Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd

Case •

[2011] WASC 207

•

23 AUGUST 2011

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RIZHAO STEEL HOLDING GROUP CO LTD -v- KOOLAN IRON ORE PTY LTD [2011] WASC 207

CORAM:   EDELMAN J

HEARD:   15 AUGUST 2011

DELIVERED          :   19 AUGUST 2011

PUBLISHED           :  23 AUGUST 2011

FILE NO/S:   CIV 1955 of 2011

BETWEEN:   RIZHAO STEEL HOLDING GROUP CO LTD

Plaintiff

AND

KOOLAN IRON ORE PTY LTD
First Defendant

MOUNT GIBSON MINING LTD
Second Defendant

Catchwords:

Inherent power of the court - Application for stay of application for pre­action discovery - Whether power of court to stay application on conditions - Whether power should be exercised - Leave given in prior proceedings to enforce arbitration award as a judgment of this court - Plaintiff having failed to pay debt without any reason - Evidence that plaintiff has taken steps to avoid enforcement

Abuse of process - Whether application for pre-action discovery manifestly groundless - Whether application brought for a purpose or to effect an object beyond that which the legal process offers - Whether if application is found to be abusive the court should exercise any power to order that the application proceed on conditions

Legislation:

Rules of the Supreme Court 1971 (WA), O 26A

Result:

Application dismissed

Category:    A

Representation:

Counsel:

Plaintiff:     Mr F M Douglas QC & Mr A Papamatheos

First Defendant             :     Mr B A J Coles QC & Mr S Murphy

Second Defendant         :     Mr B A J Coles QC & Mr S Murphy

Solicitors:

Plaintiff:     Holman Fenwick & Willan

First Defendant             :     Freehills

Second Defendant         :     Freehills

Case(s) referred to in judgment(s):

Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559

Birne v Hartpole (1717) 5 Bro Parl Cas 197; (1717) 2 ER 624

Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380

Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC 1444 (QB); [2006] 4 All ER 233

Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134

Hunter v Chief Constable of the West Midlands Police [1982] AC 529

Ireland v Norilya Minerals Pty Ltd [2010] WASCA 203

Jackson v Sterling Industries Limited [1987] HCA 23; (1987) 162 CLR 612

Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75

Koolan Iron Ore Pty Ltd v Rizhao Steel Holding Group Co Ltd (Unreported, High Court of the Hong Kong Special Administrative Region, Nos 25 and 26 of 2011)

New South Wales Solicitors Mutual Indemnity Fund v Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146

Norilya Minerals Pty Ltd v Ireland [2010] WASC 260

Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2011] WASC 1

TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335

Undershaft (No 1) Ltd v Federal Commissioner of Taxation [2009] FCA 41; (2009) 175 FCR 150

Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102

Waller v Waller [2009] WASCA 61

Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378

Williams v Spautz (1992) 174 CLR 509

EDELMAN J: 

Introduction

  1. The issue in this chamber summons is simple, though novel.  The plaintiff (Rizhao) has brought an application for pre‑action discovery.  The defendants (the Mt Gibson parties) seek orders staying the application until conditions are satisfied.  The first condition is that Rizhao pay to them an arbitration debt, ordered by this court to enforced as a judgment of the court.  The Mt Gibson parties seek payment of that part of the debt which they say is undisputed.  The second condition is that Rizhao pay into court the amount which the Mt Gibson parties say is disputed.  The question is whether this court has the power to make the orders sought and, if so, whether it should exercise such a power. 

  2. The application arises against a background of evidence which suggests that Rizhao has acted, and is acting, to ensure that the Mt Gibson parties will not be able to enforce their judgment debt in this jurisdiction or in other jurisdictions.  In these circumstances, the Mt Gibson parties say that if no power would otherwise exist to make the orders sought then the orders can be made on the ground that Rizhao's application for pre‑action discovery is an abuse of process.  My conclusion is that the orders sought by the Mt Gibson parties cannot be made on either basis which they assert.   

Background and evidence

  1. Because this application raises very similar issues to those raised in Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2011] WASC 1 (Rizhao 3), this decision should be considered alongside the decision of  Kenneth Martin J in that case.  For convenience, this decision should be referred to as Rizhao 5. 

