Cazaly Iron Pty Ltd v Minister for Resources
[2007] WASCA 60
•15 MARCH 2007
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: CAZALY IRON PTY LTD -v- MINISTER FOR RESOURCES & ORS [2007] WASCA 60
CORAM: BUSS JA
HEARD: 27 FEBRUARY 2007
DELIVERED : 15 MARCH 2007
FILE NO/S: CIV 1808 of 2006
BETWEEN: CAZALY IRON PTY LTD (ACN 101 049 334)
Applicant
AND
MINISTER FOR RESOURCES
First RespondentHANCOCK PROSPECTING PTY LTD (ACN 008 676 417)
WRIGHT PROSPECTING PTY LTD (ACN 008 677 021)
HAMERSLEY RESOURCES LTD (ACN 004 887 656)
Second Respondents
Catchwords:
Application to vary orders to permit disclosure of confidential discovered documents to directors of applicant - Relevant considerations in determining whether there should continue to be restrictions on disclosure of the documents
Legislation:
Nil
Result:
Application to vary the orders made 22 December 2006 dismissed
Category: B
Representation:
Counsel:
Applicant: Mr R J Price
First Respondent : Mr R M Mitchell
Second Respondents : Mr P C S Van Hattem
Solicitors:
Applicant: DLA Phillips Fox
First Respondent : State Solicitor
Second Respondents : Allens Arthur Robinson
Case(s) referred to in judgment(s):
Attorney‑General v North Metropolitan Tramways Company [1892] 3 Ch 70
British American Tobacco Australia Services Ltd v Cowell (2003) 8 VR 571
Cazaly Iron Pty Ltd v The Hon John Bowler MLA, Minister for Resources [2006] WASCA 282
Hadid v Lenfest Communications Inc (1996) 70 FCR 403
Harman v Secretary of State for the Home Department [1983] 1 AC 280
Index Group of Companies Pty Ltd v Nolan [2002] FCA 608
Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
Riddick v Thames Board Mills Ltd [1977] QB 881
Russell v Russell (1976) 134 CLR 495
BUSS JA: The background facts relating to these proceedings for prerogative, declaratory and other relief are recounted in my reasons in Cazaly Iron Pty Ltd v The Hon John Bowler MLA, Minister for Resources [2006] WASCA 282, which were published on 22 December 2006. It is unnecessary to repeat them.
On 22 December 2006, I made various interlocutory orders in relation to the proceedings. In par 4 of the orders, I required the first respondent, by Robert James Stevens, to provide a substitute affidavit of discovery as to documents in certain specified categories. I also made orders designed to preserve the confidentiality of documents in those categories. Paragraphs 8 ‑ 12 of the orders provide:
"8Until further order access to, and use of, the documents described in paragraph 4 (a) ‑ (e) of this order, and any affidavit filed in these proceedings which annexes or discloses the contents of those documents, ('the Confidential Documents') obtained by the Applicant or Second Respondents in these proceedings shall be restricted to the following persons:
(a)any solicitor retained by the Applicant or the Second Respondents in respect of these proceedings who has first provided to the solicitor for the First Respondent a confidentiality undertaking in the form set out at Annexure A to this order;
(b)any counsel retained by the Applicant or the Second Respondents in respect of these proceedings who has first provided to the Solicitor for the First Respondent a confidentiality undertaking in the form set out at Annexure B to this order; and
(c)any author or original recipient of the relevant Confidential Documents.
9Subject to paragraph 12, the persons referred to in paragraph 8(a) and (b) will not disclose the Confidential Documents, or the information contained therein, to any person other than the Court or persons entitled in accordance with paragraph 8(a) ‑ (c) to have access to, and use of, the Confidential Documents.
10Each of the persons referred to in paragraph 8(a) shall ensure that all copies of the Confidential Documents that remain in their control are returned to the solicitor for the First Respondent or are destroyed after discontinuation, settlement or final determination of these proceedings (including any appeal).
11Each of the persons referred to in paragraph 8(b) shall ensure that all copies of the Confidential Documents that remain in their control are returned to a person referred to in paragraph 8(a) or are destroyed after discontinuation, settlement or final determination of these proceedings (including any appeal).
