Metso Minerals (Australia) Ltd v Kalra [2009] FCAFC 57 (24 April 2009)

PRACTICE AND PROCEDURE – search order – access not granted to seized documents – application for leave to appeal – whether substantial injustice

PRACTICE AND PROCEDURE – access to seized documents – whether Court has discretion to grant access under Order 25B of the Federal Court Rules

Federal Court of Australia Act 1976 (Cth), s 23, s 50
Federal Court Rules, O 15A, O 25B

Bucyrus Australia Pty Limited v ANI Mining Service Limited [1999] FCA 1193

METSO MINERALS (AUSTRALIA) LTD ACN 000 197 428 and ANOR v KALRA and ORS

NSD 2014 of 2008

EMMETT, JACOBSON & PERRAM JJ
24 APRIL 2009
SYDNEY

BETWEEN:

METSO MINERALS (AUSTRALIA) LTD ACN 000 197 428
First Appellant

METSO MINERALS INDUSTRIES INC
Second Appellant

AND:

RAJIV KALRA
First Respondent

MICHAEL RAUSCHER
Second Respondent

TUCKWOOD DRAFTING PTY LTD ACN 072 552 526
Third Respondent

STEVEN TUCKWOOD
Fourth Respondent

CITIC HIC AUSTRALIA PTY LTD ACN 127 812 131
Fifth Respondent

JUDGES:	EMMETT, JACOBSON & PERRAM JJ
DATE OF ORDER:	24 APRIL 2009
WHERE MADE:	SYDNEY

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

BETWEEN:

METSO MINERALS (AUSTRALIA) LTD ACN 000 197 428
First Appellant

METSO MINERALS INDUSTRIES INC
Second Appellant

AND:

1 The Court has before it an application for leave to appeal from an order made by a judge of the Court dismissing an application by motion on notice dated 10 December 2008. Two prayers of the notice of motion are relevant. In order to put those prayers in context, however, it is necessary to say something about the procedural background to the primary judge’s consideration of the motion.

2 On 11 December 2007, orders were made pursuant to Order 25B of the Federal Court Rules for the search of premises. On execution of those orders, certain material was collected. The material included hard copy documents and images made of computer hard drives and other computer storage devices. On 14 December 2007, the parties’ legal representatives were granted access to photocopy the hard copy documents seized during the execution of the orders. On 11 and 12 March 2008, the parties’ solicitors received a series of reports from independent computer experts. The reports had attachments which included electronic copies of documents contained in the images obtained on the execution of the search orders. Undertakings were given by the applicants’ solicitors concerning the documents. On 26 March 2008, the Court, by consent, varied the undertakings given to permit the solicitors to disclose and provide copies to the applicants and their witnesses of some limited categories of the documents referred to in the independent computer experts’ reports.

3 On 3 April 2008 orders were made giving to six named individuals, who are employed by the applicants, access to certain further categories of the documents. On 4 April 2008, three further parties (the Third Parties) first appeared in the proceeding to seek suspension of the access regime that had been put in place on 3 April 2008. On 11 April 2008, the Court indefinitely suspended the access regime with the effect from 12 noon on that day.

4 On 18 April 2008, the applicants’ solicitors received supplementary reports from the independent computer experts, which included electronic copies of further documents contained on the images obtained during the execution of the original search orders. It was not until 22 April 2008 that the applicants first filed a statement of claim.

5 On 15 May 2008, the Court made orders permitting the applicants’ solicitors to disclose and provide copies of certain of the documents seized to two of the individuals identified in the access regime. An amended statement of claim was filed on 2 June 2008, and on 7 July 2008, the five respondents filed their defences to that amended statement of claim.

6 On 16 July 2008, the Court heard a number of notices of motion, filed variously by the applicants, the respondents and the Third Parties, relating primarily to discovery and, more significantly, to access to the documents seized in the execution of the search orders. On 13 August 2008, the primary judge published his reasons for the conclusions that his Honour had reached in relation to the notices of motion. On 11 September 2008, orders were made to give effect to the conclusions that his Honour had reached.

7 The orders of 11 September 2008 provided for general discovery by the parties on a train of inquiry basis, with verified lists to be exchanged on or before 17 October 2008 and documents to be produced by 24 October 2008. Those directions were not strictly complied with. On 24 October 2008, the applicants served their verified list of documents and on 27 November 2008 the respondents served their verified list of documents.

