Commonwealth v ADI Limited
[2004] FCA 1011
•5 AUGUST 2004
FEDERAL COURT OF AUSTRALIA
Commonwealth v ADI Limited [2004] FCA 1011
DISCOVERY – general discovery sought by applicant – whether order for general discovery is necessary – limited discovery ordered
Federal Court Rules O 15 r 15
Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 referred to
Trade Practices Commission v CC (New South Wales) Pty Limited (1995) 58 FCR 426 citedCOMMONWEALTH OF AUSTRALIA v ADI LIMITED ACN 008 642 751 AND PARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130 AND TODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986 AND JETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
N 457 OF 2001MOORE J
5 AUGUST 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 457 OF 2001
BETWEEN:
COMMONWEALTH OF AUSTRALIA
APPLICANTAND:
ADI LIMITED ACN 008 642 751
FIRST RESPONDENTPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
SECOND RESPONDENTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
THIRD RESPONDENTJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
FOURTH RESPONDENTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
FIRST CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE FIRST CROSS-CLAIMPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
SECOND CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE SECOND CROSS-CLAIMADI LIMITED ACN 008 642 751
THIRD CROSS-CLAIMANTCOMMONWEALTH OF AUSTRALIA
CROSS-RESPONDENT IN THE THIRD CROSS-CLAIMADI LIMITED ACN 008 642 751
FOURTH CROSS-CLAIMANTPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
CROSS RESPONDENT IN THE FOURTH CROSS-CLAIMADI LIMITED ACN 008 642 751
FIFTH CROSS-CLAIMANTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
CROSS-RESPONDENT IN THE FIFTH CROSS-CLAIMADI LIMITED ACN 008 642 751
SIXTH CROSS-CLAIMANTCGU INSURANCE LIMITED (FORMERLY KNOWN AS COMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED) ACN 004 478 371
FIRST CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMAMP GENERAL INSURANCE LIMITED ACN 008 405 632
SECOND CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMROYAL AND SUN ALLIANCE INSURANCE AUSTRALIA LIMITED ACN 005 297 807
THIRD CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMEMPLOYERS REINSURANCE CORPORATION ACN 072 715 738
FOURTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMSGIO INSURANCE LIMITED ACN 058 277 866
FIFTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMGERLING (LONDON)
SIXTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMFAI GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 000 827 855
SEVENTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMADI LIMITED ACN 008 642 751
SEVENTH CROSS-CLAIMANTHIH CASUALTY AND GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 008 482 291
FIRST CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMZURICH AUSTRALIA INSURANCE LIMITED ACN 000 295 540
SECOND CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAURORA CORPORATE SERVICES
THIRD CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAIG EUROPE (UK) LIMITED
FOURTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMSKANDIA INTERNATIONAL STOCKHOLM
FIFTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAIOI INSURANCE COMPANY OF EUROPE
SIXTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMASSICURZIONI GENERALI S.p.A
SEVENTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMADI LIMITED ACN 008 642 751
EIGHTH CROSS-CLAIMANTJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
CROSS-RESPONDENT IN EIGHTH CROSS-CLAIMJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
NINTH CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE NINTH CROSS-CLAIMADI LIMITED ACN 008 642 751
TENTH CROSS-CLAIMANTHIH CASUALTY AND GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 008 482 291
FIRST CROSS-RESPONDENT IN THE TENTH CROSS-CLAIMQBE INSURANCE LIMITED ACN 000 157 899
SECOND CROSS-RESPONDENT IN THE TENTH CROSS-CLAIMJUDGE:
MOORE J
DATE OF ORDER:
5 AUGUST 2004
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
- The parties bring in short minutes to give effect to these reasons for judgement within seven days.
