FEDERAL COURT OF AUSTRALIA

Nalini Asher Enterprises Pty Ltd v H&M Tracey Construction Pty Ltd [2019] FCA 2161

ORDERS

THE COURT ORDERS THAT:

1.    By 4.00 pm on 31 January 2020:

(a)    the first prospective respondent (HMT Construction or HMTC) give discovery to the prospective applicant (NAE) of the documents matching the descriptions contained in Schedule 1 to this order; and

(b)    the second prospective respondent (HMT Pilbara or HMTP) give discovery to NAE of the documents matching the descriptions contained in Schedule 2 to this order.

2.    Subject to paragraph 3, NAE pay the reasonable costs of each of HMT Construction and HMT Pilbara for collating, reviewing and providing the discovered documents, such costs to be assessed if not agreed.

3.    If NAE commences substantive proceedings against HMT Construction and/or HMT Pilbara by 4.00 pm on 28 February 2020, all costs incurred by that prospective respondent in providing discovery will be costs in the substantive proceeding.

4.    NAE pay HMT Construction’s and HMT Pilbara’s costs of the hearing on 12 December 2019.

5.    In relation to the other costs of the application for preliminary discovery as between NAE and HMT Construction:

(a)    Subject to paragraph (b), each party bear its own costs.

(b)    If NAE commences substantive proceedings against HMT Construction by 4.00 pm on 28 February 2020, each party’s costs of the application will be costs in the substantive proceeding.

6.    In relation to the other costs of the application for preliminary discovery as between NAE and HMT Pilbara: HMT Pilbara pay NAE’s costs of the application, as agreed or assessed.

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

Schedule 1

DOCUMENTS FOR PRODUCTION FROM H&M TRACEY CONSTRUCTION PTY LTD

Schedule 2

DOCUMENTS REQUESTED FROM H&M TRACEY PILBARA PTY LTD

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    By amended originating application, the prospective applicant, Nalini Asher Enterprises Pty Ltd (NAE) seeks preliminary discovery from two companies: H&M Tracey Construction Pty Ltd (HMT Construction or HMTC); and H&M Tracey Pilbara Pty Ltd (HMT Pilbara or HMTP).

2    Both NAE and HMT Construction are shareholders in HMT Pilbara. As at the establishment of HMT Pilbara, in May 2014, the shareholders of the company were:

(a)    HMT Construction, as to 75%;

(b)    NAE, as to 20%; and

(c)    Peter Woods and Sarah Woods as trustees for the P&S Woods Trust, as to 5%.

3    In December 2014, NAE, HMT Construction and Mr and Ms Woods (as trustees for the P&S Woods Trust) entered into an agreement in relation to their respective rights, interests and obligations in HMT Pilbara (the Company Agreement). In the material filed by NAE on the present application, HMT Pilbara is described as a joint venture vehicle to secure mining, oil and gas, and government projects.

4    The initial directors of HMT Pilbara were Harold Tracey (the principal of HMT Construction), Craig Rydquist (the principal of NAE), and Mr Woods. However, Mr Rydquist was removed as a director on 3 May 2018. The current directors of HMT Pilbara are Mr Tracey and Mr Woods.

5    It seems that there has been a breakdown in the relationship between Mr Rydquist, on the one hand, and Mr Tracey and Mr Woods, on the other. The removal of Mr Rydquist as a director of HMT Pilbara appears to form part of that dispute. Since his removal as a director of HMT Pilbara, Mr Rydquist has not been involved in the business of the company.

6    In this context, Mr Rydquist is concerned that opportunities belonging to HMT Pilbara, or work that ought to have been undertaken by HMT Pilbara, may have been diverted to HMT Construction. Mr Rydquist believes that NAE may have claims against both HMT Construction and HMT Pilbara, and therefore applies pursuant to r 7.23 of the Federal Court Rules 2011 for preliminary discovery from those companies.

