REASONS FOR JUDGMENT

INTRODUCTION

1                     The applicants/cross-respondents (Schutz) pursue two motions for non-party discovery. 

2                     The first of those motions seeks an order pursuant to O 15A r 8 of the Federal Court Rules (FCR) that within 21 days:

·                    the Victorian WorkCover Authority (WorkCover Victoria);

·                    the WorkCover Authority of New South Wales (WorkCover NSW); and

·                    NT WorkSafe

provide a list verified on oath by its proper officer of all documents in its possession, power or custody falling within the categories of documents listed on the motion. 

3                     Essentially those categories are the following:

1.4       documents that record, evidence or refer to any applications by the respondents to WorkCover Victoria, WorkCover NSW and NT WorkSafe for approval to manufacture and sell intermediate bulk containers (IBCs) comprised of an outer steel cage manufactured by the applicants and an inner plastic container manufactured by the respondents (Cross-Bottled Schütz) for use in the transport of dangerous goods;

1.5       documents that record, evidence or refer to any tests undertaken by Anlock Pty Ltd trading as Falcon Test Engineering or any other accredited testing laboratory on Cross-Bottled Schütz IBCs;

1.6       documents (including any test reports, summaries studies, appraisals or analyses) that record, evidence or refer to any inspection, testing, discussions, or consideration by officers or employees of WorkCover Victoria, Workcover (sic- WorkCover) NSW and NT WorkSafe of Cross-Bottled Schütz IBC;

1.7       documents that record, evidence or refer to:

1.7.1     any complaints made to WorkCover Victoria, WorkCover NSW and NT WorkSafe regarding the suitability of Cross-Bottled Schütz IBCs for use in the transport of dangerous goods;

1.7.2     any report or instance of actual confusion of customers or participants in the IBC market that WorkCover Victoria, WorkCover NSW and NT WorkSafe received in response to the respondents’ promotion and/or sale of Cross-Bottled Schütz IBCs; and

1.7.3     any statements made by or communications from consumers and other participants in the IBC market concerning Cross-Bottled Schütz IBCs,

1.8       documents which record, constitute or evidence consideration or discussion by any officers or employees of WorkCover Victoria, WorkCover NSW and NT WorkSafe or any other Competent Authority in Australia in relation to:

1.8.1     the respondents’ practice of cross-bottling;

1.8.2     Cross-Bottled Schütz IBCs;

1.8.3     safety or the practice of cross-bottling;

1.8.4     legality or otherwise of the respondents’ practice of cross-bottling;

1.8.5     the practice of cross-bottling composite IBCs generally;

1.8.6     safety or otherwise of the practice of cross-bottling IBCs; and

1.8.7     legality or otherwise of the practice of cross-bottling IBCs.

4                     Documents are also sought from Anlock Pty Ltd trading as Falcon Test Engineers (Falcon) in the following categories:

2.1       documents that record, evidence or refer to any applications by the respondents for approval to manufacture and sell Cross-Bottled Schütz IBCs for use in the transport of dangerous goods including without limitation any documents relating to rejected or withdrawn applications;

2.2       documents (including any test reports, summaries, studies, appraisals or analyses) that record, evidence or refer to any inspection, testing, discussion, or consideration by Falcon of Cross-Bottled Schütz IBCs including without limitation in assessing:

2.2.1     compliance (or non-compliance) with the Australian Code for the Transport of Dangerous Goods by Road and Rail, number 7 and/or the Dangerous Goods (Transport by Road or Rail) Regulations 2008 (Vic); and/or

2.2.2     performance under safety tests (including drop tests).

2.3       documents which record, constitute or evidence consideration or discussion by any officers or employees of Falcon in relation to:

2.3.1     the respondents’ practice of cross-bottling;

2.3.2     Cross-Bottled Schütz IBCs;

2.3.3     safety or otherwise of the respondents’ practice of cross-bottling;

2.3.4     legality or otherwise of the respondents’ practice of cross-bottling;

2.3.5     the practice of cross-bottling composite IBCs generally;

2.3.6     safety or otherwise of the practice of cross-bottling IBCs; and

2.3.7     legality or otherwise of the practice of cross-bottling IBCs. 

