FEDERAL COURT OF AUSTRALIA Daeyang Shipping Co Limited v U-Ming Marine Transport (Hong Kong) Limited [2004] FCA 1086 Discovery before suit – considerations of restrictions on use in the light of foreign arbitrations commenced Abigroup Limited v Abignano (1992) 39 FCR 74 Comcare v Grimes (1994) 50 FCR 60 Daniel's Chancery Practice, Volume 1, 7th Edition DAEYANG SHIPPING CO LIMITED v U-MING MARINE TRANSPORT (HONG KONG) LIMITED N 1104 OF 2004 ALLSOP J 19 AUGUST 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1104 of 2004 BETWEEN: DAEYANG SHIPPING CO LIMITED PLAINTIFF AND: U-MING MARINE TRANSPORT (HONG KONG) LIMITED DEFENDANT JUDGE: ALLSOP J DATE OF ORDER: 19 AUGUST 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. In addition to the orders made on 22 July 2004, until midnight on 9 September 2004 or such earlier date as is agreed between the parties, the solicitors for the plaintiff are not to communicate the documents or information to the plaintiff in Hong Kong or elsewhere. 2. The solicitors for the plaintiff are forthwith to obtain an undertaking on behalf of Mr Cosh, such undertaking being to the defendant, not to communicate the documents or information to the plaintiff. 3. Stand the matter over to 9.30 am on Thursday, 9 September 2004. 4. The costs of this application be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1104 of 2004 BETWEEN: DAEYANG SHIPPING CO LIMITED PLAINTIFF AND: U-MING MARINE TRANSPORT (HONG KONG) LIMITED DEFENDANT JUDGE: ALLSOP J DATE: 19 AUGUST 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this matter I made orders on 22 July 2004 in an application brought under Order 15A of the Federal Court Rules. These reasons should be read with my previous reasons of 21 July and I do not repeat anything in those reasons. 2 One matter to which I referred in those reasons was the possibility of arbitration taking place in another country. These arbitrations have been commenced. 3 This application is one brought under the broad powers of Order 15A for the extraction of documents compulsorily from a defendant in order to see whether litigation should be brought in this Court. The orders I made on 22 July were such as to attempt to control conformably with both common sense and even-handedness to each side, the use of these documents and information therefrom. The particular concern of the defendant was that the documents and information would not be used for a purpose within Order 15A but for the anticipated arbitrations in other countries. 4 Thus, as can be seen from the orders that I made on 22 July and referred to in my reasons of 21 July, I put the solicitor on the record for the plaintiff, that is Mr Wilson, at the centre of the orders as a responsible practitioner in this jurisdiction and an officer of this Court and laid upon him the responsibilities in those orders. 5 Two of the twelve orders that I made, orders 9 and 10, were as follows: [9] The matter be stood over to a date to be fixed for the making of any further order, in particular any order varying or modifying the terms of access to information and documents depending on the plaintiff's decision whether to sue or not to sue. [10] Liberty to apply on 24 hours' notice in this O. 15A application only. 6 The matter was relisted by the defendant under the liberty to apply; the defendant has sought further restrictions. It is unnecessary to identify with precision the further orders sought by the defendant. It is sufficient to say that they arose from the institution of arbitrations in London between the plaintiff and the disponent owner Sinochart, from whom it chartered the vessel, and between that disponent owner and the defendant. Those arbitrations, I gather are to be heard together. 7 It was put to me that the reality is now, with this information present and in the hands of the plaintiff's solicitors, that the concern that had previously been expressed as a possibility or indeed a likelihood was now a certainty. Both sides helpfully put on short affidavits stating what the factual position is. Relevantly for the plaintiff's investigations, Mr Cosh, the surveyor, has prepared a report and it was delivered yesterday. Samples have been obtained but tests have not been taken on them and that may take a week or two because it is thought that those samples may have to be examined in Melbourne. Mr Wilson is on leave until next week and, importantly, it is clear that there has been no dispersal of the documents or information from Australia and all information and documents are still within the ken of Mr Cosh and Mr Wilson's firm. 8 The defendant sought orders under the liberty to apply that a time limit be put on the plaintiff's decision-making process and that if suit had not been brought in this Court by a certain time in September that all documents should be returned under a regime set out in some draft orders. At the moment I do not think that is the appropriate course to take. 9 Before identifying