FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Orica Australia Pty Ltd [2014] FCA 592

THE COURT ORDERS THAT:

1.    Within a date to be fixed, Newlands Coal Pty Ltd give discovery to the Construction, Forestry, Mining and Energy Union of:

     (a)    any and all documents, including file notes, diary entries, emails or other correspondence relating to the delay in the pre-strip shot on 8 October 2011 at the Newlands Mine;

     (b)    any and all documents, including file notes, diary entries, emails or other correspondence relating to any direction by Newlands Coal to Orica by which Mr Henzell was excluded from the Newlands Mine on 10 October 2011;

     (c)    any complaint made by Newlands Coal in relation to the delay of the pre-strip shot on 8 October 2011 at the Newlands Mine; and

     (d)    technical data provided by Newlands Coal to Orica in relation to the delay in the pre-strip shot on 8 October 2011 at the Newlands Mine.

2.    The application filed on 18 September 2013 be otherwise dismissed.

3.    There be no order as to costs.

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

REASONS FOR JUDGMENT

1    This is an application by the Construction, Forestry, Mining and Energy Union (“the CFMEU”) against Orica Australia Pty Ltd (“Orica”) and Newlands Coal Pty Ltd (“Newlands”) (cumulatively, “the prospective respondents”) in which the CFMEU seeks an order for preliminary discovery pursuant to r 7.23 of the Federal Court Rules 2011 (Cth).

2    In summary, the case of the CFMEU is as follows:

    The CFMEU is considering commencing proceedings against the prospective respondents in respect of contraventions of Pt 3-1 of the Fair Work Act 2009 (Cth) (“FW Act”) in respect of the employment of one of its members, Mr Andrew Henzell.

    At all material times Mr Henzell was employed by Orica as a shot firer at the Newlands Coal Mine (“the mine”), and was the President of the CFMEU’s Orica Lodge.

    Newlands had contracted with Orica for the provision of shot firing services at the mine.

    Mr Henzell worked at the mine from approximately 1997 until he was permanently excluded from the mine by Newlands on 2 December 2011.

    On 7 and 8 October 2011 Mr Henzell raised safety concerns with Orica in respect of procedures at the mine, in particular the proximity of an overburden hole where drilling was to take place to the location where holes were to be loaded on the presplit. Mr Henzell requested that a dirt bund be constructed between the presplit and the overburden in accordance with the Charging and Firing Standard Operating Procedure.

    At the time Mr Henzell escalated his concerns to Orica’s site supervisor and Newland’s drill and blast engineer. They agreed a bund would be constructed.

    At approximately 5 pm on 7 October 2011 Mr Henzell observed that no bund had been constructed, and complained to Orica.

    At approximately 4.45 pm on 8 October 2011 the presplit shots were fired. This was a delay of 2 hours and 15 minutes over the original scheduled shot time.

    On 10 October 2011 Mr Henzell was stood down from duty by Orica pending an investigation into his conduct on 7 and 8 October 2011. Mr Henzell was informed by Orica that Newlands had instructed Orica to withdraw Mr Henzell from the mine pending the investigation.

    There was subsequently extensive correspondence between Orica and Mr Henzell, and an investigation conducted by Orica in respect of the incident.

    On 3 December 2011 Orica advised Mr Henzell that Newlands had permanently excluded him from the mine.

    Mr Henzell exercised a workplace right on 7 and 8 October by making a complaint or inquiry under a workplace law, namely the Coal Mining Health and Safety Act 1999 (Qld) (“CMHS Act”).

    It appears there were a number of allegations against Mr Henzell by Orica and Newlands, including an allegation that he delayed the shot firing.

    Mr Henzell was issued a warning by Orica, banned by Newlands from the mine pending completion of the investigation conducted by Orica, and finally permanently banned by Newlands from the mine site. As a result he has continued his employment with Orica on much less advantageous terms.

3    The CFMEU seeks preliminary discovery to obtain information to, in substance, identify the reasons Orica and Newlands took the actions they did.