5                     Subject to any claim for legal professional privilege or public interest immunity, inspection of all the documents produced was sought and an order that Schutz pay the reasonable costs of compliance with those orders.

6                     The non-party discovery is opposed by the respondents/cross-claimants (VIP).

7                     By a second motion for non-party discovery, Schutz seeks similar documents from SafeWork SA, WorkCover ACT and Workplace Standards Tasmania.

LEGAL PRINCIPLES

8                     Order 15A r 8 FCR provides as follows:

8          Discovery from non-party

The Court may order that a person who is not a party and in respect of whom it appears that the person has or is likely to have or has had or is likely to have had in the person’s possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document.

9                     As observed in Dover Fisheries Pty Ltd v Bottrill (1995) IPC 91-158, the purpose of the power to order discovery against a non-party is to facilitate the just and proper determination of the issues in the proceedings.  In McLernon Group Insurances Pty Ltd v Biron Corp Ltd [1995] FCA 500, Nicholson J, followed Burchett J’s decision in Richardson Pacific Ltd v Fielding (1990) 26 FCR 188, where Burchett J said:

1.         Order 15A of the Federal Court Rules 1979 (Cth) expands the court's armoury to deal with cases which the previous law could not adequately reach. It is intended to overcome the limitation on the use of a subpoena duces tecum to obtain access to documents bearing upon litigation, which are not held by a party to the litigation but by some third party. In Small's case (Commissioner for Railways v. Small (1938) 38 SR (NSW) 564), it was pointed out that a subpoena duces tecum could not be used as a substitute for discovery from a party or to obtain discovery from a third party. The new provisions contained in Order 15A, by permitting discovery to be obtained from a third party, overcome that difficulty, and also provide a more practical and convenient means by which a party may obtain an opportunity to examine documents in advance of the hearing and with sufficient time to take such further steps as a perusal of them may suggest.

...

4.         The real question is whether the circumstances are sufficiently special to justify the use of the Order, for in my opinion the Order is intended, not for the general run of case, but for cases which do have about them something outside of the ordinary. I do not agree that the court cannot go beyond what could be done upon a subpoena duces tecum issued in advance. I think in my discussion of Small's case, I have already made that plain. One limitation upon the use of Order 15A, which has been suggested, is contained in Williams Aviation Pty Ltd v Santos Limited (1985) 40 SASR 272, where it was held that, normally, an order for disclosure of documents by a stranger to proceedings should be made only when the stranger to the proceedings has the only copies of the particular documents, disclosure of which is sought, and the party to the proceedings, who is seeking disclosure, has exhausted his rights with respect to discovery against the other party to the proceedings. This is the kind of general proposition which highlights the exceptional nature of Order 15A. I accept the general proposition, but at the same time I do not think that it would be at all appropriate to read down the language of Order 15A by making such a general proposition into a fetter, restricting the applicability of the Order in cases where the evidence suggests that it would provide an appropriate and reasonable solution to real problems.

...

6.         I agree with the view expressed by Kaye J in the apparently unreported decision of Keviris Pty Limited v Capital Building Society (unreported, Supreme Court, Vic, 9 February 1988), which was cited to me by Mr Ireland, that the new jurisdiction which is exercised, when rules such as those contained in Order 15A are implemented, should be exercised with caution. However, with respect, I do not think that the exercise of that jurisdiction should be fettered by any precise rules not suggested by the terms of Order 15A itself. Rules, such as those which have been suggested in the cases, should, I think, be taken rather as general guides, as indeed it is plain was the approach adopted by O'Loughlin J in the Williams Aviation case to which I have already referred.

10                  Schutz contends that the relevant tests are:

(a)        whether it is plainly probable that there exists documents relevant to the issues in the case;

(b)        the grounds for a belief that some document or class of documents relating to a matter in question exists;

(c)        whether the party seeking disclosure has exhausted its rights with respect to discovery against the other parties; and

(d)        whether the stranger to proceedings has the only copies. 

11                  In terms of relevance, the issues which arise on the pleadings, broadly stated, are whether VIP manufactures, supplies and sells cross-bottled IBCs in accordance with approval from WorkCover Victoria number 30667; whether the cross-bottling practices of VIP compromise the integrity of the IBCs giving rise to any public safety issues; whether VIP’s cross-bottling practice is misleading in breach of the Trade Practices Act 1974 (Cth); and whether the practice of cross-bottling is an internationally established practice. 

