Federal Court of Australia

Fortescue Ltd v Element Zero Pty Ltd [2024] FCA 590

ORDERS

THE COURT ORDERS THAT:

1.    In this order the capitalised terms have the same meaning as in the search orders made on 14 May 2024 (the Search Orders).

Interim suppression and confidentiality

2.    Order 4 made on 9 May 2024 (interim suppression order) continue to have effect until the case management hearing referred to in order 14 below or further order.

3.    Three days before the case management hearing referred to in order 14 below, the Applicants file and serve an affidavit in support of a final confidentiality and suppression order in respect of the text in and attachments to the affidavits referred to in Annexure B of the Orders made 9 May 2024.

Search Orders

4.    Order 19 of the Search Orders be varied such that the Applicant’s lawyer and the Independent Lawyer must not allow the Applicant in person to inspect or have copies of any thing removed from the Premises nor communicate to the Applicant information about its contents or about anything observed at the Premises until 4:30pm on the case management hearing referred to in order 14 below or other time fixed by further order of the Court.

5.    Order 20(e)(iv) of the Search Orders be varied such that:

(a)    The Independent Computer Expert retain a digital copy of the computers, computer disks, drives or memory, electronic information storage devices or systems, and online accounts, and all electronic and hard copies of Listed Things.

(b)    The Independent Computer Expert is not to provide the digital copy referred to in order 5(a) to any of the parties except by order of the Court.

(c)    The Independent Computer Expert deliver a copy or digital copy of the computers, computer disks, drives or memory, electronic information storage devices or systems, and online accounts, and all electronic and hard copies of Listed Things to the Independent Lawyer by no later than 4pm on 30 May 2024.

6.    Order 20(f) of the Search Orders be varied such that the Independent Lawyer deliver to any registry of the Federal Court of Australia all things received from the Independent Computer Expert by no later than 4pm on 31 May 2024.

7.    Order 22(a) of the Search Orders be varied such that on or before 31 May 2024,

(a)    the Independent Lawyer provide to:

(i)    the solicitors for the First, Second and Fourth Respondent a copy of the Listed Things removed from the following Premises:

1.    Unit 2, 30 Oxleigh Drive, Malaga, Western Australia 6090;

2.    Unit 1, 19 Oxleigh Drive, Malaga, Western Australia 6090; and

3.    5A Volga Street, Hadfield, Victoria 3046.

(ii)    the solicitors for the Third Respondent a copy of the Listed Things removed from Unit 4, 213 Gildercliffe Street, Scarborough, Western Australia 6019.

(b)    the Independent Lawyer file and serve an affidavit attesting to such provision.

8.    Order 22(b) of the Search Orders be varied such that the time for compliance be extended to a date to be determined by the Court at the case management hearing referred to in order 14 below.

9.    As to the time for compliance with Orders 23(a) and 23(b) of the Search Orders:

(a)    In the event that the Respondents’ Interlocutory Application (as later defined in these orders) be filed and served on or before 18 June 2024, the time for compliance be extended to 4:30pm on the date of the case management hearing according to the time prevailing at the location of the judge constituting the Court for the purposes of the case management hearing.

(b)    If no such application be filed and served as aforesaid, the time for compliance be extended to 4:30pm at the like place on 18 June 2024.

10.    Order 26 of the Search Orders be varied such that the prohibitions therein continue to have effect until further order.

Pleadings

11.    On or before 18 June 2024, the First, Second and Fourth Respondents, and the Third Respondent, file and serve their Defences.

First, Second and Fourth Respondents’ Interlocutory Application

12.    The First, Second and Fourth Respondents’ file and serve the interlocutory application foreshadowed in the First Affidavit of Michael John Williams sworn on 29 May 2024 (Respondents’ Interlocutory Application) together with any affidavit evidence in support by 18 June 2024.

Applicants’ Interlocutory Application for Discovery

13.    The Applicants file and serve any interlocutory application for discovery by the Respondents (Applicants’ Interlocutory Application) together with any affidavit evidence in support by 21 June 2024.

Next case management hearing

14.    The matter be listed for a case management hearing not before 24 June 2024 at 9:30am on a date to be fixed by the Court after consultation with the parties. Any and all interlocutory applications for which this order provides be returned for mention and for the making of related directions at that case management hearing.

15.    Costs of the Search Orders and the costs of the hearing on 30 May 2024 are reserved.

16.    Liberty to apply.

17.    The undertaking given to the Court by each Applicant’s lawyer in Schedule B, paragraph B.2(7) of the Search Orders be varied and extended such that Applicant’s lawyer will not disclose to the Applicant any information that the lawyer acquires during or as a result of execution of the search order until 4:30pm on the date of the case management hearing referred to in order 14 above or other time fixed by further order of the Court.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    On 14 May 2024, a duty judge of the Court in Sydney was persuaded, upon the application of the applicants in these proceedings, who may conveniently be termed the “Fortescue parties”, to make search orders, sometimes alternatively termed “Anton Piller” orders; the inspiration for such terminology being a root authority: Anton Piller KG v Manufacturing Processes Limited [1976] Ch 55.