12Nothing in this Order shall prevent any person who is entitled to have a Confidential Document from permitting his or her secretary, or other clerical staff, working under his or her supervision to handle a Confidential Document within the offices of that person or within counsel's chambers."
Subsequently, par 8(a) was amended twice, by consent, to refer to any articled clerk or law graduates, in addition to any solicitor. It is unnecessary to set out, in these reasons, annexure A or annexure B. Paragraph 33 of the orders reserved to each party liberty to apply on 48 hours' notice to the other parties.
By an affidavit sworn 25 January 2007, Mr Stevens, on behalf of the first respondent, gave discovery in respect of the categories of documents specified in par 4 of the orders made 22 December 2006. Inspection of those documents for which legal professional privilege was not claimed then occurred in accordance with par 8 of those orders.
The applicant's application to vary the orders made 22 December 2006
On 27 February 2007, I heard an application by the applicant for a further order, as contemplated by par 8 of the orders made 22 December 2006, to permit disclosure to Nathan McMahon and Clive Jones (who are, and at all material times have been, the joint managing directors of the applicant) of some or all of the documents described in par 4(a) ‑ (e) of those orders (or the information contained in them) which the first respondent has discovered. In particular, the further order sought was that the orders made 22 December 2006 be varied by adding a subparagraph, as follows:
"8(d) Mr Nathan McMahon and Mr Clive Jones, provided they first serve on the solicitor for the First Respondent a confidentiality undertaking in the form set out in Annexure E to this order."
It is unnecessary, in these reasons, to reproduce annexure E. The applicant relied upon affidavits sworn 6 and 27 February 2007 by Alexander Guy Jones, a solicitor employed by the applicant's solicitors.
The first and second respondents opposed the application. The grounds of opposition were that the proposed variation was:
(a)unnecessary; and
(b)likely to be prejudicial to the interests of the first and second respondents, and third parties.
The first and second respondents relied upon affidavits of Philip Wesley Mitchell (an employee of Rio Tinto Limited) and Kate Elizabeth Barrett (a solicitor employed by the second respondents' solicitors), each sworn 26 February 2007.
Paragraphs 7 ‑ 10 of the applicant's written submissions read:
"7.Disclosure of the confidential documents in this case to the joint managing directors of the Applicant (Mr Nathan McMahon and Mr Clive Jones) would not involve disclosure to a competitor. There is nothing in the confidential documents that would provide an advantage to the Applicant.
8.A number of the documents that have been discovered and that are the subject of the confidentiality regime cannot possibly be said to be confidential. See, for example, the email from Ken Weston to Gary Stokes dated 3 May 2006 at page 14 of the affidavit of Alex Jones sworn 27 February.
9.On the terms of the confidentiality order the Applicant's solicitors are not able to consult with the joint managing directors of the Applicant in order to take instructions as to whether certain matters should be presented to the Court or not.
10.The joint managing directors of the Applicant are prepared to execute a confidentiality undertaking to the Court and the First Respondent and, if necessary, in favour of the Second Respondents. There is no prejudice that would flow from disclosure of the discovered documents to the joint managing directors of the Applicant."
The applicable legal principles
The Court has inherent jurisdiction to refuse to make an order for the production of discovered documents if production would be unnecessary or oppressive. See Attorney‑General v North Metropolitan Tramways Company [1892] 3 Ch 70 at 74. As Lord Keith of Kinkel said in Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 308:
"Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant's affairs. It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done."
A party who obtains discovery and inspection of documents, and the legal representatives of that party, impliedly undertake to the Court and the party giving discovery and inspection, that the documents in question will be used solely for the purpose of the litigation in which they are produced, and not for any collateral or improper purpose. The implied undertaking is required because "the public interest in privacy and confidence demands that this compulsion [to disclose documents on discovery] should not be pressed further than the course of justice requires" (Riddick v Thames Board Mills Ltd [1977] QB 881 at 896) and to encourage full and frank disclosure of those documents which are relevant to the litigation. See Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 per Hayne JA (with whom Winneke P and Phillips JA agreed) at 37 ‑ 38; British American Tobacco Australia Services Ltd v Cowell (2003) 8 VR 571 at 580 [20].
