FEDERAL COURT OF AUSTRALIA

Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201

PRACTICE AND PROCEDURE – Anton Piller order – grant of leave to applicants to inspect documents – no discretion to permit inspection to facilitate discovery or provision of particulars – adverse exercise of discretion – general discovery

Federal Court of Australia Act 1976 (Cth), s 23

Federal Court Rules 1979 (Cth), O 15, O15A, O 25, O 25B

Practice Notes 14, 24

Addison Wesley Longman Australia Pty Ltd v Kopystop Pty Ltd [2004] FCA 1518 followed

Airservices Australia v Transfield Pty Ltd [1999] FCA 886, 92 FCR 200 considered

Ammerlaan v Distillers Co (Bio-Chemicals) Ltd (1992) 58 SASR 164 followed

Aristocrat Technologies Australia Pty Ltd v Global Gaming Pty Ltd [2006] FCA 862 considered

Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2006] FCA 1707 considered

Australian Broadcasting Corp v Lenah Game Meats Pty Ltd [2001] HCA 63, 208 CLR 199 considered

Authors Workshop v Bileru Pty Ltd (1989) 88 ALR 211 followed

Aveling v UBS Capital Markets Australia Holdings Ltd [2005] FCA 415 followed

Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd [2004] FCAFC 270, 63 IPR 373 cited

Bugaj v Bates [2004] FCA 1260 followed

Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2) [2006] FCA 1001, 155 FCR 1 followed

Commissioner, Australian Federal Police v Oke [2007] FCAFC 94, 159 FCR 441 cited

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 followed

George v Rockett (1990) 170 CLR 104 followed

Halliday v Nevill (1984) 155 CLR 1 followed

Hart v Commissioner of Australian Federal Police [2002] FCAFC 392,124 FCR 384 cited

Hooper v Kirella Pty Ltd [1999] FCA 1584, 96 FCR 1 cited

Kyocera Mita Australia Pty Ltd v Mitronics Corp Pty Ltd [2005] FCA 242 followed

Liberty Financial Pty Ltd v Scott [2004] VSC 414 cited

Lifetime Investments Pty Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2006] FCA 637 considered

Long v Specifier Publications Pty Ltd (1998) 44 NSWLR 545 followed

Metso Minerals v Kalra [2007] FCA 2093 cited

Metso Minerals (Australia) Ltd v Kalra (No 2) [2007] FCA 2108 cited

Microsoft Corp v Goodview Electronics Pty Ltd [1999] FCA 754, 46 IPR 159 followed

Mulley & Marney v Manifold (1959) 103 CLR 341 followed

New South Wales v Corbett [2007] HCA 32, 230 CLR 606 followed

Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 followed

Remath Investments No 6 Pty Ltd v Savi World Transport Pty Ltd & Fraser (Unreported, VSC, Byrne J, 12 November 1997) cited

Rugs-a-Million (WA) Pty Ltd v Walker[2007] WASCA 23 cited

Salim v Loh (No 2) [2005] FCA 1417 followed

Thermax Ltd v Schott Industrial Glass Ltd [1981] FSR 289 followed

Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2004] FCA 183, 205 ALR 319 followed

Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 cited

Dockray M and Laddie H, ‘Piller Problems’ (1990) 106 LQR 601

METSO MINERALS (AUSTRALIA) LIMITED (ACN 000 197 428) & ANOR v RAJIV KALRA & ORS

NSD 2426 OF 2007

FLICK J

13 AUGUST 2008

SYDNEY

THE ORDERS OF THE COURT ARE:

1.                  The proceeding be adjourned to a date to be fixed for the making of orders and the determination of costs.

2.                  Liberty to apply on two days’ notice in writing.

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

.

REASONS FOR JUDGMENT

1                     Presently before the Court are three Notices of Motion, namely:

(a)           a Notice of Motion filed by the Applicants dated 4 July 2008 seeking orders for discovery and orders in respect to documents and materials previously seized in accordance with a search order first made pursuant to O 25B of the Federal Court Rules in December 2007 and relevantly varied in April 2008;

(b)          a Notice of Motion filed by the Respondents dated 15 July 2008 also seeking orders in respect to those seized documents and materials, including an order that the documents seized be returned, other than those referred to in the Applicants’ Amended Statement of Claim; and

(c)           a Notice of Motion of a non-party, Citic Pacific Mining Management Pty Ltd (“Citic Pacific”), seeking the suspension of the April 2008 orders. Citic Pacific is the management company for a project involving the mining and processing of magnetite iron ore at Cape Preston in Western Australia’s Pilbara region.

2                     The issues to be resolved by the Notices of Motion were summarised during the course of the hearing on 16 July 2008 as being:

(a)           whether there should be any continued inspection and access to the materials seized in December 2007 pursuant to the O 25B order; and, if so

(b)          upon what terms.

Orders as First Made and as Later Varied

3                     The search orders as made ex parte on 11 December 2007 (Metso Minerals v Kalra [2007] FCA 2093) were executed on 12, 13 and 14 December 2007.

4                     The persons against whom those orders were executed were the then Respondents, namely the First to Fourth Respondents. The “documents and materials” which were authorised to be seized were identified as being:

1.      works recording, containing or including ‘Plans for the building of grinding mills’ and any other plans or other documentation which relates to the crushing, grinding or screening of materials which can be reasonably ascertained to have been created by or for Metso Minerals (Australia) Limited ACN 000 197 428 and/or Metso Minerals Industries, Inc including the documents listed in the table at paragraph 3 below;

2.      works recording, containing or including ‘Calculations for the building of grinding mills’ and any other any other plans or other documentation which relates to the calculations for the crushing, grinding or screening of materials which can be reasonably ascertained to have been created by or for Metso Minerals (Australia) Limited and/or Metso Minerals Industries, Inc including the documents listed in the table at paragraph 3 below;

[The “table” referred to identified documents being mainly drawings].

4.      E-Mails and correspondence between any one or more of the respondents and any other person, corporation or entity attaching copies of the works in paragraphs 1 – 2 above or otherwise referring to them.

5.      Copies or parts of the Documents and Materials listed above.

5                     Once the materials and documents had been seized, the order was thereafter first varied, with the consent of those from whom the materials had been seized, on 14 December 2007 (Metso Minerals (Australia) Ltd v Kalra (No 2) [2007] FCA 2108). By consent, the parties’ legal representatives were granted photocopy access to the hard copies of documents seized. Various other orders were thereafter made by consent in February and March 2008, including orders extending the time for reporting by the independent solicitor.

6                     On 1 April 2008 the Applicants sought to further vary the orders made. A contested hearing followed. On 3 April 2008 orders were made that, relevantly, permitted the Applicants’ solicitors to disclose documents to named officers of the Applicants. It was that variation which prompted the intervention in the proceeding of Citic Pacific on 4 April 2008. That company claimed that amongst the materials seized were documents which they believed may have contained their own documents, being documents which they believed may well have been commercially confidential and possibly privileged. The access regime, as varied, was consequently suspended.

