Gerard Cassegrain & Co P/L v Cassiro P/L & Ors The Commonwealth Scientific and Industrial Research Organisation v Cassiro P/L
[1992] FCA 957
•11 Nov 1992
IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) GENERAL DIVISION
) No. NG 3062 of 1992 IN THE MATTER of CASSIRO PTY LIMITED
(A.C.N. 003 787 479)
BETWEEN: GERARD CASSEGRAIN & CO. PTY
LIMITED
Applicant
AND : CASSIRO PTY LIMITED
First Respondent
AND : THE COMMONWEALTH SCIENTIFIC AND
INDUSTRIAL RESEARCH ORGANISATION
Second Respondent
AND : SIROTECH LIMITED
Third Respondent
AND
IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) GENERAL DIVISION
) No. NG 3095 of 1992 IN THE MATTER of CASSIRO PTY LIMITED
(A.C.N. 003 787 479)
BETWEEN: THE COMMONWEALTH SCIENTIFIC AND
INDUSTRIAL RESEARCH ORGANISATION
Applicant
AND : CASSIRO PTY LIMITED
(A.C.N. 003 787 479)
First Respondent
PRINCLPAC
AND : GERARD CASSEGRAIN & CO. PTY
LIMITED
(A.C.N. 000 342 174)
Second Respondent
Coram: Olney J Place: Sydney Heard: 11 November 1992 Decision:
13 November 1992 15 DEC 1992
FE0ERP.L COURT OF
Reasons Published: 11 December 1992 ALLSTRAW
REASONS FOR JUDGMENT
1. INTRODUCTION
The parties to these proceedings are at present engaged in what can only be described as protracted litigation. The trial commenced on 26 October 1992. Both before and durlng the trial various notices to produce documents have been served on the second and third respondents by the applicant in application NG 3062/1992 and a number of subpoenas have been served on non- parties for the production of documents. The respondents have answered many but not all of the notices to produce whilst for the most part the non-parties have duly answered the subpoenas. The respondents object to the production of some documents in respect of which notices to produce have been served and they also object to the applicant having access to some of the documents produced by non-parties. On the 13th day of the trial, after the completion of most of the evidence of the first witness called on behalf of the applicant, I dealt with a notice of motion filed a few days earlier on behalf of the respondents in
which orders were sought inter alia to set aside certain of the notices to produce and to prohlbit access to documents produced
by non-parties. After hearing the parties I reserved my decision and two--day? later on 13 November 1992 I announced my decision
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t&khe effect' that the relief sought would be refused and I made / .j. ,$i& l*-/ kA
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g:$id r+ok :g$ye:reasons for my decision but undertook to do so as ,.., 8 ,
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mothon was regecved pending the publication of my reasons. ' .- ,.-l . .
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I now publish my reasons for the decision given on 13 November
1 9 9 2 .
What follows contains somewhat more detail than might ordinarily be anticipated in response to an application of the type dealt with on 11 November 1 9 9 2 but it seems approprlate in circumstances where it has been necessary to consider what are the issues between parties to canvass the pleadings fully, and to do so it has been necessary to explaln the background to the litigation. In due course ir: will be necessary for these matters to be gone into and when that occasion arises I anticipate that much of what follows will be incorporated into my reasons by reference rather than by repetition.
These proceedings have arisen out of a business relationship which the parties developed over a period of some 5 years or more initially in relation to a process known as soil slotting. It is not necessary to have any deep understanding of the scientific aspects of this process in order to judge the legal issues which
have arlsen but nevertheless some appreciation of what is involved is desirable in order to understand the issues raised by the pleadings. The following description is taken from the CSIRO Annual Report
1987-88 p. 40:Gypsum slotting improves soil quality
S o i l s with poor aera tson and water l n f ~ l t r a t i o n characteristics,
which have low p r o d u c t i v ~ t y when c u l t r v a t e d and r r r r g a t e d , can now be economlca l ly t r ea ted wrth gypsum by uslng a CSIRO-designed s l o t t l n g machlne.
The problem was f ~ r s t defined by CSIRO researchers who r d e n t i f i e d
a ' t h r o t t l e ' e f f e c t a t a depth of about 25-55 cm I n c l ay s o l l s l n
t h e New South Wales Riverrna p l a i n s , whrch prevented adequate a e r a t ~ o n
and water m f i l t r a t i o n .
The s l o t t i n g technique appl res gypsum t o t h e s o r l rn narrow s l o t s about one metre apa r t . The machlne drgs discrete, s t a b l e s l o t s and mrxes gypsum with t h e tops011 and subsol1 l n t h e s l o t s , which
a r e up t o 80 cm deep.
The s l o t s a c t a s pathways f o r a i r and water t o e n t e r t h e s o r l , increasing wheat y i e l d s by up t o 50 pe r cent .
A Por t Macquarie-based company l n New South Wales, Gerard
Cassegrain & Company, has helped develop t h e machine f u r t h e r f o r
s l o t t r n g acrdrc vineyard s o d s wi th lrme and gypsum, and i s
negot ia t rng t h e commerc~al development of t h e technique and machinery.
I n t h e course of t h e i r dealings t h e par t ies a l so developed a
m u t u a l l n t e r e s t i n a process which i s known as A r t i f i c i a l
V e r t l c a l F l o w Wetlands (VFW). A g a i n , an unders tanding of t he
precise s c i e n t i f i c processes involved i n VFW i s n o t necessary b u t
t h e fo l lowing desc r ip t ion t a k e n from t h e CSIRO A n n u a l Report
1988-89 p . 3 7 gives a n o u t l i n e of what i s involved:
New waste-water t reatment technique CSIRO is developrng a cheap, effective system f o r waste-water
t rea tment uslng a r t i f i c i a l wetlands. The process uses na t ive aquat lc p l a n t s t o t r e a t primary s e t t l e d sewage and can be adapted f o r s i n g l e households o r populat ions of up t o 10,000 people. I t a l s o has potential t o dea l with a range
of o the r waste-waters such a s e f f l u e n t s from a b a t t o i r s and
f e e d l o t s and mrning run-off.
The p l a n t s a r e grown i n a permeable ma te r i a l such a s g rave l t o
a l low rapid flow of waste-water through t h e wetland and good contac t wlth t h e roo t systems of t h e swamp p lan t s . The r o o t s process t h e waste-water by takrng up nutrients, adding oxygen,
and improving c l a r i t y .
The system rs v i r t u a l l y flood-proof, provides no free-standing
water f o r p e s t s such a s mosquitoes, i s odourless and w i l l
t o l e r a t e "shock loads" of nu t r r en t s . Constructron and maintenance costs will be low compared wrth more conventronal processes, and once establrshed the swamp plants will also offer an interesting addrtion to the landscape - a thriving community of Australian natives.
Prlot systems have been established at sewage treatment works in Griffith, NSW, and at army barracks m Wagga Wagga, NSW. Four household units have also been constructed.
Field testing wrll be needed over the next two years as a basis for desrgn of full commercial systems.
Another concept to which reference is made in the proceedings is the Clos farming system which was introduced in the Hastings
region by the applicant in relation to the production of grapes for use in the Cassegrain Winery at Port Macquarie. The following description is taken from an article written by one of
the witnesses (Jeremy Morris) and is exhibited to his affidavit
of 29 July 1992.
The Clos Fanning System
This system of farming originated in France many centurres ago when large family estates were often walled or enclosed. The name "Clos", meaning enclosed, was applied to such estates.
