Australia Eastern Railroad Pty Ltd v Macquarie Specialised Asset Management Ltd

In the Federal Court of Australia, the case of Australia Eastern Railroad Pty Ltd v Macquarie Specialised Asset Management Ltd revolved around a dispute involving preliminary discovery of documents. Australia Eastern Railroad sought an order for preliminary discovery, arguing that Macquarie Specialised Asset Management had failed to conduct reasonable inquiries before declining the inspection of certain documents. The legal issues before the court included the scope and nature of the reasonable inquiries that must be conducted before declining an offer of inspection under the rules of court, and whether it was reasonable for Macquarie Specialised Asset Management to refuse the inspection in the circumstances.

The court examined the principles governing preliminary discovery and the obligations of parties to conduct reasonable inquiries before declining an inspection offer. It considered the circumstances in which a party might reasonably decline an inspection offer, including the need to balance the risk of missing relevant documents against the potential prejudice of inspecting a limited class of documents. The court held that it was not unreasonable for Australia Eastern Railroad to decline the offer of inspection, as it was entitled to make its own judgment about the risks involved. The court also recognised that, in principle, the party seeking preliminary discovery was entitled to an order for such discovery, provided it had conducted reasonable inquiries and the refusal to inspect was not unreasonable.

The court found in favour of Australia Eastern Railroad, determining that Macquarie Specialised Asset Management had not conducted reasonable inquiries before declining the offer of inspection. It concluded that the refusal to inspect was not unreasonable in the circumstances, but that Australia Eastern Railroad was entitled to an order for preliminary discovery as a matter of principle. The court ordered Macquarie Specialised Asset Management to provide the documents sought by Australia Eastern Railroad, subject to any appropriate redactions or limitations on use. This decision underscores the importance of conducting thorough and reasonable inquiries before declining an offer of inspection in discovery proceedings.