2    The purpose of such search orders is invariably to preserve evidence, so as to assist in the proof of an applicant’s claim, which may be in jeopardy of destruction, concealment or perhaps removal from the jurisdiction. As the Anton Piller case exemplifies, such orders are only given on the basis of particular satisfaction on the part of the judge concerned as to a prima facie strength of an applicant’s case. By their very nature, such orders invariably are made upon an ex parte application on behalf of applicants. They usually provide, and in this case, did, for a search by representatives of the applicants, here the Fortescue parties, of nominated places associated with the respondents, under the supervision of an independent lawyer.

3    The search orders in this case were a sequel to the institution of proceedings by the Fortescue parties against four named respondents: the first respondent, Element Zero Proprietary Limited; the second, Dr Kolodziejczyk; the third, Dr Winther-Jensen; and the fourth, Mr Masterman. At today’s hearing, which was the return date contemplated by the search orders, appearances were made by counsel on behalf of the first, second and fourth respondents, and, separately, on behalf of the third respondent. The Court also had the benefit of an appearance on behalf of Mr Klotz, the independent lawyer nominated in the search orders.

4    The orders to be made today were in part the subject of agreement between the parties, but not completely.

5    It is convenient, in dealing with the orders which should be made today, to do so by reference to a document, “applicants’ proposed changes to first, second and fourth respondents’ proposed short minutes of order”, which has come to be marked as ‘MFI1’ for the purposes of today’s hearing.

6    Before so doing, some observations should be made in respect of the background to the proceeding, insofar as it is revealed by the statement of claim, filed on 30 April 2024, in conjunction with the Fortescue parties’ originating application, as well as by reference to affidavits, which have been variously filed since then, save for confidential affidavits by various parties, up to and including today.

7    In summary, and to adopt a somewhat colourful turn of phrase which featured in the submissions on behalf of the Fortescue parties, the allegation at the heart of the proceedings is an alleged “industrial-scale misuse” of what is said to be, by the Fortescue parties, confidential information concerning its “green (carbon dioxide free) iron” technology.

8    That is said to have occurred on the part of the second respondent and the third respondent whilst undertaking and leading research and development work, which included work on what is said to be a confidential process of electrochemical reduction of iron oxide in iron one using ionic liquid electrolytes, to create metallic iron.

9    It is alleged that, without the knowledge of the Fortescue parties, upon resignation of the second and third respondents from the employment of the Fortescue parties in late 2021, information concerning such a process was copied and taken. In turn, it is alleged that this has been utilised in the designing, engineering and construction and operation by the first respondent of an industrial pilot plant for an electrochemical reduction process.

10    So much was put to the duty judge who came to issue the search orders on 14 May 2024. Other affidavits more recently made by the first, second and fourth respondents’ solicitor, Mr Williams, on information and belief, give pause for thought about whether, as the Fortescue parties have alleged, there was “industrial scale misuse”, or rather whether what occurred in the obtaining of the search orders, and the obtaining of material upon their execution, was what one might describe as an “industrial-scale forensic debacle”. The third respondent embraced particular submissions made on behalf of the other respondents as to the latter being the more apt description of what has occurred to date.

11    Where the truth of the matter lies is not for determination today. What needs to be made pellucid is that there is no determination whatsoever of the merits of the claims made by the Fortescue parties, or, for that matter, the riposte which has thus far been made on behalf of the respondents.

12    The third respondent also put forward what one might term a “carve-out” to a position promoted on behalf of the first, second and fourth respondents. That position was, in effect, that what is sometimes colloquially termed a “gag order” which attended, as is usual, the making of the search order be continued until the next case management hearing.

13    It is usual upon the granting of a search order to make orders preserving the anonymity even of the making of the application, as well as the parties to it, pending a return date. The purpose of that is self-evident enough from the very nature of the disposition to grant a search order, and its purpose. The concern is to prevent subversion of the purpose of such an order by publicity concerning the application for such an order and its making.

14    Quite different considerations attend whether or not to continue confidentiality beyond today.

15    In the ordinary course of events, as with proceedings in each of our country’s courts, save for the obvious exception of proceedings concerning children, the administration of justice by the courts is conducted in public. That has long been seen as integral to public confidence in the administration of justice, and a distinguishing feature between an exercise of judicial power, and the exercise of power by officers of the executive government: see as to this Russell v Russell (1976) 134 CLR 495, at 520, per Gibbs J. Nothing in the Federal Court of Australia Act 1976 (Cth) alters that position. That Act provides for the contingency of the making of orders for confidentiality, but that is very much not the default position.

