Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd

[2014] WASC 31

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CO-OPERATIVE BULK HANDLING LTD -v- BROOKFIELD RAIL PTY LTD [2014] WASC 31

CORAM:   EDELMAN J

HEARD:   5 FEBRUARY 2014

DELIVERED          :   6 FEBRUARY 2014

FILE NO/S:   CIV 1066 of 2014

BETWEEN:   CO-OPERATIVE BULK HANDLING LTD

Plaintiff

AND

BROOKFIELD RAIL PTY LTD
Defendant

Catchwords:

Practice and procedure - Application for particular discovery orders in relation to documents which are the subject of the proceedings - Whether documents relevant to matters in issue - Whether discovery process circumvents the ultimate issue in the regulatory process and Court proceedings concerning the information in question

Legislation:

Railways (Access) Code 2000 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

Application adjourned for further conferral

Category:    B

Representation:

Counsel:

Plaintiff:     Mr A C Willinge

Defendant:     Mr K J Mony De Kerloy

Solicitors:

Plaintiff:     Williams & Hughes

Defendant:     Herbert Smith Freehills

Cases referred to in judgment:

Alcoa of Australia Ltd v Apache Energy Ltd (No 4) [2013] WASC 377

Beecham Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273

British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709

BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553

Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55

Drivetime Radio Australia Pty Ltd v Pivotal Creative Solutions Pty Ltd (t/as Broadcast GP) [2010] NSWSC 763

Grey v Australian Motorists and General Insurance Co Pty Ltd [1976] 1 NSWLR 669

Hearne v Street [2008] HCA 36; (2008) 235 CLR 125

Hightime Investments Pty Ltd v Lungan [2009] WASC 256

Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2) [2012] NSWSC 415

Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1

Martin & Miles Martin Pen Co Ltd v Scrib Ltd (1950) 67 RPC 127

Minetec Pty Ltd v Frost [2011] WASC 145

Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34

Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341

NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136

Nelson v John Lysaght (Australia) Ltd [1975] HCA 9; (1975) 132 CLR 201

Pisano v Thrum [2007] WASC 109

Re McGorm; Ex parte Co-Operative Building Society of South Australia (1989) 20 FCR 387

Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362

Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028

Shine v Williams [2007] WASCA 194

Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517

Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62

Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd (No 4) [2009] WASC 17

Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

EDELMAN J: 

Introduction to the substantive litigation and this application

1. The context in which this discovery application arises is as follows.

2. The plaintiff, CBH, is the largest exporter of wheat, barley and canola in Australia.  Almost 60% of the grain harvest which it collects is transported to various ports for export.  That transport occurs by rail.  CBH has an agreement with the defendant, Brookfield, for access to Brookfield's railway network.  That agreement terminates on 30 June 2014.  The next grain season, and peak time for transporting grain, commences on 1 October 2014.

3. CBH wishes to obtain continued railway network access from 30 June 2014.  Negotiations between CBH and Brookfield have not resulted in a further agreement.

4. In the absence of further agreement, CBH commenced a statutory process to enable it to obtain continued rail access. As part of that process, CBH sent a letter to Brookfield on 10 December 2013. CBH says that this letter was a 'proposal in writing for access' under s 8(1) of the Railways (Access) Code 2000 (WA). CBH says that the consequence of making a proposal is that Brookfield is required by s 9(1)(c) of the Railways (Access) Code to provide various information to CBH, including:

   (i)the floor price and ceiling price for each route the subject of the proposal;

   (ii)in relation to the floor price, incremental costs which would result from CBH's operations on each route and use of the associated infrastructure; and

   (iii)in relation to the ceiling price, the total costs attributable to each route and associated infrastructure.    

5. Brookfield has already provided CBH with some information, including floor and ceiling prices. The ceiling price is in the order of hundreds of millions of dollars. But, as to the further information sought, Brookfield submits that (i) CBH has not made a 'proposal' under s 8 of the Railways (Access) Code, (ii) if CBH had made a proposal it is not entitled to the information it seeks under s 9 of the Railways (Access) Code, and (iii) Brookfield is entitled to require that CBH keep confidential the information which is provided to it.