Material sought by the CFMEU

4    In its originating application filed 18 September 2013 the CFMEU sought the following material:

1.    Any and all documents, including file notes, diary entries, emails or other correspondence relating to the delay in the pre-strip shot on 8 October 2011 at the Newlands Mine;

2.    Any and all documents, including file notes, diary entries, emails or other correspondence relating to any direction by Newlands Coal to Orica by which Mr Henzell was excluded from the Newlands Mine on 10 October 2011;

3.    Any and all documents, including file notes, diary entries, emails or other correspondence evidencing the reasons for exclusion of Mr Henzell on 8 October 2011;

4.    Any and all documents, including file notes, diary entries, emails or other correspondence relating to the instigation of an investigation by Orica on 10 October 2011 in respect of the conduct of Mr Henzell;

5.    Any and all documents, including file notes, diary entries, emails or other correspondence relating to the taking of disciplinary action against Mr Henzell on 16 November 2011;

6.    Any and all documents, including file notes, diary entries, emails or other correspondence relating to permanent exclusion of Mr Henzell from the Mine by Newlands on 2 December 2011;

7.    Any complaint made by Newlands Coal in relation to the delay of the pre-strip shot on 8 October 2011 at the Newlands Mine; and

8.    Technical data provided by Newlands Coal to Orica in relation to the delay in the pre-strip shot on 8 October 2011 at the Newlands Mine.

5    At the hearing however Mr Friend SC for the CFMEU informed the Court that his client was only pressing categories 1, 2, 7 and 8 in the application. In light of this concession I now turn to relevant principles and the respective cases of the parties.

Relevant principles and submissions

6    Rule 7.23 of the Federal Court Rules provides:

Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

7    Principles relevant to consideration of an application pursuant to r 7.23 were helpfully summarised by Yates J in Reeve v Aqualast Pty Ltd [2012] FCA 679:

In Ebos Group Pty Ltd v Team Medical Supplies Pty Ltd [2011] FCA 862 Flick J held that the general statements of principle set out by Lindgren J in Glencore International AG v Selwyn Mines Ltd (recs and mgrs apptd) (2005) 223 ALR 238 at [9]-[16], respecting preliminary discovery under O 15A r 6 of the Federal Court Rules, remain apposite to an application under r 7.23. In Higgins v Hancock (2011) 199 FCR 393 Jacobson J at [55]-[59] expressed the same view. Those statements of principle, translated to the present context under r 7.23, are as follows:

(a)    The test of reasonable belief is an objective test.

(b)    The provision does not allow for third party discovery. Preliminary discovery may be ordered only against the person from whom there is reasonable cause to believe the applicant is or may be entitled to obtain relief.

(c)    A document relating only to the question whether a judgment against a person is likely to be enforceable is not within the rule and such a document is therefore not discoverable. If the only reason why an applicant has not sufficient information to enable a decision to be made whether to commence a proceeding is that the applicant lacks sufficient information as to the respondent’s capacity to satisfy a judgment, preliminary discovery will not be available.

(d)    The measure of any preliminary discovery to be ordered is the extent of information that is necessary, but no more than that which is necessary, to overcome the insufficiency of information already possessed by the applicant after the making of all reasonable inquiries, to enable a decision to be made whether to commence a proceeding.

(e)    The stronger the relevant evidence already available to an applicant of its right to obtain relief the weaker will its position be to obtain preliminary discovery.

(f)    While a respondent to an application for preliminary discovery is entitled to remain passive, the applicant must place before the Court all of the evidence already available to it relevant to the sufficiency of the information it possesses to enable a decision to be made whether to commence a proceeding. The applicant must not hold back information. This obligation on the applicant to be forthcoming arises from the special and intrusive nature of preliminary discovery and the fact that ordinarily the respondent will not know, or be in a position to expose, the full extent of the information already available to the applicant.

(g)    While the notion of reasonable belief may set the threshold “at quite a low level”, there must be some tangible support that takes the existence of the alleged right beyond mere “belief” or “assertion” by the applicant.

Submissions of the parties

8    The submissions of the parties in respect of the application for preliminary discovery can be summarised as follows.