16    The respondents each expressed concern as to an impact which publicity might have upon the business of the first respondent, its reputation, and their reputation. It is apparent enough from Mr Williams’ affidavits that there has been dialogue since the time of the resignation of the first and second respondents from employment with the Fortescue parties, with the Fortescue parties. Quite where all that leads or may lead, in terms of determination as to whether there was a material non-disclosure upon the obtaining of the search orders, remains to be seen.

17    The respondents have foreshadowed, but not as yet filed, an application for the setting aside of the search orders. In the event that such an application were to be filed, the onus would fall on them, not the Fortescue parties, to prove why the search orders should be set aside. See, for example, Brags Electrics Ltd v Gregory [2010] NSWSC 1205, especially at [10] and [17], per Brereton J; see also, as to what would constitute a material non-disclosure, Principal Financial Group Pty Ltd v Vella [2011] NSWSC 327, at [17], per Ball J.

18    The respondents, with respect, in promoting confidentiality’s continuance, looked at that solely through the prism of possible adverse effects on them, without appreciating that it might equally be in their interests for there to be publicity flowing from these very reasons for judgment, if nothing else, by way of highlighting the potentiality for the application for and execution of the search orders to have been what I termed an “industrial-scale forensic debacle”. These considerations, along with the general public interest in the administration of justice, persuade me that there should be no general continuance of confidentiality of the existence of the proceedings or their parties.

19    Some preservation of confidentiality is necessary, as will become apparent from particular orders that I make, but this is in the particular, not in the general.

20    That conclusion goes a very long way, indeed, to resolving the principal difference between the parties in respect of today’s proceeding. It also obviates any need to consider a “carve-out” of the kind promoted on behalf of the third respondent. There is nothing confidential from which to make any “carve-out”.

21    Turning, then, to the orders to make today and using MFI1 as a reference point.

22    Proposed order 1 is not controversial, and there will be an order in those terms which does nothing more than define what is later meant by the search orders.

23    Proposed orders 2 and 3 address particular aspects of interim suppression and confidentiality. These proposed orders are not opposed. In particular, what will be preserved as confidential until a case management hearing, which the Court will appoint, is a foundation in respect of the search orders.

24    Proposed order 4 is not controversial. An order in those terms will be made.

25    As to proposed order 5, it appears that what is proposed there, as to variation of order 20(e)(iv) of the search orders, may already have occurred. I see, however, no particular harm in making orders in terms of sub-paragraphs (5)(a), (b) and (c). If it transpires that particular steps have already occurred, then all that will mean is that there has been compliance with that order. It was suggested in submissions that yet another copy might be made. That informed the submission made in respect of paragraph 5(a). I can see some advantage potentially in that, if only out of an abundance of caution, concerning the fate of what is transmitted into the keeping of the Court. Sometimes, with the best will in the world, things go astray in the registry. My experience to date as a judge confirms me in an apprehension as to that.

26    As to proposed order 6, there was some debate in submissions about whether “any registry” or the “Sydney registry” should be identified in a variation of order 20(f) of the search orders. Suffice it to say, given the location of where searches occurred, where solicitors are located, and that the Court maintains registries in each State and mainland territory and exercises a national jurisdiction, I consider that it is more convenient to provide for delivery to any registry, rather than the Sydney registry alone. One might expect, although it is not certain, that the docket judge, who is yet to be identified by the Court’s National Operations Registry, will be located in Sydney, but that may not be so. That is an additional reason why I consider “any registry” to be preferred.

27    There is an alternative form of order 6 promoted by the first, second and third and fourth respondents, but events seem to have overtaken that promotion, having regard to an affidavit made by Mr Klotz.

28    As to a proposed variation of order 22(a) of the search orders and as found in paragraph 7 of MFI1, here too it may be that events have overtaken the occasion for variation, but I think it is better to make express provision, nonetheless, in these terms:

7.    Order 22(a) of the Search Orders be varied such that on or before 31 May 2024,

(a)    the Independent Lawyer provide to:

i.    the solicitors for the First, Second and Fourth Respondent a copy of the Listed Things removed from the following Premises:

1.    Unit 2, 30 Oxleigh Drive, Malaga, Western Australia 6090;

2.    Unit 1, 19 Oxleigh Drive, Malaga, Western Australia 6090; and

3.    5A Volga Street, Hadfield, Victoria 3046.

ii.    the solicitors for the Third Respondent a copy of the Listed Things removed from Unit 4, 213 Gildercliffe Street, Scarborough, Western Australia 6019.

29    Paragraph 7(b) will become “File and serve an affidavit attesting to such provision”, that will then evidence, via the independent lawyer, compliance with paragraph 7(a) in all its terms.