8 On 10 December 2008, the applicants filed and served a further notice of motion. That is the motion on which orders were made that are the subject of this application for leave. Prayer 2 of the notice of motion sought an order that, subject to their first executing a confidentiality undertaking, solicitors, counsel and independent experts and two named officers of the second applicant be granted access to the documents that had been seized in the execution of the search orders. Prayer 3 sought, in the alternative, an order that the respondents serve on the applicants, by way of further and better discovery, lists of documents in their possession, custody or power, falling into a number of categories, including certain of the documents that had been seized in the execution of the search orders.

9 The motion was argued before the primary judge on 22 and 23 December 2008, when his Honour ordered that the motion be dismissed, without giving separate reasons for doing so. The parties make no complaint about that and a transcript of the argument is before the Full Court. Significantly, his Honour observed, during the course of argument, that he did not think that there was any reason to vary the orders made for the reasons given in August. His Honour considered that those reasons sufficiently set forth the purpose for which access to the seized documents could be pursued. His Honour did not think that anything had changed, such that access should then be given, notwithstanding that it had been refused in August. His Honour considered that it was contrary to principle to order that access be given to the seized documents, but also said that, in the absence of a decision of the Court indicating that such access was permissible, his Honour would not be prepared to make the order claimed in the motion that was in issue.

10 Since the events to which I have briefly referred occurred, the matter has progressed somewhat. On 14 April 2009, pursuant to leave granted on that day, the applicants filed a further amended statement of claim. At present, there is a directions regime in place which includes the following:

• The respondents are to give discovery in accordance with orders made on 23 December 2008 by 21 April 2009.

• The respondents are to file and serve their defences to the further amended statement of claim on 1 May 2009.

• The parties exchanged proposed categories of documents for further discovery on 8 May 2009.

• The proceeding is to be listed for further directions and for argument in relation to the proposed categories for discovery on 12 May 2009.

• The applicants are to file and serve their evidence-in-chief on or before 25 May 2009.

The proceeding is set down, at least provisionally, for hearing for three weeks commencing on 28 September 2009.

11 The applicants contend that the primary judge erred in dismissing the motion on 23 December 2008. They say that they wish to raise an important question of principle, as to what access by an applicant to documents seized pursuant to search orders made under Order 25B should be permitted, and what use may be made of such documents by an applicant. They say that the primary judge erred insofar as his Honour refused to grant access because of a lack of power for the Court to do so. Secondly, they draw attention to the fact that none of the parties drew his Honour’s attention to decisions of a judge of the Court and a Full Court in a proceeding in the Queensland Registry, Bucyrus Australia Pty Limited v ANI Mining Service Limited [1999] FCA 1193. Third, they say that the decision of 23 December 2008, while it is interlocutory in its nature, is not a decision on a mere matter of practice and procedure.

12 Further, the applicants point out that the regime described above requires them to file and serve evidence-in-chief in circumstances where orders have not yet been made for the provision of full discovery. They argue that delaying the filing of their evidence to enable full discovery to be given prior to the filing of evidence could lead to a further delay of the proceeding and the possibility of vacation of the hearing dates.

13 Having regard to the circumstances relating to the dismissal of the motion in December 2008, it is difficult to be entirely certain as to the reasoning of his Honour in making that order. On the other hand, it is clear enough that his Honour indicated, in the course of argument that his reasons were as stated in August, and that nothing material had changed in the meantime. However, the applicants complain that his Honour failed to take account of a change in circumstances between August and December, in that, in December, there was material before his Honour to indicate that there were deficiencies in the discovery given by the respondents to that time. One of the bases upon which his Honour refused relief in August was that there was to be an order for discovery and there was therefore no justification for access to the seized documents to be ordered at that stage.

14 As I have said, the matter has progressed somewhat since December. A much expanded claim has now been made in the further amended statement of claim filed by the applicants. Further, there is a regime in place for the giving of further discovery in relation to those expanded claims. In the circumstances, I am not persuaded that any substantial injustice that would accrue to the applicants by reason of the orders from which leave to appeal is sought. The respondents and the Third Parties assert that this application is really an application for leave to appeal out of time from the orders made in September 2008, on the basis of the August reasons. The response by the applicants is that circumstances have changed in the way that I have already indicated.

15 However, it appears to me that there would be no present utility, although that is not a firm view, in referring the matter back to the primary judge in order to determine whether or not, assuming he has power to grant access to the seized documents, he would in the exercise of his discretion, do so. The fact that there is a significantly amended statement of claim and a regime for further discovery indicates that any decision that his Honour might make, if we were to grant leave and uphold the appeal, would very much depend upon what is now asserted in the further amended statement of claim and the extent of discovery that is given under the regime that I have identified.