The applicant contends:

    It wishes to commence claims against each of the proposed respondents in respect of adverse action taken by them against Mr Henzell in relation to the exercise by him of a workplace right. The CFMEU intends to rely on ss 340, 341, 342, 360 and 361 of the FW Act.

    Orica has specified three broad reasons for the action taken against Mr Henzell, only one of which relates to the exercise of a workplace right.

    Although Newlands is not Mr Henzell’s employer, it has arguably taken adverse action against him within the meaning of item 3 of the table attached to s 342 of the FW Act.

    “Workplace right” within the meaning of the FW Act includes a right exercised under a workplace law, which in turn includes a law regulating occupational health and safety. Section 39 of the CMHS Act provides that a coal mine worker has an obligation to take any reasonable and necessary course of action to ensure that another person is not exposed to an unacceptable level of risk.

    It seems clear Mr Henzell sought to delay the commencement of the pre-split blast on 7 October 2011 because of his concerns about an inadequate bund. Further he made a complaint about the absence of the bund.

    It is not clear what knowledge Newlands had about the reasons for the delay of the shot blast on 8 October 2011 which caused it to exclude Mr Henzell from the mine.

    It is also unclear what role Orica played in respect of the exclusion of Mr Henzell.

    The categories of discovery sought are directed at ascertaining what knowledge Newlands had. This will be an important consideration for the proposed applicant in determining whether or not to issue proceedings against Newlands, and whether those proceedings should be against Newlands as primarily liable or as a person “involved” in a contravention of the FW Act within the meaning of s 550.

    Newlands’ information appears to have come from Orica. The CFMEU wishes to review material to ascertain whether it should commence proceedings against Orica as a person involved in a contravention by Newlands under s 550 of the FW Act.

    In respect of the relevant principles:

o    the CFMEU has a reasonable belief that it may have the right to obtain relief;

o    the CFMEU has taken significant steps including by bringing an application in the Fair Work Commission to seek the material in question, however the material remains unavailable;

o    it is almost certain that Orica and Newlands have the material requested.

9    The application is opposed by both prospective respondents. In summary, Orica submits:

    It does not dispute that the CFMEU has a reasonable belief as to its right to obtain relief.

    There is no evidence that the CFMEU has taken “significant steps” to obtain the material in question including bringing an action in the Fair Work Commission. Further:

o    the CFMEU’s action in the Fair Work Commission was ultimately discontinued on 27 July 2012;

o    categories 3, 4, 5 and 6 sought in the originating application before this Court were not sought in the Fair Work Commission proceedings;

o    neither the CFMEU nor Mr Henzell communicated with Orica in relation to this issue between the date of the discontinuance of the Fair Work Commission proceedings and 15 August 2013;

o    the letter on 15 August 2013 makes no mention of Categories 3, 4, 5 and 6;

o    it follows the CFMEU has not made any reasonable inquiries in respect of those categories.

    The CFMEU acknowledges that it has sufficient information to establish a case that Mr Henzell exercised a workplace right and that he has suffered adverse action. Further the CFMEU has had the benefit of reviewing a significant amount of correspondence regarding Mr Henzell’s exclusion from the mine.

    On the CFMEU’s own materials it has already established that it has sufficient information to satisfy itself whether to commence a general protections claim against Orica.

    Orica has already filed substantial affidavit material relevant to any case the CFMEU chooses to commence.

    The CFMEU does not articulate how it has formed the “almost certain” belief that Orica has the material requested.

    The categories of material sought are too broad in any event.

10    At the hearing Mr McLean Williams for Newlands conceded that the application did found a reasonable belief in the CFMEU that relief against Newlands could be available. However Newlands also contended:

    A considerable volume of material had already been filed, indicating extensive communications between Mr Henzell and Orica. There was clearly sufficient information before the CFMEU to decide whether to commence a proceeding in the Court against Newlands.

    If the CFMEU was uncertain whether it should claim primary or accessorial liability in Newlands, it is open to it to plead the case against Newlands in the alternative.

    The categories of material sought are too broad. The application is in the nature of fishing.

    Newlands seeks costs pursuant to s 570 of the FW Act.