  2. In the application before me I have received five affidavits without objection.  In support of Mt Gibson's application I have two affidavits from Mr Shane Michael Murphy; one which was affirmed on 17 June 2011, and the other which was affirmed on 15 July 2011.  I also received an affidavit of Mr David Garth Berg sworn on 30 September 2010.  In opposition to the orders sought, Rizhao has provided two affidavits from Mr Nicholas John Tebutt Poynder; one which was sworn on 1 June 2011, and the other which was sworn  on 30 June 2011.  This background draws from the evidence in those affidavits. 

  3. In June and July 2010, Rizhao and the Mt Gibson parties engaged in an arbitration.  The dispute concerned an agreement for the sale of iron ore.  Rizhao defended the arbitration and brought counterclaims against the Mt Gibson parties.  On 16 August 2010, the arbitrator made awards in favour of the Mt Gibson parties.  Rizhao was ordered to pay $US114,415,303, plus interest and costs, to the Mt Gibson parties (the Awards).  This sum was the total of the two awards in favour of each of the Mt Gibson defendants. 

  4. Rizhao did not pay the Awards.  On 3 November 2010, the Mt Gibson parties were granted leave by Kenneth Martin J to enforce the Awards in the same manner as judgments of this court.  Subsequently, the Mt Gibson parties also obtained judgments on the Awards in New York and Hong Kong.  They have also applied for recognition and enforcement of the Awards in mainland China. 

  5. At the date of this hearing Rizhao still has not paid any part of the Awards despite the orders permitting enforcement as judgments in Australia, New York and Hong Kong.  There is no indication that Rizhao has made any arrangements to pay the Awards.  It has not given any explanation for its failure to pay the Awards.  There is no suggestion that it lacks capacity to pay.  What Rizhao has done is the following:

    (1)Rizhao sought leave to appeal from the Awards, which leave was refused on 16 November 2010. 

    (2)Rizhao appealed from this refusal to grant leave to appeal, but subsequently discontinued that appeal. 

    (3)Rizhao appealed to the Western Australian Court of Appeal from the order which granted the Mt Gibson parties leave to enforce the Awards in the same manner as judgments of this court.  That appeal was heard on 12 August 2011. 

    (4)After orders were made giving the Mt Gibson parties leave to enforce the Awards in Hong Kong as if they were judgments, Rizhao applied to set aside the consequential orders for service upon its Hong Kong subsidiary.  This application was dismissed on 13 July 2011 by Saunders J in the Court of First Instance of the High Court of the Hong Kong Special Administrative Region.  Saunders J said of an application by Rizhao to extend the time to apply to set aside the orders granting leave to enforce the awards that it was 'as plain a delaying tactic as I have ever seen':  Koolan Iron Ore Pty Ltd v Rizhao Steel Holding Group Co Ltd (Unreported, High Court of the Hong Kong Special Administrative Region, Nos 25 and 26 of 2011) [15]. 

    (5)There is evidence that Rizhao has rearranged contracts with Australian suppliers citing as a reason that the dispute with the Mt Gibson parties is ongoing.  There is also evidence that Rizhao has ceased to perform a multi‑million dollar iron ore sales contract, and refused to take delivery of cargoes under that contract due to the existence of the Awards and judgment against it. 

    (6)On 1 June 2011, Rizhao brought an originating summons seeking orders under O 26A(4) of the Rules of the Supreme Court 1971 (WA) for discovery from a potential party. The purpose of this pre‑action discovery is said by Rizhao to be to investigate a potential cause of action to set aside the Awards if the arbitrator was misled about the nature or length of any structural discount in assessing damages for the Awards.