30    As to a proposed variation of order 22(b) of the search orders, as found in proposed order 8, my view is that this particular time for compliance should be determined by the docket judge at the case management hearing, rather than earlier. It seems to me that a decision about the extension contemplated is one best made by a docket judge in the context of the overall case management of the proceedings.

31    Some controversy attended a proposed variation of orders 23(a) and 23(b) of the search orders. The controversy was the extent to which there should be an extension of those orders. It was put, on behalf of the Fortescue parties, that compliance of this kind was contemplated by the practice note of the Court, which sets out the practice in respect of Anton Piller orders. It is certainly contemplated in that practice note, but that practice note does not address a scenario where the very making of the search order may be the subject of an application to set aside that order. It seems to me that it would be premature to fix a time for compliance with orders 23(a) and 23(b), without making provision for the contingency that the respondents may apply to set aside the search orders, to require the respondents to provide written notification and affidavits in respect of the location and disclosure of the listed things. Not making provision for that contingency may confer a benefit on the applicants to which they have no entitlement whatsoever, if the search order were to be set aside.

32    To this end, the order that I make in respect of paragraph 9 is not that in the draft, but rather this.

9.    As to the time for compliance with Orders 23(a) and 23(b) of the Search Orders:

(a)    In the event that the Respondent’s Interlocutory Application (as later defined in these orders) be filed and served on or before 18 June 2024, the time for compliance be extended to 4:30 pm on the date of the case management hearing according to the time prevailing at the location of the judge constituting the Court for the purposes of the case management hearing.

(b)    If no such application be filed and served as aforesaid, the time for compliance be extended to 4:30 pm at the like place on 18 June 2024.

33    As to the latter contingency, I consider that 18 June 2024, rather than 5 June 2024, is a more just time to fix, having regard to the obligations which may fall upon the respondents in complying with orders 23(a) and 23(b). I have expressly taken into account, in that regard, the contents of Mr Williams’ affidavits as to what that compliance might entail in terms of a burden on the respondents.

34    Paragraph 10 in MFI1 is not now controversial. An order in those terms will be made.

35    As to paragraph 11, and having had the benefit of submissions by each of the parties, it seems to me that 18 June 2024 is the more just time to allow for the filing and service by the first, second and fourth respondents and the third respondent, respectively, to file their defences. That same date, 18 June 2024, strikes me in the circumstances which have occurred since the making of the search orders and their execution, and the retaining of legal practitioners by respondents, and related assessment of lead times for analysis and related advice as the more just date; so that the time in order 12 will be 18 June 2024, not 12 June 2024, as contemplated in MFI1. That deals then with the subject of pleadings.

36    As to an interlocutory application for discovery by the Fortescue parties, it is axiomatic that that will need to follow the filing of defences. Some time is necessary to allow analysis of those defences. I allow until 21 June 2024 for that purpose. Otherwise, order 13 will be in the terms of the draft, which is MFI1.

37    After the proceedings are allocated to a docket judge, it would be in accordance with the usual practice of the Court for a case management hearing to be conducted. Having regard to provision already made for interlocutory steps, that case management hearing should not occur before 24 June 2024.

38    It is also necessary to take into account, in the fixing of the date and time for that case management hearing, the contingency of representation across the country for various parties. I propose, therefore, to order that order 14 will therefore be, “the matter be listed for a case management hearing not before 24 June 2024 at 9:30am on a date to be fixed by the Court after consultation with the parties”. I shall add a further sentence to order 14, which is that “any and all interlocutory applications for which this order provides be returned for mention and for the making of related directions at that case management hearing”.

39    As to order 15, there was no submission to the contrary as to the provision in the draft MFI in respect of costs. The order will therefore be that costs of the search orders continue to be reserved, and I shall add, if only out of an abundance of caution, as too also are the costs in respect of today’s hearing. Order 16 makes provision for liberty to apply, which is hardly unremarkable and, in the circumstances of the present case, one might think absolutely necessary.

40    The order also provides, as is sometimes done, for the court to note particular events or effects. Suffice it to say I see no need in the order made today for the noting to do other than reproduce that which is found in paragraph 17 of the draft, which concerns schedule B, paragraph B2(7) of the search orders. Indeed, that needs rather more than just noting, as opposed to a variation and extension as is provided for in MFI1.

41    These orders, then, cover that which was the subject of agreement, as well as controversy, today.

42    Having regard to submissions made today, I conclude the reasons by sounding, for the benefit of each of the parties, a cautionary note as to the need to be scrupulous in not misrepresenting, by way of any publicity, the subject matter of the litigation and the absolutely controversial position which presently prevails in respect of that subject matter.

Associate:    

Dated:    5 June 2024

SCHEDULE OF PARTIES