FEDERAL COURT OF AUSTRALIA

Austal Ships Pty Ltd (ACN 079 160 679) v Incat Australia Pty Ltd
(ACN 051 556 855) (No 3) [2010] FCA 795

THE COURT ORDERS THAT:

Upon the undertaking of senior counsel that the respondents will answer 932 of the interrogatories administered by the applicant it is ordered that:

1.                  the interrogatories be sworn, filed and served within 28 days;

2.                  the applicant’s motion for interrogatories and ancillary relief filed 5 May 2010 be dismissed.

3.                  unless within 14 days submissions to the contrary are filed and served by the parties, the applicant do pay the respondents’ costs of the motion to be taxed if not agreed.

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

REASONS FOR JUDGMENT

INTRODUCTION

1                     The applicant (Austal) applies by motion for orders as follows:

…

2.         The applicant do have leave to formally file and serve a notice requiring the below mentioned parties, as duly served, to answer interrogatories relating to matters in question in the within proceedings as between the applicant and the parties served, such notice to answer interrogatories being deemed for purposes of this order to be in the following form, namely:

(a)        applicant’s substituted minute of proposed interrogatories dated 22 January 2010, as administered to Incat Europe ApS, the fifth respondent;

(b)        applicant’s substituted minute of proposed interrogatories dated 22 January 2010, as administered to Incat Europe Limited, the sixth respondent;

(c)        applicant’s substituted minute of proposed interrogatories dated 22 January 2010, as administered to Robert Frederick Clifford, the seventh respondent;

(d)        applicant’s substituted minute of proposed interrogatories dated 22 January 2010, as administered to Justin Paul Merrigan, the eighth respondent; and

(e)        applicant’s substituted minute of proposed interrogatories dated 22 January 2010, as administered to Stephen James Thurlow, the ninth respondent,

and for purposes of this order, any further requirements for filing and service of the said notice to answer interrogatories be dispensed with.

3.         The respondents, and each of them, as referred to in Order 1 hereof, (sic-Order 2), give answer to the subject interrogatories by affidavit verifying a statement of the subject respondent, and each of them, with the deponents of the required affidavits being:

(a)        in respect of the fifth respondent, Stephen James Thurlow, as a director of that company, alternatively, the managing director of that company if that person be other than the ninth respondent;

(b)        in respect of the sixth respondent, Michael Andrew Weston of Langtry House, 40 La Motte Street, St Helier, Jersey (Channel Islands), a director of that company, alternatively, the managing director of that company if that person be other than the ninth respondent;

(c)        in respect of the seventh respondent, by himself;

(d)        in respect of the eight respondent, by himself; and

(e)        in respect of the ninth respondent, by himself.

4.         (a)        The respondents’ schedule of objections to the applicant’s proposed interrogatories as directed to the following respondents, dated 3 March 2010, do stand as the objections to answering the subject interrogatories as identified in the subject schedule of objections, subject, however, to the applicant being entitled to contend at the hearing of this Notice of Motion that the objections are or any of them is not sufficient, and for the Court to determine the sufficiency of the objections following submissions from the parties on the point or, in default thereof, the Court determining the sufficiency of the subject objection itself.

(b)        in the event that the Court so determines that any such objection is not sufficient, the respondent relying upon any such objection, not be entitled to object to answering that interrogatory in a statement in answer to the said interrogatories being the:

(i)         respondents’ schedule of objections to applicant’s proposed interrogatories for the fifth and sixth respondents; and

(ii)        respondents’ schedule of objections to applicant’s proposed interrogatories for the seventh, eighth and ninth respondents.