As time passed, the orrginal landholdings were divided and passed onto successive generations untll they now consist of many small, separately owned, yet contrguous, areas of simrlar farmlng activ~ties.
operated as a single agricultural unit within which each owner Desprte this multiple ownership, each Clos contrnues to be can identrfy hrs holding and its product. At the same time, each owner benefrts from the economies of scale that are inherent in large-sized operations. Thrs system was adapted to suit the partrcular slte chosen and a number of features were incorporated to enhance the development. These rncluded: The farmrng and residential sectron of each lot were to be separated by a buffer strip to keep both land uses apart to enable optrmum farmrng practices and resrdential and lifestyle pursuits to be carried out in the most harmonious manner.
A privately controlled access road, constructed to publrc road standards, was to be used to service the homes.
An rntrlcate system of restrrctions as to user, easements and covenants were to be implemented to control the future
management and land use of the prolect.
Landscaping and recreatron areas were to be grven a hrgh prlority in the design to assrst rn attractrng potential purchasers to the resrdential qualrties of the development.
The use of the Soil Conservatron Service of New South Wales as oaid consultants for the des~an of the vrnevard lavout so is to minimise any erosron pgtentral whrleamaxrmr;mg the length of the trellrs rows to achieve ootrmum economres - of scale.
The use of the best available consultants for the ongorng viticultural operations to assrst in the maximrsing of the quality and quantity of the grapes produced from the development.
As the whole aim of this development was to ensure a long term supply of quality grapes to the Cassegrarn Wrnery, a contract guaranteeing the purchase of the grapes was to be offered to all farm owners.
2. THE PROCEEDINGS
On 8 April 1992 the applicant in proceeding NG 3062/92 (GC & CO)
filed an application seeking declaratory and other relief concerningthe affairs of the first respondent in that proceeding (Cassiro). The relief sought includes a claim for declarations
that the affairs of Cassiro are being conducted in a manner that
is oppressive or unfairly prejudicial to, or unfairly
discriminatory against, GC & CO and contrary to the interests of the members of Cassiro as a whole. In addition an order is sought that the second respondent in the proceeding (CSIRO) and/or the third respondent (Sirotech) purchase the shares of GC & CO in Cassiro according to a formula set out in the
application. An amended application filed by leave on 19 October 1992, also contams a clam for damages.
By application filed on 7 May 1992 in proceeding NG 3095/92 CSIRO seeks an order that Cassiro be wound-up pursuant to section 461 of the Corporations Law. GC & CO is named as second respondent in this proceeding.
On 8 May 1992 Lockhart J ordered that the two proceedings be heard together and that evidence in one proceeding be evidence in the other.
The trial of the two proceedings commenced on 26 October 1992. The evidence-in-chief of all witnesses is being taken by way of affidavit or verified statement subject to the rlght of the opposite party to cross-examine. At the time of hearing the notice of motion the principal witness of GC & CO (Claude Cassegrain) had given his evidence-in-chief and been cross- examined for some 10 days. He had not at that stage been re- examined.
3 . THE PLEADINGS
proceeding. Unfortunately, many issues have been raised and even It is convenient to give an overview of the pleadings in each an abbreviated summary is of necessity quite substantial. For ease of reference the statements of claim in proceedings 3062/92 and 3095/92 are referred to respectively as GC & CO's statement of claim and CSIRO's statement of claim. In proceeding 3062/92 CSIRO and Sirotech filed a common defence which is referred to as CSIRO's defence and in proceeding 3095/92 the defence is
referred to as GC & Co's defence. Cassiro has not appeared in
either proceeding.
There are a number of facts where are common cause to which no more than passmg reference need be made at this stage. GC & CO is a company incorporated in NSW, as is Cassiro. CSIRO is a body
corporate established by the S c i e n c e and I n d u s t r y Research A c t
1949 (Commonwealth). The shares in Casslro are owned equally by
GC & CO and CSIRO. Each of GC & CO and CSIRO has the right to nominate 3 directors to the board of Casslro. Slrotech is a company incorporated in the ACT and 1s wholly owned by CSIRO.
GC & Co's case is pleaded in an amended statement of claim filed
by leave on 1 9 October 1992. CSIRO's defence was filed on 2 2
July 1 9 9 2 in answer to GC & Cots origmal statement of claim. The defence was not amended after the amended statement of clam was filed. The amended statement of claim contains a series of main headings which are adopted below. In each case the facts pleaded in the statement of claim are summarised and followed by
the matters pleaded by way of defence. (a) GC & Co's statement of claim and CSIRO's defence
A. Claim (paras. 8-10)
The Joint Venture establish a joint venture for the purpose of developing and commercialising soil slotting machinery (the soil slottlng machinery) and in about January
1988 the agreement was varied to include the
commercialisation of other Australian research and
development projects. On or about 19 June 1989 the agreement was further varied to provide that the jolnt venture activities be transferred to and thereafter conducted principally by a company to be jointly owned initially by GC & CO and CSIRO.
On 28 July 1987 CSIRO entered into an agreement with
GC & CO for a collaborative research program to be
conducted by the CSIRO Centre for Irrigation and Fresh
Water Research (CIFR) and GC & Co.Defence agreement with GC & CO styled "Memorandum of Commercial Intent" (MOCI) but otherwise denies all facts pleaded under this heading.
Undertaking of the Joint Venture
Claim (paras. 11-15) In the course of the joint venture GC & CO, CSIRO and (since 10 July 1989) Cassiro have undertaken activities with respect to:
(ba) research and development into soil slotting for improvement of soils, and for the disposal of sludge;
(bb) research and development into artificial vertical
flow wetlands;
(bc) field trlals of sol1 slotclng techniques at Wauchope, including ongolng monitoring of test beds over several years;
(bd) design and conduct of slotting trlals for thlrd parties for agricultural actlvitles and for sludge disposal;
(be) field trials of VFW at Wauchope, Coffs Harbour and other sites;
(bf) development of scanning software known as "SCI- SCAN", for measurement of lengths, areas and quantities of objects
(the principal activities).
The day to day conduct of the principal activities have been conducted by scientists and others seconded to Cassiro by CSIRO. Since about October 1987 the conduct of activities in respect to slotting technology has been supervised by Blackwell and those with respect to VFW, by Mitchell.
GC & CO provided financial and other contribution to the joint venture and Cassiro. So much of the assets of the joint venture and Cassiro as comprise the knowledge, understanding and know-how in respect of the principal activities (the technology) has been derived from and developed by the scientists and other staff of CSIRO enhanced by the conduct of the principal activities.
Defence
Save that it admits that Cassiro has undertaken:(baa) research and development into soil slotting for improvement of soils, and for the disposal of sludge ;
(bab) design and conduct of slotting trials for third parties for agricultural activities and for sludge disposal;
and that under the terms of the MOCI, it seconded Blackwell to Cassiro, CSIRO denies all facts pleaded under this heading.
C. Management of the Joint Venture
Claim (paras. 16-19) It was agreed that decisions about the joint venture would be made jointly by GC & CO and CSIRO and since the establishment of Cassiro, by its directors.
In and after October 1987 responsibility for the
management of the joint venture was undertaken by Blackwell who was appointed chief executive officer and secretary of Cassiro in July 1989. In or about June 1991 Cassiro appointed Sirotech to manage and supervise its accounts and financial affairs. Foster assumed the position of managing director of Cassiro in about August 1991 and on about
26 August 1991 Abourizk was appointed secretary and
public officer.