7                     Given the description of the “documents and materials” to be seized, such a contention was perhaps unexpected. Certainly when initially making the order, there then was no reason to believe that such documents as would be seized would potentially include the documents of Citic Pacific(or related entities). The very description of the documents and materials that were the subject of the order was an attempt to confine the seizure of materials to those belonging to the Applicants, being materials that improperly remained in the possession of their former employees and contractor, the then Respondents. The seizure of any documents and materials falling outside of the terms of the order obviously would not have been authorised.

8                     It was the variation of the order in April 2008 however, which permitted inspection of the documents by officers of the Applicants, which crystallised the concerns of Citic Pacific. Those concernscannot summarily be rejected. Within the documents to which access was then granted were potentially documents sent to or copied to the then Respondents by Citic Pacific concerning the iron ore project at Cape Preston.

9                     Notwithstanding the fact that at no earlier point of time had it been suggested that any entity other than the Applicants or the persons whose documents had been seized may have had any interest in those documents, in retrospect it must nevertheless be accepted that insufficient attention was given, when varying the orders as first made, to at least two factors, namely:

(a)           the identification or clarification of the purpose being pursued by the Applicants’ solicitors in accessing the documents seized; and

(b)          the need to ensure that there were no other interests to be considered other than those represented by the parties to the existing proceeding.

The potential for the seized documents to include documents commercially confidential to parties other than the Applicants and the then Respondents was clearly raised in an Affidavit of the First Respondent filed on 31 March 2008. Although the form of an order may provide considerable certainty that only a confined class of documents and materials will be seized, the Court itself must nevertheless remain alert to ensure that the interests of persons other than those appearing before it are properly protected.

10                  The orders were, however, made and varied and the Applicants’ solicitors have inspected the seized documents. The result of that access having been given is that the Applicants’ solicitors have been able to identify a number of documents relevant to the causes of action to be relied upon and have also been able to verify that some documents seized have no relevance and should thus be returned.

11                  It is against this background that the issues which emerged during the hearing on 16 July 2008 are to be resolved.

12                  Whether or not there are in fact amongst the documents and materials seized in December 2007 documents which are confidential to Citic Pacific need not presently be resolved; that which needs to be resolved is the parameters of any further inspection which should be permitted and (possibly) upon what terms, including in particular the persons who should be permitted to inspect the seized documents.

Practice Note 24

13                  Order 25B expressly confers power upon this Court to make what is now called a “Search Order”. Previously such orders were known as “Anton Piller” orders. Practice Note 24 supplements O 25B and addresses the Court’s usual practice relating to the making of such orders.

14                  Once documents have been seized, Practice Note 24relevantly envisages access being granted to those documents to the person against whom the order was made. The example form of the Penal Notice thus provides in part as follows:

INSPECTION

22. Prior to the Return Date, you or your solicitor or representative shall be entitled, in the presence of the independent solicitor, to inspect any thing removed from the premises and to:

(a) make copies of the same; and

(b) provide the independent solicitor with a signed list of things which are claimed to be privileged or confidential and which you claim ought not to be inspected by the applicant.

The very purpose of permitting the person whose documents have been seized to inspect the documents so that claims for confidentiality and privilege may be made is presumably so that such claims may be made before any access is granted to the applicant.

15                  Practice Note 24 stresses the importance of the role played by the “independent solicitor” and the qualified right of access of an applicant to the documents seized. It thus provides in part as follows:

11. The independent solicitor is an important safeguard against abuse of the order. The independent solicitor must not be a member or employee of the applicant’s firm of solicitors. The independent solicitor should be a solicitor experienced in commercial litigation…

12. Ordinarily, the applicant is not permitted, without the leave of the Court, to inspect things removed from the premises or copies of them, or to be given any information about them by members of the search party.

The importance of the role potentially to be played by an “independent solicitor” with appropriate experience has long been recognised, eg Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 at 861 per Nicholls VC. And, as Practice Note 24 makes clear, the applicant is not to inspect the seized documents “without the leave of the Court”.

16                  What is not set forth in Practice Note 24, and perhaps not surprisingly, is the basis upon which leave may be given. The bases upon which leave may be given should perhaps not be confined. Much may depend upon the circumstances of an individual case and much may also depend upon the precision with which the documents and materials that are authorised to be seized can be identified at the outset. Certainly, Practice Note 24 does not seek to confine the bases upon which leave may be granted or the purpose to be achieved in granting an applicant access to seized documents.

The Competing Positions of the Parties

17                  When the order was first made pursuant to O 25B, there had previously been filed an Application on 10 December 2007. A Statement of Claim was first filed on 22 April 2008. Again, in retrospect, directions should have been made for the filing of a Statement of Claim at a far earlier date. A specification by Senior Counsel for the Applicants of the proposed causes of action (albeit a fairly detailed exposition), should not have been endorsed by the Court as an appropriate way to proceed.  

18                  Subsequent to the Applicants’ solicitors having access to the seized documents, an Amended Statement of Claim was filed on 2 June 2008. The drafting of the amendments (or at least some of them), it may safely be assumed, was considerably facilitated by the access granted to the Applicants’ solicitors to the seized documents. The Respondents filed their Defences on 7 July 2008.

19                  The Amended Statement of Claim as now filed is a lengthy document which essentially pleads four causes of action, being:

(a)           breach of an equitable duty of confidence;

(b)          breach by the First, Second, Third and Fourth Respondents of employment consultancy agreements and confidentiality agreements;

(c)           breach of fiduciary duty by the First Respondent; and

(d)          infringement of copyright by all Respondents.

As recounted in the reasons for decision when first making the order under O 25B (Metso Minerals v Kalra [2007] FCA 2093), the First and Second Respondents were former employees of the First Applicant, Metso Minerals (Australia) Ltd. The Third Respondent was a contractor to the First Applicant and employed the Fourth Respondent. When making the order, the case being advanced against the Respondents was that there had been a breach of the duties and the agreements now pleaded. The Respondents were said to now be employed with the “Citic Group of companies”, a competitor of the Applicants. The Fifth Respondent is said to be a company under the control of the First Respondent, Mr Kalra.

20                  The search order as first made and as subsequently varied, the Respondents maintain, was relevantly made in advance of the detailed Amended Statement of Claim being filed and the Defences being filed. Those pleadings, they contend, define the ambit of the dispute between the parties and the ambit of evidence relevant or potentially relevant to the resolution of that dispute.

21                  The Applicants want to continue to access the materials seized as an aid to the discovery process and in order to be able to further particularise their claims. Although not expressed in these terms, the application is presumably an application for leave to inspect (or to continue to inspect) the documents as envisaged by Practice Note 24. Leave to continue to inspect the seized documents for the purposes identified is said by the Applicants to be desirable “in the interests of the administration of justice” and as a means to promote good “case management”.

22                  To now permit continued access for those purposes is said by the Respondents to be:

(a)           not authorised or, (alternatively) as a matter of discretion, should not be permitted; and

(b)          inconsistent with principle.

Concurrence is expressed with those submissions of the Respondents.

