FEDERAL COURT OF AUSTRALIA

Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited (No 2) [2007] FCA 1510

DISCOVERY ‑ preliminary discovery ‑ whether an applicant is entitled to “identity discovery” under O 15A r 3 of the Federal Court Rules where information is sought in respect of the conduct of identified persons ‑ whether the applicant had made reasonable inquiries under O 15A r 3 ‑ whether the Court should exercise its discretion to permit the oral examination of a person under O 15A r 3

Federal Court Rules O 15A rr 1, 3, 6, 7

Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited [2007] FCA 578

National Education Advancement Programs (NEAP) Pty Ltd v Ashton (1995) 128 FLR 334

G Breschi & Son Pty Ltd v AFT Ltd [1988] VR 109

Austal Ships Pty Ltd (ACN 079 160 679) v Thurlow (No 2) [2007] FCA 202

Barnes v Commissioner of Taxation [2007] FCAFC 88

LYNX ENGINEERING CONSULTANTS PTY LTD (ACN 059 949 469) v THE ANI CORPORATION LIMITED TRADING AS ANI BRADKEN RAIL TRANSPORTATION GROUP (ACN 000 421 358), BRADKEN RESOURCES PTY LTD (ACN 098 300 988) AND BRADKEN LIMITED (ACN 108 693 009)

WAD 219 OF 2006

SIOPIS J

28 SEPTEMBER 2007

PERTH

THE COURT ORDERS THAT:

1                    The applicant’s notice of motion dated 7 May 2007 is dismissed.

2                    The applicant is to pay the costs of the respondent to the notice of motion.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The applicant carries on the business of designing, manufacturing and supplying railway wagons for carrying freight and bulk materials.  From 1993 to about April 1997 the applicant was engaged in research and development for the design of a new or improved railway wagon body suitable for carrying freight and bulk materials.  This project was known as the “Lynx 3CR12 Wagon Project”.  The respondents carry on business manufacturing railway wagons.

2                     On 10 April 1996 the applicant entered into an agreement (the 1996 Confidentiality Agreement) with the first respondent to disclose confidential information to it in respect of the Lynx 3CR12 wagon for the purpose of cooperating with the first respondent in a joint response to BHP Iron Ore Ltd’s (BHP) invitation to tender for the design, manufacture, supply and testing of 120 enhanced gondola ore cars.

3                     Pursuant to the 1996 Confidentiality Agreement, the applicant provided the first respondent with a number of design drawings and technical information.  The joint response to the BHP tender invitation by the applicant and the first respondent was unsuccessful.

4                     In April 1997, the applicant and the first respondent entered a second confidentiality agreement in respect of the disclosure of confidential information by the applicant to the first respondent for the purposes of the joint response to a tender invitation from Hamersley Iron Ore Ltd (Hamersley) for the design and manufacture of bulk freight rail wagons.  Pursuant to that agreement the applicant disclosed further information relating to various improvements, enhancements and modifications to the Lynx 3CR12 wagon.  The applicant subsequently withdrew from the Hamersley tender.

5                     In 2000, a third confidentiality agreement was entered into in respect of the joint participation by the applicant and the first respondent in responding to a tender invitation from Hamersley.  Pursuant to that agreement the applicant disclosed further confidential information comprising substantial design changes by way of modifications, enhancements and improvements to the earlier design of the Lynx 3CR12 wagon which, by then, became known as the Lynx Golynx wagon.  This tender was also unsuccessful.

6                     Some time later, the respondents manufactured and supplied each of BHP and Hamersley with railway wagons known as the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car respectively.

7                     On 2 August 2006, the applicant commenced an originating application in this Court alleging that the respondents had, in breach of the three confidentiality agreements, used and disclosed to others, the applicant’s confidential information for the purpose of manufacturing, and procuring the manufacture of, rail wagons, known as the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car.

8                     In their defence, the respondents denied the allegations and said that each of the wagons was designed by “a company in the Worley Group trading as Williams Worley Rail (Worley)” and that the respondents had not provided, or caused to be provided, any of the confidential information to Worley.  The respondents pleaded that neither Worley nor its officers and employees had access to, or made use of, the applicant’s confidential information.