Defence
CSIRO admits that Blackwell was the chlef executive
officer and secretary of Cassiro from about July 1989,
and says that:(ca) Cassiro appointed Sirotech to manage and
supervise its accounts and financial affairs in
about June 1991;
(cb) Cassiro appointed Foster to the position of managing director in about August 1991;
(cc) Cassiro appointed Abourizk as secretary on or about 26 August 1991;
and that since July 1991:
(cd) Kenley has had managerial responsibility for the
accounts and financial affairs of Cassiro;
(ce) Foster has acted as managing director;
(c£) Abourizk has acted as secretary;CSIRO otherwise denies all facts pleaded under this
heading.
D. Contribution t o Joint Venture A c t i v i t i e s
Claim (paras. 20-22) It was a term of the agreement that GC & CO and CSIRO would make the following contributions to the joint venture:
(da) CSIRO was to provide the soil slotting and other technology developed by it since about 1985;
(db) CSIRO was to provide scientific and other technical expertise for the purpose of research and development to advance the commercialisation of the technology;
(dc) GC & CO was to provide funds to:
(i) meet certain expenses of the joint venture and Cassiro (other than for staff employed or seconded by CSIRO and Sirotech) as they were incurred; and
(ii)purchase scientific and technical equipment required by the joint venture;
(dd) GC & CO was to provlde some of its existing staff
and employ additional staff to support the
scientific and commercial activities of the joint
venture;
(de) GC & CO was to provide trial sites for the joint venture activities;
(df) GC & CO was to provide office accommodation and
administrative support for the joint venture and
Cassiro .
Up to 30 June 1991 GC & CO made the following contributions to the joint venture and its activities: (dg) direct funding by payment of cash of $2,410,185; (dh) provision of offlce accommodation atwauchope for
use by staff engaged in joint venture activities, including employment of additional secretarial and administrative staff and overheads associated
with the provision of such accommodation, staff and direct funding at a cost to GC & CO of $3,600,099;
(di) provlslon of existing staff and employment of
additional staff to support the scientific activities of the loint venture, at a cost to GC
& CO of $241,071;
(dj) made available 205 ha of land at Wauchope and at Pokolbin in the Hunter Valley for the conduct of sol1 slotting trials, and made available 3 sites at Wauchope for the construction of VFW trials.
Defence
CSIRO denies all facts pleaded under this heading.
E. GC & CO's Expectations of the Joint Venture
Claim (paras. 23-25) Since October 1987 GC & CO has had the following expectations of the loint venture (GC & CO's
expectations): (ea) GC & CO and CSIRO would:
(i) develop t h e technology f o r "commercialisation", namely mass marketing of the technology in Australia and overseas; and
(ii)take steps to obtain equity investment by major Australian corporations to facilitate
"commercialisation" of the technology,
through or under the auspices of Cassiro;
(eb) CSIRO, by participation in the joint venture and
Cassiro, would establish a permanent research and
development base in the Hastings Rlver district;(ec) CSIRO would not use the technology other than for
the benefit of the joint venture and Cassiro;
(ed) CSIRO would not attempt to misuse the position of control which it exercised over its employees who were involved in the principal activities to gain an advantage for ~tself or to the detriment of the joint venture, Cassiro or GC & CO;
(ee) CSIRO would not act other than in utmost good faith towards GC & CO at all tlmes in connection with the principal activities, the technology and the amount of the contributions which GC & CO was to make to the joint venture and Cassiro;
(ef) CSIRO would account to GC & CO and Cassiro for the nature and amounts of its contributions to the jolnt venture and Cassiro;
(eg) CSIRO would inform GC & CO and Cassiro of any conflicts of interestwh~ch might arise affecting CSIRO in the conduct of the principal activities, and in the course of the research and development of the technology.
GC & CO's expectations were legitimate expectations for GC & CO to have and at all relevant times CSIRO and Sirotech were aware of and encouraged the same and
the making by GC & CO of ~ t s contribut~ons to the loint venture and Cassiro. Defence
CSIRO denies all facts pleaded under t h ~ s heading.
F. Representations to GC & CO
Claim (paras. 26-36) In and between December 1990 and February 1991 CSIRO
represented to GC & CO that:
(fa) CSIRO had analysed the inputs which were requiredby Casslro for completion of its current trials, and to enable Cassiro to become self-funding by 30 June 1991;
(fb) on the basis of the sald analysis CSIRO had prepared a budget of the funds and other inputs which were required by Cassiro and the joint venture to complete those trials and become self- funding by 30 June 1991;
(fc) CSIRO requested GC & CO to make a further contribution to the value of $308,000 from December 1990, such amount being calculated on the basis of and derived from the said budget; (fd) all other inputs required by the said budget would be arranged by CSIRO, and that CSIRO had allocated those other inputs to the joint venture and Casslro;
(the representations). thereby GC & CO obtained funds in excess of $308,000 which it contributed to or for the benefit of Cassiro.
Contrary to the representations:
(fe) no, or no proper, analysls had been made of thelnputs required by Cassiro to enable it to complete its current trials or to become self- fundlng whether by 30 June 1991 or at some later date;
( f f ) no, or no proper, budget had been prepared of the funds and other inputs which were required by Cassiro and the joint venture to complete its current trials or become self-funding whether by 30 June 1991 or by some later date; (fg) the amount of $308,000 was an insufficient contribution to enable Cassiro to become self- funding whether by 30 June 1991 or by some later date;
(fh) an amount substantially in excess of $308,000 was required by Cassiro from December 1990 to enable lt to become self-funding on 30 June 1991 or some later date; (fi) CSIRO had not made any, or any adequate, arrangements to provlde other inputs to Cassiro and the jolnt venture, which were required by Cassiro to enable it to become self-funding whether by 30 June 1991 or some later date.
CSIRO is a corporation wlthin the meanlng of the TPA and is carrying on business within the meanlng of
S. 2A of that Act. CSIRO in trade and commerce
engaged in conduct that was misleading or deceptive or was likely to mlslead or deceive in contravention of S. 52 of the TPA, by reason whereof GC & CO has
suffered loss and damage.
Further or in the alternative, at all relevant times CSIRO owed GC & CO a duty to exercise reasonable skill, care and diligence in making statements or giving advice to GC & CO with respect to:
(fj) the amount of any contributions sought from GC & CO for the purpose of Cassiro and the joint venture;
(fk) what contributions, whether in cash or kind, were
required by Cassiro to enable it to be self-
f undlng;
(£1) the time by which Cassiro would become self-
funding .
CSIRO made the representations well-knowing GC & CO would rely thereon. The representations were made negligently and by reason thereof GC & CO has suffered loss and damage.
Defence
Save that it does not admit the allegation that it iscarrying on a business wlthln the meaning of S. 2A of the TPA, CSIRO denles all facts pleaded under thls heading.
G. Dealing with Joint Venture Assets
Claim (paras. 37-42) By an agreement dated 21 December 1990 GC & CO and CSIRO agreed that they owned the intellectual property In the VFW process in equal shares. In January and February 1992 CSIRO informed GC & CO that it intended in its own name and without the authority or consent of GC & CO to enter into an agreement with Coffs Harbour City Council (CHCC) for the sale use development and exploitation of the intellectual property in the VFW process.