5.         The obligation on the fifth, sixth, seventh, eighth and ninth respondents, and each of them, to provide a statement in answer to interrogatories as approved by the Court, pursuant to the orders sought in paragraph 3 above, requires the said respondents, and each of them, to:

(a)        answer to the best of its/his knowledge, information and belief;

(b)        make all proper enquiries and efforts to ascertain such information as may be acquired from servants or agents who have or may have gained information in that capacity;

(c)        insofar as the subject interrogatories require identification of documents, make all proper enquiries and efforts to identify all relevant documents in its/his possession, custody or power; and

(d)        insofar as such documents, as referred to in (c) above are not in the possession of the subject respondent, such obligation is to extend to:

(i)         making enquiries from the person or persons in whose possession any such documents now are; and

(ii)        specify in the affidavit verifying answers to the subject interrogatories, details of the enquiries so undertaken by the subject deponent; and

(e)        state whether any such documents which otherwise would have been discoverable have been destroyed since 1 November 2004 to 16 June 2006 and, if so:

(i)         identify which documents or classes of documents were so destroyed; and

(ii)        describe the substance of the contents of same;

(iii)       state the date; and

(iv)       identity of the source and, where relevant, the recipient of any such document,

6.         The applicant do have liberty to apply to the Court in relation to the implementation of Order 2 above, such liberty to include applying for an order for examination of any deponent in the event of an insufficient answer to an interrogatory, under O 16 r 8(1)(a) or (b).

7.         Such further or other orders and directions as the Court may deem appropriate.

8.         Costs of this application be reserved. 

2                     Austal seeks to administer 459 interrogatories totalling approximately 1,149 separately numbered questions.  The respondents complain that many of them are repetitive; comprise more than one question; are in the nature of leading questions; and are in their nature entirely fishing. 

3                     In Austal Ships Pty Ltd (ACN 079 160 679) v Incat Australia Pty Ltd (ACN 051 556 855) [2009] FCA 368 (Austal No 1), I indicated that I may grant leave for Austal to administer what I described as limited interrogatories because of the unusual circumstances of the case.  Over a thousand separate questions was not what I had in mind. 

4                     As I made clear in Austal No 1, Austal has established one breach which has been admitted.  The balance of the statement of claim is at present bare assertion despite it having already obtained orders for pre-action discovery and orders for the cross-examination of several of the respondents.  That cross-examination has been carried out.  Austal is no further advanced in its case. 

THE PRINCIPLES

5                     Relevantly, O 16 of the Federal Court Rules provides as follows:

1          Interrogatories by notice — Form 23

(1)        The Court may, in its discretion, give leave to any party to file and serve upon any other party, within the period limited by the Court for this purpose, a notice requiring the party served to answer interrogatories relating to any matter in question between the interrogating party and the party served.

(2)        The notice to answer interrogatories shall be made in, or substantially in, the form numbered 23 in Schedule 1.

2          Answers pursuant to notice

(1)        A party required to answer interrogatories shall do so within such time, not being less than 14 days after service on him of the notice under rule 1, as may be specified in the notice.

(2)        A party shall, subject to rule 3, answer interrogatories by filing and serving on the party requiring the answers:

(a)        a statement in accordance with rule 6; and

(b)        an affidavit verifying that statement.

3          Limitation of interrogatories by notice

(1)        The Court may, before or after any party has been required under rule 1 to answer interrogatories, order that answers to interrogatories under rule 2 by any party shall not be required, or shall be limited to such interrogatories or classes of interrogatories, or to such of the matters in question in the proceeding, as may be specified in the order.

(2)        Where any party has been required under rule 1 to answer any interrogatory, the Court may order that an answer to that interrogatory shall not be required or may limit the extent to which an answer shall be required.

(3)        The Court may make such orders under subrules (1) and (2) as are necessary to prevent unnecessary interrogatories or unnecessary answers to interrogatories.

4          Co respondents

Where an applicant claims relief against two or more respondents, and requires any respondent to answer interrogatories under rule 2, that respondent shall serve his statement in answer and affidavit not only on the applicant but also on each other respondent who has entered an appearance.

5          Order to answer

The Court may, at any stage of the proceeding, order any party to answer interrogatories either in accordance with rule 2 or in accordance with such directions as the Court may give.

6          Contents of statement — Form 24

(1)        A statement in answer to interrogatories required by or under this Order must, unless the Court otherwise orders, be in accordance with Form 24 and conform to the requirements of this rule.

(2)        A statement in answer to interrogatories shall deal with each interrogatory specifically either:

(a)        by answering the substance of the interrogatory without evasion; or

(b)        by objecting to answer the interrogatory on one or more of the grounds mentioned in subrule (3) and briefly stating the facts on which the objection is based.