6. CBH has emphasised the commercial urgency in this litigation.  CBH says that if it is unable to secure railway access under the statutory process then it may be forced to contract with the monopoly supplier, Brookfield, on terms, including price, that it says are inefficient.  Alternatively, CBH will be required to engage road transport to move the grain.  This will require up to 300 trucks and potentially significantly increased cost.

7. After obtaining provisional trial dates of 4 and 5 March 2014, CBH brought this discovery application.  It was brought urgently and without complete conferral.  The application was initially much broader than foreshadowed and based on 837 pages of affidavit evidence.

8. The array of documents sought, and the scope of the discovery application, had the potential to delay the timetable for trial and expand the scope of the trial.  At the hearing yesterday counsel for CBH narrowed the scope of the application.  He also properly accepted that the lack of time for proper conferral meant that the differences between the parties had not been fully narrowed concerning any confidentiality regime which might attach to orders for discovery.

9. My conclusion below is that the documents about which discovery orders are sought relate to matters in issue.  However, whether my discretion should be exercised to make the discovery orders sought will depend on the terms of the proposed confidentiality regime and the extent of protection afforded to Brookfield's rights.  Counsel will have the opportunity to confer on this issue following delivery of these reasons today.  That conferral should be in person.  The matter will be re‑listed tomorrow for hearing and final orders if they cannot be agreed.

10. Although I have read all of the material provided, in the interest of producing an expedited judgment today I have not footnoted each reference made in these reasons to facts or submissions upon which I have relied.

This discovery application

1. CBH initially applied for orders that Brookfield provide an affidavit of discovery in relation to the documents in five categories which are, or were, at any time in the possession, custody or power of Brookfield or, if not, when Brookfield parted with them and what has become of them. The application focused upon the power of this Court to order discovery under O 26 r 6 of the Rules of the Supreme Court 1971 (WA).

2. Inspection was also sought of the discovered documents subject to proposed confidentiality orders.

3. This discovery application was foreshadowed at a directions hearing on 21 January 2014. At that hearing, counsel for CBH said that the discovery orders which would be sought concerned information which Brookfield provided to the Regulator (the Economic Regulation Authority) under cl 10(2) of sch 4 of the Railways (Access) Code. The chamber summons filed by CBH went significantly beyond this.

4. In its chamber summons CBH initially sought categories of document including all documents recording or regarding calculations, assumptions and costs information used by Brookfield for its determination, notified to CBH in a letter on 17 December 2013, of floor prices, ceiling prices, and costs of route sections.  The categories of document were as follows:

   1.All Communications between the defendant and the Economic Regulation Authority (Authority) in relation to or connected with the plaintiff's letter to the defendant dated 10 December 2013 (Plaintiff's Proposal), including but not limited to the notification referred to at section 8 of the letter from the defendant to the plaintiff dated 17 December 2013 (Defendant's Letter).

   2.All Communications between the defendant and the Authority in relation to or connected with the defendant's determination of floor and ceiling process for any of the access sought in the Plaintiff's Proposal including, but not limited to, any costs information provided to the Authority.

   3.All documents recording or regarding calculation, assumptions and costs information used by the defendant to determine the floor and ceiling prices specified in section 7 of the Defendant's Letter.

   4.All documents recording or regarding calculation, assumptions and costs information used by the defendant to determine the route sections referred to in section 7 of the Defendant's Letter.

   5.All documents, calculations and costs information used by the defendant to determine the floor price and ceiling price for, and the costs of, the route sections referred to in section 7 of the Defendant's Letter, as notified to the Authority.