Defence entered into an agreement with GC & CO for
treatment of sewage by the VFW process and proposed collaboration in research and development of the commercialisation of that system and admits that GC & CO has not given it authority for it to enter into the alleged contract with CHCC. It denies that GC & CO has any interest in the VFW process and that CSIRO requires the authority of GC & CO before entering into any contract in respect of that process.
CSIRO denies all other facts pleaded under this heading.
H. Oppression
Claim (paras. 43-46) From about June 1991 CSIRO, and Sirotech actlng for
and on behalf of CSIRO:
(ha) procured the appointment of officers of Sirotechto manage the affairs of Casslro:
(i) without disclosing to GC & CO that CSIRO's purpose in so doing was to ensure that Cassiro's affairs were managed in the interests of and for the benefit of CSIRO and not the shareholders generally; and
(ii)in respect of the purported appointment of Foster as managing director of Cassiro, without approval of the Cassiro board;
(hb) procured Sirotech's offlcers after their
appointment on 14 August 1991 to manage Cassiro's
of CSIRO and not the shareholders generally; affalrs in the interests of and for the benefit
(hc) by falsely representing on about 14 August 1991 to GC & CO that Cassiro's projects would become self-funding by 31 December 1991 without the need for any further contribution by GC & CO to the joint venture or Cassiro, procured GC & CO's consent to the resolutions of the Cassiro board on l4 August 1991 that:
(l)
the contrlbutlons of GC & CO and CSIRO be considered to be equal, whereas GC & Co's contributions substant~ally exceeded those of CSIRO; and
(ii)GC & CO transfer certain assets owned by it to Casslro for a nominal sum;
which resolutions were for the benefit of CSIRO
and to the detriment of GC & CO;
(hd) determined not to prepare a business plan for the
purposes of obtaining third party equityparticipation in Cassiro, contrary to the
direction of the Cassiro board on 14 August 1991;
(he) caused Cassiro to relocate its office from GC &
Co's premises at Wauchope to an office in Port
Macquarie, contrary to the interests of Cassiro's
shareholders generally;
(h£) demanded further contributions of about $40,000 from GC & CO for the VFW activities, whereas no further contributions were due;
(hg) hindered the completion of the financial accounts for Casslro for the year ending 30 June 1991 by preparing and refusing to correct draft accounts which: (i) valued Casslro's intellectual property other than on the basis of capitalised expenditure
as directed by the Cassiro board;
(ii) included as income of Cassiro an amount which represented insurance proceeds
recovered form the wrecking of a slotter, contrary to generally accepted accounting
principles;
(iii)included as income of Cassiro cash contributions made by GC & CO, contrary to generally accepted accounting principles;
(hh) hindered and prevented the holding of an annual
general meetlng for 1991 of Casslro:
(1) on 9 September 1991, in accordance with a
resolution of the Cassiro board on 26 August
1991;
(ii)by Foster refusingto nominate another date, as directed by the Cassiro board on 11 September 1991;
(hl) hindered and prevented the f~ling of Cassiro's annual return for 1991 by reason of the matters
referred to ln (g) and (h);
(hj) caused to be undertaken a confidential report and
analysis of Cassiro's affairs by Foster and
Kenley in about October 1991 otherwise than for the benefit of shareholders generally, which report was provided to the CSIRO board but not to
GC & CO;
(hk) for the purpose and with the effect of frustrating the conduct of Cassiro's affairs, caused created and affected a dispute on and from
17 October 1991 as to the following matters with
respect to which no genuine dispute existed:
(i) the auditing of the financial accounts for Cassiro for 1989/90;
(ii)the ownership by Cassiro of the soil slottlng machinery;
(iii)the agreement by GC & CO to transfer to Cassiro scientific and technical equipment;
(iv) the provision of files to Cassiro;
(v) the access by Cassiro staff to GC & Co's premlses for the conduct and monitoring of fleld trials;
(hl) for the further purpose and with the effect also of frustrating the conduct of Casslro's affalrs, caused created and affected a dispute on and from
17 October 1991 as to the following matters with
respect to which Sirotech and/or CSIRO were
responsible or were the cause:(i) each of the matters referred to in (g), (h) and (i);
(ii) the decision not to hold a special general
meeting to increase the number of directors of Cassiro from 6 to 8;
(hm) for the further purpose and wlth the effect also of frustrating the conduct of Cassiro's affairs, caused created and affected a dispute on and from
17 October 1991 as to the following matters which
had no bearing on the conduct of the joint
venture or the operations of Cassiro:
(i) GC & Co's ownership of assets such as motorvehicles and office partitions;
(li)holiday pay and employment expenses of about $1,500 due to certain CSIRO staff who were not involved in Cassiro's operations;
(hn) by falsely representing to the Cassiro board and GC & CO's representatives on the Cassiro board that a substantial dispute in respect of the matters referred to in (k), (1) and (m) existed between Cassiro and GC & CO, caused the Casslro board to pass resolutions at its meetings on 8 November, 18 December and 23 December that Casslro cease its operations and commence proceedings for voluntary liquidation, which resolutions were rescinded before taking effect;
(ho) determined not to deal, and have not attempted to deal, either in any bona fide way or at all, with any of the concerns raised by GC & CO since 17 October 1991 with respect to the matters which were allegedly in dispute, referred to in
subparagraphs (k), (l), (m) and (h);
(hp) determined not to pursue any proposals for commercialisation of the technology or a sale to a third party of an equity interest in the joint venture or Cassiro;
(hq) caused a contraction of the activities and business operations of Cassiro, in particular preventing Cassiro from entry into new contracts and arrangements for its benefit, including the
following:
(i) preventing Cassiro from entering a contract for research and development of slotting for the Sydney Water Board to the value of $370,000;
(ii) directing staff not to pursue opportunities for performance by Casslro of slotting on various properties in the Hunter Valley;
(lii)directing staff not to pursue opportunltles
for the conduct by Casslro of research and development with respect to the Multi- Function Polis in South Australia;
(iv)directing staff not to pursue any opportunities or further opportunities for performance by Cassiro of research and development and feasibility studies with respect to VFW processes in the Hastings Valley, the Riverlna and at Coffs Harbour;
(V) preventing Cassiro from banking a cheque
received by it from Hastlngs Council of $50,000 paid to Casslro for the conduct of work on an exlsting project, and seeklng to return that cheque which would cause Cassiro to be in breach of its obligations to Hastings Council; (vi)preventing Casslro from banking, and seeking to return a cheque from Department of Industry, Technology and Commerce of $35,000
in respect of an approved grant to Cassiro;
(hr) attempted to brlng to an end the research and
development activities of Cassiro and the jointventure, in particular by threatening to withdraw
the services of Blackwell in about May 1992;
(hs) threatened to and sought to wind-up Casslro without any or, any proper basis so as to:
(i) cause potential customers of Cassiro to cease to enter into contracts with or conduct buslness wlth Cassiro;
(li)bring current research and development activities of Cassiro and the jolnt venture to an end;
(iii)dissipate the goodwill attaching to the technology;
(iv)prevent GC & CO from realising GC & CO's expectations; and
(v) force GC & CO to sell its interests in the joint venture and Cassiro for the least
posslble price and at a substantial under value, rather than face the consequences of a winding-up, and thereby gain a grossly unfair advantage
(the oppressive acts).