(3)        Subject to subrule (4), a party may object to answering any interrogatory on the following grounds but no other:

(a)        where the answering is not required by an order, that the interrogatory does not relate to any matter in question between him and the party requiring the answer;

(b)        that the interrogatory is vexatious or oppressive; and

(c)        privilege.

(4)        On an application under subrule 3 (2) or rule 5 in respect of any interrogatory, the Court may require the applicant to specify on what grounds he objects to answering that interrogatory and may determine the sufficiency of the objection and, if the Court determines that the objection is not sufficient, the applicant shall not be entitled to object to answering that interrogatory in a statement in answer to interrogatories.

…

6                     As will be apparent from r 6, an interrogatory may be objected to by a party when it is too wide, fishing or immaterial:  Aspar Autobarn Co-operative Society v Dovala Pty Ltd (1987) 16 FCR 284.  It may be objected to as being vexatious when it is fishing Aspar at 287.  It can be objected to on grounds of being oppressive if it is unfair or unreasonable in the sense that the burden of answering it far outweighs the likely benefit which may be adduced from the answer. 

7                     The administering and answering of interrogatories is a form of discovery.  Just as this Court has now substantially limited the scope for wide ranging discovery, the circumstances on which leave to administer interrogatories will be granted is increasingly rare.  That is not to say that interrogatories and discovery of documents are mutually exclusive.  It is clear that they may overlap on occasions.  In this Court it will be unlikely that interrogatories will be permitted as a substitute for discovery of documents.

8                     Interrogatories which are directed towards ascertaining the contents of documents may be an exercise in fishing and are not generally permissible:  WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 181-182 per Brennan J, and at 191-191 per Lockhart J.  Although the respondents are prepared to answers 82% of the questions asked by way of interrogatories, they rely upon my observations in Austal No 1 (at [154]) in which I said ‘[a]t this stage, there is no significant evidence at all in relation to the allegations concerning Higashinihon Ferries, Spanish Acciona and PATT’ and (at [161]) where I said:

I would accept that there is no evidence in the witness statements of Mr Christopher Gerrard, Mr Christopher Pemberton, Mr Darren Edwards, Mr James Bennett, Mr Richard Regan, Mr Kobayashi Toyohiko and Mr Neville Anthony Armstrong which positively establishes usage of the Austal Reports in connection with Higashinihon, Spanish Acciona or PATT.

9                     The respondents stress, and I agree, that this case has very similar characteristics to those considered by the Full Court in WA Pines 41 FLR 175 where Lockhart J said (at 190-191) (footnotes omitted):

There are four objects of interrogatories: 1. To obtain admissions as to facts which will support the case of the interrogating party. 2. To obtain admissions which will destroy or damage the case of the party interrogated. 3. Interrogatories which are in the nature of a request for further and better particulars. 4. Interrogatories which seek to obtain accounts from a party occupying a fiduciary position.

However, among the well-established limitations upon the power to interrogate and to discovery of documents is the rule that this power cannot be used for the purpose of "fishing".

In Hennessy v. Wright (No. 2) (1888) 24 Q.B.D. 445 (reported as a note to Parnell v. Walter (1890) 24 Q.B.D. 441) Lord Esher M.R. said: "In other words, the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present. If that is the effect of the interrogatories, it seems to me that they come within the description of `fishing' interrogatories, and on that ground cannot be allowed.

The moment it appears that questions are asked and answers insisted upon in order to enable the party to see if he can find a case, either of complaint or defence, of which at present he knows nothing, and which will be a different case from that which he now makes, the rule against `fishing' interrogatories applies".

In Lane v. Gray (1873) L.R. 16 Eq. Cas. 552 Sir Richard Malins V.C. held that the court's power to make an order for discovery was a discretionary power to order production when it shall appear to the court to be right to do so. His Lordship refused the application until the case had proceeded further and the plaintiff made out a prima facie case in support of her claim. The plaintiff had brought a suit claiming to be entitled to a share in the estate of an intestate as an alleged next of kin. It appears that discovery was refused because all that the plaintiff had done at that stage of the case was to allege that she was next of kin of the intestate and there was no evidence to support her assertion. The estate of intestates were frequently claimed by persons of whom many had no foundation for their claims; but by obtaining on discovery production of documents belonging to the intestate they obtained information by means of which fresh fictitious cases were in many instances manufactured.