5. The scope and extent of this discovery raised issues concerning the effect of discovery upon the trial timetable and upon the length of trial.  In response to these issues, counsel for CBH, upon instructions, abandoned any reliance at this hearing upon categories 3 and 4.  Counsel for CBH also explained that category 5 was only pressed to the extent that the information was provided to the Authority (the Regulator).[1] 

   [1] ts 69 (5 February 2014).

6. Broadly, Brookfield's response to the application is as follows:

   (i)the information in the documents is irrelevant to the issues in dispute and could not affect the result of the action;

   (ii)discovery should be refused for discretionary reasons of policy,  fairness, and because discovery would be oppressive; and

   (iii)if discovery is ordered, it should be subject to Brookfield's proposed confidentiality regime.

Principles relevant to the discovery application

1. The principles concerning this application are well known and are not in dispute. Order 26 r 6 of the Rules of the Supreme Court provides that:

   (1)Subject to rule 7 the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document specified or described is, or has at any time been, in his possession custody or power, and if not then in his possession custody or power when he parted with it and what has become of it.

   (2)An order may be made against a party under this rule notwithstanding that he may already have made or been required to make a list of documents or affidavit under rule 1 or rule 7.

   (3)An application under this rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this rule has, or at some time had, in his possession, custody or power the document or class of document specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.

2. The power to order discovery under O 26 r 6 concerns documents which, as described in O 26 r 1, relate to any matter in question in the proceedings. It is sufficient if the document would either (i) advance a party's case or damage his or her opponent's case, or (ii) lead to a train of inquiry that would either advance a party's case or damage his or her opponent's case.[2]  Alternatively, the documents will relate to a matter in question in the proceedings if they contain information which could affect the manner in which a party may decide to conduct proceedings.[3]  The assessment of whether documents relate to a matter in question therefore proceeds by reference to the pleadings, the conduct and admissions of the parties, and the nature of the action.[4]

   [2] Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co(1882) 11 QBD 55, 63 (Brett LJ); Mulley v Manifold[1959] HCA 23; (1959) 103 CLR 341, 345 (Menzies J).

   [3] Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1, 11 [19] (Gleeson CJ, Gaudron, Gummow & Callinan JJ).

   [4] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [5] (Newnes M).

3. In addition to the requirement that the documents sought relate to a matter in question, it has been held that O 26 r 6, and its antecedents, require that there are reasonable grounds for being fairly certain of the existence of the documents sought.[5]  There is no dispute in these proceedings concerning the existence of the documents sought in each category.

   [5] British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709, 714 (Viscount Haldane LC); Beecham Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273, 276, 279 (Menhennitt J); Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3] (Newnes M); Hightime Investments Pty Ltd v Lungan [2009] WASC 256 [12] (Beech J).

4. Finally, the power under O 26 r 6 is discretionary. All relevant circumstances, including case management considerations, are relevant to the exercise of discretion.

Do the categories of document sought relate to a matter in question?

1. The litigation in this matter focuses upon a letter sent from CBH to Brookfield on 10 December 2013 for railway access.  The letter, including annexures, is 201 pages. 

2. Section 8(1) of the Railways (Access) Code provides that an entity may make to a railway owner a proposal in writing for access by the entity.  A railway owner is 'the person having the management and control of the use of the railway infrastructure concerned'.[6] That person is Brookfield in this case. A central issue in these proceedings is whether CBH's 10 December 2013 letter was a valid proposal within s 8 of the Railways (Access) Code.

   [6] Railways (Access) Code 2000 (WA) s 3.

3. Counsel for Brookfield submitted that there is one matter at the heart of Brookfield's submission that CBH's 10 December 2013 letter was not a proposal. That central matter is Brookfield's contention that the letter did not contain mandatory information required by s 8(3)(c) of the Railways (Access) Code.

4. Section 8(3)(c) provides that a 'proposal must set out the nature of the proposed rail operations'. The central issue between the parties therefore concerns the minimum content required to be contained in a proposal concerning 'the nature of the proposed rail operations'.