  6. When Rizhao sought leave to appeal from the Awards (referred to at [7](1) above) it was met with an application from the Mt Gibson parties seeking orders that Rizhao pay the entire amount of the Awards into court, essentially as the price for an appeal against the Awards.  That application was refused by Kenneth Martin J in Rizhao 3.  I discuss that decision below.  The application before me is very similar.  It seeks payments to be made as the price of Rizhao being able to bring the application for pre‑action discovery.  The orders sought include that Rizhao's application for pre‑action discovery be stayed until it pays: 

    (1)the first defendant $US44,217,840 plus interest at 6% per annum from 16 August 2010 to the date of payment (being the undisputed amount of the first defendant's Award delivered on 16 August 2010);

    (2)the second defendant $US27,216,656 plus interest at 6% per annum from 16 August 2010 to the date of payment (being the undisputed amount of the second defendant's Award delivered on 16 August 2010); and

    (3)$US42,980,907 plus interest at 6% per annum from 16 August 2010 to the date of payment (being the potentially disputed amount of the Awards delivered on 16 August 2010) into court pending determination of the plaintiff's application dated 1 June 2011 for pre‑action discovery and any subsequent action to set aside that part of the Awards. 

  7. The amounts which are sought to be paid to each of the Mt Gibson parties in (1) and (2) represent the amount of the Awards which would have been made if no structural discount had been allowed by the arbitrator.  In summary, the potential dispute about the structural discount is as follows.  In the arbitration, Mt Gibson was held to be able to recover losses it had suffered as a result of Rizhao's breach of contract.  Rizhao's breach led Mt Gibson to terminate its contracts with Rizhao and to enter into substitute contracts with third parties.  The price in the substitute contracts was based on an iron ore pricing index called the Hamersley Benchmark Price, with a 10% structural discount due to conditions in Mount Gibson.  The substitute contracts contemplated that the Hamersley Benchmark Price might cease to exist, as in fact occurred.  At the arbitration, the managing director of Mt Gibson was cross‑examined about the structural discount.  Implicit in the cross-examination was the proposition that once the Hammersley Benchmark Price ceased to exist then the managing director could renegotiate the structural discount in the substitute contracts, and hence recoup part of the potential loss from Rizhao's breach.  The managing director did not agree with the proposition that the substitute contracts envisaged him renegotiating the 10% structural discount.  In Rizhao's written submissions this denial was characterised as a 'self-imposed limitation'.  The argument was essentially that some of the loss suffered by the Mt Gibson parties could be mitigated by renegotiation of the structural discount, or that the Mt Gibson parties had unreasonably failed to mitigate.  The arbitrator referred to the evidence of the managing director and found that it was reasonable for the Mt Gibson parties to approach the good faith price renegotiation on the basis that the structural discount was not up for renegotiation.  Damages were therefore assessed on the assumption that the Mt Gibson parties would not have obtained the benefit of removing the structural discount from the substitute contracts. 

  8. Rizhao has now applied for pre‑action discovery essentially to determine whether there is a basis for a claim that the managing director's evidence was perjured and, if so, whether the Awards could be set aside on this basis. 

The two grounds upon which the power to order the stay is said to arise

  1. This application is essentially brought on two grounds.  Although reference was made to the inherent jurisdiction of the court, the grounds are better described as concerned with the inherent power of the court to order the stay which was sought:  Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559, 590 [64] (Gleeson CJ, Gaudron & Gummow JJ). First, it is said that this court has the power to make the orders sought as part of its inherent power to regulate proceedings. The second ground upon which this application is brought is said to be pursuant to the exercise of its power to control and prevent the abuse of its processes. Both of these grounds fall within the inherent power of the court, as preserved by s 16 of the Supreme Court Act 1935 (WA): TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335, 338 (Malcolm CJ).

  2. In one sense the two grounds are simply different sides of the same coin.  The court's power to regulate its proceedings in situations such as this involves a need to protect the integrity of its processes.  The ability of the court to protect its processes has been said to be the 'counterpart' of the court's power to prevent its processes from being abused:  Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 393 [25] (Gaudron, McHugh, Gummow & Callinan JJ). However, due to the different considerations raised in submissions in relation to each ground, I will deal with each of these two grounds independently.

Can the stay be ordered pursuant to the court's inherent power to regulate its proceedings?

  1. The immediate problem which confronts this asserted ground of power is that it is remarkably similar to a submission which failed before Kenneth Martin J in Rizhao 3.  In that case, the question was essentially whether this court could make orders dismissing an application for leave to appeal unless Rizhao paid the Award debt due to the Mt Gibson parties.  In an ex tempore judgment which spans considerable judicial and academic commentary on this question, Kenneth Martin J concluded that the court's inherent power did not support the orders sought in the circumstances before him:  see [78], [87]. 