Although the confidential character of a party's discovered documents will not usually justify denying inspection by another party, the existence of trade rivalry between the party giving discovery and the party seeking inspection is a relevant consideration in determining whether the Court should impose any restrictions upon inspection. In Mobil Oil, Hayne JA referred to this issue, at 38:
"While it may readily be accepted that a party is ordinarily entitled to discovery and inspection of all discoverable documents in the possession or control of the opposite party … it is important to bear steadily in mind that discovery is but a tool to be used in the pursuit of justice and that the right to discovery and inspection is not without its limits. …
Where it is said that the documents are confidential, it may be accepted that the fact that the documents are confidential will not ordinarily be a sufficient reason to deny inspection by the opposite party. In most cases, the fact that the documents may not be used except for the purposes of the litigation concerned will be sufficient protection to the party producing them. But where, as here, the party obtaining discovery is a trade rival of the person whose secrets it is proposed should be revealed by discovery and inspection, other considerations arise.
Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed. Is that necessary for the attainment of justice in the particular case?"
Other considerations in determining whether to impose restrictions upon the inspection of discovered documents include:
(a)The concern of the Court to promote and ensure open justice. See Russell v Russell (1976) 134 CLR 495 at 520; Hadid v Lenfest Communications Inc (1996) 70 FCR 403 at 406.
(b)A party has a prima facie right, as a matter of procedural fairness, to inspect discovered documents for the purpose of ensuring that he or she is able properly to present his or her case at the trial or other hearing. See Hadid at 406.
(c)The effect, in the particular litigation, of the proposed restrictions upon a party's capacity properly to present his or her case. As Kiefel J noted in Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 at [8], "much may turn upon what it is necessary for that party to prove or disprove". Similarly, it may be significant whether the litigation involves a dispute as to the facts or is confined to issues of law on facts which are agreed or not disputed.
(d)Whether an undertaking as to confidentiality is offered by the party seeking unrestricted or less restrictive access to the discovered documents.
The merits of the application to vary the orders made 22 December 2006
At the hearing of the application there were objections to some of the material in the affidavits; in particular, the applicant objected to pars 13, 14 and annexure KEB 11 of Ms Barrett's affidavit and par 14 of Mr Mitchell's affidavit. It is unnecessary, however, to determine the objections.
Mr Alexander Jones' affidavits annex copies of some of the documents in respect of which the first respondent has given discovery and inspection pursuant to par 4 of the orders made 22 December 2006. I have examined the documents. They relate to on‑going commercial negotiations between representatives of the State of Western Australia on the one hand, and representatives of Rio Tinto Ltd and its subsidiaries (including the third‑named second respondent) on the other, in connection with existing and prospective iron ore interests in this State. Some of the documents relate to the interests of third parties with whom the Rio Tinto Group has joint venture arrangements. The documents include correspondence, draft contractual documents and memoranda relating to meetings. The affidavit evidence relied upon by the first and second respondents (to the extent not objected to by the applicant) indicates, and my examination of the documents confirms, that the documents as a whole, and most of the documents individually, are confidential. Some documents do not, themselves, contain confidential information or reveal confidential discussions, but they are an integral part of the on‑going negotiations which I have described. The draft contractual documents are properly to be regarded as confidential, even though the content of the final and executed form of agreements which vary State agreements will become publicly known after they have been tabled in Parliament.
The applicant is a wholly‑owned subsidiary of Cazaly Resources Ltd. There is, no doubt, an enormous disparity between the size and value of the existing business operations of:
(a)each of the first and second‑named second respondents and the Rio Tinto Group (of which the third‑named second respondent is a member); and
(b)the applicant and its related entities.
The applicant maintains, however, that it has the ability to explore, develop and mine the Shovelanna resource. See the submissions made by or on behalf of the applicant to the first respondent which are annexed to Mr McMahon's affidavit sworn 4 August 2006.
The applicant and the second respondents are competitors to the extent that they are engaged in litigation concerning the Shovelanna resource and they have competing applications for mining tenements. More significantly, however, if the applicant were to be granted an exploration licence in respect of the Shovelanna resource and, subsequently, a mining lease over the ground in question:
(a)competition may well develop between the applicant and the second respondents in relation to the supply of iron ore in a particular market or submarket; and
(b)it is conceivable that the applicant and the State of Western Australia may enter into negotiations for and execute a State agreement to regulate the commercial exploitation of the Shovelanna resource.