5. One way in which CBH seeks to meet Brookfield's s 8(3)(c) objection is by a plea in par 3C of its Amended Statement of Claim that:

   Further, and alternatively, the [CBH] Proposal was a proposal for the purposes of the Code because it allowed [Brookfield] to comply with, relevantly, the requirements under clauses 10(1) and 10(2) of Schedule 4 of the Code and section 9(1)(c) of the Code because [Brookfield], in fact:

   (a)purported to determine the costs pursuant to clause 10(1) of the Schedule 4 of the Code in respect of those routes the subject of the [CBH] Proposal where, and to the extent that, [Brookfield] said there was available capacity on those routes to carry out the proposed railway operations;

   (b)purported to notify the Regulator of the costs referred to in clause 10(2) of Schedule 4 of the Code;

   (c)purported to provide [CBH] with the information referred to in section 9(1)(c) of the Code.

   Particulars

   (i)Letter from Paul Larsen, Chief Executive Officer, [Brookfield] to Mr David Capper, General Manager - Operations of [CBH] dated 17 December letter (17 December Letter).

   (ii)The invitation for Public Submissions issued by the Economic Regulation Authority of Western Australia (ERA) dated 6 January 2014.

6. Paragraph 3C assumes that the proper construction of 'proposal' in s 8 of the Railways (Access) Code, and the minimum mandatory content of information such as that in s 8(3)(c), is that which enables the railway owner to comply with its obligations to respond under s 9(1)(c) and cl 10(1) and cl 10(2) of the Railways (Access) Code. In other words, a proposal will provide sufficient information about 'the nature of the proposed rail operations' if the information provided is sufficient for the railway owner, within seven days of receipt of the proposal to do the following:

   [9(1)(c)]

   provide the proponent with ‑

   (i)the floor price and the ceiling price for the proposed access;

   (ii)the costs for each route section on which those prices have been calculated; and

   (iii)a copy of the costing principles that for the time being have effect under section 46.

7. And where 'a proposal has been made' the railway owner is required

   [Cl 10(1)]

   ... to determine the costs referred to in clauses 7 and 8 that are relevant to that proposal in accordance with the costing principles for the time being approved or determined by the Regulator under section 46.

   [Cl 10(2)]

   ... to notify the Regulator of the costs determined under subclause (1) (including the costs for each route section) at the same time as it provides the proponent with the information specified in section 9(1)(c).

8. It seemed from the oral submissions by counsel for Brookfield, and from its defence,[7] that Brookfield accepts that the mandatory minimum content of s 8(3)(c) will be informed by whether the information in a purported proposal is sufficient to enable the railway owner to do the things provided in s 9.

   [7] Defence [5(b)(B)].

9. There may be more dispute concerning whether the mandatory minimum content in s 8(3)(c) is also informed by cl 10(1) and cl 10(2). But I consider that it is reasonably arguable that the mandatory minimum content of 'the nature of the proposed rail operations' in s 8(1)(c) will also be informed by whether the information in a purported proposal is sufficient to enable the railway owner to perform its duties under cl 10(1) and cl 10(2) when a proposal is made (if cl 9 of sch 4 does not apply).

10. Brookfield pleads that it was not obliged to comply with, and therefore did not purport to comply with, the requirements of s 9(1)(c) and cl 10(1) and cl 10(2) of sch 4 of the Railways (Access) Code.  It otherwise denies each and every allegation in par 3C of the amended statement of claim.[8] 

    [8] Defence [7].

11. One way in which CBH therefore seeks to advance its case, or damage Brookfield's case, is by showing that Brookfield was actually able to comply with s 9(1)(c) and cl 10(1) and cl 10(2). At the least, a train of inquiry in this respect would be created by the discovery of documents which Brookfield provided to the Regulator (Authority).