23                  Citic Pacific broadly supports the position advanced by the Respondents.

The Extraordinary Relief Permitted by Order 25B

24                  The determination of the ambit of the discretion of the Court to grant leave to an applicant to inspect seized documents, and the manner in which that discretion is to be exercised, must necessarily start with an acknowledgment of the extraordinary nature of the relief which may be granted pursuant to O 25B.

25                  The extraordinary nature of such relief was not put in issue by any of the parties or Citic Pacific. Nor could it be. In Microsoft Corp v Goodview Electronics Pty Ltd [1999] FCA 754 at [9], 46 IPR 159 at 161 Branson J cited with approval the following observations of Powell JA (with whom Meagher and Handley JJA agreed) in Long v Specifier Publications Pty Ltd (1998) 44 NSWLR 545 at 547:

Reduced to its essentials, an Anton Piller order is an order that the defendant to whom, or to which, it is directed, should permit the persons specified in the order to enter upon his, or its, premises, and to inspect, take copies of, and to remove, specified material, or classes of material, indicating, where appropriate, documents, articles or other forms of property. It is an extraordinary remedy, designed to obtain, and to preserve, vital evidence pending the final determination of the plaintiff's claim in the proceedings, in a case in which it can be shown that there is a high risk that, if forewarned, the defendant, would destroy, or hide, the evidence, or cause it to be removed from the jurisdiction of the court. For this reason, such orders are invariably made ex parte.

Her Honour went on to observe:

[26] … The court must, in my view, be careful to avoid the extraordinary jurisdiction of the court to make an Anton Piller order from being subverted to a mere investigatory tool for applicants or indeed, from being used for any purpose other than the preservation of vital evidence pending the hearing and determination of a proceeding.

See also: Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2004] FCA 183 at [53]–[58], 205 ALR 319 at 330–1 per Wilcox J. Leave to appeal from that decision was refused: Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd [2004] FCAFC 270, 63 IPR 373. In agreeing with the decision that leave to appeal should be refused, Emmett J there also observed that orders “in the nature of Anton Piller orders are a severe interference with the rights of citizens”: [2004] FCAFC 270 at [67]. The procedure is “obviously draconian in its results”: Thermax Ltd v Schott Industrial Glass Ltd [1981] FSR 289 at 291 per Browne-Wilkinson J. See also: Addison Wesley Longman Australia Pty Ltd v Kopystop Pty Ltd [2004] FCA 1518 at [12]. “Anton Piller orders”, it has been said,“are offensive weapons”: Dockray M and Laddie H, ‘Piller Problems’ (1990) 106 LQR 601 at 603.

26                  As occurred in the present proceeding, where there is no longer a basis for believing that documents may be destroyed, O 25B cannot then be invoked as the source of a power to vary orders previously made. Thereafter, if those orders are to be varied, recourse must be had to O 25 r 2 of the Federal Court Rules or s 23 of the Federal Court of Australia Act 1976 (Cth): Metso Minerals (Australia) Ltd v Kalra (No 2) [2007] FCA 2108.

27                  It was not disputed by any of the parties, or Citic Pacific, that leave may be granted to the Applicants to inspect the seized documents. But, other than the Applicants’ submission that leave should be granted because it is necessary (or desirable) in the “interests of the administration of justice” — and other than the competing submission that the Applicants should not be given leave to pursue inspection for the purposes relied upon — none of the parties (or Citic Pacific) attempted to identify less controversial considerations relevant to the exercise of the discretion. The identification of such considerations may throw some light upon the outer limits of the discretion and how it is to be exercised.

28                  In that context, it is considered that the discretion to allow an applicant to inspect seized documents may be exercised to permit:

(a)           an assessment to be made as to whether or not there has been compliance with the order as made and (possibly) whether any further order pursuant to O 25B may be warranted;

(b)          the identification and separation from the entirety of those documents that were in fact seized, those documents which do or may provide evidence pending the hearing and determination of a proceeding; and

(c)           the identification and separation from the entirety of those documents that were in fact seized, those documents which do not provide such evidence so that those documents may be returned.

And, in identifying those documents which should be preserved pending the final hearing and determination of a proceeding:

(d)          the search is not limited to those documents directly related to the precise cause of action then known: cf Aristocrat Technologies Australia Pty Ltd v Global Gaming Pty Ltd [2006] FCA 862 at [6]–[7] per Allsop J; Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2006] FCA 1707 at [4] per Jacobson J.

There may well be other reasons for granting leave to an applicant to inspect seized documents. All of the purposes identified, however, have one thing in common — they allow the documents which have been seized to be inspected in order to ensure that the search order has been complied with and to ensure that only evidence which should be preserved is in fact preserved pending the final determination of a proceeding.

29                  In issue in the present proceeding is whether a review of the documents seized may proceed in tandem with, and as an adjunct to, the discovery process and as an aid to the provision of particulars. The Applicants contend that such access as has to date been permitted has facilitated the identification of a large number of documents which support the case they seek to advance and which should be discovered by the Respondents. Subject to appropriate undertakings and orders as to confidentiality, the Applicants contend that continued access to the documents seized is necessary in the interests of justice and good case management.

30                  The convenience of the course being urged by the Applicants cannot be denied. Indeed, there is artificiality in possibly permitting the Applicants to continue to inspect documents seized but to deny the utility of that access as a tool in the identification of documents to be discovered by the Respondents.

31                  It is not a course, however, which it is considered is either permitted by the Federal Court Rules or (even if permitted) should as a matter of discretion be endorsed in the present proceeding.

Limits of the Discretion Conferred

32                  The primary object and purpose of O 25B is to preserve evidence pending the final determination of a proceeding.

33                  Order 25 is likewise confined to the making of interim orders. Order 25 r 2, in particular, is confined to the making of orders as to the “preservation of property”. Those seeking orders pursuant to that rule do not need to satisfy the more onerous requirements imposed by O 25B: Authors Workshop v Bileru Pty Ltd (1989) 88 ALR 211 at 215 per Lockhart J.

34                  It is considered that it is no part of the object or purpose of those provisions to facilitate the discovery processes otherwise authorised by the Rules or to facilitate the provision of further particulars. To construe those provisions as extending to such a purpose would erode both the importance attached by the common law to protecting the privacy of individuals and the constraints otherwise imposed by the Rules upon the discovery process.

35                  As a matter of principle, the common law has long been “jealous of the prima facie immunity from seizure of papers and possessions”: George v Rockett (1990) 170 CLR 104. Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ were there addressing s 679 of The Criminal Code (Qld) which authorised the issue of a search warrant and observed at 110–11:

A search warrant thus authorizes an invasion of premises without the consent of persons in lawful possession or occupation thereof. The validity of such a warrant is necessarily dependent upon the fulfilment of the conditions governing its issue. In prescribing conditions governing the issue of search warrants, the legislature has sought to balance the need for an effective criminal justice system against the need to protect the individual from arbitrary invasions of his privacy and property. Search warrants facilitate the gathering of evidence against, and the apprehension and conviction of, those who have broken the criminal law. In enacting s 679, the legislature has given primacy to the public interest in the effective administration of criminal justice over the private right of the individual to enjoy his privacy and property. The common law has long been jealous of the prima facie immunity from seizure of papers and possessions: see Holdsworth, A History of English Law, vol 10 (1938), pp 668–672. Except in the case of a warrant issued for the purpose of searching a place for stolen goods, the common law refused to countenance the issue of search warrants at all and refused to permit a constable or government official to enter private property without the permission of the occupier: Leach v Money [(1765) 19 State Tr 1001]; Entick v Carrington [(1765) 19 State Tr 1029]. Historically, the justification for these limitations on the power of entry and search was based on the rights of private property: Entick [(1765) 19 State Tr, at p 1066]. In modern times, the justification has shifted increasingly to the protection of privacy: see Feldman, The Law Relating to Entry, Search and Seizure (1986), pp 1–2.

