FEDERAL COURT OF AUSTRALIA

Lipson v Penrice Soda Products Pty Ltd (No 2) [2012] FCA 337

THE COURT ORDERS THAT:

1.    There be no order as to costs of the application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    I delivered judgment and made orders in this matter in respect to an application for pre-action discovery by the prospective applicants on 2 March 2012: Lipson v Penrice Soda Products Pty Ltd [2012] FCA 172. The prospective respondent was required to make discovery on oath of four groups of documents. I reserved the question of costs.

2    The parties have now made their submissions on costs. Both the prospective applicants and prospective respondent seek costs of the application, the alternative, on the basis that the question of costs be reserved pending the outcome, and abide the event, of substantive proceedings. The prospective respondent qualifies that by saying that if the applicants do not commence proceedings within a nominated period, the prospective applicants should pay the prospective respondent costs of the application in any event.

3    It is well established the Court has discretion under s 43 of the Federal Court Act 1976 (Cth) to award costs. Division 7.3 of the Federal Court Rules 2011 (Preliminary Discovery) contemplates the court ordering a prospective applicant to pay the prospective respondent’s costs, even where an order has been made against the prospective respondent under that Division. Rule 7.29 reads as follows:

A person against whom an order is sought or made under this Division may apply to the Court for an order that:

a)    the prospective applicant give security for the person’s costs and expenses including:

i)    the costs of giving discovery and production; and

ii)    the costs of complying with an order made under this Division; and

b)    the prospective applicant pay the person’s costs and expenses.

Note Part 40 deals with costs and Division 40.2 deals with taxation of costs.

4    The prospective applicants have no automatic entitlement to costs. In the words of Gyles J, referring to the O 15A under the previous Federal Court Rules, applications for preliminary discovery involve an ‘extraordinary jurisdiction’, whereby the threshold to meet the test is not very high: C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [50].

5    The prospective applicants succeeded in obtaining an order that the prospective respondent make discovery of four different categories of documents related to two general issues: the redundancy policies of the prospective respondent, and secondly documents that related to the process of deciding to make the prospective applicants redundant. I accepted that the prospective applicants may have the right to obtain relief in this Court from the prospective respondent, and that that they did not have sufficient information to decide whether to start proceedings to obtain relief under the Australian Consumer Law or its legislative ancestors, or otherwise. I also accepted that the prospective applicants reasonably believed the prospective respondent had documents in its control relevant to whether the prospective applicants have a right to obtain relief, and that inspecting the documents would assist the prospective applicants.

6    The prospective respondent maintained a blanket opposition to the prospective applicants’ requests. It did not respond in a timely fashion to the prospective applicants’ letter of 14 October 2011, after the prospective respondent provided a copy of what it identified as its redundancy policy of 22 October 2011, which sought further documents. It therefore left the prospective applicants little alternative but to apply for discovery prior to commencing proceedings.

7    Notwithstanding this, the discovery orders made were significantly more limited than those initially proposed by the prospective applicants. The orders initially proposed by the prospective applicants included all documentation, including but not limited to, reports, reviews, recommendations, memoranda, intra office and external emails and Board Minutes relevant to (1) the ‘comprehensive review’ of the prospective respondent’s human resources conducted by the prospective respondent immediately prior to 17 July 2011; (2) the prospective applicants’ redundancies; (3) the amendment, revoking, issuing or replacement of the prospective respondent’s redundancy policies from 28 April 1982 until 1 July 2011; and 94) the various enterprise agreements of the prospective respondent as referred to in the prospective respondent’s correspondence with the prospective applicants.

8    The orders made on 2 March 2012 were more confined than this.

9    The application was broadly expressed and the potential causes of action relied upon only clearly emerged in the course of submissions.

10    In those circumstances, I consider that the parties should each bear their own costs. I do not know how the prospective respondents would have responded to a more confined request, more or less in terms of the orders ultimately made. It was in the power of the prospective applicants to be more refined in their request. On the other hand, throughout the hearing the prospective respondent maintained the position that it should not be required to provide any further discovery. I think the interests of justice are best served by finally dealing with the costs of the application in the manner I have indicated. That is preferable to leaving the costs unresolved for a lengthy period of time and where there may, ultimately, be no substantive proceeding at all.

11    Accordingly, there will be no order for costs of the application.

Associate:

Dated:    3 April 2012