12. Counsel for Brookfield submitted that even if Brookfield did engage in the conduct alleged in par 3C(a) to 3C(c), that conduct cannot determine whether CBH has made an access proposal which complies with the requirements of s 8 of the Railways (Access) Code. This misstates the test.  The question is not whether the conduct can determine an ultimate issue in dispute.  The question is whether that conduct can advance Brookfield's case, or damage CBH's case, or lead to a train of enquiry which could do so.

13. Counsel for Brookfield also submitted that even if Brookfield did engage in the conduct described in par 3C(a) to 3C(c) this would not relate to a matter in issue because the issue arising from the construction of the legislation is an objective question informed by the principles of statutory construction. On that approach, the question to be asked is whether the information in a purported proposal would permit a reasonable person in Brookfield's position to comply with the duties in s 9, cl 10(1) and cl 10(2). Although that question is one which involves construction of the Railways (Access) Code, it also raises issues of fact. The issue of combined fact and law might be expressed as follows: whether the information in CBH's 10 December 2013 letter was sufficient for a reasonable person in Brookfield's position to comply with the duties in s 9, cl 10(1) and cl 10(2).

1. It is at least arguable that the answer to this question will be informed by what Brookfield actually did. In other words, it is arguable that CBH's case could be advanced if, despite Brookfield's denial of par 3C, the documents sought by CBH showed that Brookfield actually purported to perform its duties under s 9, cl 10(1) and cl 10(2). The fact that Brookfield actually purported to perform those duties could inform the answer to whether a reasonable person in its position was capable of doing so. Naturally, the manner in which Brookfield purported to perform that duty will be relevant.

2. An analogy, which might support CBH's submission on this point, can be seen in the law of torts.  When an allegation is made that a defendant has been negligent, one question of combined law and fact is whether the extent of the defendant's conduct did not meet the standard of a reasonable person.  What the defendant actually did subsequently can be relevant to an assessment of what a reasonable person was capable of doing at the time and what a reasonable person should have done.  So, in Nelson v John Lysaght (Australia) Ltd,[9] Mr Nelson was injured as a result of a system of work which he submitted was unsafe because it required him to walk backwards to carry out a task.  About a month after his accident, a new system was installed which made it unnecessary to walk backwards to carry out the task.  A majority of the High Court held that the new system was relevant to the question of negligence, although it was not an admission of negligence.  It was evidence of a reasonably practicable alternative system that would have eliminated or minimised the risk of injury to Mr Nelson.  Gibbs J said:[10]

   Even on that assumption [ie, that a bar had been installed as part of a remodelling of the plant] the [plaintiff] has shown that it was practicable to provide a new method of doing the work that would eliminate or minimise the risk, because such a new method has in fact been put into operation.

   [9] Nelson v John Lysaght (Australia) Ltd [1975] HCA 9; (1975) 132 CLR 201.

   [10] Nelson v John Lysaght (Australia) Ltd [1975] HCA 9; (1975) 132 CLR 201, 214 (Gibbs J; Stephen & Mason JJ agreeing). See also Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517, 555 [101] (McHugh J).

3. This is not, as counsel for Brookfield submitted, to treat the conduct of Brookfield as admitting a conclusion which depends upon the application of a legal standard.  Rather, if this approach is correct, it would be to use the fact of what Brookfield actually did as one basis from which a conclusion of law (what a reasonable person in Brookfield's position could have done) might be drawn by the Court.  In any event, facts can be admitted if they are facts from which a conclusion of law can be drawn.  As the Court of Appeal explained in Shine v Williams:[11]

   when a standard, measure or capacity is fixed by a law, a party cannot be asked to admit a conclusion depending upon the legal standard; however, the witness may be asked to admit facts from which the conclusion of law may be drawn by the Court.

   [11] Shine v Williams [2007] WASCA 194 [25] (the Court) citing Grey v Australian Motorists and General Insurance Co Pty Ltd [1976] 1 NSWLR 669, 676 (Glass JA).