Consideration

11    It is clear that even if an applicant for a preliminary discovery order satisfies the requirements of r 7.23, the Court retains a broad discretion as to whether, and the extent of, discovery to be granted. It is also important for the Court to keep in mind the competing considerations of the intrusive nature of an order for preliminary discovery versus the generally beneficial construction the Court accords to the rule: St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360 at [26]; Reeve at [64].

12    In this case I am satisfied that there are grounds upon which the CFMEU could form a reasonable belief that it may have the right to obtain relief in the Court against Orica and Newlands, and indeed both Orica and Newlands conceded that this was so. I also note that the CFMEU has chosen not to press four of the categories of preliminary discovery it originally sought.

13    In the circumstances, I have formed the view that the CFMEU is not entitled to an order for preliminary discovery pursuant to r 7.23 against Orica, but it is entitled to such an order against Newlands.

Case against Orica

14    At the hearing Mr Friend SC for the CFMEU tendered a copy of the decision of the Fair Work Commission (then Fair Work Australia) in Construction, Forestry, Mining and Energy Union v Orica Australia Pty Ltd [2012] FWA 4915 delivered on 15 June 2012 in which the Commission upheld a jurisdictional objection to an application by the CFMEU for discovery in respect of these facts. In this respect I am satisfied that the decision of the CFMEU not to pursue the determination of the provision of the final warning by Orica to Mr Henzell was not related to any abandonment of a claim for discovery by the applicant.

15    There is, however, an unexplained delay between the decision of the CFMEU not to further proceed in the Fair Work Commission and the commencement of proceedings in this Court in September 2013. The failure of the CFMEU to progress the claim during this period is a factor which can properly influence the discretion of the Court in respect of this application.

16    More to the point, however, and in my view decisive of the CFMEU’s case against Orica in respect of the current application is that I am satisfied that the CFMEU has sufficient information to decide whether to start a proceeding in the Court to obtain relief under the Fair Work Act. The CFMEU has clearly identified the nature of the proceedings it proposes to commence against both prospective respondents as well as the legislative provisions upon which it intends to rely. At the hearing Mr Murdoch for Orica took me to the extensive material before the Court in respect of relevant conduct of Orica annexed to the affidavits of Mr Henzell, Mr Luke Forsyth, Mr Stephen Smyth and Ms Julia Swift, for example:

    The letter from Mr Clive Leeds, Operations Manager - NER & PNG at Orica to Mr Henzell dated 10 October 2011 suspending Mr Henzell from duty and informing him of an investigation by Orica into the incidents on 7 and 8 October 2011.

    A further letter from Mr James Kirkpatrick, Operations Manager NQ at Orica to Mr Henzell dated 18 October 2011 seeking additional information.

    A final warning letter from Mr Leeds to Mr Henzell dated 16 November 2011.

    A letter from Mr Leeds to Mr Henzell dated 2 December 2011 informing Mr Henzell that his access to Newlands site has been permanently revoked.

17    Each of these letters contained varying levels of detail. Added to the material already under the control of the CFMEU however this material is sufficient to enable the CFMEU to make a decision as to whether to commence proceedings under the FW Act against Orica.

Newlands

18    I take a different view in respect of the prospective case of the CFMEU against Newlands.

19    First, as I have already noted, at the hearing Mr McLean Williams conceded (properly, in my view) that the Court ought be satisfied of the criterion in r 7.23(1)(a) so far as concerned a prospective case against Newlands by the CFMEU.

20    Second, I am satisfied that the CFMEU has made reasonable inquiries of Newlands. In particular I note the detailed letter of request for documents from Hall Payne Lawyers (acting for the CFMEU) to Newlands dated 25 June 2013, and the letter in response from Mr Matthew Smith of Sparke Helmore Lawyers (acting on behalf of Newlands) to Hall Payne Lawyers dated 3 September 2013. In his brief letter Mr Smith conveyed the decision of Newlands to refuse Hall Payne’s request for documents relating to Mr Henzell. As Mr Friend SC correctly submitted during the hearing it would make little or no difference to the case for the CFMEU to continue to ask Newlands for relevant documents when Newlands has already refused.

