Mineral Resources Ltd v Destec Pty Ltd [No 4]
[2023] WASC 176
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MINERAL RESOURCES LTD -v- DESTEC PTY LTD [No 4] [2023] WASC 176
CORAM: HILL J
HEARD: 27 APRIL 2023
DELIVERED : 31 MAY 2023
FILE NO/S: CIV 1465 of 2020
BETWEEN: MINERAL RESOURCES LTD
First Plaintiff
CRUSHING SERVICES INTERNATIONAL PTY LTD
Second Plaintiff
AND
DESTEC PTY LTD
First Defendant
STEPHEN LESLIE WYATT
Second Defendant
FILE NO/S: CIV 1466 of 2020
BETWEEN: CRUSHING SERVICES INTERNATIONAL PTY LTD
First Plaintiff
MINERAL RESOURCES LTD
Second Plaintiff
AND
STEPHEN LESLIE WYATT
Defendant
Catchwords:
Practice and procedure - Discovery - Where categories of discovery relevant on current statement of claim - Where defendant has foreshadowed application to strike out statement of claim - Application filed during course of hearing - Whether discovery of disputed categories should be given prior to hearing of application to strike out - Case management considerations - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4B
Result:
Orders for discovery made
Category: B
Representation:
CIV 1465 of 2020
Counsel:
| First Plaintiff | : | S Penglis SC |
| Second Plaintiff | : | S Penglis SC |
| First Defendant | : | P D Evans |
| Second Defendant | : | P D Evans |
Solicitors:
| First Plaintiff | : | Bennett |
| Second Plaintiff | : | Bennett |
| First Defendant | : | HFW Australia |
| Second Defendant | : | HFW Australia |
CIV 1466 of 2020
Counsel:
| First Plaintiff | : | S Penglis SC |
| Second Plaintiff | : | S Penglis SC |
| Defendant | : | P D Evans |
Solicitors:
| First Plaintiff | : | Bennett |
| Second Plaintiff | : | Bennett |
| Defendant | : | HFW Australia |
Case(s) referred to in decision(s):
Agility CIS Ltd v White [2021] FCA 1145
Cove House Illiquid Investments DAC v YA Global Investments LP [2018] WASC 349
Creative Brands Pty Ltd v Franklin [2001] VSC 338
Lanco Resources Australia Pty Ltd v Griffin Energy Group Pty Ltd [2016] WASC 322
Liberty Financial Pty Ltd v Scott [No 2] [2005] VSC 26; (2005) 11 VR 629
Pioneer Concrete Services Ltd v Galli (1985) VR 675
Roe v Western Australia [2013] WASC 130
Singh v Friedman [2013] WASC 78
HILL J:
On 7 March 2023, the plaintiffs filed a minute of proposed orders seeking orders for discovery of certain categories of documents from the defendants. Orders were made at a directions hearing on 8 March 2023 to program the application through to a hearing on 27 April 2023.
After the application was filed, conferral between the parties continued, significantly narrowing the scope of the disputed categories. At the time of the hearing, there remained only six categories in dispute between the parties, as set out in an amended schedule filed 26 April 2023 (amended schedule).
Counsel for the defendants accepted these categories of documents were relevant to the matters raised on the statement of claim as presently pleaded.[1] However, it was submitted that orders for discovery of the disputed categories should not be made at this stage, but should await determination of the defendants' application to strike out the statement of claim (strike out application).
[1] ts 341; ts 355.
For the reasons that follow, I consider that the court should not delay making orders for discovery and that each of the disputed categories are relevant to the issues on the pleadings as they currently stand. In circumstances where these allegations have formed part of the plaintiffs' pleaded case for 15 months and the strike out application was only filed during the hearing, I consider that the defendants should give discovery in accordance with the amended schedule.
Relevant procedural history
On 2 April 2020, the first plaintiff commenced proceedings against the first defendant, being CIV 1465 of 2020. On the same date, the plaintiffs commenced proceedings against the second defendant, being CIV 1466 of 2020. On 8 December 2020, orders were made to consolidate these proceedings.
The current statement of claim is a second amended consolidated statement of claim which was filed on 18 April 2023 (statement of claim). The previous version was filed on 21 January 2022. The first plaintiff pleads that it entered into two agreements with the first defendant: a general services agreement for the provision of consultancy services on or about 20 April 2015; and a separate general services agreement for the provision of engineering and modelling services on or about 16 March 2017. The second plaintiff pleads that it entered into an executive services agreement with the second defendant on 26 June 2006. The plaintiffs say that each of these agreements contains a definition of 'confidential information' and imposes contractual obligations on the defendants in respect of the retention and use of the confidential information.