4. For these reasons, I do not accept the submission by Brookfield that CBH's approach to this issue is untenable or unarguable so that the documents sought could not affect the result in this case.[12]  The three categories of document sought relate to this matter in issue. 

   [12] Martin & Miles Martin Pen Co Ltd v Scrib Ltd (1950) 67 RPC 127, 131 (Jenkins LJ; Asquith LJ agreeing); approved in Pisano v Thrum [2007] WASC 109 [33] (Newnes M).

5. Although CBH raised numerous other grounds upon which the categories of document were said to relate to matters in issue, most of those reduced to the same issue above.  For instance, the submission by counsel for CBH that the documents would allow CBH to test any expert evidence from Brookfield was, at base, the same submission explained above because that matter in issue was the point upon which Brookfield's expert would be tested. 

6. However, there are two further bases upon which I accept the submission by counsel for CBH that the three categories of document relate to a matter in issue.

7. The second basis upon which the three categories of document relate to a matter in issue concerns the defence by Brookfield[13] that, 'having regard to the deficiencies' in CBH's 10 December 2013 letter, Brookfield provided CBH with information so far as it was able including matters such as floor price, ceiling price, incremental costs for each route section, total costs for each route section.  The ability of Brookfield to provide further information to CBH in relation to these matters, so far as it is required to do so under the Railways (Access) Code, will be relevant to the relief sought by CBH.  In particular, it will be relevant to whether there is any utility in the declarations sought by CBH concerning the scope of what Brookfield is required to do.[14]  If the information which Brookfield actually gave the Regulator goes beyond these matters then it is arguable that CBH's case for a declaration will be advanced or any defence based upon discretionary refusal of a declaration would be weakened.

   [13] Defence [12(b)].

   [14] See Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362.

8. The third basis upon which the three categories of document relate to a matter in issue concerns the dispute between the parties about the confidentiality of the information to which CBH says that it is entitled.[15]  At first glance, this appears to be a bootstraps argument.  CBH seeks production of the very information to which Brookfield says CBH is not entitled in order to test whether Brookfield's claims of confidentiality over that information can be maintained.  Upon closer examination, I accept that a consideration of the substance of the information provided to the Regulator is relevant to the question of whether that information is confidential.  But this point does highlight the need for protection of the rights of Brookfield especially if it were to be decided that the information is confidential and that CBH was not entitled to it.  

   [15] Defence [11].

Discretionary factors

1. Although the three categories of document about which CBH's orders were sought relate to matters in issue, a further question in this application is whether my discretion should be exercised to refuse to make the orders sought. Brookfield says it should, relying upon discretionary factors of policy, fairness and oppression. Brookfield also relies on O 26 r 11 of the Rules of the Supreme Court. That rule provides that 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.

2. Some of the matters upon which Brookfield relies in relation to discretion have little independent weight.  For instance, I reject Brookfield's submission that CBH is using the discovery process to circumvent a regulatory process, or to circumvent the Court's ultimate determination, and thereby obtain documents which CBH would not otherwise be able to access.  The discovery of the documents, if ordered, is subject to restrictions which will not apply if CBH is ultimately successful.  Most notably, one restriction is the obligation to use documents obtained by coercive process only for the purposes of the action in which they were obtained.[16]  In this case, the considerations to which I refer below also require considerable further restrictions which would not replicate those imposed upon any final relief if CBH is successful.

   [16] Hearne v Street [2008] HCA 36; (2008) 235 CLR 125, 157 ‑ 160 [105] ‑ [108] (Hayne, Heydon & Crennan JJ).

3. Another consideration which, although relevant, is not of substantial weight is that CBH obtained the consent of Brookfield to expedition of the trial on the basis that there would be no requirement for discovery.  That consideration would have been highly pertinent if CBH had persisted with its application for discovery of all five categories of document.  But my assessment is that the likely effect of discovery of the three categories sought by CBH in oral submissions would not significantly disrupt the trial timetable or the length of trial. 