In Associated Dominions Assurance Society Pty. Ltd. v. John Fairfax & Sons Pty. Ltd. (1952) 72 W.N. (N.S.W.) 2, Owen J. said: "A `fishing expedition', in the sense in which the phrase has been used in the law, means, as I understand it, that a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding out whether there are any there or not". See also Bray on Discovery (1885), pp. 13, 16, 98 and 461.

In the present case the appellant seeks discovery and leave to interrogate before there is any evidence that the respondent did not have the belief required by s. 155(1). There are the barest allegations in par. 5 and 6 of the statement of claim. They are denied by the respondent in his defence who, in addition, swore an affidavit that he held the relevant belief required by the section. Brochures which were published obviously by, or with the concurrence of, the appellant contain statements which at the very least are not inconsistent with the respondent's statement of belief. Together with the form of the notice under the section that is all the material on which this Court is asked to act and to permit discovery and administration of interrogatories.

"This is not merely clutching at a non-existent straw, but expecting to be carried by it": per Menzies J. in Mulley v. Manifold (1959) 103 C.L.R. 341, at p. 345.

I have no doubt that the appellant is seeking to use the weapons nf (sic-of) discovery and interrogatories to find out if it has a case of which it presently knows nothing. It is a fishing expedition to which this Court will not lend its aid. I respectfully agree with the following passage from the reasons for judgment of Smithers J. in Melbourne Home of Ford Pty. Ltd. v. Trade Practices Commission and Bannerman: "Accordingly in a proceeding pursuant to s. 163A(1), certainly in the absence of satisfactory evidence that the Chairman did not have the relevant reason to believe, the applicants are faced with the prima facie validity of the notice. In the absence of such evidence the proceeding is essentially speculative in nature. In such circumstances, for the court to assist the applicants by making available to them the processes of interrogatories and discovery would be to assist them in an essentially fishing exercise and from this the court on established principle should refrain"

10                  In circumstances where a party makes allegations in a pleading based on suspicion, it is not entitled to interrogate on those suspicions, for to do so is the clearest example of fishing by making a case where none exists:  WA Pines Pty Ltd v Bannerman (1980) 41 FLR 169at 173-174 per Toohey J; WA Pines 41 FLR 175 at 181-182 per Brennan J; and 190-191 per Lockhart.  More recently see Minister for Immigration & Multicultural & Indigenous Affairs v Wong [2002] FCAFC 327 at [28]-[36]). 

11                  In Wong a Full Court of this court said:

32        It is clear from Bannerman that a mere allegation, in the absence of something more, would not suffice to require discovery and it may be said here interrogatories. In fact the case concerned both interrogatories and discovery and did not suggest any difference in principle between the two. What that something more is will depend on the particular circumstances of the case. In some cases (the present is not one) there may be evidence upon which it is open to conclude that the matter into which enquiry is sought may be made out so that discovery or interrogatories may be appropriate. In other cases it may be possible by reference to known facts to draw inferences which then found a suspicion. But mere suspicion not "grounded" on evidence or inference will not suffice.

33        It may be remarked here that cases which have concerned discovery in judicial review have, at least in part, been influenced to adopt a liberal view on discovery by the fact that the rules of the Court now permit discovery before action (cf Order 15A, rule 6). That rule requires, however, that the person seeking discovery before action show that there is reasonable cause to believe that the applicant has, or may have the right to obtain relief. That limitation reflects the policy that while discovery may be ordered even before proceedings have commenced the power to do so will only be enlivened where that is something upon which the Court can base its conclusion that the applicant may have a right to relief. It was for this reason that in Canwest Global Communications Corp v Australian Broadcasting Authority (Hill J, 16 June 1997, unreported) at first instance, Hill J drew a distinction between the case where discovery was sought in an attempt to determine whether there was a case to be made out under some head of judicial review and the case where discovery is sought to show that the case which has by then been formulated can in fact be made out. The full Court refused leave to appeal. However, in the course of the reasons their Honours pointed out that the question whether interrogatories are appropriate will depend, as Brennan J had said in Bannerman, both upon the particular circumstances of the case and the stage at which discovery is sought. Their Honours said:

"Where in a case properly before the Court, a case that cannot be dismissed as an abuse of process, the pleading raise an issue for decision to which a party's documents may be relevant, the Court will have a discretion to order discovery. The need to establish a basis for the suspicion described by Brennan J in WA Pines will generally be confined to the kind of case to which he was adverting. In the normal case, the pleading will adequately ground the order."