  2. The first ground upon which the application in these proceedings is brought bears considerable similarity to the application before Kenneth Martin J.  Senior counsel for the Mt Gibson parties pointed to two differences which were said to distinguish this application from Rizhao 3. First, he said that the facts have moved on. However, although some of the facts which I have described above at [7] were not before Kenneth Martin J at the time of his decision, his Honour's conclusion was reached on the basis of very similar evidence concerning the conduct of Rizhao. I do not consider that this distinction is sufficiently material.

  3. A second basis upon which senior counsel for the Mt Gibson parties submitted that decision in Rizhao 3 could be distinguished was that the order sought before Kenneth Martin J was simply a payment order; here what is sought is not a compulsory order for payment but a condition to be imposed upon Rizhao's application for pre‑action discovery.  However, that is not a distinction which was material to his Honour's decision.  In particular, in reaching his conclusion, Kenneth Martin J was influenced by a decision of Le Miere J in Norilya Minerals Pty Ltd v Ireland [2010] WASC 260. One issue before Le Miere J in that case was whether the court could require a prospective plaintiff to make a payment of a judgment debt (a restitution order) due to the defendants as a condition of advancing its civil action against them. Le Miere J dismissed that application, giving as one ground for his decision that the prospective plaintiff was not in contempt: [32]. The decision of Le Miere J was affirmed by the Court of Appeal, without comment on this aspect of his Honour's reasons: Ireland v Norilya Minerals Pty Ltd [2010] WASCA 203.

  4. I agree with Kenneth Martin J that it is desirable that there be consistency between first instance judges in relation to issues of the inherent jurisdiction of the court [85]. This is particularly so where the issue has arisen in very closely related proceedings between the same parties. For the reasons below, I do not consider that the decision in Rizhao 3 is 'clearly' or 'plainly' wrong or that there is some reason why, in the interests of justice, I should not follow it:  Undershaft (No 1) Ltd v Federal Commissioner of Taxation [2009] FCA 41; (2009) 175 FCR 150, 165 ‑ 169 [68] ‑ [88] (Lindgren J).

  5. As Kenneth Martin J explained at [80], relying on the late Professor Dockray (see The Inherent Jurisdiction to Regulate Civil Proceedings (1997) 113 LQR 120), novel applications of inherent power are a matter of institutional responsibility.  The inherent powers of the court are not an unbounded fount from which to satisfy the supplication of an individual litigant.  Further, when the Federal Court ordered payment into court of money as security for a prospective judgment which might be entered against a respondent, the High Court quashed that order, on the basis that in those circumstances there was no power to make the order:  Jackson v Sterling Industries Limited [1987] HCA 23; (1987) 162 CLR 612. It is true that this case is a step removed from Jackson because the Mt Gibson parties have already obtained orders giving effect to the Awards.  However, in the leading decision Deane J explained that the purpose of asset preservation orders did not extend to 'create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him' (625). 

  6. Although, for the reasons above, I reach the conclusion that there is no inherent power of the court in these circumstances to make the orders sought, I do so with some diffidence for three reasons.  First, in Jackson the only question was whether asset preservation orders should be made.  The High Court was considering the scope of those asset preservation orders, in circumstances where no judgment had yet been obtained.  In the majority, Brennan J (621) also observed that in shaping the Mareva order novelty of form is no objection to the validity of the order. 

  7. The second reservation I have concerning the lack of this court's power to make the orders sought is that, in any event, such orders are not entirely novel.  There is English authority, which was not cited to Kenneth Martin J, in which such an inherent power was held to exist.  In Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC 1444 (QB); [2006] 4 All ER 233, the issue was whether an order could be made debarring defendants from taking part in a detailed costs assessment. The defendants had failed to make payments which the court had ordered. They had simply refused to pay. They had also been found to be in contempt. Langley J held that an order debarring the defendants from participation in the costs assessment could be made subject to the defendants making the payments ordered. His Lordship accepted submissions of Mr Auld QC that the court had power to make the order on several different bases. Although his Lordship's judgment focused upon the CPR, he also accepted that one source of power was the inherent power of the court to control its own processes [20] and, separately, the general power in cases of contempt [23].