State and Commonwealth statutes have made many exceptions to the common law position, and s 679 is a far-reaching one. Nevertheless, in construing and applying such statutes, it needs to be kept in mind that they authorize the invasion of interests which the common law has always valued highly and which, through the writ of trespass, it went to great lengths to protect. Against that background, the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature's concern to give a measure of protection to these interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation. …

The importance of the rights protected by the common law has likewise been repeatedly recognised by all courts, including this Court: eg, Commissioner, Australian Federal Police v Oke [2007] FCAFC 94 at [36]–[37], 159 FCR 441 at 448 per Branson and Lindgren JJ (Besanko J agreeing at [47]); Hart v Commissioner of Australian Federal Police [2002] FCAFC 392 at [66], 124 FCR 384 at 400 per French, Sackville and Nicholson JJ. See also: Rugs-a-Million (WA) Pty Ltd v Walker [2007] WASCA 23 at [35]–[36] per Pullin JA (Wheeler and Buss JJA agreeing).

36                  Order 25B of the Federal Court Rules is likewise a provision which gives primacy to the public interest in the administration of justice over the private interests of the individual. But it is a provision which should be strictly confined within the limits of the authority conferred and, once an order is executed, access to the materials and documents seized should be confined to the purpose for which that power was conferred. In the absence of consent, to permit access to seized materials for the purposes of facilitating discovery or the provision of particulars, as opposed to preserving the continued existence of evidence, it is considered would go beyond the authority conferred.

37                  Although there may be no enforceable right to privacy presently recognised in Australian law (cf Australian Broadcasting Corp v Lenah Game Meats Pty Ltd [2001] HCA 63, 208 CLR 199), such compulsory powers of search and seizure as are conferred by both Commonwealth and State legislation should not be construed as authorising any greater intrusion into the private affairs of individuals than is unambiguously authorised.

38                  In some circumstances there may be a “tension” between common law privileges and “the efficient exercise of statutory powers”: Halliday v Nevill (1984) 155 CLR 1 at 20 per Brennan J; New South Wales v Corbett [2007] HCA 32 at [16]–[22], 230 CLR 606 at 610–12 per Kirby J. Not in the context of the exercise of statutory powers facilitating the investigation of criminal offences, but rather in the context of construing that which is permitted by O 25B of the Federal Court Rules, there is not considered to be any such “tension”. The convenience of the position being advocated by the Applicants may well be understandable, but it is not a sufficient reason to depart from the importance accorded by the common law to an individual’s right to preserve the privacy and confidentiality of his own documents. The interests in the administration of justice should not be understated or minimised; but those interests are adequately served by the preservation of the documents and materials properly seized.

39                  No submission was advanced on behalf of the Applicants contrary to the importance attached by the common law to protecting the privacy of individuals. Their submission was that the primacy attached to the administration of justice extended to conferring authority to access the materials as an adjunct to the discovery process. This contention was said by the Applicants to have been resolved by Jacobson J in Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2006] FCA 1707. An order pursuant to O 25B in that proceeding had previously been made by Allsop J (as he then was). Consent orders were made on 7 September 2006 which provided for inspection by the Applicants and their solicitors.

40                  One of the two issues before Jacobson J was “the proper construction of the orders of 7 September 2006”. His Honour observed that those consent orders provided that a list of all documents seized which were claimed to be privileged or confidential was to be made available to the independent solicitor and the applicants’ solicitors, and that the remaining material was then to be made available for inspection by the applicants and their solicitors. The orders also provided for the filing of affidavits setting out the nature and basis of any objection or claim for privilege or confidentiality. An issue previously mentioned by His Honour was whether the seizure of documents was to be confined to those documents “directly related to the precise cause of action then known to an applicant”. His Honour referred to the order as made by Allsop J and continued:

[4] In his reasons, his Honour noted at [6] that an issue may be ventilated in due course as to the necessity for the search to be closely related to the accrued cause of action. However, his Honour thought that the better reading of O 25B was that the flexibility and amplitude of the order would be undermined if the search order was limited to the precise cause of action known.

[5] His Honour also observed at [7] that it is not the practice that the terms of orders for search and seizure are limited to material directly related to the precise cause of action then known to an applicant. He said that “[s]uch a course would tend to make the utility of this procedure doubtful”.

His Honour thereafter continued the discussion of the principles to be applied and, in the passage relied upon by the Applicants, observed:

[26] The respondents submit that the purpose of the search orders made by Allsop J on 30 June 2006 was to preserve evidence contained on various hard drives or computers located at their premises. The respondents then submit that once the evidence is preserved access to the material falls to be determined in accordance with the usual principles, that is to say categories of discovered documents would then need to be determined and access would be given in the usual way.

[27] The respondents submit that the applicants cannot overreach their usual discovery entitlements to have access beyond relevant material contained on the imaged hard drives. They submit that simply by obtaining a search order from a court the applicants do not automatically obtain an entitlement to traverse the entirety of the material retrieved by the independent experts. In my view that is not the proper construction of the orders which were consented to on 7 September 2006. I have already given my reasons for that.

[28] Moreover, it seems to me that the approach proposed by the respondents is not consistent with the usual practice which applies to search orders. The terms of O 25B of the Federal Court Rules are to be considered in light of the practice which evolved in the years following the decision in Anton Piller KG v Manufacturing Process Ltd [1976] Ch 55.

[29] Prior to the advent of the computer era, the practice was for a physical search to be conducted at the premises. Questions of relevance were not an issue, although provision was always made for the protection of material claimed to be privileged or confidential. The computer imaging which now takes place seems to me to be the equivalent of what Mr Cobden SC for the applicants called the “flick through”, which took place in the searched premises in the days when only hard copy documents and other physical materials were the subject of searches.

[30] I accept that the effect of the modern regime of computer imaging as applied in the present case is to grant an applicant a far more leisurely period in which to examine the seized materials than was previously available. This will be a particular concern where the seized materials are obtained from a trade competitor as has happened in the present case. This emphasises the draconian and exceptional nature of the remedy.

[31] However, in order to obtain a search order an applicant must satisfy the stringent conditions laid down in O 25B r 3. As I have already noted, Allsop J was satisfied that the necessary conditions were met. His Honour was also satisfied that the search should not be limited to the precise cause of action known to the applicants when the search order was obtained.