- Costs of the application by the Commonwealth seeking general discovery be costs in the cause.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 457 OF 2001
BETWEEN:
COMMONWEALTH OF AUSTRALIA
APPLICANTAND:
ADI LIMITED ACN 008 642 751
FIRST RESPONDENTPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
SECOND RESPONDENTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
THIRD RESPONDENTJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
FOURTH RESPONDENTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
FIRST CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE FIRST CROSS-CLAIMPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
SECOND CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE SECOND CROSS-CLAIMADI LIMITED ACN 008 642 751
THIRD CROSS-CLAIMANTCOMMONWEALTH OF AUSTRALIA
CROSS-RESPONDENT IN THE THIRD CROSS-CLAIMADI LIMITED ACN 008 642 751
FOURTH CROSS-CLAIMANTPARKER ENZED TECHNOLOGY PTY LIMITED ACN 005 879 130
CROSS RESPONDENT IN THE FOURTH CROSS-CLAIMADI LIMITED ACN 008 642 751
FIFTH CROSS-CLAIMANTTODD HYDRAULIC PTY LIMITED TRADING AS "ENZED FREMANTLE" ACN 009 084 986
CROSS-RESPONDENT IN THE FIFTH CROSS-CLAIMADI LIMITED ACN 008 642 751
SIXTH CROSS-CLAIMANTCGU INSURANCE LIMITED (FORMERLY KNOWN AS COMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED) ACN 004 478 371
FIRST CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMAMP GENERAL INSURANCE LIMITED ACN 008 405 632
SECOND CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMROYAL AND SUN ALLIANCE INSURANCE AUSTRALIA LIMITED ACN 005 297 807
THIRD CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMEMPLOYERS REINSURANCE CORPORATION ACN 072 715 738
FOURTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMSGIO INSURANCE LIMITED ACN 058 277 866
FIFTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMGERLING (LONDON)
SIXTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMFAI GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 000 827 855
SEVENTH CROSS-RESPONDENT IN THE SIXTH CROSS-CLAIMADI LIMITED ACN 008 642 751
SEVENTH CROSS-CLAIMANTHIH CASUALTY AND GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 008 482 291
FIRST CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMZURICH AUSTRALIA INSURANCE LIMITED ACN 000 295 540
SECOND CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAURORA CORPORATE SERVICES
THIRD CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAIG EUROPE (UK) LIMITED
FOURTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMSKANDIA INTERNATIONAL STOCKHOLM
FIFTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMAIOI INSURANCE COMPANY OF EUROPE
SIXTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMASSICURZIONI GENERALI S.p.A
SEVENTH CROSS-RESPONDENT IN THE SEVENTH CROSS-CLAIMADI LIMITED ACN 008 642 751
EIGHTH CROSS-CLAIMANTJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
CROSS-RESPONDENT IN EIGHTH CROSS-CLAIMJETROCK PTY LIMITED (IN LIQUIDATION) TRADING AS "THE HOSE DOCTOR" ACN 080 369 268
NINTH CROSS-CLAIMANTADI LIMITED ACN 008 642 751
CROSS-RESPONDENT IN THE NINTH CROSS-CLAIMADI LIMITED ACN 008 642 751
TENTH CROSS-CLAIMANTHIH CASUALTY AND GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ACN 008 482 291
FIRST CROSS-RESPONDENT IN THE TENTH CROSS-CLAIMQBE INSURANCE LIMITED ACN 000 157 899
SECOND CROSS-RESPONDENT IN THE TENTH CROSS-CLAIM
JUDGE:
MOORE J
DATE:
5 AUGUST 2004
PLACE:
SYDNEY
REASONS FOR JUDGMENT
An issue has arisen in these proceedings about the extent to which parties should give discovery to various other parties. The proceeding concerns an action by the Commonwealth of Australia against four respondents who were involved, directly or indirectly, in the refurbishment of a diesel engine on a naval vessel, the HMAS Westralia. On 5 May 1998, during the refurbishment a fire occurred in the engine room causing loss of life and extensive damage to the vessel. What caused this fire, who was responsible and what losses were suffered by the Commonwealth as a consequence of the fire are at the heart of this litigation. Various insurance companies have been joined in the proceedings as cross-respondents to a number of cross-claims.
The matter is not without its complexities. First, the Commonwealth entered into a deed of indemnity with the first respondent, ADI Limited ("ADI") in 1999 when the Commonwealth sold its interests in ADI. While some rights and obligations under the deed are in issue in these proceedings, the deed provides that the Commonwealth will indemnify ADI for all uninsured losses with respect to all claims and all causes of action and all liability to the Commonwealth arising from the fire of 5 May 1998. The deed goes on to provide, however, that the Commonwealth can make claims against ADI in relation to losses it suffered from the fire. ADI is obliged, under the deed, to seek to recover against insurers. The existence of the deed is raised by various insurers in defending claims made against them by ADI.
Secondly, the circumstances of the fire have, as I presently apprehend it, been extensively canvassed before a Naval Board of Inquiry as well as, more recently, a Coronial interest by a Western Australian magistrate. While I have not read either the Board's report or the Coroner's report, I apprehend from comments made by counsel in these proceedings that there may be a divergence between the conclusions reached. While the proceedings were commenced sometime ago, many months were taken up in a mediation I ordered. I ordered mediation on the assumption that issues of fact may have been settled by the Naval Board of Inquiry and a mediation could focus on the nature and extent of the liabilities of the parties by reference to those facts. However, the mediation was not successful.
The Commonwealth submits that all parties should give general discovery to all other parties. This includes the insurers who are cross-respondents to cross-claims by ADI. Some parties, including the Commonwealth, volunteer general discovery. Other parties, while not opposing general discovery by those who volunteer it, submit that their obligation should be more limited. Notable amongst that latter group is ADI (and insurers against which it maintains cross-claims). During the course of the argument on what form discovery should take, some of the parties who had volunteered general discovery sought to retreat from that position, seemingly on the basis that there was a prospect other parties might not be required to give general discovery.