  1. Decisions of English courts in relation to powers of a court, apart from those under the English Civil Procedure Rules, are useful guidance in this area.  In the related area of abuse of process, which I address below, Australian courts have followed the guidance of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529, 536: see Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75, 93-94 [28] (French CJ, Gummow, Hayne & Crennan JJ); Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 393 (Mason CJ, Deane & Dawson JJ).

  2. Finally, if the matter were entirely free from authority, it might be thought to be a short step to reach the conclusion that as a matter of principle it would 'bring the administration of justice into disrepute among right‑thinking people' if Rizhao is entitled to bring an application in this court when, in a related matter, it has refused to comply with an order of this court without any apparent reason:  Jeffery & Katauskas (93 ‑ 94) [28] (French CJ, Gummow, Hayne & Crennan JJ). 

  3. On balance, my conclusion as a first instance judge is that I should follow the same approach as Kenneth Martin J in these similar circumstances.  However, although my conclusion is that there is no power to make the orders sought in these circumstances, because of my reservations in respect of this conclusion, I have considered whether, if such a power did exist in these circumstances, it should be exercised.  My conclusion is that, on the current evidence before me, it should not.  A precautionary principle ought to inform the exercise of any power which would prevent or substantially impair access to justice.  In this case, caution should particularly be exercised because Rizhao has not been found to be in contempt for its failure to satisfy the Awards.  Nor has it been found to be in contempt for any steps which it has taken which might be considered to be directed towards avoiding enforcement of the Awards.  Rizhao has, in some respects, complied with orders of this court including compliance with reporting obligations in relation to proposed freezing orders, and satisfying orders for security for costs, including in these proceedings. 

  4. A further reason why I consider that such a power should not be exercised is because Rizhao has raised the possibility of an action to set aside the Awards.  Although these allegations have been raised more than seven months since the material which is said to support its allegations became available, it is arguable that if fraud were established the Awards could be set aside in their entirety, as senior counsel for Rizhao submitted, and not merely in relation to the amount of the structural discount.  I put this point no higher than to say that this is arguable because there was not substantial argument before me on this point.  The authorities of which I am aware do not clearly establish such a proposition.  Historically, if fraud were proved an original Bill could be brought in Chancery to rescind a decree in its entirety:  Birne v Hartpole (1717) 5 Bro Parl Cas 197; (1717) 2 ER 624, 626. Although the separate Chancery Bill of review no longer exists, the equivalent power to bring an original bill to rescind an order obtained by fraud has been maintained to this day. But the cases of which I am aware are all cases where fraud infected the whole of the judgment. The principle may not be the same in circumstances such as this case: compare, in different circumstances, Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102, 114 (Deane, Dawson, Toohey, Gaudron & McHugh JJ).

  5. In considering whether a power to make the orders sought should be exercised, I have weighed these two factors against the fact that Rizhao has no apparent reason for its failure to comply with orders of this court, unlike the impecuniosity of the prospective plaintiff in Norilya.  I have also taken into account Rizhao's conduct, as described above at [7] and the fact that Rizhao does not yet even advance a claim to set aside the Awards;  it does not even have the material with which to assess whether such a claim exists, hence its application for pre‑action discovery.  But, in my assessment of all the circumstances, if such a power existed I would decline to exercise it to make the orders sought by the Mt Gibson parties. 

Abuse of process

  1. The second basis upon which it was submitted that this court had power to make the orders sought is the court's power to prevent abuses of process.  Kenneth Martin J in Rizhao 3 expressly declined to consider whether a power to make the orders sought existed on the basis of abuse of process ([68], [76]), although his Honour observed that there may not be much doctrinal difference between the inherent power of the court to regulate its own processes and the power of the court to prevent abuses of process [83]. 

  2. I have explained above at [12] that the power of the court to prevent an abuse of its processes is concomitant to its power to regulate, and protect the integrity of, its proceedings.  However, the factors which senior counsel for Mt Gibson relied upon in relation to abuse of process were distinct in two respects.  In relation to the submission of abuse of process it was said that Rizhao's application for pre‑action discovery was brought for improper purposes.  It was also submitted that the application was without foundation.  These are two of the well recognised bases upon which an abuse of process can arise. 