7    The application was initially set down for hearing on 12 December 2019. However, at the outset of that hearing two issues arose. The first was that counsel for HMT Pilbara sought to cross-examine Mr Rydquist on his affidavits. However, Mr Rydquist was not available for cross-examination as he was interstate for business. The possibility of cross-examination of Mr Rydquist had been flagged some time before the hearing. Further, at 9.36 am on 10 December 2019, the solicitors for HMT Pilbara emailed a letter to the solicitors for NAE stating that Mr Rydquist was required for cross-examination. The email was sent to the email address that appeared on Court documents filed by NAE. I was told by counsel for NAE that the request to cross-examine Mr Rydquist had only come to his attention, and the attention of the person instructing him in Court, that morning upon arrival at Court. The second issue that arose was that I indicated to counsel for NAE that I was concerned that there may be a gap in the material filed by NAE. Mr Rydquist had filed an initial affidavit in which he expressed his beliefs as to the matters referred to in r 7.23. Mr Tracey and Mr Woods had subsequently filed responding affidavits that provided an explanation of some of the concerns raised by Mr Rydquist and annexed a number of documents in connection with those concerns. In addition, HMT Pilbara had provided some of the documents sought by NAE. However, apart from a brief affidavit correcting some errors in his first affidavit, Mr Rydquist had not provided any subsequent affidavit addressing whether he still held the beliefs expressed in his first affidavit, notwithstanding the matters covered in the affidavits of Mr Tracey and Mr Woods and the provision of documents by HMT Pilbara. Counsel for NAE submitted that such an affidavit from Mr Rydquist was not necessary. In any event, as I considered it appropriate to permit limited cross-examination of Mr Rydquist by HMT Pilbara, it was necessary for the hearing to be adjourned. Orders were made permitting NAE to file a further affidavit of Mr Rydquist.

8    The hearing of the application took place yesterday. The following affidavits were relied on by the parties:

(a)    NAE relied on three affidavits of Mr Rydquist, dated 30 August 2019, 11 December 2019 and 13 December 2019;

(b)    HMT Construction relied on two affidavits of Mr Tracey, dated 7 November 2019 and 12 December 2019; and

(c)    HMT Pilbara relied on an affidavit of Mr Woods dated 4 November 2019 and an affidavit of Benjamin Casey (a solicitor) dated 13 December 2019.

Applicable principles

9    Rule 7.23 of the Federal Court Rules provides as follows:

7.23    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 he or she 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).

10    The terms “prospective applicant” and “prospective respondent” are defined in r 7.21 as follows:

prospective applicant means a person who reasonably believes that there may be a right for the person to obtain relief against another person who is not presently a party to a proceeding in the Court.

prospective respondent means a person, not presently a party to a proceeding in the Court, against whom a prospective applicant reasonably believes the prospective applicant may have a right to obtain relief.

11    There was no real issue between the parties as to the applicable principles. In Poole v Australian Pacific Touring Pty Ltd [2017] FCA 424, Bromwich J summarised the applicable principles as follows:

38    Critically, the policy behind r 7.23 remains the same as that of its predecessor, namely, that “even where there is a reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile”: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435 at 443 [36]; cited with approval by Perry J in ObjectiVision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087; (2014) 108 IPR 244 at 254 [30].

39    Moreover, the general body of principles developed in relation to the requirements for an application for preliminary discovery in this Court, many of which were originally expounded in relation to the old rule, remain apposite and may be summarised as follows:

(1)    Rule 7.23 is to be beneficially construed and given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court, exercised in the particular circumstances of each case: Optiver at 444-5 [43] quoting with approval St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; 211 ALR 147 at 153 [26(a)] and Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733.

(2)    Each of the pre-requisites set out in r 7.23(1) must be met before the discretion in r 7.23(2) is enlivened: St George Bank Ltd at 153 [26(b)], citing Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 11 [38].

(3)    Not every element of any relevant cause of action must be established, provided there exists a reasonable cause to believe the prospective applicant “may have” a right to obtain the relief: Optiver at 445-6 [48].

(4)    A “belief” requires more than mere assertion and more than suspicion or conjecture. The evidence must “incline the mind towards the matter of fact in question”: Optiver at 446 [48], citing, inter alia, John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13], [14], [17] and [73].