[32] It seems to me that all of that is reflected in the terms of the orders that were made on 7 September 2006 when the regime for access was adopted in the orders that I made on that date. I should add that the decision of Lindgren J in Microsoft Corp v Adelong Electronics Pty Ltd (1997) 37 IPR 283, at 291–292, though not directly in point, does suggest that a copyright owner will ordinarily be able to inspect all of the evidence in the possession of the alleged infringer without it being confined to the documents that relate to the cause of action then known to the copyright owner.

[33] In my view the approach proposed by the respondents is not consistent with the purpose for which a search order is issued. It is not for the respondents to put to the applicants the task of identifying categories of documents to which they seek access on discovery. That would be to reserve to the respondents, against whom a strong prima facie case of infringement is required for the issue of the search order, the ability to limit the documents which are inspected to those that are subject of the accrued cause of action. I do not think this has been part of the ordinary practice of the Court in relation to the execution and implementation of search orders, nor does it seem to me to be reflected in the provisions of practice note 24.

41                  One of the issues clearly being addressed by Jacobson J in that passage was the proposition that O 25B permitted the seizure of documents going beyond the “precise cause of action” then before the Court. The orders as made on 7 September 2006 were to be so construed.

42                  It is also equally clear that His Honour rejected a proposition that the respondents could confine the applicants to a search of the documents seized by reference to “categories of documents”. To so confine the applicants would confer upon the respondents “the ability to limit the documents which are inspected to those that are subject of the accrued cause of action”.

43                  But that, it is respectfully considered, is all that His Honour decided. The decision does not stand as authority for the proposition that seized documents (in the absence of consent) may be inspected as an adjunct to the discovery process or to facilitate the provision of particulars. It is simply a decision as to what may be seized and, once seized, what may be looked for when inspecting those documents. Neither of the other decisions cited by the Respondents in this proceeding — Remath Investments No 6 Pty Ltd v Savi World Transport Pty Ltd & Fraser (Unreported, VSC, Byrne J, 12 November 1997) and Liberty Financial Pty Ltd v Scott [2004] VSC 414 — provide further assistance. No decision other than that of Jacobson J was able to be identified by any of the parties, or Citic Pacific, which provided any further guidance on the issues now to be decided.

44                  In addition to considering that the course now being urged by the Applicants is inconsistent with principle and not endorsed by the decision of Jacobson J, it is further considered that that course (if accepted) would erode the constraints otherwise imposed by the Federal Court Rules in respect to discovery.

45                  The regime for discovery is that set forth in O 15 and O 15A of the Federal Court Rules.

46                  The traditional test for discovery, it will be recalled, was expressed in part in terms of whether a document would lead to a “train of enquiry” which could advance a party’s case or damage that of his opponent: Mulley & Marney v Manifold (1959) 103 CLR 341. Menzies J there observed at 345:

I now turn to the pleadings to determine what are the matters at issue between the parties, because discovery is a procedure directed towards obtaining a proper examination and determination of these issues—not towards assisting a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of his adversary.

See also: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55.

47                  The Federal Court Rules, however, were amended in 1999 with the intent of confining the ambit of documents to be discovered: Salim v Loh (No 2) [2005] FCA 1417. French J there summarised the position as follows:

[3] The 1999 amendments to the Rules, which introduced the new O 15 r 2, manifested ‘… a quite new and restrictive policy in relation to the discovery to be allowed’ in the Federal Court — South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519 per Finn J. The rule that the discovery obligation covered documents that did no more than relate in some way to a matter in issue or that might lead to a train of inquiry has been abolished. The categories required to be discovered under O 15 r 2(3) include documents that support or adversely affect another party’s case or that adversely affect a party’s own case. They do not extend to documents that might support or adversely affect a party’s case. The search obligation is limited to ‘reasonable search’.

Similarly, in Aveling v UBS Capital Markets Australia Holdings Ltd [2005] FCA 415 Lindgren J observed:

[10] The question arises: what are the principles which should guide the parties in identifying categories? They are the principles which guide the Court when ordering discovery. In ACCC v Advanced Medical Institute [[2005] FCA 366], I attempted to explain (at [19] — [21]) that rule amendments and Practice Note 14 (Discovery) of 1999 were intended to establish a régime under which discovery is more confined than it was under the former Peruvian Guano test (cf The Compagnie Financière et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55). Practice Note 14 para 3 states:

To prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by Order 15 rule 2(3).

Consistent with the more confined extent of discovery which is required, the Federal Court Rules now confer an express power to limit discovery and to make orders “necessary to prevent unnecessary discovery”: O 15 r 3(2).

48                  Order 15A provides for “Preliminary Discovery”. And again the rules contain limiting conditions: cf Airservices Australia v Transfield Pty Ltd [1999] FCA 886, 92 FCR 200. Finn J there made the following observations as to the features of both rr 3 and 6 of O 15A:

[5] I would emphasise at the outset the following features of these rules. First, while r 3 for obvious reasons allows discovery against a person whether or not that person is a possible respondent to the projected proceeding, the discovery available under r 6 is limited to discovery against the person who is the “prospective respondent”. Secondly, as has been emphasised by judges of this Court, r 6 prescribes significant limiting conditions to be satisfied before an order can be made… An applicant who can satisfy them, is allowed “to fish” for the purpose of ascertaining whether he has a case against the prospective respondent… But preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves. It does not mandate mere rummaging through another's affairs. Thirdly, while an applicant does not have to make out a prima facie case for the purpose of satisfying the r 6(a) condition that he or she has reasonable cause to believe he or she has a right to obtain relief… an applicant will not necessarily be denied preliminary discovery because he or she “already has available evidence establishing a prima facie case for the granting of relief”… Fourthly, an order for discovery under r 6 can properly be characterised as an interlocutory order… Fifthly, in Kirella Pty Ltd v Hooper (1999) 92 FCR 90; 161 ALR 447 Tamberlin J held that the provisions of O 15A do not infringe the constitutional requirement that for this Court to have jurisdiction in relation to a proceeding there must be a “matter”. …

Leave to appeal was granted and the appeal dismissed: Hooper v Kirella Pty Ltd [1999] FCA 1584, 96 FCR 1.

49                  The power conferred by O 25B is expressed to be “for the purpose of securing or preserving evidence”. The purpose, not surprisingly, is not confined to securing only that material which may thereafter be discoverable. But, to enable a party to obtain an order pursuant to O 25B and thereafter permit that party to “rummage through” the materials seized, in order to make an assessment as to those documents which that party considers would be or should be discoverable, would defeat the perimeters within which discovery is to be made by a party, especially the more confined and restricted extent of discovery which this Court now permits. It would also endorse a course which courts have properly shunned, namely a course of improperly permitting the relief authorised by O 25B to become an “investigatory tool” (Microsoft Corp v Goodview Electronics Pty Ltd [1999] FCA 754 at [26], 46 IPR 159 at 164 per Branson J; Bugaj v Bates [2004] FCA 1260 at [13] per Stone J) or a preliminary step that later facilitates such an investigation.