16 In essence, the dispute appears to me to be a dispute concerning discovery. That is not to say that the question of access to the seized documents is not of significance. It may well be that, if there were material that cast doubt on the adequacy of discovery that has actually been given by the respondents, it would be appropriate to grant access to some or all of the seized documents. I would not endorse a view, if that is the view that his Honour expressed, that the Court would not have power to grant access to the seized documents, in those circumstances.

17 Section 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), to which his Honour does not appear to have been taken in any substance, would authorise an order granting access to seized documents, if that were considered appropriate for the purposes of ensuring that the proceeding be adequately and properly prepared, and for the purpose, if need be, of testing whether proper discovery had been given and whether discovery that had been given was adequate.

18 It is not entirely clear that his Honour concluded that the Court does not have power to make such an order. Indeed, in the course of argument, it was not necessarily disputed by counsel for the respondents or the Third Parties that, in an appropriate case, the Court would have power to grant access to seized documents, assuming, of course, that an appropriate confidentiality regime were put in place to protect the confidentiality of documents that belong to the respondents or the Third Parties, which have no bearing on the claims that are made by the applicants.

19 Another matter to which reference was made in the course of argument is the problem that can arise by limiting access to material by reference to the issues in the proceeding as they are formulated in a current pleading. A claimant can only make such allegations in its statement of claim as can be justified by the material available to it. One possibility that arises from the execution of search orders is the gaining of access to material that would show a further cause of action beyond that which is pleaded. On the other hand, search orders under Order 25B must not be treated as a substitute for an application under Order 15A for preliminary discovery, in order to ascertain whether or not there is a cause of action. That is not the matter that is presently before the Court.

20 Insofar as his Honour held that there would be no discretion to grant access to enable the applicant to determine whether it should expand its claim, and I am not satisfied that his Honour did in fact refuse access on that basis, there may have been an error. That is to say, once a prima facie case has been made out for seizure of documents under Order 25B, there may be a basis for permitting access to the material seized in order to formulate the claims that may be made in respect of that prima facie case. On the other hand, as I have said, such a process ought not be treated as a substitute for an application under Order 15A.

21 In all of the circumstances, I am not persuaded that there is any substantial injustice at present from refusing the orders that were sought in the motion. That is not to say that, if a further question arises, in the course of the discovery regime that is presently in place, that matter would not give rise to an injustice. That, however, is not the matter before us. In my view, leave to appeal should be refused, with costs.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

BETWEEN:	METSO MINERALS (AUSTRALIA) LTD ACN 000 197 428 First Appellant METSO MINERALS INDUSTRIES INC Second Appellant
AND:	RAJIV KALRA First Respondent MICHAEL RAUSCHER Second Respondent TUCKWOOD DRAFTING PTY LTD ACN 072 552 526 Third Respondent STEVEN TUCKWOOD Fourth Respondent CITIC HIC AUSTRALIA PTY LTD ACN 127 812 131 Fifth Respondent
JUDGES:	EMMETT, JACOBSON & PERRAM JJ
DATE:	24 APRIL 2009
PLACE:	SYDNEY

22 I agree with the orders proposed by the presiding judge for the reasons given by him including his remarks as to the power conferred under section 23 of the Federal Court of Australia Act 1976 (Cth) to grant access to seized documents.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

BETWEEN:

METSO MINERALS (AUSTRALIA) LTD ACN 000 197 428
First Appellant

METSO MINERALS INDUSTRIES INC
Second Appellant

AND:

23 I agree with the orders proposed by the presiding judge for the reasons given by his Honour. There would be little utility now in interfering with the discovery process which has taken place in light of the fact that there is now to be a new discovery regime. However, I would not wish to be seen as embracing the proposition that where a deficiency in discovery is demonstrated by the partial inspection of the impounded documents, that access should not be granted to the balance in order to test the adequacy of discovery. Questions of degree are involved which would be a matter for the docket judge.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Counsel for the Appellants:	Mr DK Catterns QC with Mr MJ Darke

Solicitor for the Appellants:	Minter Ellison

Counsel for the First to Fifth Respondents:	Mr AJ Sullivan QC with Mr NR Murray

Solicitor for the First to Fifth Respondents:	Clayton Utz

Counsel for the Sixth to Eighth Respondents:	Mr R Cobden SC with Mr JM Hennessy

Solicitor for the Sixth to Eighth Respondents:	Gilbert + Tobin

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2014 of 2008

Date of Hearing:	24 April 2009

Date of Judgment:	24 April 2009

Federal Court of Australia - Full Court

Metso Minerals (Australia) Ltd v Kalra [2009] FCAFC 57 (24 April 2009)