9                     As to the Bradken 9100 Wagon, the respondents alleged that in about March 2003, Mr Warren Williams of Worley and Mr Doug Cummings of the second respondent had conducted a detailed physical inspection of existing wagons owned by BHP, and of various items of infrastructure relating to the use of the wagons.  These items included three dumpers used by BHP to empty ore from the wagons, the maintenance shop where wagons were repaired and serviced and the layout of the Port Hedland site, including the crusher plants.

10                  As to the Rio Tinto Pilbara Iron Ore Car, the respondents alleged that the car was developed by Worley after a detailed physical examination of existing wagons owned by Hamersley and the infrastructure with which those wagons were required to interface.  It was said that in April 2000 Mr Warren Williams of Worley and Mr Allan Walshe of Hamersley had conducted a physical inspection of the existing iron ore wagons owned by Hamersley.  They had also inspected the Seven Mile facility infrastructure.

11                  The reference in the defence  to “a company in the Worley Group trading as Williams Worley Rail” as being the party responsible for the design of the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car led to the applicant’s solicitors making further inquiries.  The solicitors learned that the entity trading as Williams Worley Rail was not a company, but was an unincorporated joint venture between two companies, namely, WorleyParsons Services Pty Ltd and WP Williams & Associates Consulting Engineers Pty Ltd.  In a letter Mr Warren Williams, the principal and director of WP Williams & Associates Consulting Engineers Pty Ltd, advised the solicitors acting on behalf of the applicant that:

The entity known as Williams‑Worley Rail commenced trading in 1995.  Williams‑Worley Rail was known as Williams‑Worley during the period 1995 until around 1998.  The structure of Williams‑Worley Rail from 1995 until 22 June 2005 was that of an informal and unincorporated joint venture.  On 22 June 2005 WorleyParsons Services Pty Ltd (ABN 61 001 279 812) procured all of the assets of WP Williams & Associates Consulting Engineers Pty Ltd via an Asset Purchase Agreement.  WorleyParsons Services Pty Ltd did not purchase the corporate entity WP Williams & Associates Consulting Engineers Pty Ltd.

The first application for preliminary discovery

12                  By notice of motion dated 20 December 2006, the applicant commenced an application for preliminary discovery under O 15A r 7 of the Federal Court Rules (the Rules) from each of WorleyParsons Services Pty Ltd trading as “Williams Worley Rail” (WorleyParsons) and from WP Williams & Associates Consulting Engineers Pty Ltd formerly trading as “Williams Worley Rail”.  The applicant sought discovery of documents relating to the design and the development by WorleyParsons and/or any other company or group of companies known as the Worley Group trading as Williams Worley Rail, relating to the design of each of the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car; communications between WorleyParsons and each of the second and third respondents to the proceedings concerning the design of the cars and documents relating to the examination of the wagons and infrastructure at BHP and Hamersley operations referred to in the defence.

13                  Before the hearing of the applicant’s notice of motion, WP Williams & Associates Consulting Engineers Pty Ltd provided an affidavit of discovery sworn on 9 February 2007 by Mr Warren Williams.  The discovery was confined to handwritten extracts from the diary of Mr Warren Williams recording the names of various persons with whom he had met and, on occasions, brief notes of meetings.

14                  Notwithstanding that WP Williams & Associates Consulting Engineers Pty Ltd had not contested the applicant’s notice of motion dated 20 December 2006, the applicant also obtained an order that it have liberty to apply for an order pursuant to O 15A r 3(2) of the Rules for the examination of WP Williams & Associates Consulting Engineers Pty Ltd by its appropriate officer.

15                  WorleyParsons contested the applicant’s notice of motion at a hearing before Nicholson J on 10 April 2007.  The applicant relied upon a number of affidavits which annexed documents discovered by the respondents in the substantive application.  These documents included emails, minutes, notes and other communications about the design of the relevant wagons between a number of identified persons from each of a number of identified companies including the respondents, WP Williams & Associates Consulting Engineers Pty Ltd, WorleyParsons, and BHP.