50                  The onerous nature of the requirements prescribed by O 25B r 3 before an order can be made is no reason to permit materials and documents seized pursuant to an order when made to be used for any purpose other than that identified in r 2, namely “the purpose of securing or preserving evidence”. The onerous nature of the requirements imposed is but a recognition of the exceptional nature of an order made under O 25B. If those requirements have been satisfied, there is thereafter conferred upon those who seize the documents no licence to use them for the collateral purpose of assisting in the discovery to be provided by an opponent.

51                  Order 25B does not permit the seizure of documents or other materials in order to isolate and preserve a pool from which the Applicants can conduct a self-determined regime of preliminary discovery.

Discretion?

52                  If this approach to the construction of O 25B be incorrect, and should it be concluded that there remains a discretion to permit seized materials and documents to be reviewed so as to facilitate the discovery process and to facilitate the provision of particulars, that discretion would have been exercised adversely to the Applicants.

53                  In the present proceeding, such review as has been undertaken of the seized materials has placed the Applicants in the position whereby they have been able to identify a number of documents which they contend support the claims they seek to advance. It has presumably also enabled the Applicants better to draft and to amend the Statement of Claim as first filed. Whether the Applicants should have been able to review the seized documents to the extent that they did, even if the access regime evolved largely with the concurrence of the parties, may presently be left to one side. Whether they should have been able to review those documents, without the Court at an earlier point of time considering the interests of those entities which now claim to have an interest in preserving the commercial confidentiality of documents which they claim to be their own documents, may also presently be left to one side. Although such matters may be left to one side for present purposes, it must be recognised that the Court should have been more cognisant of the potential interests of persons not represented in this proceeding — even if those interests were not otherwise raised by the parties.

54                  The fact remains that the Applicants have reviewed the seized documents and that review process has facilitated the drafting of the existing Amended Statement of Claim. No submission was advanced by the Applicants that further amendments to the causes of action as pleaded were presently being contemplated.

55                  In the absence of the consent of the Respondents (and Citic Pacific), and as a matter of discretion, it is considered that a compelling reason to deny the Applicants any further access to the seized materials to facilitate discovery, or for the purpose of enabling the Applicants to provide further and better particulars of their claims, is the fact that the Respondents have consented to an order for general discovery. There is no suggestion that the Respondents (properly advised) would not fully comply with an order requiring general discovery.

56                  Limited support for a conclusion that the Applicants themselves are content to rely upon discovery as the means whereby they are to provide further and better particulars can be gleaned from the fact that the Amended Statement of Claim itself states that such particulars will or may be provided “following discovery”.

57                  Provision, of course, is made in O 15 r 5 of the Federal Court Rules for the making of an order that a party give general discovery. The fundamental policy behind discovery is to ensure that litigation is decided upon the merits and that cases are not decided by ambush and surprise: Ammerlaan v Distillers Co (Bio-Chemicals) Ltd (1992) 58 SASR 164 at 173 per Olsson J. Such discovery as is ordered is a matter for the discretion of the Court. As a general rule the Court will not order a party to give general discovery: Kyocera Mita Australia Pty Ltd v Mitronics Corp Pty Ltd [2005] FCA 242 at [5] per Stone J. Subsequent to the amendments to this Court’s Rules in 1999 and the promulgation of Practice Note 14, discovery is normally limited to the circumstances of a particular case.

58                  In the circumstances of the present case there is unquestionably going to be substantial dispute as to ownership of particular documents and drawings. And where, as there is at present, reason to believe that the markings and insignia on particular documents of the Applicants may have been improperly removed and replaced with those of the Respondents or others, it would be difficult to limit discovery to those categories mentioned in O 15 r 2(3). An order for general discovery by all parties, it is considered, is the most expeditious and appropriate means to ensure that all documents relevant to the merits of the issues to be resolved are disclosed. The appropriateness of making such an order may also be informed by the consent of the parties to such an order being made.

59                  Even in the absence of any consideration being given to whether leave should be given to inspect documents seized pursuant to O 25B, an order for general discovery is considered appropriate. Consent to an order for general discovery should not be seen by a party from whom documents have been seized as the “price” they have to pay to resist leave being given to an opponent to inspect those documents or to continue to inspect those documents. Consideration of the two matters should, it is considered, initially proceed independently. But if (as in the present proceeding) an order for general discovery is warranted, the making of that order is a compelling reason to deny leave being given to an applicant to inspect seized documents — except for the limited purposes of ensuring compliance with the order itself and ensuring the return of documents not falling within the ambit of the order authorising seizure.

60                  Difficulties envisaged by the Applicants in making decisions as to which particular documents should or should not be discovered pursuant to a general discovery order are considered, with respect, to be more theoretical than real. A deficiency urged by the Applicants envisaged a drawing which may on its face purport to suggest its origins as being within the camp of the Respondents; whereas the Applicants may wish to contend that it was their own drawing which had improperly been altered to delete any reference to its having originally emanated from the Applicants’ camp. The prospect of there being such a document cannot summarily be rejected. Such evidence as has been filed permits of an inference that at least someone within the Respondents’ camp has attempted to pursue such a course of altering documents to conceal their original identity. Whether such evidence is answered at a final hearing, and whether any such inference should ultimately be drawn, remains a matter of course for the final hearing. No view could be formed in respect to such a course of transition of a drawing or drawings without the benefit of the Respondents’ evidence.

61                  But it is not considered that such difficulties as may emerge are not satisfactorily resolved by an order for general discovery. It is understood that Senior Counsel for the Respondents accepts that an order for general discovery would extend to an obligation to discover any such document.

62                  In consenting to an order requiring general discovery, it is not understood that the parties are merely consenting to an order requiring the discovery of only those documents as are contemplated by O 15 r 2(3): Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2) [2006] FCA 1001 at [153], 155 FCR 1 at 22–3 per Collier J. It is understood that the parties are consenting to what was described by Beaumont J as an order in the “traditional form” requiring discovery of those documents which “may” — not “must” — either directly or indirectly enable a party to advance its own case or damage that of his adversary: Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109. Beaumont J there observed:

[64] In their traditional form, rules of court required, under a general discovery order, that the party disclose any document in its possession, custody or control “relating to any matter in question” in the proceeding; that is to say, any document which may — not which must — either directly, or indirectly, enable the party requiring the discovery either to advance its own case, or to damage the case of its adversary, or which may fairly lead to a train of inquiry which may have either of those two consequences (see, eg Compagnie Financière et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 at 62–63).

[65] The nature and extent of disclosure, in terms of the adjectival “relevance” of documents for the purposes of a general order for discovery in its traditional form is explained in Halsbury's Laws of England 4th ed, Vol 13 at [38] to the following effect:

·    So long as they are likely to throw light on the case, documents “relate to a matter in question”, whether or not admissible in evidence.

·    A document may be “relevant” for discovery purposes by reason of its character (ie it is a document of a particular type); or by reason of its contents.

·    Discovery will not be ordered in respect of an allegation not made in the pleadings or particulars, nor will discovery be allowed to enable a party to “fish” for witnesses, or for a new case, ie to enable the party to frame a new case.