12                  Schutz asserts that approval 30667 was only valid to the extent that VIP manufactured IBCs in compliance with the sample submitted to Falcon for performance testing which, amongst other things, required the inner rigid plastic blow-moulded container to have a tare mass of 17.5 kilograms plus or minus 500 grams.  Schutz pleads that VIP has been using an inner rigid blow-moulded container embossed with a number 30665 with a weight of about 15.5 kilograms (outside the weight specification listing in the application for approval 30667).  VIP admits this assertion.

13                  Schutz argues that by virtue of the weight discrepancy, VIP has engaged in the manufacture, sale and supply of cross-bottled IBCs outside the scope approved under approval 30667.

14                  However, VIP pleads that the use of an inner rigid blow-moulded container of a weight of approximately 15.5 kilograms does not materially affect the integrity of a cross-bottled IBC or its performance under safety tests.

15                  Schutz also argues that as a result of the weight discrepancy, the certification markings embossed on the VIP cross-bottled IBCs are misleading or deceptive, constitute false representations and represent to various classes of person that VIP are certified or authorised to manufacture, supply and sell the cross-bottled IBCs and that VIP is affiliated with Schutz. 

16                  As recorded in other judgments in this litigation, there is a competent authority in each State and Territory responsible for the regulation and administration of the national framework for the transport of dangerous goods.  The Australian Code for the Transport of Dangerous Goods by Road and Rail (the ADG Code) is a technical safety code setting out detailed instructions for the safe transport of dangerous goods by road and rail developed by the National Transport Commission (NTC).  The relevant competent authority in the State of Victoria is WorkCover Victoria:  see s 3(1) of the Dangerous Goods Act 1985 (VIC) and the Dangerous Goods (Transport by Road and Rail) Regulations 2008 (VIC) (DGR).  Similar authorities’ legislation and regulations apply in other States and Territories. 

17                  Schutz argues that the various authorities in respect of which non-party discovery has been sought are likely to have in their possession, custody or power applications submitted by VIP for approval to manufacture and sell cross-bottled IBCs for use in the transport of dangerous goods.  Schutz wishes to examine the assessment of any VIP applications by those authorities. 

18                  Schutz contends that it is likely that documents would be created including memoranda, summaries, advices, conclusions, guidance notes and protocols once such applications are made by VIP.  It is submitted that receiving discovery of documents in the possession, custody or power of the competent authority generated in consideration, assessment and determination of VIP’s applications is likely to lead to a chain of enquiry to assist the parties to resolve whether VIP’s manufacture, supply and sale of cross-bottled IBCs is in accordance with WorkCover Victoria’s approval 30667. 

19                  Schutz also argues that given Schutz and VIP are the only two entities in Australia that manufacture and offer for sale and supply IBCs for the transport of dangerous goods, it is likely that the respective competent authorities will have considered and discussed the legality of VIP’s practice of cross-bottling.  This is said to be especially so given that on 2 September 2009 and again on 2 November 2009, Mr Johnston, the managing director of Schutz, wrote to the relevant competent authorities in the States and Territories to advise of VIP’s practice of cross-bottling and cross-bottling generally and to offer copies of the documents filed in these proceedings.  Schutz notes that since being made aware of the proceedings, WorkCover Victoria undertook an inspection of VIP’s premises and that Mr Adrian Simonetta of WorkCover Victoria subsequently advised Mr Johnston that VIP’s practice of cross-bottling has been the subject of various written and verbal communications between representatives of WorkCover Victoria and representatives of its counterparts and that the matter was discussed at a National Competent Authorities’ Panel meeting. 

20                  As to Falcon, the package testing laboratory for VIP, Schutz notes that it conducts tests on IBCs to ascertain compliance with technical and regulatory issues under Dangerous Goods legislation.  It is accredited by the National Association of Testing Authorities (NATA) specialising in dangerous goods transport packages.  NATA in turn is a national laboratory accreditation system which proscribes conditions to be met for accreditation.  It examines test facilities to ensure that the quality management systems and laboratory codes of practice conform to national and international test standards. 