  3. It may be that the application for pre‑action discovery could fall within an abuse of process if it were found to be brought 'for a purpose or to effect an object beyond that which the legal process offers':  Williams v Spautz (1992) 174 CLR 509, 523. If the court were satisfied that Rizhao's application for pre‑action discovery was made with the purpose of promoting delay or hindrance to the enforcement of the Awards, as an end in itself, then this would constitute an abuse of process: Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134, 150 ‑ 151 [64] (Lee, Hill & Sundberg JJ). Alternatively, the pre‑action discovery application would be an abuse of process if it were 'manifestly groundless or without foundation or which serve no useful purpose': Jeffrey & Katauskas (93) [27] (French CJ, Gummow, Hayne & Crennan JJ).  However, there are two reasons why I am unable to reach the conclusion that an abuse of process, of either type alleged, exists which could permit this court to make the orders sought. 

  4. First, there is a disconnect between the orders which are sought (to permit the application to continue on conditions) and the power which is said to support those orders (an abuse of process).  Proceedings are either an abuse of process or they are not.  If the pre‑action discovery application is an abuse of process then it would be a strange result if this court were to order that an application which is an abuse of process could nevertheless proceed on condition that the Award debts were paid. 

  5. Secondly, this chamber summons was listed to be heard prior to the hearing of Rizhao's application for pre‑action discovery.  I have not heard full argument about the basis and detail of Rizhao's application.  In relation to whether the pre‑action discovery application is brought for ulterior purposes (in the sense described in Williams v Spautz  and Flower & Hart (a firm) v White Industries (Qld) Pty Ltd), I have not received any evidence concerning the state of mind of the relevant persons at Rizhao, nor has Rizhao had any opportunity to put in evidence rebutting any inferences which might be drawn at a hearing of the pre-action discovery application. 

  6. In relation to whether the application is 'manifestly groundless', I was provided with some evidence from Rizhao which is said to support their pre‑action discovery application.  That evidence included repeated requests by Rizhao seeking information in relation to the structural discount; these requests were rejected as baseless or based on improper allegations.  It also included a nineteen page expert report (with annexures) from the managing director of a resource economics consultancy which considers correspondence between the parties and Australian Stock Exchange announcements from the Mt Gibson parties.  He refers to an announcement from the Mt Gibson parties that the substitute contracts will be based on a different index (the Platts Index) to the Hamersley Benchmark Price.  The export report then considers whether a price based on the Platts Index is equivalent to a price based on the abandoned Hamersley Benchmark Price less the structural discount.  The report concludes that it is not. 

  7. As with the question of ulterior purpose, I did not hear full argument which would enable me to reach a conclusion on this aspect of abuse of process. In total, the evidence is not substantial, but as senior counsel for the Mt Gibson parties properly accepted, in the absence of a hearing of the pre‑action discovery application, the best that can be said at this hearing would be that the basis of the application is rather hard to divine (ts 47). The evidentiary threshold for a pre‑action discovery application under O 26A(4) of the Rules of the Supreme Court is not demanding.  The application requires 'some tangible backing, or objective foundation, that takes the existence of the cause of action beyond a mere allegation, suspicion or assertion':  Waller v Waller [2009] WASCA 61 [75] (Le Miere AJA). However, caution should be exercised before the order is made and it should only be made when reasonably necessary to achieve the proper administration of justice: New South Wales Solicitors Mutual Indemnity Fund v Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146 [10]. In the absence of full argument on the issue, and with the existence of some evidence to support the potential application, a difficulty of divining the basis of the application is not sufficient for a conclusion that there is manifestly no tangible evidence to support even the making of the application.

  8. The absence of full argument on these two grounds of abuse of process simply reinforces the conclusion that if the complaint concerning the pre-action discovery application is that it is abusive, then the proper course should be to apply to dismiss that application.  This court could then hear full argument concerning whether the application is brought for an ulterior purpose or whether it is manifestly groundless. 

Conclusion

  1. For these reasons I would dismiss the application by the Mt Gibson parties for orders imposing the conditions sought before Rizhao's application for pre‑action discovery can proceed.

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