In this Court, at least since 1999, there has been a clear bias against ordering general discovery though the facts of a particular case may warrant such an order being made. First, O 15 r 15 of the Federal Court Rules provides, in effect, that any order concerning discovery should only be made if the Court is satisfied that the order is necessary at the time it is made. Indeed, this condition on the exercise of the power is expressed as a prohibition subject to a qualification. The Court must not make a discovery order unless it is satisfied that the order is necessary. Secondly both authority and a Practice Note issued by the Chief Justice (Practice Note No.14 issued 3 December 1999) point to the power to order discovery being exercised cautiously and general discovery not being ordered other than in a clear case where such an order is warranted. These matters were canvassed by a Full Court in Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 and it is clear from the judgement of Beaumont J (Tamberlin J agreeing) that the approach I have just outlined, is to be adopted when considering what order should be made requiring discovery. Beaumont J also affirmed (at [70]) the continuing applicability of O 15 r 15 to any order for discovery and also endorsed the observations of Lindgren J in Trade Practices Commission v CC (New South Wales) Pty Limited (1995) 58 FCR 426 (at 436-7) as to what is constituted by notions of "reasonably necessary" for any order of discovery to be made.
ADI and other parties opposing an order that they give general discovery have identified categories of documents which they contend comprehend all relevant documents. During argument on what form discovery should take, counsel for ADI added to and modified the proposed categories. Observations of counsel for the Commonwealth about the inadequacy of the categories contributed to that process.
The Commonwealth identified various reasons why general discovery should be ordered. They include potential delay if discovery is given by categories, potential disputes the Court will need to resolve and potential additional costs incurred in resolving those disputes or at least in the on going review by the parties of the categories and their sufficiency. These matters may arise in what is undoubtedly complex litigation involving a multiplicity of parties. It is possible that some, or indeed perhaps all, of the Commonwealth's concerns will materialise. However, I am not affirmatively satisfied at this stage of the proceedings that they will. Accordingly, in these circumstances, I am not prepared to order general discovery as the Commonwealth contends.
With one qualification, which I refer to shortly, the parties should agree on categories. I will adjudicate on any dispute about categories if agreement cannot be reached, though my expectation is that agreement should be reached having regard to the limited areas of difference apparent by the end of the hearing. I should indicate, however, that the parties cannot discount the possibility that, notwithstanding this judgement, if the areas of dispute are too great and the resolution of those disputes is likely to be protracted, general discovery might be ordered.
Consistent with principle, I should not order general discovery by any party (including the Commonwealth) who has volunteered to do so if they wish to resile from the commitment. If, after this judgement, any party (including the Commonwealth) remains willing to give general discovery (perhaps because it is more convenient to do so), that can be reflected in the orders. All parties should give discovery by 19 November 2004.
The qualification referred to earlier concerns documents brought into existence after this litigation was commenced. The draft list of categories proposed by ADI requires discovery only of documents in the categories which came into existence before these proceedings were commenced (on 23 April 2001). I accept, as the solicitor representing the second respondent (Parker Enzed Technology Pty Ltd) pointed out, this limitation on the obligation to give discovery is reflected in Pt 23 r 1(b) of the Supreme Court Rules 1970 (NSW) in the definition of "excluded documents" (the definition includes any document which wholly came into existence after the commencement of the proceedings) which operates, in this respect, in conjunction with Pt 23 r 3(5)(a). While I can conceive of situations where it might be appropriate to limit discovery in this way, it is not apparent to me it should qualify the obligation to give discovery in this matter. The rationale of limiting discovery in this way, as advanced by the solicitor for the second respondent, was that since these proceedings had been commenced, there have been a number of other proceedings (including the Board of Inquiry and the Coronial inquest) which would have generated a significant quantity of privileged documents. Implicit in the submission, as I understood it, was that the parties should not be required to list these documents as documents in respect of which a claim of privilege was made, which is the primary obligation imposed by O 15 r 6. There is some sense of addressing this practical problem. I would make an order, if all parties agreed, that all parties should be relieved of the burden of listing privileged documents when giving discovery. In the absence of agreement, I would hear the parties on what qualifications, if any, should operate in relation to documents created after these proceedings were commenced.
I propose to order that the parties bringing short minutes to give effect to these reasons. The primary responsibility for doing so should be assumed by ADI. The costs of this application should be costs in the cause. If there are any outstanding issues concerning categories, I will deal of them at the hearing scheduled for 8 September 2004. If such a hearing is necessary, ADI should notify me 14 days before the hearing of all outstanding issues concerning discovery.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate:
Dated: 5 August 2004
Counsel for the Applicant: J A Timbs QC Solicitor for the Applicant: Australian Government Solicitor Counsel for the First Respondent: A S Martin SC Solicitor for the First Respondent: Deacons Solicitor for the Second Respondent: Corrs Chambers Westgarth Solicitor for the Third Respondent: Hicksons Counsel for the First to the Fifth Cross-Respondents in the Sixth Cross-Claim: A J Bowen
Solicitor for the First to the Fifth Cross-Respondents in the Sixth Cross-Claim: Henry Davis York
Counsel for the Sixth Cross-Respondent in the Sixth Cross-Claim: A T S Dawson
Solicitor for the Sixth Cross-Respondent in the Sixth Cross-Claim: Minter Ellison
Counsel for the Second Cross-Respondent in the Seventh Cross-Claim: T Clarke
Solicitor for the Second Cross-Respondent in the Seventh Cross-Claim: Vardanega Roberts
Solicitor for the Second Cross-Respondent in the Tenth Cross-Claim: Ebsworth & Ebsworth
Date of Hearing: 28 July 2004 Date of Judgment: 5 August 2004
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