Southern Waste Resourceco Pty Ltd v Adelaide Hills Region Waste Management Authority - [2014] SASC 140

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SOUTHERN WASTE RESOURCECO PTY LTD v ADELAIDE HILLS REGION WASTE MANAGEMENT AUTHORITY
[2014] SASC 140
Reasons of Judge Dart a Master of the Supreme Court
23 September 2014
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION
Document referred to in a pleading - application of Rule 61 - production of redacted copy - claim of confidentiality.
Held: the defendant is to produce an unredacted copy of the subject report for inspection by the plaintiff, save that it may redact those parts of the report for which a claim for legal professional privilege is made.
Supreme Court Civil Rules 2006 (SA) r 61, r 140, r 144; Local Government Act 1999 s 43, referred to.
Balnaves v Smith & Anor [2008] QSC 215; Quilter v Heatly (1883) 23 Ch.D. 42; Harris Scarfe Limited (Receivers & Managers Appointed)(In Liq) & Ors v Ernst & Young & Ors (No 11) [2006] SASC 389, considered.

SOUTHERN WASTE RESOURCECO PTY LTD v ADELAIDE HILLS REGION WASTE MANAGEMENT AUTHORITY
[2014] SASC 140

The plaintiff operates a bulk waste disposal facility (“facility”) at Hartley (“the land”) and has done so since 2013. The land is owned by third parties. Prior to 2013 the facility was conducted by the defendant.
The defendant is a regional subsidiary of four Councils, being the District Council of Mount Barker, The Rural City of Murray Bridge, The Adelaide Hills Council and Alexandrina Council (“the Councils”). It was established pursuant to the provisions of the Local Government Act 1999.[1]The defendant has now established a new waste disposal facility at Brinkley near Murray Bridge.
[1] See Section 43.
The defendant operated the facility from about 1991. In 2011 it sought to exercise a right of renewal to remain on the land. The defendant and the third parties were in dispute about the entitlement of the defendant to exercise that right of renewal. The dispute was resolved by the defendant agreeing to vacate the site.
As part of the settlement of the dispute the plaintiff agreed to commence operating the facility. Terms of settlement were negotiated between the plaintiff, the defendant and the third parties. Two deeds reflecting the terms of the settlement of the dispute were entered into. Pursuant to the deeds the plaintiff agreed, inter alia, to pay a sum of money to the defendant and to assume full responsibility for all environmental performance issues in respect of the facility.
The gist of the plaintiff’s case against the defendant is that it alleges that in order to induce it to enter into the two Deeds of Settlement, the defendant made a number of implied representations about the future use of the facility by the Councils. This was a significant issue for the plaintiff, as it was aware that the defendant was developing a new waste disposal facility at Brinkley. It is pleaded that the implied representations were false and that, accordingly, the defendant engaged in misleading or deceptive conduct. Relief is sought under the Australian Consumer law. The allegations are denied.
The present application[2] deals with the request of the plaintiff that the defendant provide a copy of a report dated 21 November 2013 of its Executive Officer, which contains both financial and SWOT analysis of the operating models of the plaintiff and defendant. A redacted copy of the report has been disclosed.[3]
[2] FDN11.
[3] Defendant’s List of Documents, FDN7, document 72.
In its defence, the defendant pleaded as follows:[4]
11.5the Authority considered SWR’s letter at its meeting on 21 November 2013 (“the November Meeting”) together with a report addressing both a financial and non financial analysis of the Authority continuing with its current business plan and the SWR offer;
11.6at the November 2013 meeting it was resolved that the Authority advise the member Councils that following an analysis of the financial and non financial impacts of the SWR offer on the Authority, it recommended that the Member Councils commit to sending their waste stream to the Brinkley landfill;
[4] Defendants' Defence, FDN4.
The plaintiff says that it is entitled to inspect an unredacted copy of the report. It seeks that access in two different ways. The first is that the plaintiff says by reason of the operation of Rule 61, the defendant is obliged to provide an unredacted copy of the report to the plaintiff. Rule 61 provides as follows:
61—Copies of documents to be provided
(1)If—
(a)a party files in the Court a document that refers to some other document; and
(b)the party is in possession of the original or a copy of the document referred to,
the party must, at the request of another party, provide the other party with a copy of the document.