16                  On 27 April 2007, Nicholson J made orders that WorleyParsons provide preliminary discovery of the documents, the subject of the applicant’s notice of motion.  In addition, his Honour also made an order that there be liberty to the applicant to apply for an order for the examination of WorleyParsons by its appropriate officer under O 15A r 3(2) of the Rules (Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited [2007] FCA 578).

17                  WorleyParsons has, in compliance with the order of Nicholson J, given discovery.  Counsel for the applicant handed to me a copy of the affidavit of discovery and the accompanying list of documents.  The list of documents comprises, according to counsel for the applicant, 1,701 documents.

The second notice of motion for preliminary discovery

18                  On 7 May 2007, the applicant, pursuant to its liberty to apply, filed a notice of motion for the examination of WP Williams & Associates Consulting Engineers Pty Ltd by its appropriate officer, Mr Warren Williams, under O 15A r 3 of the Rules.

19                  Order 15A r 3 of the Rules provides:

3  (1)   Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this rule called “the person concerned”) and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had possession of any document or thing, tending to assist in such ascertainment, the Court may make an order under subr (2).

(2)      The Court may order that the person, and in the case of a corporation, the corporation by an appropriate officer, shall:

(a)      attend before the Court to be examined in relation to the description of the person concerned;

(b)     make discovery to the applicant of all documents which are or have been in the person’s or its possession relating to the description of the person concerned.

(3)      Where the Court makes an order under para (2)(a), it may:

(a)      order that the person or corporation against whom or which the order is made shall produce to the Court on the examination any document or thing in the person’s or its possession relating to the description of the person concerned;

(b)     direct that the examination be held before a Registrar.

20                  Order 15A r 1 states:

“description” includes the name, and (as applicable) the place of residence, registered office, place of business, occupation and sex of the person against whom the applicant desires to bring a proceeding, and also whether that person is an individual or a corporation”.

21                  The applicant’s notice of motion is supported by the affidavit of Maria Gabriella Trichilo sworn 7 May 2007 and a supplementary affidavit sworn by Ms Trichilo on 19 July 2007.  The scope of the examination of Mr Williams sought in the orders is extensive.  In summary, the applicant seeks to examine Mr Williams as to information which would or may lead to the identity or description of any person or persons who in the period 1 January 2000 to 12 December 2006, were in any way directly or indirectly involved in preparing the design brief, or in any way directly or indirectly involved in the design of the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car.  There is serious dissonance between of the scope of the examination sought in the orders and the evidentiary foundation laid by the applicant.  I will deal with this application on the basis of the evidence relied upon by the applicant.

22                  In her affidavits Ms Trichilo referred to the handwritten entries in Mr Williams’ diary and to a number of the documents from the respondents’ discovery annexed to the affidavits read in support of the applicant’s notice of motion dated 20 December 2006 before Nicholson J.  From these sources, Ms Trichilo identified WorleyParsons, BHP, Mr Derrick Owens, Mr Doug Cummings, Mr Patrick Torok, Mr Russell Donnelly, Mr John Scott and Mr Warren Williams as persons and entities having some involvement in the design pathway of the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car.  Ms Trichilo also said that another party that may have been involved in the design pathway is United Rail Group Ltd, formerly known as A Goninan Pty Ltd.  Ms Trichilo then deposed that the applicant was unable, from the documents discovered by the first and second respondents and from Mr Williams’ diary to “understand or ascertain the respective involvement of each of these parties or entities in the design pathway of the Bradken 9100 Wagon and Rio Tinto Pilbara Iron Ore Car and the applicant is thus not able to sufficiently ascertain whether or not any or each of these entities or persons are a ‘person concerned’ for the purpose of commencing proceedings in the Court against them or any of them”.

23                  Ms Trichilo went on to depose that an examination of Mr Williams as to the content of his diary would be “likely to enable, or materially assist, the applicant to ascertain the nature and extent of the involvement of each of the said persons or entities in the design pathway of the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car”.