I am satisfied that the documents as a whole, and most of the documents individually, reveal some details of the manner in which the State of Western Australia is or may be willing to negotiate a State agreement to regulate the commercial exploitation of a mining resource, and the manner in which negotiations with the State might usefully be undertaken. Also, various of the documents disclose some information as to issues of concern to the Rio Tinto Group, in its negotiations with the State, which may be of benefit to a current or future competitor. I consider that information in the documents in question in this application is likely to be of commercial advantage to the applicant, especially if it obtains rights to develop the Shovelanna resource. If unrestricted access to the documents is likely to be useful to the applicant then it is also likely to result in some corresponding detriment to the State and the Rio Tinto Group (including the third‑named second respondent).
In these proceedings, the relevant facts appear to be agreed or not in dispute, even though there may be some argument between the parties as to the extent of the first respondent's actual knowledge, at material times, of the "Statement of Principles", referred to in par 21 of Rio's First Submission, and related and ancillary matters. On the applicant's case, the first respondent's actual knowledge of the Statement of Principles, and related and ancillary matters, appears to be relevant only to the procedural fairness ground set out in par 13 of the re‑amended notice of originating motion. Otherwise, the proceedings are concerned with identifying and delineating the applicable legal principles, and determining the proper application of those principles to agreed or undisputed facts.
On 27 February 2007, the applicant filed and served written submissions in support of its claim for prerogative, declaratory and other relief. On 6 March 2007, the applicant applied for, and was granted, leave to re‑amend the grounds on which it claims relief. The restrictions on the inspection of the relevant discovered documents do not appear to have impaired the applicant's capacity properly to draw the affidavits on which it wishes to rely, its written submissions, or its grounds. The applicant's written submissions are comprehensive in relation to all grounds including the procedural fairness ground.
Counsel for the applicant submitted that a party has a prima facie right to inspect discovered documents and that there was an insufficient basis for continuing to impose restrictions on the inspection of the first respondent's discovered documents. Counsel also said:
" … there are strategic matters as to whether particular arguments ‑ because there's numerous arguments we have put forward … assume importance over other arguments.
There are always strategic issues in presenting a case … and ordinarily it's not for the lawyers … to organise the priorities of the various arguments, some of which are conceivably inconsistent with others … It's not for the lawyers to choose their own order of presenting arguments, as to how arguments are presented, without the benefit of instructions in doing so, unless there's good reason."
It is not apparent that the applicant's legal representatives require instructions from Mr McMahon or Mr Clive Jones on any specific or particular matter which is contained in any of the first respondent's discovered documents. Also, it is not apparent that it is necessary or desirable for Mr McMahon or Mr Clive Jones to have access to those documents for the purpose of providing any specific or particular instructions on the "strategic matters" referred to by the applicant's counsel. It is not suggested that any expert knowledge of the mining industry or any other form of expertise is required to understand the discovered documents. My examination of the documents annexed to Mr Alexander Jones' affidavits indicates that the applicant's counsel and solicitors should be well able to assess the relevance and significance of those documents in the context of the grounds on which prerogative, declaratory and other relief is sought.
If Mr McMahon and Mr Clive Jones were to be permitted to inspect the documents in question, the information which they would derive from them would not be forgotten and, as a result, the confidentiality of that information is unlikely to be preserved adequately by the implied undertaking or their execution of the express undertaking which has been offered.
In the circumstances, I consider that the facts and matters I have mentioned at [12] ‑ [20] above, in combination, militate against granting the applicant's application to vary the orders made 22 December 2006. The affidavit evidence relied on by the applicant, and the submissions it has made, do not persuade me that the interests of justice require that, for the purposes of this litigation, there be unrestricted or less restrictive access to the documents which the first respondent has produced (or the information they contain). The application to vary the orders will therefore be dismissed. I would, however, reserve to the applicant liberty to apply if it encounters any particular difficulty in the proper presentation of its case at the substantive hearing on 19 and 20 March 2007, without the benefit of specific or particular instructions from Mr McMahon or Mr Clive Jones in relation to a discovered document or documents.
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