(5)    The rule does not speak in terms of a belief in the existence of a cause of action. It speaks of a right to relief. By reason of the expression “may have”, the rule is concerned with a belief in the possibility (not the existence) of such a right: Sandhurst Trustees Limited v Clarke [2015] FCAFC 21; (2015) 321 ALR 1 at 16 [24], citing EBOS at 540 [31].

(6)    The notion that an order for preliminary discovery is no longer appropriate once a prospective applicant has sufficient information to meet the threshold of “a bare pleadable case” is fundamentally inconsistent with the purpose of the rule, which is concerned not just with reasonable belief as to the possible right to relief, but also with whether the cost and risk of litigation is worthwhile: Optiver at 443 [35]-[36]. It follows that the question posed by r 7.23(1)(b) is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent, but rather whether the applicant has sufficient information to make a decision whether to commence proceedings in the Court.

(7)    It is not an answer to an application to say that preliminary discovery is in the nature of a fishing expedition, because that is precisely what such a rule contemplates: St George Bank at 154 [26(h)].

12    In Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 351 ALR 103, Allsop CJ emphasised two points at [2]:

First, the words of the rule are the framework of analysis for deciding applications under the rule. Secondly, these are summary applications not mini-trials.

13    The Chief Justice also stated at [4] and [8]:

4    Rule 7.23 is a beneficial provision, the purpose of which is to enable a person who believes he, she or it may have a right to seek relief to obtain information to make a responsible decision as to whether to commence proceedings.

…

8    It is important to approach the task with the fundamentals of the rule in mind. There have been a large number of cases now (both at first instance and Full Court) dealing with and explaining the relevant rule. Those authorities should not be utilised to form a complex matrix of sub-rules for the operation and application of a tolerably straightforward provision. Whilst there was no submission that any of these cases was wrongly decided, there does appear to have been a tendency to create an overly abstracted conceptualisation of refined states of mind which, if the words of the rule are not kept in mind, can lead in application to a misstatement of the essence of the rule, focused as it is upon what may be the position. The foundation of the application in r 7.23(1)(a) is that an applicant (a person or a corporation) reasonably believes that he, she or it may have a right to relief. The belief therefore must be reasonable (expressed in the active voice that someone reasonably believes) and it is about something that may be the case, not is the case. It is unhelpful and likely to mislead to use different words such as “suspicion” or “speculation” to re-express the rule. For instance, it is unhelpful to discuss the theoretical difference between “reasonably believing that one may have a right to relief” and “suspecting that one does have a right to relief” or “suspecting that one may have a right to relief” or “speculating” in these respects. The use of such (different) words and phrases, with subtleties of differences of imprecise meaning, and not found within the rule itself is likely to lead to the proliferation of evidence and of argument, to confusion and to error. One must keep the words of the rule firmly in mind in examining the material that exists in order to come to an evaluation as to whether the relevant person reasonably believes that he or she may have a right to relief. That evaluation may well be one about which reasonable minds may differ.

The documents sought from HMT Construction

14    In Schedule 1 to the amended originating application, NAE seeks the following categories of documents from HMT Construction. (Categories that are no longer sought are not set out.)

Schedule 1 DOCUMENTS FOR PRODUCTION FROM H&M TRACEY CONSTRUCTION PTY LTD

Consideration regarding documents sought from HMT Construction

15    The first element of r 7.23(1) is a reasonable belief that NAE may have the right to obtain relief from HMT Construction. This matter is dealt with in [72]-[85] of Mr Rydquist’s first affidavit, and confirmed in his third affidavit. Mr Rydquist’s belief is summarised in [72] of his first affidavit as follows:

I believe that since my exclusion from the business of HMTP, opportunities belonging to HMTP or work which ought to have been undertaken by HMTP may have been diverted instead to HMTC. This belief, if substantiated would mean that HMTP, and NAE as a shareholder, are being deprived of its share of the profits for these projects.