·    Each case must be considered according to the issues raised; but where there are numerous documents of slight relevance and it would be oppressive to produce them all, some limitations may be imposed.

[66] The foregoing is also an accurate description of Australian practice and procedure (see, generally, Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 23 – 24).

[67] Under a traditional general discovery order, the following methods are available to obtain further disclosure where a party seeks to show that “relevant” documents have been omitted from the list: (1) It may require verification of the list; (2) It may apply for a further and better list, whether verified or not, either in general terms, or limited to certain classes of documents. (The power to order a further and better list is parallel with, and may be combined with, the court's power, on application, to order the disclosure of particulars of specific documents.); (3) It may apply for an affidavit as to specific documents or classes of documents; (4) In certain special circumstances, it may apply for leave to interrogate as to particular documents (Halsbury, op. cit. at [48]).

His Honour there further observed that:

[70] … where, extraordinarily, the Court judges that it is, in the particular circumstances, appropriate to order general discovery, in the absence of any special (ad hoc) restriction, the traditional (broad) obligation to discover any document relating to any matter in question in the proceeding will continue to apply.

It is this “traditional (broad) obligation” which has been relied upon as a discretionary reason — should it be a matter for discretion — to confine the tasks to be pursued by the Applicants’ solicitors in their review of the seized documents.

63                  A final consideration potentially relevant to an exercise of discretion remains to be addressed. When first making the search order, it was considered that the Applicants had more than comfortably satisfied the requirements of O 25B r 3. Instances had been provided by Senior Counsel for the Applicants of documents initially bearing a Metso insignia which subsequently appeared without that insignia. One email from the First Respondent to his son on 14 October 2007 annexed a document describing a “MODULAR MILL TROMMEL CONFIGURATOR” bearing the “metso minerals” insignia and stated:

“Unprotect this spread sheet”

An inference of improper “appropriation” of the Applicants’ confidential information was readily available. Any such inference was only further supported by evidence as to the deletion of materials from computer hard drives.

64                  The Respondents have to date not attempted to provide any explanation to counter the conclusions reached when making the initial order. The Respondents, it must be acknowledged, are well-represented. The reasons why no explanation has been forthcoming may be various — the legal representatives may have formed the view that the search order has already been made and the materials and documents seized; they may have formed the view that they would prefer to wait until the final hearing to explain their position. All of those matters remain for future consideration. Findings of fact obviously can only be finally made when all of the evidence is available and tested.

65                  But potentially relevant to the exercise of the discretion to permit the continued inspection of the documents seized is the basis upon which the search order was first made, and which remains unanswered. On balance, however, it is not considered that that factor is of present relevance or, if relevant, should be given such weight as to permit inspection to continue for the purposes advanced by the Applicants. The inferences previously drawn were of relevance to the making of the order; of relevance to the exercise of the discretion to permit inspection to continue is whether such inspection is necessary to ensure that the merits of the dispute dividing the parties can be fully and properly litigated. It is considered that the ability to ventilate all of the merits of the dispute is sufficiently preserved by an order for general discovery.

Grant of Leave to Continue Inspection?

66                  In the absence of the consent of the Respondents to a grant of leave to the Applicants to continue their inspection of the seized documents, it is thus considered that no further inspection should occur, except for the limited purpose of ensuring compliance with the search order.

67                  Such documents as have presently been identified as having no continuing relevance to the proceeding, together with any documents that have been seized which fall outside the terms of the order as made and as varied, should be returned to the persons from whom they were seized. “[I]ntrusions into personal privacy and commercial confidentiality” should be minimised: cf Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2004] FCA 183 at [82], 205 ALR 319 at 336 per Wilcox J.

68                  The Respondents, by their Notice of Motion, seek the return of all documents seized and, it may safely be assumed, do not consent to any further inspection occurring. They may wish to reconsider their position, as may the Applicants, in light of the conclusions reached as to the limits of the right of inspection permitted by the Federal Court Rules. It may be noted that in Lifetime Investments Pty Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2006] FCA 637 an order was made for the return of documents to the solicitor of a party apparently “to facilitate completion of discovery”.

69                  Subject to the return of those documents which have no continuing relevance to the proceeding, it is not however considered that the remaining documents seized should be returned — at least at this stage. No case has sought to be advanced by those from whom the documents were seized that the continued retention of those documents is causing them any inconvenience or prejudice. In the absence of any such contention, and notwithstanding the fact that a copy of the documents seized remains available to the Court, it is presently considered that the documents seized should remain available pending the resolution of the proceeding.

70                  Pursuant to the terms of the orders made, records have also been kept of those who have inspected the seized documents and materials. Citic Pacific should be provided with a copy of those records that disclose the identity of those officers of the Applicants who have been given access to documents seized and the documents in fact inspected (if any).

71                  Outstanding is the prospect that agreement may be reached between the parties as to the further inspection of the seized documents. Even if there be agreement between the parties, the leave of the Court to continue the inspection of the documents or other materials would be required. In granting any such further leave, consideration would have to be given to protecting the interests asserted by Citic Pacific.

72                  If continued inspection was to be permitted, a further matter addressed during the course of the hearing on 16 July 2008 was the terms upon which that review should be undertaken. It is most probably unnecessary to make any comment upon such terms as may be considered appropriate. But the following summary observations are made to address the prospect that agreement may be reached.

73                  The difficulties with formulating any access regime to documents which potentially gives rise to competing claims as to commercial confidentiality, and which may well also give rise to claims for privilege, are not uncommon. Appropriately drafted undertakings provide a considerable measure of comfort to ensure that the competing claims are properly protected. But no regime is without the prospect of inadvertent error, as has already occurred in the present proceeding. That error, it should be noted, has not occasioned any prejudice and was (quite properly) not the subject of any adverse submission by either the Respondents or Citic Pacific.

74                  The particular difficulties as they have emerged from the competing submissions in the present proceeding seem to focus upon:

(a)           who should first review the seized documents — should the Applicants be permitted to continue their review or should the solicitors and counsel for those entities claiming to have a commercial interest in those documents be permitted to review the documents in advance?

(b)          if the Applicants are to continue to review the seized documents, who if any of the officers or employees of the Applicants should be permitted to participate in that process?

(c)           if the Applicants are to continue to review the seized documents, to whom should they be permitted to disclose particular categories of documents?

(d)          the fact that some documents have been reviewed pursuant to an earlier access regime, that regime being suspended on 12 April 2008 — which (if any) of those documents should be identified and disclosed to Citic Pacific and upon what terms?

75                  A submission advanced by Citic Pacific was that if the seized documents are not to be returned, the Court should first permit Citic Pacific to review those documents. One order sought in their proposed “Access Regime” is drafted as follows:

2    Upon execution of a confidentiality undertaking in the form annexed and marked “B”, the solicitors and counsel for the Third Parties shall be permitted by the Applicants’ solicitors to review and analyse copies of each of the Seized Documents, for the purpose of ascertaining whether any of those documents (including whole files or emails, deleted files of emails, or file or email residue data) contain the Third Parties’ confidential or commercially sensitive information…

Practice Note 24, it will be recalled, annexes a draft “Penal Notice” which contemplates that the person upon whom the order is executed may “inspect any thing removed from the premises”. There is no comparable “right” of inspection conferred upon entities who may claim a like entitlement to confidentiality or privilege. The use of the term “right”, it should be acknowledged, may well not be apposite — Practice Note 24 simply being an attempt to record the usual “practice” of the Court. However it be described, the interests of those whose concerns should be addressed when granting or refusing leave are interests that should be addressed when exercising the discretion.