By reason of the matters previously pleaded:
(ht) the affairs of Cassiro in and from August 1991
have been conducted in a manner that is
oppressive or unfairly prejudicial to or unfairly
discriminatory against GC & CO;
(hu) the affairs of Cassiro in and from August 1991 have been conducted in a manner that is contrary to the interests of the members of Cassiro as a whole;
(hv) each of the oppressive acts were acts or
omissions, or proposed acts or omissions, that
were or would have been oppressive or unfalrly prejudicial to or unfairly dlscrlmmatory against GC & CO;
(hw) each of the oppressive acts were acts or omissions, or proposed acts or omissions, that were or would have been contrary to the interests of the members of Casslro as a whole.
GC & CO would be relieved from the consequences of the oppression and/or it would be in the interests of the members of Cassiro if:
(hx) CSIRO were to purchase from GC & CO its shares in Cassiro for the value those shares would be worth if the oppression had not occurred;
(hy) In the alternative:
(i) Sirotech and its officers were removed from the positions of management of Cassiro;
(ii)an independent chairman were appointed to the Cassiro board, with power to exercise a casting vote;
(iii)in the alternative to (il), an independent board of directors of Cassiro were
appointed.
(hz) CSIRO and Slrotech were to compensate Cassiro and GC & CO, whether by payment of money or otherwise, in respect of:
(1) the cost of rectifying the defaults of Cassiro occasioned by the conduct of CSIRO and Slrotech;
(ii)the cost to Cassiro of recovering the opportunities lost by it since August 1991 by reason of such conduct;
(iii) the cost to GC & CO occasioned by such conduct, including the dlsruptlon caused to the affairs and business of GC & CO thereby.
Defence
CSIRO denies all facts pleaded under thls heading.
I. Breach of fiduciary and contractual duties
Clam (paras. 47A-54) CSIRO and Sirotech at all relevant times have duties, both fiduciary and contractual, to GC & CO and to Cassiro:
(ia) to act in the interests of and for the benefit of the joint venture and Cassiro;
(ib) to act with scrupulous fairness to GC & CO in the
conduct of the affairs of the joint venture andCassiro, and the exerclse of any management powers of Cassiro;
(ic) not to prefer the interests of CSIRO to the
detriment of the interests of Cassiro or GC & CO;(ld) not to subordinate the interests of Cassiro and
GC & CO to the interests of CSIRO;
(ie) to give full and frank disclosure to GC & CO of any matter concerning the affairs of the joint venture and Cassiro, the conduct of the principal activities, and the contributions made by CSIRO to the joint venture and Cassiro;
(if) to act in accordance with directions of the Cassiro board, concerning any duties undertaken by either of them in the management of the affairs of Cassiro and the joint venture;
(ig) not to frustrate the activities of Cassiro or to act in a manner which undermines the value of the technology or other assets and undertaking of the jolnt venture and Cassiro;
(ih) not to prevent Cassiro from entering into contracts and arrangements whlch are for the benefit of Cassiro and the joint venture, or for the further research and development of the technology; (il)not to cause, create or affect disputes between any or all of Cassiro, GC & CO, CSIRO and Sirotech;
(ij) to investigate and consider in a bona fide way
matters about which GC & CO has a concern with respect to the conduct of the affairs of Cassiro by CSIRO and Sirotech; and
(ik) not to act or refrain from acting in such a manner as might prevent GC & CO from realising GC
& CO's expectations;
(il) to act in good faith towards GC & CO and Cassiro to take all steps necessary for the commercialisation of the technology and the research and development of the technology for the purpose of commercialisation;
( ~ m ) to co-operate with GC & CO in the conduct and affairs of the joint venture and Cassiro to enable GC & CO to obtain the benefit of its
participation in the joint venture and Cassiro by commercialisation of the technology and research and development of the technology for the purpose of commercialisation;
(in) not to destroy the substratum of the joint venture or Cassiro so as to prevent or render it impossible for the joint venturers or Cassiro to commercialise the technology or research and develop the technology for the purpose of commercialisation; (io) not to purport to arbitrarily terminate the joint venture or have Casslro wound-up or cease business during the currency of the joint venture.
CSIRO is In breach of all and each of such duties and Sirotech has knowingly participated in such breach, and by reason of such breaches GC & CO has suffered loss and damage.
Defence
CSIRO denles all facts pleaded under this heading.
J. Damages
Claim (paras. 55-57) GC & CO claims damages pursuant to S. 82 of the TPA, and damages for negligence and breaches of fiduciary and contractual duties.
Defence
CSIRO denies all facts pleaded under this heading.
(b) CSIRO's statement of claim and GC & CO's defence
A. Claim (para. 4)
By an agreement contained in a letter dated 28 July 1987, CSIRO and GC & CO entered into a collaborative research agreement for the development of a technology (the "slotting technology") for the amelloration of low yielding sodlc clay soils for broad acre farming and other applications (the "letter agreement").
Defence
GC & CO:
(aa) admlts that it entered into an agreement on about 14 July 1987 with CSIRO for research and development of improved slottingtechnology, with particular emphasis on its application to amelioration of acid soils ("the July agreement");
(ab) says that the July agreement was written, and that the writing was comprised in letters dated, 14 May 1987 and 10 July 1987;
(ac) says that it was a term of the July agreement
that:
(i) the maxlmum sum that GC & CO was obliged to contribute was $120,000 to the development of the technology of which $60,000 was required to build the machinery component of the technology;
(ii) 65 hectares of land would be ameliorated by
way of a trial;
but otherwise does not admlt para. 4.
By about 16 october 1987, CSIRO was in breach the July agreement because GC & CO had been requlred to contribute an amount of $325,000 to the development of
the technology.On or about 16 October 1987 GC & CO agreed to waive the breach by CSIRO of the July agreement in cons~deration of CSIRO entering into a joint venture agreement wlth GC & CO for the purpose of developing and commercialising the soil slotting machinery.
B. Claim (paras. 5-7)
By the MOCI, CSIRO and GC & CO agreed to:
(ba) incorporate a company to be the vehlcle throughwhich a joint venture between them for the development of the slottlng technology was to be carried out;
(bb) transfer to that company all them respective rights in the slotting technology; and
(bc) engage in such further activities as agreed
between them.
It was a term of the MOCI that:
(bd) the slotting technology was to be developed and
commercialised by a joint venture company:
(i) incorporated in New South Wales;
(ii) known as "Cassiro Pty Ltd";
(iii)with a share capltal comprising two classes of shares, namely "A" class shares and "B" class shares;
(be) the initial share capital of Cassiro was to be owned as to 50% by CSIRO and 50% by GC & CO;
(bf) CSIRO and only CSIRO was to be issued with 50 "A"
class shares;
(bg) GC & CO and only GC & CO was to be issued with 50
"B" class shares;
(bh) the board of directors of Cassiro was to consist of SIX directors of whom three would be appointed by CSIRO (the "A" directors) and three would be appointed by GC & CO (the "B" directors).
(bi) in consideration of the Issue to each of them of the lnltial share capltal of Cassiro, CSIRO and GC & CO were to assign to Cassiro all their respective rights in the slottlng technology.
Defence
GC & CO:
(baa) admits that it executed the MOCI on about 19 May
1989;
(bab) admits that it had agreed with CSIRO to the
establishment of a company alleged;
(bac) says that the joint venture between CSIRO and GC
& CO was established in October 1987 and that the
agreement governing the joint venture (the joint venture agreement) is as stated in paragraphs 8
to 10 of GC & CO's statement of claim;
(bad) admits (bb) and (bc) were terms of the MOCI and
the joint venture agreement;
(bae) admlts (bd), (be) and (bi) were terms of the
MOCI .