16    On the basis of the material presently before the Court, that belief appears to have been justified in respect of the Woodside Project (as defined in [23] of Mr Rydquist’s first affidavit). Mr Tracey (at [127]-[133] of his first affidavit) gives evidence that HMT Pilbara has novated the contract for the Woodside Project to HMT Construction. The terms of the Novation and Indemnity Agreement disclose that HMT Pilbara was to receive the sum of $10 in consideration for that novation.

17    NAE relies on a number of provisions of the Company Agreement in support of the proposition that it may have a right to obtain relief from HMT Construction. In particular, NAE relies on clause 3.2 (good faith), clause 3.3 (general obligations) and Schedule 2 (company objectives).

18    One of the issues between the parties on the present application concerns the geographical scope of the Company Agreement. NAE’s position is that the agreement provided for HMT Pilbara to carry out works in all areas other than the Kimberley region (this being the area in which HMT Construction was already carrying on business). NAE relies on the wording of Schedule 2 to the Company Agreement to support its position. On the other hand, HMT Construction contends that HMT Pilbara was established primarily to conduct works in the Pilbara region. This contention derives support from Recital B of the Company Agreement, the definition of “Projects” in clause 1.1, and the subsequent references to Projects in other clauses of the Company Agreement (for example, clauses 2.2, 3.4 and 4.2). It may be accepted that there is a tension, if not a conflict, between the parts of the Company Agreement relied on by NAE and the parts relied on by HMT Construction. I do not consider it possible or appropriate to resolve this matter on the present application. Resolution of this matter is likely to require further evidence as to the circumstances surrounding entry into the Company Agreement. I will therefore proceed on the basis that NAE’s position is at least arguable. In proceeding in this way, I also note that, even if it is correct that HMT Pilbara was established to conduct works primarily in the Pilbara region (as the name of the company suggests), the definition of “Projects” also refers to “such other areas as the Directors may unanimously agree”. It was therefore envisaged that the company may undertake works in other areas as well.

19    Another issue raised in connection with the novation of the Woodside Project to HMT Construction concerned the need to obtain certain insurance. It was contended on behalf of HMT Construction that HMT Pilbara was unable to obtain the required insurance due to the failure on the part of Mr Rydquist to arrange registration as a builder. It is also not possible or appropriate, on the basis of the material presently before the Court, to resolve this aspect of the matter. It suffices to note that I am not satisfied that the material relied on by HMT Construction contains a complete answer to NAE’s potential right to obtain relief from HMT Construction in relation to the Woodside Project.

20    The circumstances of the Woodside Project support a reasonable belief that, at least in relation to that project, NAE may have a right to obtain relief from HMT Construction (whether on the basis of breach of the Company Agreement or breach of fiduciary duty, if it could be established that such duties were owed). I am therefore satisfied that, at least in relation to the Woodside Project, NAE has a reasonable belief that it may have the right to obtain relief from HMT Construction.

21    Mr Rydquist refers in his first affidavit to other projects that he is concerned may have been diverted from HMT Pilbara to HMT Construction. Specifically, he refers to the Onslow Aircraft Hanger project for the Shire of Ashburton at [79(a)] of his first affidavit, and the Royal Flying Doctor Service – Jandakot project (RFDS Project) at [79(b)] of that affidavit. In relation to the Onslow Aircraft Hanger project, Mr Rydquist states that, “[t]o the best of my knowledge, this project was contracted to HMTP and HMTC was awarded the construction subcontract on behalf of HMTP”. This is confirmed by Mr Tracey in his first affidavit at [54] and [67]. While Mr Tracey states that the funds were paid to HMT Pilbara (at [73]), no reconciliation has been provided.

22    In relation to the RFDS Project, Mr Rydquist states that this was discussed by the directors of HMT Pilbara “as an HMTP project”. Mr Tracey does not address this allegation in his affidavits. Rather, Mr Tracey simply states that HMT Construction was awarded the project and performed the work (at [57] of his first affidavit).