76                  Both the Applicants and Citic Pacific contend that the seized documents include their own commercially confidential information. It is the Applicants, however, who successfully applied for the order as made under O 25B and it is considered that they — if there be consent — should first be permitted to review the documents that were seized, subject to appropriately drafted confidentiality agreements. It is the Applicants, after all, who satisfied the requirements imposed by O 25B and it is the Applicants who have filed evidence substantiating their concerns. The order as sought in Citic Pacific’s Notice of Motion seeking prior access would thus not have been made.

77                  The Applicants’ proposal is that the review of the seized documents, which was suspended on 12 April 2008 on the application of Citic Pacific, should continue. Key elements of their proposal are that:

(a)           those documents which they maintain are clearly their own documents should be able to be shown to any person. Those documents, they maintain, can clearly be identified by reference to the letterhead or other insignia appearing on the face of the documents;

(b)          documents which have been sent to or received by identified individuals should be able to be disclosed to those persons, and documents which on their face disclose the author of the document should be able to be disclosed to that author;

(c)           other documents should be able to be disclosed to “Identified Individuals, counsel and any expert witnesses or potential expert witnesses subject to counsel and any expert witness first executing a Confidentiality Undertaking”; and

(d)          with the exception of those documents which the Applicants maintain are clearly their own documents, the remaining documents should be disclosed to the solicitors and counsel for Citic Pacific — again subject to the execution of appropriately drafted confidentiality agreements.

78                  Where it is common ground that documents are clearly those of the Applicants, it is not considered that there is any reason why those documents cannot freely be disclosed to the Applicants and their advisers.

79                  That element which occasioned concern was the proposal to allow “Identified Individuals” to look at particular documents. Those persons were identified as being Messrs Hendrix, Hicks and Leonard. Mr Hendrix is the Engineering Manager of the Second Applicant, Metso Minerals Industries, Inc. Mr Hicks is the Chief Engineer of the Second Applicant. And Mr Leonard is the Senior Vice President of the Second Applicant. An Affidavit of Mr Leonard filed by the Applicants states that documents would need to be reviewed by:

Metso personnel with sufficient experience with Metso design documentation (including engineering drawings) to be able to recognise designs or information created by Metso where the documentation is not labelled or has a label indicating that another company created or owns it. If there are a large number of Files, multiple personnel will need access to the documents to complete the necessary review in an efficient manner and to minimise the impact on Metso’s day-to-day business.

80                  Mr Leonard identified five persons who could provide such assistance, in addition to himself.

81                  Even if there be agreement as to the continued inspection of the seized documents, it is accepted that the solicitors and counsel for the Applicants need the assistance of a person with sufficient knowledge to provide the input described by Mr Leonard. The legal representatives of the Applicants, with respect, would be the first to acknowledge that they would not have the expertise to identify (for example) an engineering drawing as originating from their clients in the absence of a marking or insignia unequivocally disclosing its origins. An independent expert would potentially be able to provide such assistance, but only after a considerable period of time familiarising himself with the content of the Applicants’ engineering knowledge.

82                  The most expedient and efficient manner in which the Applicants’ solicitors and counsel can gain the assistance they need is to have the input of one or other of the persons identified by Mr Leonard. It is not understood that there is any particular objection by the Respondents or Citic Pacific to any particular person; their objection is to any person internal to the Applicants’ operations having access to what they maintain are their documents. Their concern cannot be dismissed. But it can be addressed in part by confining the Applicants to a single person. The price paid for restricting the assistance to a single person is that the review process could not be undertaken as expeditiously and as efficiently as if two or more persons were assigned to the task. Restricting the assistance to be provided to the Applicants’ solicitors and counsel to a single person will inevitably prolong any review process — it will take the Applicants longer to review the documents and it will delay the return to the Respondents of documents which are of no relevance to the existing proceeding. In the absence of consent by the Respondents and Citic Pacific to more than one person providing the assistance required, it is considered that assistance should be confined to a single individual.

83                  That assistance will enable the Applicants’ solicitors to identify those documents which they claim are their own documents, even if they do not bear any letterhead, insignia or other marking identifying them as those of the Applicants.

84                  The Applicants’ proposed “Access Regime” properly contemplates that documents which their solicitors maintain should be retained should be disclosed to Citic Pacific’s solicitors and counsel with a view to claims being made (if considered appropriate) in respect to confidentiality or privilege. The proposed “Access Regime”, as presently drafted, confines disclosure to the solicitors and counsel for Citic Pacific, again upon confidentiality agreements being executed. Nothing is presently said as to whether those solicitors should be permitted to obtain instructions from an officer or employee within their camp, in the same manner as is contemplated by the Applicants. If such a request is made by Citic Pacific, it is considered that their solicitors should be permitted to obtain the same assistance as that to be provided to the Applicants. And for the same reasons.

Conclusions

85                  The Applicants are to bring in draft orders which give effect to these reasons within 14 days. If those orders are not by consent, liberty is reserved to the parties to bring the matter back for further argument.

86                  The conclusion as to the limited purpose for which the seized documents may be inspected is a conclusion which, it is considered, is dictated by the limited purpose to be served by an order under O 25B and by the terms of the Federal Court Rules and by common law principles protecting the privacy of individuals. In the absence of agreement between the parties and Citic Pacific, the impracticality of the result nevertheless remains. All concerned can only be encouraged to see if a more practical outcome can be achieved.

87                  In those exceptional circumstances where a party can satisfy the requirements of O 25B, and where leave is granted to inspect the documents seized, it may be considered desirable that the right of inspection should also facilitate the giving of discovery and the provision of particulars. To conclude otherwise may be seen as placing a party’s solicitors in the position of having inspected documents for a seemingly unnecessarily confined purpose. But that conclusion is dictated by the Rules as presently drafted.

88                  If there remain other outstanding difficulties with the form of the proposed Undertakings which cannot be resolved, those difficulties can be addressed. In the absence of any reason being urged to reach a different conclusion, it is envisaged that documents produced on discovery which give rise to the same concerns as to commercial confidentiality and privilege should also be subject to the same Undertakings as those now being drafted in respect to possible access to the seized documents.

89                  Although short argument would be entertained (if necessary) in respect to the costs incurred in the hearing of the present Motions, there is not presently considered to be any reason why costs should not follow the event. It is thus envisaged that the Applicants should pay the costs of the Respondents and of Citic Pacific.

Orders

90                  The orders of the Court are:

1.             The proceeding be adjourned to a date to be fixed for the making of orders and the determination of costs.

2.             Liberty to apply on two days’ notice in writing.

Associate:

Dated:         13 August 2008