21    Third, I am satisfied that on the present state of material before the Court, the CFMEU does not have sufficient information to decide whether to start a proceeding against Newlands. In forming this view I note:

    While the facts demonstrate that the CFMEU can reasonably believe that it may have a right to obtain relief from Newlands as contemplated by r 7.23(1)(a), this does not equate to sufficient information to make a decision as required by r 7.23(1)(b). The states of satisfaction required of a prospective applicant by these two paragraphs are quite distinguishable.

    There is in my view ample material to which the CFMEU can have regard in relation to potential litigation against Orica, which was the employer of Mr Henzell and has engaged in lengthy and detailed correspondence which is before the Court. However the situation is nowhere near as clear in relation to Newlands. The only material which the CFMEU can consider in relation to Newlands is correspondence from Orica to Mr Henzell, which adverts in a limited manner to Newlands and is essentially hearsay.

    I am not persuaded by Mr McLean Williams’s submission to the effect that if the CFMEU is unsure whether it should commence proceedings against Newlands for primary liability or involvement in a contravention, a proper course is for the CFMEU to commence proceedings and plead a case against Newlands in the alternative. In my view this issue goes both to the issue in r 7.23(1)(b) concerning whether the prospective applicant has sufficient information and the broader discretion of the Court in r 7.23(2). I accept that whether proceedings for relief should be commenced, and the nature of the relief which could be sought by the CFMEU against Newlands, will be significantly influenced by whether the CFMEU considers it is entitled to bring a claim for primary or accessorial liability. Further as a matter of discretion I am satisfied that granting an order for limited preliminary discovery at this point will potentially save time, unnecessary expenditure of costs, and perhaps avoid the need for further interlocutory litigation between the parties at a later date.

    In light of the limited case pressed by the CFMEU, the categories of documents sought from Newlands are not too broad to warrant an order for preliminary discovery. I am satisfied that they fall within the parameters of r 7.23(2).

22    Fourth, I am satisfied that there is a basis upon which the CFMEU can form a reasonable belief that Newlands has or is likely to have in its control documents directly relevant to the question whether the CFMEU has a right to obtain the relief, and that inspection of such documents would assist the CFMEU in making a decision one way or the other.

Costs

23    Finally, I note that both the CFMEU and Orica were content for the Court to make no order as to costs. Newlands pressed a claim for costs depending on the outcome of the proceeding.

24    Section 570 of the FW Act provides:

Costs only if proceedings instituted vexatiously etc.

(1)    A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.

(2)    The party may be ordered to pay the costs only if:

(a)    the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)    the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

(c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before the FWC;

(ii)    the matter arose from the same facts as the proceedings.

25    The general power of the Court to make an order for costs is found in s 43(1) of the Federal Court of Australia Act 1976 (Cth) which provides:

(1)    Subject to subsection (1A) and section 570 of the Fair Work Act 2009 , the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs shall not be awarded.

26    As submitted by Newlands, there is a question as to whether the proceeding currently before the Court is in relation to a matter arising under the FW Act such that the power of the Court to order costs is limited by s 570. Mr McLean Williams submitted that, in fact, the proceeding arose under r 7.23 of the Federal Court Rules.

27    In the circumstances of this case it is unnecessary for me to decide this question. It is sufficient for me to note that:

28    There is an arguable case that the proceeding arises under the FW Act (or is preparatory to litigation under the FW Act). If the proceeding does arise under the Federal Court Rules, then I note that as a general proposition costs follow the event in the absence of a reason why they should not: Oshlack v Richmond River Council (1998) 193 CLR 72. In this proceeding the CFMEU has been successful in obtaining the orders which it pressed in this Court. Newlands did not suggest at the hearing that it incurred any costs specific to the abandoned categories of preliminary discovery. Certainly, Counsel for Newlands did not submit that Newlands would be entitled to any costs in the event that the CFMEU was successful in relation to the four categories of documents for which it pressed.

29    In any event however the CFMEU has not sought any order as to costs against Newlands. It is appropriate that no orders in respect of costs be made.

Associate:

Dated:    5 June 2014