what is the appropriate course to take I should identify the argument made on behalf of the plaintiff and that is, as I understood it, that this matter is improperly before me and that really I have no power to make any further orders. I was reminded helpfully of the nature of liberty to apply and referred to Daniel's Chancery Practice, Volume 1, 7th Edition at p. 629; Abigroup Limited v Abignano (1992) 39 FCR 74, 88; and Comcare v Grimes (1994) 50 FCR 60, 62. But liberty to apply is not the only relevant order here. Order 9 was an order by which I stood the matter over to a date to be fixed for the making of any further order, in particular, any order varying or modifying the terms of access to information and documents depending on the plaintiff's decision whether to sue or not to sue. 10 The inclusive identification of the varying or modifying order was not intended by me to be exhaustive. The orders that I made on 22 July were interlocutory; they did not otherwise dismiss the summons. 11 The particular development that I had in mind was the decision of the plaintiff. That has not occurred; but, nevertheless, matters have moved on, not least by the crystallisation of the existence of the arbitrations. 12 What I propose to do, with Mr Wilson on leave and in light of the fact that it is evident that not all information has yet been gathered upon which the plaintiff will make a decision, in particular, the sample results, is to hold the position as it is with the information and documents in this country until a time when at least the sample results are available, Mr Cosh has had an opportunity to view them and Mr Wilson and his colleagues and counsel have had an opportunity to consider their position. 13 Given that the reality of arbitration is now before us, that is, the potential use of the documents for a purpose which would be abusive without leave and given the fact that documents have not left the country and given the fact that the plaintiff's Australian advisers are not yet in a position of being fully briefed with the facts, before deciding whether or not to make any further order or leaving the position that we have at the moment with the orders of 22 July, I want to hear from Mr Wilson. There is no necessity for an affidavit but I will want to hear from Mr Wilson either directly or through counsel. 14 Once all the information is available, I will want to be told the nature of the information and documentation which must go to Hong Kong or elsewhere for any decision and why a solicitor's advice appropriately fleshed out with the contents of material would not be sufficient, I will also want to know that if that is sufficient whether or not the plaintiff is prepared to give a form of undertaking not to seek to prove through the solicitor's letter matters contained within the letter in any arbitration without the leave of the Court. That may not be the best way of dealing with the matter. In due course, I may be persuaded that no further step beyond those which are set out in the orders of 22 July should be made. 15 The parties should understand that Order 15A is an ample power which I have used in this application. It is a discretionary power. It is a power that is being used by one foreign company against another through the jurisdiction of this Court as the plaintiff is entitled to do; but it is a power that ought be, in the context of foreign arbitrations and the limitations on the use of the documents, a power that is supervised carefully and the care and control of the execution of the power should not in my view be left solely to the blunt instrument of contempt when a moulded, sensible and fair regime can be put in place to forestall circumstances which may throw up more serious and unpleasant issues. In the sensible commercial resolution of these matters it is that moulded fair regime that I would prefer to undertake. The orders that I made on 22 July were intended, by order 9 in particular, to give a flexibility of control to the conduct of this matter. 16 The orders I make are: 1. In addition to the orders made on 22 July 2004, until midnight on 9 September 2004 or such earlier date as is agreed between the parties, the solicitors for the plaintiff are not to communicate the documents or information to the plaintiff in Hong Kong or elsewhere. 2. The solicitors for the plaintiff are forthwith to obtain an undertaking on behalf of Mr Cosh, such undertaking being to the defendant, not to communicate the documents or information to the plaintiff. 3. Stand the matter over to 9.30 am on Thursday, 9 September 2004. 4. The costs of this application be reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 7 September 2004 Counsel for the Plaintiff: Mr E G H Cox Solicitor for the Plaintiff: Norton White Counsel for the Defendant: Mr R F Margo SC with Mr A P Spencer Solicitor for the Defendant: Blake Dawson Waldron Date of Hearing: 19 August 2004 Date of Judgment: 19 August 2004