21                  VIP engaged Falcon to undertake the requisite performance testing including a ‘drop test’ to accompany its application 30667 to WorkCover Victoria and to determine compliance or non-compliance with the ADG Code and relevant legislation. 

22                  Schutz argues that given that VIP engaged Falcon to undertake the requisite performance testing of its sample cross-bottled IBC to accompany its application to WorkCover Victoria, it is likely that Falcon received copies of VIP’s application and undertook testing and analysis of the sample cross-bottled IBCs and produced test certificates, laboratory reports, photographic records, DVDs, field notes, memoranda, summaries and records throughout the process. 

23                  Schutz contends that discovery of these documents would be likely to lead to ‘a chain of inquiry’ to assist the parties to resolve whether VIP manufacture, supply and sell cross-bottled IBCs in accordance with the WorkCover Victoria approval 30667 and whether VIP’s cross-bottling practices compromise the integrity of the IBCs and give rise to any public safety issues. 

24                  Mr Donkers of Falcon has been retained as an expert witness by VIP.  In that regard, Schutz makes the point that VIP only informed them on 10 June 2010 of the retaining of Mr Donkers.  Schutz maintains its entitlement to non-party discovery from Falcon accepting Mr Donkers’ obligations to VIP as an expert witness can remain discreet.  It does not seek discovery of Mr Donkers’ retainer or any documents produced by Mr Donkers pursuant to the retainer. 

CONSIDERATION

25                  At the core of VIP’s objection to the production of this documentation is the complaint that their communications with WorkCover Victoria are highly confidential, disclosure of which has the potential to reveal information about the business that is not published or that VIP would not be willing to share with a competitor. 

26                  Considerations of confidentiality are relevant to the exercise of the Court’s discretion to order or withhold production (Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 at [8]).  There is, however, no principle of confidentiality per se precluding discovery or inspection being ordered (Tipperary Developments Pty Ltd v Western Australia (1999) 21 WAR 250 at [30]).  Schutz argues that disclosure should be made of confidential materials which are necessary for the proper preparation of the case of the party seeking discovery (Mackay Sugar Co-operative Association Ltd v CSR Ltd (1996) 63 FCR 408 per Spender J).  Disclosure of confidential material would be protected under the confidentiality regime existing between the parties under which inspection of documents would be limited to solicitors and counsel. 

27                  The first question, however, is whether Schutz has demonstrated to the standard required by the authorities that ‘internal working documents’ of the non-parties exist and are relevant.

28                  The evidence shows that the process by which VIP undertook to obtain its approvals for cross-bottling involved, first, the testing by an appropriately qualified laboratory, in this case, Falcon.  The relevant composite IBC tests are referred to as the ‘bottom lift’, ‘stacking’, ‘leak-proofness’, ‘hydraulic pressure’ and ‘drop’ tests.  Having conducted those tests, the laboratory is required to submit to WorkCover Victoria a signed test report setting out particulars including the manufacturer of the IBC, a description of the IBC design type, maximum capacity, test descriptions and results, and the name and status of the signatory to the report.  The evidence is that Falcon submitted those reports.  WorkCover Victoria granted its approval in accordance with reg 56 of the DGR.  Automatically, it seems by decision of the Competent Authorities Panel (CAP), the approval was given nationwide effect. 

29                  VIP has confirmed that Falcon’s test reports, the applications for approval and the approvals granted by WorkCover Victoria are already or will be available to Schutz following inter-partes discovery.  The question is whether Schutz is entitled to more than that. 

30                  As Burchett J in Richardson Pacific observed, the purpose of the order is to enable discovery to be obtained where anything less than the broad obligations imposed by an order for discovery would simply not meet the case.  It was not for the general run of case.  It is designed to go beyond what could be done by subpoena duces tecum issued in advance.  Normally an order for disclosure of documents by a stranger to the proceedings should only be made when the only copies of a particular document are likely to be held by that stranger to the proceedings and the party to the proceedings who is seeking disclosure has exhausted his or her rights with respect to discovery against the other party to the proceedings.  It is a jurisdiction which should be exercised with caution. 