The plaintiffs plead they developed proprietary modular crushing plants which can be rapidly deployed, installed and mobilised, as well as demobilised and relocated. The plaintiffs say that the first defendant is a trade competitor and plead that the first defendant has contended it has designed and constructed its own novel crushing and screening plant which is modular and quick to erect on site.
The plaintiffs allege that during the course of the performance of the agreements by the defendants, confidential information in relation to the design, manufacture and commission of crushing and screening plants was imparted to the defendants in circumstances of confidentiality.
The plaintiffs allege that, in breach of the obligations of confidentiality under the agreements, the defendants have failed to return all of the plaintiffs' documents in their possession, the defendants have copied and retained confidential documents, and that the defendants have used this information in Destec's business to design and develop modular crushing, screening and processing plants and to tender for work.
By way of relief, the plaintiffs seek delivery up of any documents containing the confidential information, an injunction to restrain the defendants from using or disclosing any information in the documents, damages, and equitable compensation.
At the commencement of the hearing, counsel for the defendants informed the court that the strike out application, which sought to strike out the statement of claim in its entirety, alternatively to strike out certain paragraphs of this pleading, had been filed 'moments ago'.[2] To the extent required, the defendants also seek leave to bring the strike out application.
[2] ts 338.
The specific paragraphs which the defendants now challenge plead the defendants accessed the plaintiffs' confidential information and used this information to the detriment of the plaintiffs. The majority of the allegations raised in these paragraphs were inserted by way of amendments made to the statement of claim on 21 January 2022.
The defendants responded to these allegations in their amended defence dated 2 March 2022. Specifically, the defendants admit they are trade competitors of the plaintiffs, deny the remainder of the allegations and say the alleged inference (as to use) is not open and should be rejected by the court.
Principles governing discovery in commercial and managed cases list
It is not in dispute that orders for general discovery are not now routinely made in major litigation, particularly for cases in the commercial and managed cases of this court. The rationale for limiting the scope of discovery is set out in Singh v Friedman,[3] Roe v Western Australia,[4] and Lanco Resources Australia Pty Ltd v Griffin Energy Group Pty Ltd.[5]
[3]Singh v Friedman [2013] WASC 78.
[4]Roe v Western Australia [2013] WASC 130.
[5]Lanco Resources Australia Pty Ltd v Griffin Energy Group Pty Ltd [2016] WASC 322.
Relevantly, these principles include:
(a)the power to order discovery is discretionary. The discretion is to be exercised having regard to the timely and cost‑effective disposal of litigation;
(b)discovery is an essential part of the administration of justice;
(c)in determining what classes of documents are relevant, the court must consider the pleadings together with the conduct and the nature of the action;
(d)in deciding what orders to make, the court must consider the cost to the parties and whether the discovery sought is proportionate to the value, importance and complexity of the subject matter in dispute and the financial position of each of the parties; and
(e)in the absence of evidence, it is difficult for the court to make a proper assessment of proportionality.
An additional observation, as was noted by Smith J in Cove House Illiquid Investments DAC v YA Global Investments LP,[6] is that orders for discovery in the commercial and managed cases list of this court are usually restricted to discovery of documents that are directly relevant to an issue.
[6]Cove House Illiquid Investments DAC v YA Global Investments LP [2018] WASC 349 [27].
Parties' submissions
Senior counsel for the plaintiffs submitted that all of the categories of documents sought by the plaintiffs were relevant to the issues raised in the current pleadings. The plaintiffs emphasised that, in respect of the disputed categories, these allegations were introduced by way of amendments in January 2022, shortly prior to the hearing of an appeal from a decision to set aside a subpoena issued to Rio Tinto. As a consequence of these amendments, the defendants conceded the orders setting aside the subpoena should be set aside. Since that time and until the date of the hearing, the defendants had not filed any application to disallow the amendments or to strike out any aspect of the statement of claim. Senior counsel for the plaintiffs had not received or had any opportunity to consider the strike out application at the time of the hearing. It was contended it was not in accordance with the principles of case management for the plaintiffs' application to await the outcome of a foreshadowed or late filed application by the defendants.
Counsel for the defendants submitted that most of the categories of discovery proposed by the plaintiffs sought discovery from the defendants in relation to three issues:[7]
(a)whether the defendants returned documents to the plaintiffs in response to the plaintiffs' request (categories 2, 3, 7 - 11, and 16);[8]
(b)the calculation of any damages suffered by the plaintiffs (categories 12 - 14); and
(c)documents relevant to the alleged contravention of confidentiality by copying or use of the confidential information (categories 4 - 6A, 11A, and 15).
[7] ts 341 - 342.
[8] At the hearing, counsel for the defendants referred to categories 7 - 10. It is clear from the description of category 11 in the amended schedule that this is a category which is relevant to this issue.