(2) A party who files a secondary originating process introducing a new party to the action must, at the request of the new party, provide the new party with a copy of all documents filed in the action before that party was served with the originating process.
(3) A party who files a document in the Court must, at the request of another party and payment of the appropriate fee, provide the other party with a number of photocopies of the document (not exceeding 10) requested by the other party.
The defendant having pleaded the report in its Defence must provide an unredacted copy, says the plaintiff. In the alternative, the plaintiff says Rule 140 applies, which provides as follows:
140—Obligation to produce documents for inspection
(1)A party must produce documents disclosed under this Part for inspection.
(2)     If a document is not in the party's immediate possession but is obtainable by the party, the party must take all reasonable steps to obtain the document or a copy of it.
(3)     A party must nominate a place at which documents disclosed under this Part may be inspected and copied during ordinary business hours.
(4)     Unless the parties otherwise agree, or the Court otherwise orders, the place for inspection must be premises;
(i)    at which a lawyer practices in South Australia; or
(ii)     within 50 km of the GPO at Adelaide,
as nominated by the party holding the documents to be inspected..
(5)     Instead of making documents available for inspection, a party may, with the agreement of the party to whom the documents are to be produced for inspection or by direction of the Court, provide the other party with photocopies of documents at the appropriate fee.
(6)     The Court may, on application by a party, relieve the party from the obligation to produce a particular document under this rule.
(7)     A party is not required to produce any document which is subject to privilege from production.
The Rule is in Part 3 of Chapter 7 of the Rules. Part 3 contains the rules of court in relation to the disclosure and production of documents. The plaintiff notes that there has been no application from the defendant pursuant to Rule 140(6) to be relieved from its obligation to produce the document under the Rule.
To fully consider the Rule 140 issue, it is necessary to also have regard to Rule 144, which provides as follows:
144—Orders to protect confidentiality of documents
The Court may make orders to protect the confidentiality of documents that are to be disclosed or produced under this Part.
It can be seen that Rule 144 on its terms only relates to documents that are required to be disclosed or produced under Part 3 of Chapter 7. It has no application to documents that are required to be produced pursuant to Rule 61.
In my opinion this application can be dealt with by a consideration of operation of Rule 61. It is the more apposite Rule. It also appears to be a more powerful rule in that the obligation to produce a document for inspection is mandatory.
The report is said to contain some matters which are subject to a claim of legal professional privilege. In other jurisdictions it has been held that the equivalent rule does not waive legal professional privilege, which is a fundamental right.[5] The plaintiff does not seek to inspect that part of the report that contains material subject to a claim of legal professional privilege.
[5] Balvanes v Smith & Anor [2008] QSC 215.
The critical issue to be determined is whether Rule 61 leaves scope for the defendant to object to the production for inspection of the full report on the basis that it contains confidential and sensitive commercial information. The report is said to contain pricing comparisons between the operation of the plaintiff and the defendant’s operation at Brinkley.[6]
[6] Transcript 20 August 2014, page 6, line 11.
The plaintiff’s contention is that the defendant is not entitled, having pleaded the document, to refuse production or inspection on the grounds it contains confidential information.
The defendant’s position is that it agrees that Rule 61 is mandatory but, nonetheless, the Court retains a discretion to permit the defendant to mask parts of the document. The discretion is said to arise when a document contains material which is irrelevant and/or confidential. Both arise here, according to the defendant.[7] The only evidence of the confidential nature of the document is contained in a solicitor’s affidavit.[8] The affidavit is not an information and belief affidavit, but is direct evidence given by the solicitor as to the relevance or commercial sensitivity of aspects of the report. Such an affidavit is of limited value but, nonetheless, the matter can be resolved by accepting that the report contains matters that are irrelevant, and also matters that are commercially sensitive.
[7] Transcript 20 August 2014, page 5, line 19.
