentally flawed in at least three respects:1.It depends on the contention that the respective obligations of the applicant and HMP were interdependent. In fact, on a proper construction of the rental agreement the applicant was obliged, in return for the hire of the Excavator, to pay the demobilisation charge in addition to hourly use charges and an amount described as the “mobilisation charge”. Clause 18 of the rental agreement does not support the existence of a personal promise by HMP. In any event it may be inferred that the price HMP obtained for sale of the Excavator took account of the cost of dismantling and removal, and that if the applicant had not paid the demobilisation charge it would have obtained a benefit that it did not contract to receive (namely the benefit of the Excavator being removed from its mine site by Leightons at no cost at all).2.The applicant’s material falls far short of demonstrating a basis for the applicant having reasonable cause to believe that the respondents, who are professional men appointed initially as administrators and subsequently as liquidators of HMP, intentionally participated in an alleged contravention of the Trade Practices Act by HMP.3.On the material produced by the applicant, the applicant does not satisfy the elements of O 15A r 6(b) or (c).Consideration Rule 6 gives discretion to the Court to make orders requiring discovery prior to the commencement of proceedings. It has been the subject of extensive scrutiny in this Court including in the Full Court (for example Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64, Hooper v Kirella Pty Ltd [1999] FCA 1584, Caltex Refining Co Pty Limited v Amalgamated Metal Workers Union [1990] FCA 483). Helpful principles to assist the Court in exercising its discretion have been developed in a number of cases. In particular, I note that:·Rule 6 permits an application for what otherwise would be termed “fishing”: Caltex per Burchett J, MacDonald v Department of Employment and Workplace Relations [2003] FCA 631 at [25], C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [39].·An applicant must satisfy each of the three conditions specified in paras (a), (b) and (c) of O 15A r 6 in order to obtain an order for information discovery: Hooper at [35].·Rule 6(a) and r 6(c) pose an objective test, the opening words “there is” in each paragraph signifying “there exists”; but the “insufficiency test” of r 6(b) has both subjective and objective aspects. The test posed by r 6(a) is whether there is reason to believe that the applicant has or may have the right to obtain relief from the prospective respondent: Hooper at [39], Minister for Health & Aged Care v Harrington Associates Ltd [1999] FCA 549 at [28], Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 1500 at 41, MacDonald at [25].·In respect of r 6(a) it is not necessary for the applicant to prove that it has a prima facie case or for the Court to come to an affirmative conclusion that an applicant is likely to succeed to warrant an order under the rule. It is sufficient to say that there is reasonable cause for the belief that the applicant may have a right to obtain relief. It is not sufficient however for the applicant to merely assert the existence of a case: WR Pateman Pty Limited v Walker Corporation Pty Limited [1990] FCA 26 at [20], St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at [26], [29], CCA Beverages (Adelaide) Ltd v Hansford (unreported O’Loughlin J, 15 November 1991), C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [39], Telstra Corporation at [58].·Rule 6(b) contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding: Alphapharm at 41.·Rule 6(c) may be satisfied by the drawing of inferences as to the nature of documents that a particular entity may have in its possession. However, it must be possible to identify specific issues for which documents that a respondent may have in its possession are likely to be relevant: Benchmark Certification Pty Ltd v Standards Australia International Ltd (2004) 212 ALR 464 at [6].·Rule 6 should be beneficially construed and given the fullest scope that its language will reasonably allow: Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733, Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215 at 220-221, Hooper at [35], C7 at [39], Aitken v Neville Jeffress Pidler Ltd (1991) 33 FCR 418 at 422.