4. It is possible that the introduction of further factual issues raised by discovery will delay provision of a judgment following trial but that is a matter which would prejudice CBH and which prejudice it appears to be prepared to accept.  CBH is aware that the more issues which are litigated at trial on 4 and 5 March 2014, and the more substantive the trial, the less likely that it will have (i) a judgment, (ii) compliance with any orders in its favour by Brookfield if it is successful, and (iii) time to prepare a submission to the Regulator based on any further information to which it might be entitled, before the deadline for submissions to the Regulator.  That deadline which CBH agreed with Brookfield and the Regulator is apparently 28 April 2014.     

5. Perhaps the most important consideration in the exercise of discretion in this case is whether the production of discovered documents would be unnecessary or oppressive.[17]  In relation to oppression, relevant factors include the value of the discovery to the party seeking it and the burden imposed on the party giving it.  Further, the court should restrict the volume of documents and the labour and expense involved to that which is needed for fairly disposing of the issues in the proceeding.[18]

   [17] Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60 [7] (Buss JA).

   [18] Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62 [27] (Parker J); Re McGorm; Ex parte Co-Operative Building Society of South Australia(1989) 20 FCR 387, 390 (von Doussa J); BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553; Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd (No 4) [2009] WASC 17 [13] (Le Miere J).

6. An assessment of the value of the documents to CBH, on the three bases set out above, is necessarily a very preliminary and high‑level exercise.  Much will depend upon the issues at trial in light of submissions and evidence.  At this stage, all that it is necessary to say is that the documents sought by CBH are not insignificant in the context of the pleadings, the evidence on this application, and the foreshadowed issues at trial.  

7. Weighed against the value of the documents to CBH is the confidentiality of the documents asserted by Brookfield.[19]  Affidavit evidence provided by one of Brookfield's solicitors deposes to his belief, based on information from the head of the legal department at Brookfield, that the information sought is highly confidential and commercially sensitive.  Although this affidavit evidence is in very general terms, it must be considered in the context of the urgency and expedition with which this application was brought.  It must also be considered in the context of Brookfield's evidence of potential trade rivalry between CBH and Brookfield following the announcement by CBH of their intention to operate Brookfield's Tier 3 rail track.  The potential of trade rivalry is a matter to be given weight in making discovery orders.[20]

   [19] Science Research Council v Nasse[1979] UKHL 9; [1980] AC 1028, 1065 (Lord Wilberforce); Minetec Pty Ltd v Frost[2011] WASC 145 [22] (Corboy J); Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34, 37 ‑ 38 (Hayne JA; Winneke P & Phillips JA agreeing).

   [20] Alcoa of Australia Ltd v Apache Energy Ltd (No 4)[2013] WASC 377 [8] (Le Miere J) quoting Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2)[2012] NSWSC 415 [11] (Black J).

8. Perhaps as a concession to the significance of this issue, CBH proposed orders which imposed very substantial restrictions upon the use to which it could put any documents discovered.  As I indicated to the parties yesterday, at first glance it appeared to me that there were difficulties with the restrictions proposed by CBH based on concerns raised in the submissions by counsel for Brookfield.  It may be that some of those concerns are semantic and might be addressed by re‑wording of the proposed restrictions.  Counsel for CBH accepted that the telephone conferral in relation to the appropriate restrictions which occurred this morning was not complete and should continue. 

9. The conclusion of this hearing should be adjourned to permit this conferral to be completed, in light of these reasons.  In almost every case, conferral should be completed.  The urgency of a hearing usually makes full conferral more important, not less so.  In this case there is the added reason that Brookfield, with knowledge of the content of the relevant information, is currently in the best position to 'fashion' (to use the word of counsel for Brookfield) the extent of appropriate, reasonable, restrictions proposed by CBH to protect Brookfield’s interests.[21] 

   [21] ts 108 (5 February 2014).