The defendants did not oppose discovery being ordered on the first of these issues on the basis that the response was 'relatively straightforward'. However, the defendants submitted that discovery on the remaining issues should await the resolution of their strike out application.[9] The defendants emphasised that on a claim for misuse of confidential information, the information which is said to be confidential, as well as the misuse of that information must be specified with particularity.[10] Counsel for the defendants submitted this had not occurred, discovery should not be allowed to be used to 'make good an unparticularised claim'[11] and that, in these circumstances, the defendants should not be required to provide discovery before their strike out application had been heard and determined.
[9] ts 342.
[10] Agility CIS Ltd v White [2021] FCA 1145 [10]; Creative Brands Pty Ltd v Franklin [2001] VSC 338 [21]; Pioneer Concrete Services Ltd v Galli (1985) VR 675, 711; Liberty Financial Pty Ltd v Scott [No 2] [2005] VSC 26; (2005) 11 VR 629.
[11] ts 343.
Disposition
In considering the application, I have taken into account the principles set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA) which confirm the ultimate objective of the court is to achieve a just, efficient and expeditious determination of the substantive dispute between the parties. With these principles in mind, the essential question for determination on this application is what orders are most likely to achieve that object.
In this case, it is relevant that the strike out application was only filed on the morning of the hearing, some 15 months after the amendments were initially made. The strike out application is listed for hearing on 22 June 2023. I also take into account the fact that no evidence was filed by the defendants in opposition to the application for discovery, particularly as to the time and cost involved in providing discovery of the disputed categories.
The specific categories of documents sought by the plaintiffs and disputed by the defendants, are:
(a)tenders submitted by Destec since 1 November 2019 to supply crushing, screening and processing plants to mining companies (category 4), documents evidencing the design and specification of the Destec plant (category 6), documents evidencing the creation of the design (category 6A), as well as all communications between 1 January 2018 and 31 December 2021 relating to the design of any crushing, screening and processing plant (excluding any of the first plaintiff) (category 15);
(b)documents which record the outcome of tenders submitted by Destec (category 5); and
(c)documents created on or after 21 July 2018 relating to crushing, screening or processing of minerals, the design, manufacture and commissioning, and the operation and maintenance of plants (category 11A).
The defendants concede that each of these categories are relevant to the issues on the pleadings as they currently stand. In my view, this was an appropriate concession to make.
For this reason, I consider the plaintiffs are entitled to discovery of each of these categories unless, for reasons of case management, the court considers it should decline to exercise its discretion to order discovery at this time.
For the following reasons, I consider that it is appropriate for discovery to be ordered prior to the hearing and determination of the defendants' strike out application.
First, on the pleadings as they currently stand, the categories of documents are relevant to the pleaded issues.
Second, these allegations were incorporated in a statement of claim filed more than 15 months ago and the defendants filed a defence in response more than 12 months ago. There is no evidence that any issue was raised with the manner in which the plaintiffs had pleaded their case until some significant time afterwards.
Third, there is no evidence before the court to explain the delay that has occurred or when these issues were first raised with the plaintiffs. Immediately prior to the directions hearing on 8 March 2023, the plaintiffs filed a minute of orders seeking discovery by categories and orders programming their application through to a hearing. At that hearing, counsel for the defendants opposed orders for discovery being made on the basis that pleadings had not closed. This was because the plaintiffs had provided the defendants with a draft minute of an amended statement of claim which would require 'some reconsideration of the scope of discovery'. The defendants did not foreshadow any application to strike out the statement of claim and no application was filed until immediately prior to, or during the course of, this hearing. At the commencement of the hearing, neither counsel for the plaintiffs nor the court had been provided with a copy of the strike out application. In my view, it is inconsistent with the case management principles set out in O 1 r 4A of the Rules for the defendants to delay bringing any application until the date of the hearing and then effectively seek to use that application to prevent orders being made until after their application is heard and determined.
Fourth, while I accept the categories of documents sought by the plaintiff will require the defendants to discover large swathes of their business records, there is no evidence before me as to how long this will take, what number of documents will be required to be reviewed or how long the process will take. At this stage, neither of the parties have addressed me as to the likely timeframe for the provision of discovery. However, it is unlikely that discovery would be finalised until after the strike out application is heard. If the defendants were to succeed in their application, the question as to whether the orders for discovery should be amended or revised can be considered at that time. On this basis, I do not consider the defendants will suffer any real prejudice if orders are made at this stage. In contrast, I accept the plaintiffs will suffer the prejudice of further delay if their application is adjourned until after the hearing and determination of the strike out application.
Conclusion and orders
For these reasons, I consider the defendants should provide discovery in terms of the amended schedule of categories of documents dated 26 April 2023. My preliminary view is that the defendants should pay the plaintiffs' costs of the application.
I will hear from the parties as to the precise orders that should be made to reflect these reasons, including the timing of the provision of discovery.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
31 MAY 2023
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