31                  The broader ‘train of inquiry’ test under Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 (the Peruvian Guano test) has been displaced by the modern test of relevance under FCR O 15 r 2.  Discovery is required of documents on which a party relies, documents that adversely affect a party’s own case, documents that adversely affect another party’s case and documents that support another party’s case (Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 at [19]-[21]). 

32                  In my view, in the case of non-party discovery the approach should be similar to the modern rule, not the broader Peruvian Guano test.  In the case of third parties, documents are typically sought by way subpoena.  In doing so, a subpoena must identify the documents sought with particularity in circumstances where the non-party is not familiar with the issues in dispute on the pleadings.  As observed by Jordon CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 (at 573):

A writ of subpoena duces tecum may be addressed to a stranger to the cause or to a party. If it be addressed to a stranger, it must specify with reasonable particularity the documents which are required to be produced. A subpoena duces tecum ought not to be issued to such a person requiring him to search for and produce all such documents as he may have in his possession or power relating to a particular subject matter. It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery. A stranger to the cause ought not to be required to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant: Lee v. Angas LR 2 Eq.59; Burchard v. Macfarlane [1891] 2 QB 241 at 247; A-G v. Wilson 9 Sim 526; Newland v. Steer 13 LT 111; 13 WR 1014. And if a subpoena duces tecum is issued to such a person in an objectionable form, the witness may apply to the Court to have it set aside.

33                  By the time these several motions, of which this is the last, came to be heard, the parties had substantially agreed on the categories of discovery.  It is undesirable to repeat all of the content of the agreed categories save to observe that it appears very likely that they cover much of the same subject matter as the categories now sought from non-parties. 

34                  It seems to me then that Schutz can anticipate disclosure of much of the documentation which it would seek by these extensive third party discovery applications through the ordinary discovery under the agreed categories. 

35                  As to ‘internal working documents’, I am not persuaded that it can be asserted with confidence at this stage that Schutz would not obtain such documents on inter-partes discovery.  Further, Schutz has relied upon the broader ‘train of enquiry’ or the Peruvian Guano test which, as I have indicated, has been displaced, also in the case of non-party discovery.  In accordance with the analysis by Burchett J, the onus rests on Schutz to demonstrate a clear reason why non-party discovery should be ordered rather than relying upon the issue of a subpoena at the appropriate time.  Further, it is not apparent at this stage what it is in those potential ‘internal working documents’ that would be relevant to the issues between the parties.  The width of some of the descriptions illustrates the difficulty.  For example, Schutz has sought documents that ‘record, evidence or refer to any applications by [VIP]’.  Documents that refer to such applications are not obviously relevant to the issues between the parties.  It is clear on discovery that Schutz will be provided by VIP with the relevant applications themselves, the test reports and approvals for the 30667 Approval and the 30746 Approval.  In relation to Falcon, Schutz has already been provided with Falcon’s test reports for the relevant approvals themselves.  Documents which ‘evidence or refer to’ any such tests could relate to a wide number of things.  Similarly, it does not appear that there is a probability that the various authorities would have documents recording an instance of actual confusion of customers or participants in the IBC market. 

36                  In relation to both the competent authorities and Falcon, the opinion of all of those bodies as to VIP’s cross-bottled IBCs including the legality or safety of those IBCs would be relevant only to the pleaded issues insofar as a test report was provided indicating that the relevant IBCs met the requirements of the tests under ADG7 and VIP’s applications were approved.  I am not persuaded at this stage that consideration or discussion by Falcon lying behind that test report, or by the competent authorities lying behind such an approval, adds or detracts to the proposition that the VIP cross-bottled IBCs practice is in any relevant sense lawful and/or safe. 

37                  For all those reasons, I consider that the application by Schutz is premature.  Given the breadth of categories of documents it is proposed to discover, on the strength of the principles discussed above, in my view, non-party discovery is not presently necessary or desirable.  In saying that, it should not be understood that I consider non-party discovery (as distinct from one or more subpoenas) will necessarily be appropriate at a later time. 

38                  Accordingly, the orders will be:

1.                  The application for non-party discovery will be dismissed. 

2.                  The applicants/cross-respondents to pay the respondents/cross-claimants’ costs of the motions to be taxed if not agreed. 

Associate: 

Dated:         13 October 2010