10. Although my preliminary assessment is that Brookfield's proposed restrictions go considerably further than might be reasonably necessary to protect its interests, the opportunity for full and proper conferral may enable CBH to accommodate some, or all, of the concerns raised by Brookfield with CBH's proposed restrictions. 

11. If, in light of these reasons, the parties are unable to agree upon appropriate confidentiality orders to protect the interests of Brookfield, it may be necessary for me to inspect the documents in order to determine whether the orders proposed by CBH are sufficient to justify the exercise of my discretion to make the discovery orders.  In particular, in Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2),[22] Black J said the following, with which I agree:

    Once trade rivalry is established, then the Court must be conscious of the risk that, once the principals of the trade rival inspect confidential information, then that information cannot be forgotten and it may be impossible for the trade rival not thereafter to use that information except for the purposes of the proceedings.[23]  It will often be appropriate where confidentiality is claimed for the Court to inspect the relevant documents since '[i]t is only upon 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 the other party, and arrangements as to confidentiality should 'strike a fair balance between the competing interests of the party seeking inspection and the party claiming confidentiality' and the nature and content of the disputed documents will be an important relevant matter ...

    [22] Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2)[2012] NSWSC 415 [11] (Black J).

    [23] Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34, 38 (Hayne JA; Winneke P & Phillips JA agreeing).

12. On the other hand, if the dispute between the parties in relation to the scope of the proposed restrictions is primarily concerned with the extent to which the solicitors or counsel for CBH (and not CBH itself as counsel for CBH accepts) should have access to the documents, then this might be able to be resolved as a matter of principle.  In particular, in NAK Australia Pty Ltd v Starkey Consulting Pty Ltd,[24] Brereton J said:

    [I]t has long been the practice that restrictions be imposed on the access of a party to documents produced on discovery, or on subpoena, particularly in cases concerning patents and trade secrets.  Although that is less so when documents are sought from parties to litigation than from third parties, and particularly where it is a plaintiff who asserts confidentiality against a defendant (because, the plaintiff having invoked the jurisdiction of the Court, a still stronger case is required to deny a defendant access to relevant confidential documents), the position of a defendant brought to a court by a plaintiff is in an intermediate position.  Protective limitations are sometimes introduced at the time of the production or inspection - such as orders for inspection by an independent solicitor or expert, or limiting access (for example) to the plaintiff's expert but not the plaintiff, or inspection by the plaintiff's solicitor but not by the plaintiff.

    In more recent times it has become rarer that a person is excluded from knowledge, because courts take the view that decisions such as whether to continue or abandon litigation should be made by the party personally on advice, rather than by the advisors.  Imposing restrictions on the ability of lawyers to speak to their clients and disclose to their clients information produced to them is undesirable. It places those lawyers in a position of difficulty vis‑a‑vis their client and even in the conduct of the litigation.  But, despite these difficulties, courts do nonetheless still make such orders as the best compromise that can be achieved between preserving the interests of the defendant's confidentiality, and allowing the plaintiff reasonably to conduct its case.

    [24] NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136 [8] ‑ [9]. See also Drivetime Radio Australia Pty Ltd v Pivotal Creative Solutions Pty Ltd (t/as Broadcast GP) [2010] NSWSC 763 [11] (Brereton J); Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2) [2012] NSWSC 415 [13] (Black J).

Conclusion

1. The revised categories of document about which discovery orders are sought by CBH relate to matters in issue and are potentially discoverable.  Whether orders for discovery should be made will depend upon whether the restrictions to be imposed upon the disclosure are sufficient to protect the interests of Brookfield.  The parties should have the opportunity to confer properly on the scope of the restrictions to be imposed in light of these reasons.

2. This hearing will be re‑listed tomorrow, the 7th of February 2014, to enable the parties to confer about the terms of any confidentiality orders.  The position of the parties in relation to this matter will inform the exercise of my discretion.  The parties should email to my associate a minute of agreed orders, or competing minutes, by 9:30 am tomorrow.