C. Claim (paras. 8-9) 1989, the members of Cassiro by special resolution
adopted Articles of Association of Cassiro (the "Articles") which provided, lnter alia, that no resolution should be passed at a meeting of directors unless the majorlty vote comprises the votes of at least one "A" director and one "B" director.
D. Claim (paras. 10-13) the MOCI the parties expressed the intention that CSIRO and GC & CO would make such further capital contributions to Cassiro as were mutually agreed such
contributions to be in cash or in kind.
CSIRO further says that it was the mutual expectation of the parties that the contributions of GC & CO to Cassiro would be made by provision of cash funds and staff whilst the contributions of CSIRO would be made by the provision of staff and research approved by the Board. Until September 1990, Cassiro, in fulfilment
of the intentions of the parties to the MOCI: (da) entered into commercial agreements with third parties for the application of the slotting technology; and
(db) executed commercial agreements usingthe slotting technology for the amelioration of sodic and acid soils;
and, until August 1991, in fulfilment of the intentions of the parties to the MOCI, developed the
slottug technology.
Defence
GC & CO says:(daa) it was a term of the jolnt venture agreement that the value of the respective interests in and contributions to the technology, assigned to Cassiro by GC & CO and CSIRO, were to be
considered equal as at 16 October 1987;
(dab) it was a term of the joint venture that as and from 16 October 1987 each of CSIRO and GC & CO required to make equal capital contributlons to the joint venture either in cash or kind;
(dac) the terms of the jolnt venture agreement with respect to the nature and type of the contributions to be made by GC & CO and CSIRO to the joint venture are as stated in paragraph 20 of GC & Co's statement of claim; or alternatively
(dad) the mutual expectations of GC & CO and CSIRO were chat they would each make the respective contributlons to the ]oint venture of the nature and type stated in subparagraphs 20(a) to (f) of
GC & Co's statement of claim;(dae) the contributions made by GC & CO pursuant to (dac) or (dad) are as stated in paragraph 21 of GC & Co's statement of claim;
(daf) Cassiro has entered into some commercial
arrangements with third parties for theapplication of the slottlng technology since its
formation in July 1989;
(dag) Cassiro has executed some commercial agreements uslng the slottlng technology for the amelioration of sodlc and acid solls slnce its formation in July 1989 but denies that Cassiro ceased entering into the said agreements and arrangements after September 1990 and denles that Cassiro entered into the said agreements and arrangements in fulfilment of the intentions of the partles to the MOCI;
(dah) Cassiro entered lnto the sald agreements and arrangements pursuant to the terms of the joint venture agreement and in furtherance of the intentions and expectations of the parties to the joint venture;
(dai) Cassiro has developed the slotting technology since its formation in July 1989 but
(daj) denies that Cassiro ceased developing the sald technology after August 1990 and denies that Cassiro developed the said technology in fulfilrneht of the intentions of the parties to
the MOCI;(dak) Cassiro had developed and is developing the said technology pursuant to the terms of the joint venture agreement and in furtherance of the intentions and expectations of the parties to the joint venture.
E. Claim (paras. 14-19)
Since September 1990, GC & CO has failed to discharge
the liabilities of Cassiro as and when they fell due
and a series of disputes has arisen between GC & CO
and CSIRO including a dispute as to:
(ea) the extent and value of the respective
contributions of each member to Cassiro;
(eb) the nature and extent of the obligations of each member to transfer assets to Cassiro;
(ec) the obligation of GC & CO to transfer to Cassiro
assets purchased by GC & CO on behalf of Cassiro;
(ed) the ownership of assets;
(ee) the ownership of the Mark V slotter;
(ef) the extent and quantum of the liabilities to
third parties;
(eg) the liabilities of Cassiro to the Commissioner of
Taxation;
(eh) the authority of the Board and members thereof
with respect to the control and direction of the
management and staff of Cassiro;
(ei) the custody of the flles, papers and research
materials of Cassiro;
(ej) the drawing of and the signing off of the accounts of Cassiro;
(ek) the appointment of an auditor to Cassiro;
(el) the holding of the annual general meeting of
Cassiro;
(em) the lodging of statutory returns of Cassiro;
(en) the approval of budgets for Cassiro;
(eo) the exploitation of commercial opportunities
available to Cassiro; and
(ep) the entry by Cassiro into contracts with third
partles .
The Board of Cassiro has, and CSIRO and GC & CO have, been unable to reach agreement on these matters or on the conduct and management of the affairs of Cassiro, and by reason thereof:
(eq) Cassiro is unable to carry on the business for which it was incorporated, namely the carrying out of the joint venture between Cassiro and GC
& CO;
(er) Cassiro is unable to comply with its obligations under the Cor~orations Law; (es) the Board is unable to provide direction to its management and staff as to the conduct of the business;
(et) neither the directors nor the shareholders of Casslro are able to agree on the conduct of the business of the company; and (eu) there 1s a deadlock in the management of the business and affairs of Cassiro.
In the premises it is just and equitable that Cassiro be wound-up.
Defence llabllities of Casslro as alleged and:
(eaa) denles that there have been a series of disputes
between GC & CO and CSIRO as alleged or at all;
(eab) says that CSIRO has failed to provide GC & CO
any, or any proper accounting, for thecontributions which it has made to Cassiro or the
joint venture;
(eac) says that CSIRO and Sirotech acting for and on behalf of CSIRO, have caused created or affected disputes between GC & CO and Casslro about each of the matters referred to in (eb) to (em) above;
(ead) says further CSIRO, and Sirotech acting for and on behalf of CSIRO, are responsible for each of the matters referred to in (eg), (ej), (el) and (em) above;
(eae) says that CSIRO, and Sirotech acting for and on
behalf of CSIRO, have determined not to present
Board slnce November 1991 and thereby caused any or any proper budgets for approval by the created or affected a dispute for the purpose of
frustrating Cassiro's affairs;
(eaf) says that CSIRO and Slrotech acting for and on behalf of CSIRO, have acted to the detriment of Cassiro since June 1991 as set out in
subparagraphs 43(d), (p), q ) (r) and (S) of GC
& Cogs statement of claim.
Further, GC & CO:
(eag) denies that the Board has been unable to agree on all of the matters referred to in (ea) to (ep) above or on the conduct and management of the affairs of Cassiro at any time slnce its formation in July 1989;
(eah) says that any lack of agreement by the Board wlth respect to any of the matters referred to has been caused by the conduct of CSIRO and Sirotech acting for and on its behalf;
and otherwise denies the allegations pleaded in this
series of paragraphs.
F. Further pleading In further answer to the whole of CSIRO's statement of claim GC & CO pleads as set out in GC & CO's statement of claim and further and in the alternative pleads in detail what it says would be the consequences should Cassiro be wound-up. It is unnecessary to canvass
these details at this stage.
4. THE NOTICE OF MOTION
By notice of motion dated 9 November 1992 and flled in Court on
10 November 1992 CSIRO and Sirotech (referred to hereafter as the
respondents) sought orders:
1. That t h e n o t ~ c e of motron be made re tu rnab le m s t a n t e r . 2. That the notrces to produce dlrected to the second and third respondents referred to as notrces to produce 17A, 20 and 22 be set as~de.
3.