23    The material suggests that there may have been a lack of clarity as to the respective roles of HMT Pilbara and HMT Construction in relation to a number of projects. HMT Pilbara is a small company and did not secure its first project until 2017. In contrast, HMT Construction is a larger company and has been carrying on construction projects for some time. In these circumstances, it seems that HMT Construction acted as the contracting party or Head Contractor on behalf of HMT Pilbara: see Mr Rydquist’s first affidavit at [20]. This blurring of the lines between HMT Pilbara and HMT Construction makes it difficult, on an application such as this, to conclude that NAE does not hold a reasonable belief that it may have the right to obtain relief from HMT Construction in respect of other projects, that is, projects other than the Woodside Project. Having considered the material before the Court, including the material to which I was taken by counsel for HMT Construction, I consider that NAE does have a reasonable belief that it may have the right to obtain relief from HMT Construction (whether on the basis of breach of the Company Agreement or breach of fiduciary duty) in respect of other projects.

24    I note for completeness that the Company Agreement contains a dispute resolution clause (clause 13). It appears that the requirements of that clause have not been complied with by NAE. It was submitted on behalf of HMT Construction that in these circumstances I should not be satisfied that NAE held a reasonable belief as referred to in r 7.23(1)(a). Counsel for HMT Construction referred me to nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790 at [59]-[62]. In the circumstances of this case, and given the wording of the dispute resolution clause, the apparent failure to comply with that clause does not alter my view that NAE has a reasonable belief as required by r 7.23(1)(a).

25    The second element of r 7.23(1) is that, after making reasonable inquiries, NAE does not have sufficient information to decide whether to start a proceeding to obtain that relief. I am satisfied on the basis of the material before the Court (in particular, Mr Rydquist’s first affidavit at [86]-[98]) that NAE has made reasonable inquiries and that, having made those inquiries, it does not have sufficient information to decide whether to start a proceeding to obtain that relief.

26    The third element of r 7.23(1) is a reasonable belief that the prospective respondent has or is likely to have documents directly relevant to the question whether the prospective applicant has a right to obtain the relief, and inspection of the documents would assist in making the decision. Subject to considering the scope of the categories of documents sought, I am satisfied that this element is established. The basis for NAE’s reasonable belief that the documents are within the control of HMT Construction is set out in [106] of Mr Rydquist’s first affidavit. In particular, the documents sought are documents that would have been produced by HMT Construction in the course of its business. Similarly, the matters listed in [107]-[109] of Mr Rydquist’s first affidavit support the conclusion that NAE holds a reasonable belief that the requested documents will assist NAE in making a decision whether to issue proceedings against HMT Construction.

27    In relation to the scope of the categories sought, I consider the documents relating to the general financial affairs of HMT Construction to go beyond what is necessary to achieve the objects of r 7.23, at least at this stage. It appears that HMT Construction is a substantial business and it appears likely that many aspects of its business are unconnected with NAE’s potential claims. In the circumstances, I do not consider it appropriate, at least at this stage, to require HMT Construction to discover its general financial documents. I appreciate that this may affect NAE’s ability to quantify any damages which it may be able to claim (and that this may be necessary to make a responsible decision about whether to commence a proceeding). Nevertheless, on the basis of the material currently before the Court, and in the circumstances to which I have referred, I do not consider it appropriate to require discovery of the general financial documents. Accordingly, I will not order discovery of categories 1.1, 1.2, 1.3 and 1.4. It may be that, after production of documents in the other categories, a further application for preliminary discovery of categories 1.1, 1.2, 1.3 and 1.4 could be made.

28    In relation to category 1.5, I do not consider it appropriate to order discovery of paragraph (b) of this category, which is concerned with tenders by HMT Construction. I do not consider this part of the category to be sufficiently connected with the potential right to relief. However, I do consider paragraph (a) to be appropriate.

29    In relation to category 1.6, which also relates to tenders, for the same reason as category 1.5(b), I do not consider it appropriate to order discovery of this category.

30    Category 3.5 is confined by the general heading for category 3, namely documents relating to existing contracts between Woodside and HMT Construction. This category is appropriate.