24                  In my view, the applicant’s notice of motion should be dismissed.

25                  First, I have serious doubts whether O 15A r 3 permits the examination of Mr Warren Williams as appropriate officer, in the circumstances and for the purpose deposed to by Ms Trichilo.

26                  Order 15A r 3 permits an applicant to obtain information limited to the ascertainment of the description of the person or persons against whom he or she desires to commence a proceeding.  The definition of “description” in O 15A r 1 is indicative of the limited nature of the information which is available to an applicant under this rule ‑ being the basic information needed to commence a proceeding, namely, the name, address, sex and occupation of the person to be sued, and whether that person is a natural person, or a corporation.  The fact that O 15A r 1 provides that the definition of “description” “includes” these items of information, emphasises the limited scope of the information that is obtainable under this rule.  Accordingly, this rule will have application where the applicant has already identified a cause of action against an anonymous person or persons and desires to commence a proceeding against that person or those persons, but is unable to do so because of the absence of the necessary information.

27                  In the case of National Education Advancement Programs (NEAP) Pty Ltd v Ashton (1995) 128 FLR 334 at 343, Young J cited the circumstance of an applicant who knew that it wanted to sue the owner of a particular vessel, but did not know the identity of the owner, as an example of when the rule would apply.  Young J declined to permit a person to be examined by an applicant who wanted to discover which of his 138 customers had disclosed a confidential document.

28                  By contrast with the position under O 15A r 3, the scope of the information which can be obtained by an applicant under O 15A r 6 of the Rules is substantially wider.  Under O 15A r 6 an applicant can obtain information which goes to the question of whether it can obtain relief against a potential respondent.  Order 15A r 6 can only be invoked, however, where the applicant seeks to investigate whether it can obtain relief against an identified potential respondent.

29                  A further difference between the two rules is that under O 15A r 6 an applicant is confined to obtaining information by means of the inspection of documents provided on discovery, whereas under O 15A r 3, the applicant may be able to obtain an order for the oral examination of the person in relation to the ascertainment of the “description” of the party to be sued.

30                  In the case of G Breschi & Son Pty Ltd v AFT Ltd [1988] VR 109, Gobbo J found that r 32.03 of the Rules of the Supreme Court of Victoria (being the equivalent provision to O 15A r 3 of the Rules) could not be used to determine whether the plaintiff had a cause of action against one or more of a number of identified potential defendants.  At 113, Gobbo J observed:

It was argued that where there were a number of identified potential defendants, the Rules should be interpreted widely enough to enable an examination to occur to resolve the question as to which was the contracting party or the tortfeasor, as the case may be.  There may be good arguments of convenience for allowing a preliminary proceeding of this kind to achieve this result and so obviate the inevitable result of prospective defendants being made actual defendants in the proceedings.  But the Rule is not so expressed, and should not, in my opinion, be so interpreted.  If an applicant believes that its remedy in contract rests against one of say three identified persons but it is unable to decide which was the contracting party, it cannot, in my view, use r 32.03 to make preliminary inquiries by way of oral examination or discovery under that Rule to assist it in ascertaining which was the contracting party.

On one view, of course, such an applicant is seeking to ascertain the identity of the prospective defendant.  But on closer analysis, such an applicant is not doing so for the purpose of commencing proceedings but to decide which of a group of identified persons is most likely to be made liable or, put in another way, to assist it in establishing which person is liable.  In my view this is outside both the terms and the intent of r 32.03.  It could mean that a preliminary examination under that Rule could become very protracted, as questioning on what were essentially the issues in future proceedings covering a large range of matters might occur.  There are no such considerations of possible great inconvenience where only discovery of documents is involved.  It is thus understandable that r 32.05 should be available to assist an applicant in seeking preliminary discovery of documents from one or more prospective defendants.

31                  By reason of the considerations attendant upon oral examinations referred to by Gobbo J, it is unlikely that the framers of the Rules, having specifically excluded a power to examine a person under O 15A r 6, would have intended that an examination going to the potential liability of an identified party, could be undertaken by reference to O 15A r 3(2).