That the f ollowrng paragraphs of certa~n notlces to produce
directed to the second and th~rd respondents be set aside:
3.1 Notrce to produce No. 15: - Paragraph (d) to the extent that lt seeks
personal diarles;3.2 Notrce to produce No. 16: - Paragraph l(a) - (g); 3.3 Notice to produce No. 21: - Paragraph l(b)-(d);
- Paragraph 2;
3.4 Notice to produce No. 23 - Paragraph 2; - Paragraph 3. 4. That the followrng subpoenas issued at the request of the applrcant be set asrde:
4.1 Department of the Prime Minrster and Cabrnet frled 3 November 1992;
4.2 The Honourable Ross Free, Minlster for Scrence and Technology frled 4 November 1992;
4.3 Department of Scrence and Technology frled 4 November 1992;
4.4 Department of Industry, Technology and Commerce flled 4 November 1992;
4.5 Hunter Water Corporation filed 3 November 1992;
4.6 Australian Technology Group Pty Limited filed 3 November
1992;
4.7 Australasian Technology Group Pty Limited filed 3 November
1992;
4.8 Department of Arts, Sport, the Env~ronment and Terrrtories filed 4 November 1992;
4.9 The Honourable Ros Kelly, Mrnister for Arts, Sport, the Envrronment and Terrrtorres flled 4 November 1992;
4.10 Griffith City Council filed 4 November 1992;
4.11 Environmental Management Industry Assocration of Australia Lrmited filed 4 November 1992; and
4.12 Rrce Research Commrttee filed 4 November 1992.
5. Further and rn the alternatrve, that the applrcant and lts legal advisers not be allowed to inspect the documents produced in answer to the subpoenas referred to ln paragraph 4.
6. That further subpoenas and notrces to produce not be issued by the applicant without the leave of the Court.
THE NOTICES TO PRODUCE
The Federal Court Rules contemplate two circumstances in which a party to a proceeding may give the other party notice to produce documents.
In Order 15, which deals with discovery and inspection of documents, and in particular in divislon 2 of that order which specifically deals with inspection, rule 10 provides:
lO(1) Where a pleadmg or affidavrt filed by a party refers to a document, any other party may, by notice to produce served on hlm require hrm to produce the document for ~nspectlon.
(2)
Where a notlce to produce a document 1s served on a party under sub-rule (l), he shall, wlthin 4 days after that service, serve on the party requlrlng product~on a notlce-
(a) appo~nting a tune within 7 days after service of the notrce under this sub-rule when, and a place where,
the document may be ~nspected;
(b)
claiming that the document is pr~vileged from productron and sufflc~ently statrng the grounds of the privilege; or
(c)
statlng that the document is not In his possession, custody or power and stating to the best of his knowledge information and belief where the document 1s and in whose possession, custody or power rt is.
Rule 10 provldes for the normal process of inspection following discovery. Ancillary to this procedure rule ll(1) empowers the Court to order production of documents where:
(a) rt appears from a l ~ s t of documents filed by a party under t h ~ s Order that any document is Ln h ~ s possession, custody or power;
(b) a plead~ng or affidav~t f~led by a party refers to any document; or
(C)
it appears to the court from evldence or from the nature or circumstances of the case or from any document f~led in the
proceedrng that there are grounds for a bellef that any document relating to any matter ln question rn the proceeding 1s ln the possessron, custody or power of a party,
Rule ll(l)(c) is in terms closely slmilar to Order 15 rule 8 which makes provision on order for particular discovery. Be that as it may, Order 15 clearly deals with pre-trial procedures and has no relevance in the present context.
Order 33 rule 12 provides:
12(1) Where a party to any proceedrngs serves on another party notice requrring the party served to produce at any trial or hear~ng ln the proceedrngs, or before any Judge, off~cer, examlner or other person havlng authority to take evidence ln the proceedings any document or thlng for the purpose of evidence and the document or thing is in the possessron, custody or power of the party served, the party served shall, unless the Court otherwise orders, produce the document or thing in accordance with the notice, wrthout the need for any subpoena for production.
(2) Where the document or thing required to be produced in accordance with sub-rule (1) is not produced, the party serving the notice may lead secondary evidence of the contents or nature of the document or thlng.
(3)
Sub-rule (2) does not affect the power of the Court to order costs agalnst a party who falls to comply wlth a notice under sub-rule (1).
the attendance of any person and the production by him of any By Order 33 rule 13 the Court is empowered, inter alia, to order document or thing specified or described in the order to the Court at trial or on any other occaslon and thls whether or not the person in question has been requlred to attend by subpoena. And it would seem that the same power could be exercised to compel the production of a document by a party whether or not notice to produce has been glven pursuant to Order 33 rule 12.
The notices to produce served by the applicant in these proceedings are clearly not intended as a pre-trial step nor have they been served for the limited purpose contemplated by Order 33 rule 12(2). Rather, they have been drawn in the form of a subpoena to produce documents.
My lnitlal response on reading the papers was that I would have some difficulty wlth the idea of setting aside a notlce to produce but upon the hearing of the motion counsel for both parties invited me to treat the notices to produce as if they were subpoenas to produce documents and lt is on this basis that the motion was heard and determined.
That a party may subpoena an opposing party to produce documents is beyond doubt. Nor is there any question that the person named in a subpoena may apply on motion to have the subpoena set aside by the Court either wholly or in part. (Order 27 rule 9.) The rules of Court do not identify any particular grounds upon which a subpoena can be set aside. There is however abundant judicial
purposes to refer brlefly to two well-known decisions which authority on the sublect but it is sufficient for present sufficiently state to principles applicable in the present case. In (1938) 38 SR (NSW) 564 at pp. 574, 5 7 5 Jordan C3 said in respect of a subpoena addressed to a party:
Where the subpoena 1s addressed to a party, it 1s still necessary
that ~t should state wrth reasonable particular~ty the documents wh~ch are to be produced . . . It is true that a party, unlike a stranger, can be required to grve discovery; but rt is not legitimate to use a writ of subpoena duces tecum as a substrtute for an applrcatron for discovery of documents, or as an alternatrve to an applrcatron for further and better d~scovery. Discovery applicatlons should be made at the proper tune and place. It would greatly mpede the tr~al of actions at nlsl pnus, and Impose an intolerable burden upon the presrding judge, rf he were requrred form trme to tune to suspend proceedings and wade for himself through masses of documents for the purpose of endeavourrng to determrne whether any of them are relevant. Especrally IS t h ~ s so when the documents may be called for whrlst the case is still at the stage when ~t is drffrcult or perhaps impossrble for the Judge to know what may become relevant and what may not. In the absence of specral crrcumstances, e.g. Grlehart v . Horrls [l9201 1 K.B. 659, a party is no more entrtled to use a subpoena duces tecum than he rs a summons for
interrogatorres, for the purpose of 'flsh~ng', r.e. endeavour~ng, not to obtain evidence to support h ~ s case, but to d~scover whether he has a case at all . . . or to drscover the nature of the other s~de's evidence. ... Even ~f the documents are specrfied, a subpoena to a party wrll be set asrde as abusrve if great numbers of documents are called for and it appears that they are not sufficiently relevant.
In a somewhat different context, Glbbs CJ said in Alister and others v The Oueen (1983-4) 154 CLR 404 at p. 414:
Although a mere "fish~ng" expedrtron can never be allowed, rt may be enough that ~t appears to be "on the cards" that the documents wrll materially assist the defence.