31    Category 4 refers to projects carried out by HMT Construction outside the Kimberley region. A number of projects are listed but the category is more general, and relates to the period since 2 December 2014, when the Company Agreement was entered into. Insofar as the sub-categories relate to actual contracts, I consider the categories to be appropriate. I do not accept the submission that these sub-categories should be limited to the projects identified in Mr Tracey’s second affidavit. To the extent that the sub-categories relate merely to tenders, for the reasons already indicated, I do not consider it appropriate to order discovery of the sub-categories. Accordingly, I will order that categories 4.4 and 4.5 be provided, but not categories 4.1 and 4.3.

32    The basis for category 5 is explained in [82] of Mr Rydquist’s first affidavit, namely a concern that HMT Construction may be relying on HMT Pilbara facilities and presence in the Pilbara to secure work. That paragraph is not addressed in Mr Tracey’s affidavit. I consider it appropriate to order discovery of category 5.1 on this basis. Category 5.2 is rather broad and goes beyond the Pilbara region. It is also unconfined by a date period. I am prepared to order discovery of this category, but confined to the Pilbara region and confined to the period since HMT Pilbara was established (i.e. 22 May 2014).

33    I note for completeness the submission that NAE is seeking preliminary discovery for a collateral purpose. I am not satisfied on the material that this is the case. I accept that the application for preliminary discovery is brought for the reasons articulated in Mr Rydquist’s affidavits.

Documents sought from HMT Pilbara

34    The documents sought from HMT Pilbara, as set out in Schedule 2 to the amended originating application, are as follows:

Schedule 2 DOCUMENTS REQUESTED FROM H&M TRACEY PILBARA PTY LTD

Consideration regarding documents sought from HMT Pilbara

35    The first element of r 7.23(1) is a reasonable belief that NAE may have the right to obtain relief from HMT Pilbara. The second element is that, after making reasonable inquiries, the prospective applicant does not have sufficient information to decide whether to start a proceeding to obtain that relief. NAE contends, on the basis of the material set out in Mr Rydquist’s affidavits, that it may have the right to obtain relief from HMT Pilbara on the basis of the oppression provisions of the Corporations Act 2001 (Cth): see, in particular, ss 232 and 233. NAE contends that it has made reasonable enquiries and, having done so, it does not have sufficient information to decide whether to start a proceeding to obtain that relief.

36    HMT Pilbara does not dispute that NAE may be able to bring an oppression claim against the company. Its position is that NAE already has enough information to decide whether to bring such a claim or, indeed, has already decided to do so. HMT Pilbara relies on the material referred to in Mr Woods’s affidavit at [71] and the matters raised in the cross-examination of Mr Rydquist. I do not accept these submissions. First, Mr Rydquist makes clear in his first and third affidavits that he believes he needs the requested documents in order to decide whether to commence a proceeding against HMT Pilbara. It is implicit in this that he has not yet decided whether to do so. I accept this evidence of Mr Rydquist. Secondly, I am satisfied that NAE does not have sufficient information to decide whether to start a proceeding to obtain relief from HMT Pilbara. This includes making a responsible decision about whether to commence proceedings, including consideration of the quantum of any claim.

37    Accordingly, I consider the first two elements of r 7.23(1) to be satisfied. In relation to the third element of r 7.23(1), subject to consideration of the scope of the categories sought, I consider this element to be satisfied.

38    I note for completeness that in cross-examination it was put to Mr Rydquist that he had not disclosed all of the information that he already has available to him. On the basis of Mr Rydquist’s responses, HMT Pilbara submitted that this was a difficulty with NAE’s application for preliminary discovery: see Reeve v Aqualast Pty Ltd [2012] FCA 679 at [65(f)] per Yates J. I do not accept this submission. Mr Rydquist has provided extensive material in support of the application. To the extent that he has certain additional information, as raised in cross-examination, this information is not the same as that sought in the application for preliminary discovery.

39    I will now consider the scope of the categories sought from HMT Pilbara. I note that three of the categories included in the originating application as filed (categories 1.1, 1.2 and 1.3) (relating to financial records) have been provided by HMT Pilbara and, therefore, have been deleted in the amended originating application.