32                  In my view, by seeking to examine Mr Williams orally in respect of the “nature and extent of the involvement” of each of the persons and entities identified by Ms Trichilo for the purpose of discerning the potential liability of these persons, the applicant is attempting to blend the power to examine orally a party under O 15A r 3, with the power to obtain information under O 15A r 6, in respect of the potential liability of identified persons.

33                  The applicant relied strongly on the case of Austal Ships Pty Ltd (ACN 079 160 679) v Thurlow (No 2) [2007] FCA 202 as authority for its proposed course of conduct.  In that case, French J made orders permitting the examination of a director of nine identified corporate entities as to what the director did after receiving a confidential report because such an examination may enable the applicant to decide whether there was a basis for an action against the corporate entities.  The result in that case is consistent with the applicant’s contention.  However, it appears that French J was not required to deal with submissions on the relationship between O 15A r 3 and r 6 such as those addressed to me.  In any event, in light of the findings that I have made below, it is unnecessary for me to determine whether O 15A r 3 permits an examination of a person in the circumstances and for the purposes identified by Ms Trichilo.

34                  Second, even if, contrary to the doubts I have expressed, the applicant can invoke O 15A r 3 in the circumstances of this case, it is still necessary for the applicant to show that it has made “reasonable inquiries” before reaching the view that it is unable to commence a proceeding.  In my view, the applicant has failed to satisfy this requirement.

35                  In her affidavit of 7 May 2006, Ms Trichilo says that after having examined the documents discovered by the respondents in the originating proceeding and Mr Williams’ diary, the applicant was not able to “understand or ascertain the respective involvement of each of these parties or entities in the design pathway of the Bradken 9100 Wagon and Rio Tinto Pilbara Iron Ore Car and the applicant is thus not able to sufficiently ascertain whether or not any or each of these entities or persons are a ‘person concerned’ for the purpose of commencing proceedings in the Court against them or any of them”.

36                  Despite the fact that the applicant is in possession of the WorleyParsons discovery ordered by Nicholson J, there was no evidence of the applicant having carried out, or even having attempted to carry out an examination of any of the 1,701 documents which were discovered by WorleyParsons.  I infer, therefore, that the applicant has not inspected the documents discovered by WorleyParsons.  The very object of the application to Nicholson J was to obtain information about the design pathway of the Bradken 9100 Wagon and Rio Tinto Pilbara Iron Ore Car from a party alleged to be a major participant in that process.  The information contained in the documents discovered by WorleyParsons is, therefore, likely to be highly relevant to the ascertainment of the design pathway and the nature and extent of the involvement of the participants, particularly WorleyParsons, therein.  The failure of the applicant to examine the documents discovered by WorleyParsons before proceeding with this notice of motion, constitutes, in my view, a failure to make “reasonable inquiries” within the meaning of O 15A r 3.  This is particularly so where the relief sought by this notice of motion is founded upon an asserted lack of information about the nature or extent of the involvement in the design pathway of a number of entities or persons ‑ one of whom is WorleyParsons itself.  Accordingly, even if the applicant was otherwise able to invoke O 15A r 3, I find that the applicant has failed to make “reasonable inquiries” and relief should be refused on that ground.

37                  Third, even if I am wrong as to the inference which I have drawn, I would deny relief on the basis that I am not satisfied that there is a sufficient evidentiary foundation to warrant the exercise of the Court’s discretion in favour of taking the unusual step of authorising the oral examination of Mr Williams under O 15A r 3 of the Rules.  In her affidavits, Ms Trichilo has simply asserted that the applicant was unable to ascertain the nature and the extent of the involvement of the identified persons in the design pathway.  No weight can be placed on that assertion when there is no reference in the evidence to an examination having been made of the most likely source of information said to be lacking, namely, the WorleyParsons discovery.  A court is not obliged to accept bald assertions contained in affidavits even if there is no affidavit evidence challenging that evidence (Barnes v Commissioner of Taxation [2007] FCAFC 88).

38                  The notice of motion is dismissed with costs.

Associate:

Dated:         28 September 2007