Much of the argument advanced in support of the notice of motion was based upon the assertion that the applicant had embarked upon
a gigantic "fishing" expedition and for this reason the orders sought should be made. In my opinion, the comment of Gibbs CJ quoted above is equally applicable to the present context. And I support the view of Jordan CJ that lt would impose an intolerable burden on a presiding judge to have to suspend proceedings to enable him to wade through masses of documents for the purpose of endeavouring to determine whether any of them are relevant.
The notice of motion was supported by an aff~davlt of MS Anne Carollne Collins, a sollcltor employed by the respondentsr solicitor's Sydney agents (the affidavit). Objection was taken to some aspects of the affidavit but I allowed the affidavit to be read.
I propose to deal in order with the various notices to produce which the respondents seek to have set aside in whole or in part.
NOTICE NO. 15: The applicant does not press this notice to the
extent objected to.
NOTICE NO. 16: The notice seeks production of records of
meetings of the Institute of Natural Resources and the Environment since 1 January 1987
referr~ng to 7 different matters. The affidavit asserts that documents falling wlthln paragraphs (a) to (c) inclusive have been
discovered. If this is so, they should be produced. The matters referred to in paragraphs (e) to ( j ) inclusive relate to the CRC for Waste Management and Pollution Control, a Memorandum of Understanding wlth Sydney Water Board and Commercialisation and/or Equity participation policies.
Counsel for the respondents oblects to production of these documents on the ground of their irrelevance and says that if they are relevant, they have become so since counsel for the applicant opened his case.
In my view the documents sought in paragraphs (e) to ( j ) are relevant to issues raised in the
pleadings. In a general sense they clearly
relate to the lssue of commerc~alisation of the
VFW technology. As no other objection has been
ralsed the documents ought to be produced.
NOTICE NO. 17A:
The respondents seek to set aside the whole of this notice. No specific oblection is raised in the affidavit. The notice seeks production of a wide range of documents relatlng generally to two companies Australia Technology Group Pty Ltd and Australasian Technology Group Pty Ltd.
Counsel for the respondents says that as there is no reference to either company in the pleadings or in the cross-reference document which serves as particulars of the clam, the documents sought are irrelevant and further that the notice is in effect an attack on the respondents' discovery.
Counsel for the applicant says that they are
CSIRO/Sirotech documents, that the applicant wants them produced and there is no evidence that the companies have nothing to do wlth any issue in the proceedings. He says that "it is on the cards they would have something to do with the case".
Having heard part of the evidence in the case I agree (wlthout making any findings on that evLdence) that there is some basis to think that the documents may have something to do with the case and they should be produced.
NOTICE NO. 20:
The respondents seek to set aslde the whole of the notice. The notice contains 3 numbered paragraphs but the applicant does not press paragraphs 2 and 3. Paragraph 1 seeks production
of documents of the Executive Committee and/or Board of CSIRO referring to 5 identified
subjects. In the affidavit it is said that "many documents falling wlthin paragraphs l(a) and (d)" have been produced in answer to prevlous notices to produce and/or subpoenas issued to third parties. This assertion is clearly not a valid ground for refusal to produce the documents referred to. In the absence of any other objection the facts
asserted do not justify the non-production of the
documents by the respondents.
NOTICE NO. 21: The respondents seek to set aside all but
paragraph l(a) of the notice which refers in paragraph 1 to documents of the Executive Committee of CSIRO since 1 January 1991 referring to 4 identified topics and in paragraph 2 to CSIRO Board documents since 1 January 1991 referring to equity participation.
In the affidavit it is said that all documents within paragraphs l(b) and (c) have been discovered and that "many documents" falling within paragraphs l(b), (c) and (d) have been produced in answer to other notices. No other ground of objection is raised. The comments in relation to notice no. 20 apply.
documents sought in paragraph 2 are irrelevant Counsel for the respondents says that the but in my view the question of equity participation and CSIRO policy in relation thereto is a matter which arises out of the issues raised in the pleadings.
NOTICE NO. 22:
The respondents seek to set aside the whole of the notice which contains 3 paragraphs. The
applicant does not press paragraph 3. Paragraph 1 refers to documents concerning the CSIRO 1991 Annual Report, and paragraph 2 refers to documents relating to a meeting which is referred to in an exhibit to the affldavlt of one of the respondents' witnesses.
The affidavit does not make any specific reference to the notice.
Counsel for the respondents oblects to both paragraphs on the ground of relevance.
The CSIRO 1991 Annual Report has been tendered in evidence without objection. In opening counsel for the applicant commented on the absence of any reference in the report to CSIRO's interest in Cassiro despite the fact that such reference is made in an earlier report. In my oplnion the
documents sought could have something to do wlth the case and should be produced. As to paragraph 2, the meetlng in question was attended by 4 CSIRO personnel who feature to one degree or another in the evidence thus far. The meeting 1s referred to in the respondents' own evldence and in my opinion the documents should be produced.
NOTICE NO. 23:
The respondents seek to set aslde paragraphs 2 and 3. Paragraph 2 seeks Division of Water Resources publications relating to 3 identified sublect matters. Paragraph 3 seeks all edltions of the CSIRO publication "Channels" slnce 1 January i991.
In the affidavit it is said that the documents referred to in paragraph 2 do not exlst. Whilst this may be a proper response if made on the appropriate occasion it cannot be a ground to set aslde a subpoena. It is also said that "Channels" is a document produced by CSIRO fortnightly. No other objection is raised. In particular it is not said that it would be oppressive or embarrassing to have to produce the documents which in my opinion should be produced.
6. THE THIRD-PARTY SUBPOENAS
Although there is some authority to suggest that in proper circumstances a subpoena addressed to a third party can be set aside on the motion of a party to the proceedings such a step would only be taken in extraordinary circumstances as would the step of denying access to documents produced without objection by a third party In answer to a subpoena to produce.
The respondents seek to set aside (or in the alternative seek to
deny the applicant and its legal advisers access to) documents produced to the Court under subpoenas issued to 12 named individuals who are not parties to the proceedings. As it happens, in one case (Department of Science and Technology) no such subpoena has been issued and in another no documents were produced when the subpoena was called. In the case of the Minister for Science and Technology a claim for public interest privilege was foreshadowed in respect of some of the documents produced. Given that the documents sought are now within the custody of the Court it would be idle to contemplate setting the subpoenas aside.
Apart from the foreshadowed claim by the Minister for Science and Technology, no objection has been raised by any non-party to the production of documents produced.
Neither the number of documents produced nor the variety of sources from which they have been derived justifies the Court denying the applicant access to the documents. As no other
appropriate that the usual order for inspection be made. sustainable ground for such an order has been raised it is 7. OTHER RELIEF SOUGHT It is undesirable that the Court should restrict the exercise by a party of any right legitimately open to it in the pursuit of its case. If any abuse of process is perceived an appropriate application should be made.
8. CONCLUS ION
I would dismiss notice of motion. The question of costs is reserved. I certify that this and the
preceding 53 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney
A S S O C ~ ~ ~ ~ :
Dated: 11 December 1992
Mr J. Santamaria (Instructed by Mark Wllliams) appeared for the second and third respondents in application NG 3062 of 1992 in
suppo~t of the motlon.
Mr R. Gyles QC and Mr T. Castle (~nstructed by Garrett & Walmsley) appeared for the applicant in application NG 3062 of 1992 in opposition to the motion.
Date of Hearinq: 11 November 1992 Place: Sydney Date of Judaient: 13 November 1992 Reasons Published: 11 December 1992
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