40    I consider paragraphs 1.5 and 1.6 to be appropriate. Although these categories relate both to existing projects and tenders (or possible tenders), the nature of the documents (agendas and minutes of board meetings) is confined, and the date period is confined. Further, these documents are sought from HMT Pilbara, a company in respect of which NAE is a shareholder, as distinct from HMT Construction. The documents may be relevant in identifying opportunities that were diverted to HMT Construction.

41    For the same reasons, I consider it appropriate to order that categories 1.10 and 1.12 be provided. I note that there was a submission by HMT Pilbara that category 1.12 lacked utility (on the basis of Mr Casey’s affidavit) but I am not satisfied that this is the case. There may be additional documents that have not already been provided.

42    Similarly, I consider it appropriate to order that categories 2.1, 2.2, 2.3, 2.4 and 2.5 be provided.

43    I consider categories 3.1, 3.3, 3.5, 3.7 and 3.10, which relate to the Woodside Project, to be appropriate.

44    Finally, I consider categories 4.1 and 4.5 to be appropriate, for the same reasons as indicated above.

45    I note for completeness that it was submitted on behalf of HMT Pilbara that the application for preliminary discovery has been brought for a collateral purpose. I do not accept this submission on the basis of the material before the Court.

Conclusion

46    For these reasons, I will make orders for preliminary discovery of certain of the categories sought in the amended originating application. I will hear from the parties as to the form of the orders, and costs.

[Submissions were then made regarding the form of orders and costs.]

Costs

47    There is no issue between the parties regarding the costs orders sought in paragraphs 2 and 3 of the amended originating application. (These relate to the costs of the prospective respondents in providing discovery.) However, there is an issue between the parties in relation to the costs of the application.

48    NAE seeks its costs of the application on the basis that it has been successful in obtaining preliminary discovery, and in circumstances where both HMT Construction and HMT Pilbara adopted an adversarial approach: see Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657 (Pfizer No 2) at [26]-[29].

49    HMT Construction seeks its costs of the adjournment on 12 December 2019 on the basis that it was merely an observer to the need for that adjournment. HMT Construction also seeks its costs of the application on the basis that NAE has invoked an extraordinary jurisdiction and in accordance with the principles discussed in ObjectiVision Pty Ltd v Visionsearch Pty Ltd (No 3) [2015] FCA 304 at [13], [19] and [23]. See also Pfizer (No 2) at [25(2)].

50    HMT Pilbara seeks its costs of the adjournment on 12 December 2019 on the basis that it gave reasonable notice that it sought to cross-examine Mr Rydquist and the adjournment was occasioned by NAE’s failure to make Mr Rydquist available on that day. In relation to the application itself, HMT Pilbara accepts that it has been ordered to provide all the categories sought, but notes that it has conducted the case in a responsible way and that the original categories were substantially narrowed in the amended originating application.

51    I will start with the costs of the adjournment on 12 December 2019. In my view, NAE should pay the costs of both HMT Construction and HMT Pilbara for that day. No satisfactory explanation has been provided as to why the request to cross-examine contained in the letter emailed on the morning of 10 December 2019 was not addressed. While Mr Rydquist has deposed that he could not have changed his travel plans, had the letter dated 10 December 2019 been read and dealt with appropriately, it may be that the hearing could have been adjourned without the need for an appearance on 12 December 2019.

52    I turn now to the other costs of the application. The applicable principles are discussed by Burley J in Pfizer (No 2) at [25]-[27]. In circumstances where the prospective respondents adopted an adversarial approach to the application, I consider it appropriate to approach the issue having regard to (among other factors) the outcome of the application. As between NAE and HMT Construction, each side has had a substantial measure of success. I consider it appropriate in all the circumstances (including the nature of the application) for each party to bear its own costs of the application. However, as discussed with counsel for NAE and counsel for HMT Construction, I will also order that, if a substantive proceeding is commenced within a limited period of time, these costs be costs in that cause. As between NAE and HMT Pilbara, NAE has been successful in respect of all the categories in the amended originating application. Although it is true that the categories as originally proposed were amended, I nevertheless consider it appropriate in the circumstances for HMT Pilbara to pay NAE’s costs of the application.

Associate:

Dated:    20 December 2019