[8] Affidavit of James Scott Linton Lumsden, sworn 8 August 2014, FDN13.
The issue raised by the plaintiff on the application is not new but there appears to be little direct authority. It was an issue as long ago as 1883. In Quilter v Heatly,[9] Lindley LJ was dealing with equivalent rules. He said: [10]
There is a broad distinction between a general application for discovery of documents relating to the matters in question in the action and an application for production of documents referred to in the pleadings … The general rules as to discovery of documents are intended to give a party discovery of all documents relating to the case which are in his adversary’s possession unless there is some sufficient ground for refusing production. Rules 14-17 of Order XXXI. are very differently expressed, and are confined to documents mentioned in the pleadings or affidavits. These rules were evidently intended to give the opposite party the same advantage as if the documents referred to had been fully set out in the pleadings.
[9] (1883) 23 Ch.D. 42.
[10] Quilter v Heatly (1883) 23 Ch.D. 42 pp. 49-50
There is a significant difference between the obligation placed on a party with respect to disclosure and the obligation to produce a document for inspection which has been pleaded. There is no doubt there has long been a practice of masking documents or passages of documents that are said to be irrelevant in respect of documents which have been disclosed.[11] However, I do not think that the practice assists the defendant in respect of Rule 61.
[11] Harris Scarfe Limited (Receivers & Managers Appointed)(In Liq) & Ors v Ernst & Young & Ors (No 11) [2006] SASC 389 at [87].
The masking of irrelevant parts of documents or, for that matter, commercially sensitive parts of documents, is understandable when considered in the context of a party’s obligation to make disclosure.
Disclosure is an obligation imposed on the parties by the Rules of Court. It is an intrusion into the right of a party to keep its documents confidential. However, only documents which are relevant, now directly relevant, are required to be disclosed. When regard is had to the intrusive nature of the obligation to make disclosure, and the limitation on the scope of documents to be disclosed, it is understandable that documents can be masked to exclude irrelevant or commercially sensitive parts of a document.
The obligation under Rule 61 is totally different, in my opinion. Relevance has no part to play. It is an obligation on a party who pleads a document to produce a copy of that document to the other party so that that party is able to properly understand the case put against it. No issue of disclosure or relevance arises. A document which did not fall within the relevant criterion to be disclosed would still need to be produced if referred to in a pleading.
The defendant’s argument that, notwithstanding the wording of Rule 61, the Court retains a discretion in respect of the production of documents must be accepted at least to some extent. The effect of Rule 117 is that the Court always has a discretion to override the Rules of Court when it is in the interests of justice to do so. The Court could decline to require the production of a document that had been referred to in a pleading. However, it would be a very rare case in which the Court would do so. This is not such a case.
The defendant’s pleading is that at its meeting on 21 November 2013 it received the subject report and considered the information contained in it. It then resolved to act in a certain way based on that information. The position of the defendant is that, notwithstanding pleading that it acted on information contained in the report, the information should not be made available to the plaintiff.
To accede to the defendant’s proposition would be to create significant difficulties for the conduct of the trial. The report must be an important issue for the defendant’s case. It would not have been pleaded otherwise. How, for example, is counsel for the plaintiff to cross-examine, at trial, a member of the Authority about its decision to act in a certain way when counsel is not entitled to see the information he or she relied upon. In my opinion, Rule 61 does not anticipate such an approach and, once a document has been pleaded, except in the rarest of cases, the obligation is to produce an unredacted copy to the other party upon request.
Even if I am wrong about the operation of Rule 61, in my opinion the plaintiff would be entitled to an order requiring the production of the document under Rule 140. If it had been necessary to rely on that rule, I would also have made an order under Rule 144 restricting access to the document, at least initially, to the solicitors and counsel for the plaintiff. However, in the result, it is unnecessary to make such an order.
I propose to order that the defendant is to provide a copy of the report dated 21 November 2013 to the plaintiff for inspection within 21 days. The report is to be unredacted except and insofar as it contains material for which a claim of legal professional privilege is made. I will hear the parties as to consequential orders.