34        However, their Honours noted that the pleadings in Canwest and other material before the Court provided grounds for an inference sufficient to satisfy the test stated by Brennan J in WA Pines. In other words, the case was not one where a mere allegation, without a "tittle of evidence", was all that could be relied upon.

35        In our opinion the present case is one where more than a mere allegation would be required before interrogatories of the kind here sought to be administered could properly be ordered. The additional matter may rest in evidence; it may rest in inferences that might be drawn from the evidence, or inferences that may be raised from other material, including matters that have been pleaded. But there will be a need here at least to ground an inference that an extraneous matter was taken into account and more significantly, that the Minister had an ulterior purpose, before it would be appropriate to order interrogatories to be administered.

12                  Four categories of objection have been retained and on their face, the objections appear to be well-grounded.  The first category is where the question calls for the expression of a legal opinion from a layperson.  The second category is on the grounds that the interrogatory is fishing in that it seeks discovery of documents or other information in order to attempt to convert a speculative claim into something else.  The third category is where the question is embarrassing or too wide in that it is not capable of being answered or otherwise requires the deponent to embark on an inquiry or inquiries that would outweigh any benefit to be gained from providing an answer having regard to the issues in dispute and would place an undue burden on the deponent.  The fourth and final category is where the question does not relate to any matter in issue between the parties; is otherwise too wide; or is an exercise in fishing.  Many of the objections are advanced on multiple bases. 

13                  I also accept the respondents’ submission that the ‘factual matrix’ of the case is not, as asserted by Austal, ‘highly complex’.  It is, in fact, a relatively straightforward allegation.  The suggestion by Austal that the interests of justice would be served by ordering answers to this extraordinary number of interrogatories is misplaced.  In submissions in reply which were also filed on the morning of the hearing which also ran to over 20 pages with attachments, Austal said (at [6]) ‘the facts of this case before the Court are, on any view of the matter, of the broadest factual spectrum which could reasonably be contemplated,…’.  I am unable to agree with that submission.  There is an admission as to the misuse of one of Austal’s reports.  The balance of the case is at this stage, speculation.  That cannot be resolved by the administration of a vast number of interrogatories, particularly in circumstances where Austal has already had the benefit of pre-action discovery and cross-examination on oath in Australia and in the United Kingdom of representatives of the respondents. 

CONCLUSION

14                  This entire set of interrogatories is so burdensome in circumstances where there is no other case indicated in the materials in support that Austal would have been at risk of having the entire set dismissed.  As it transpires, senior counsel for the respondents has indicated notwithstanding that position, that the respondents are prepared to answer 82% of the interrogatories which have been administered.  This includes a number of interrogatories to which objections have been raised but that nevertheless the respondents are prepared to answer. 

15                  In light of the fact that the respondents are prepared to answer 932 of the 1,149 separately numbered questions, further analysis seems inappropriate.  I propose dismissing the application but only upon the undertaking from senior counsel that the respondents will, with or without objection, within 21 days provide answers on oath to the 932 separately numbered questions of the 1,149 separately numbered questions in the list of interrogatories. 

16                  I am of a view that Austal should pay the respondents’ costs in the event as the list of interrogatories submitted was entirely beyond a reasonable or ‘limited’ scope.

17                  I will receive submissions to the contrary on that proposition if Austal wishes to advance them.

18                  The following orders will be made:

Upon the undertaking of senior counsel that the respondents will answer 932 of the interrogatories administered by the applicant it is ordered that:

1.                  the interrogatories be sworn, filed and served within 28 days;

2.                  the applicant’s motion for interrogatories and ancillary relief filed 5 May 2010 be dismissed.

3.                  unless within 14 days submissions to the contrary are filed and served by the parties, the applicant do pay the respondents’ costs of the motion to be taxed if not agreed. 

Associate: 

Dated:         27 July 2010