FEDERAL COURT OF AUSTRALIA Kingspan v Amalgamated Metal Industries Pty Ltd trading as Ametalin [2016] FCA 1490 File number(s): WAD 76 of 2016 Judge(s): GILMOUR J Date of judgment: 9 December 2016 Catchwords: PRACTICE AND PROCEDURE – application for further and better discovery – where the relevant documents have previously been discovered Legislation: Federal Court Rules 2011 rr 20.11, 20.14, 20.14(1), 20.14(1)(a), 20.14(3) Cases cited: Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55 Metcash Trading Limited v Bunn [2010] FCA 8 Salim v Loh (No 2) [2005] FCA 1417 Taylor v Saloniklis (No 3) [2014] FCA 744 United Salvage Pty Ltd v Louis Dreyfus Amateurs SNC [2006] FCA 116 Westpac Banking Corporation v Hingston [2010] FCA 528 Date of hearing: 20 September 2016 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 34 Counsel for the Applicant: Mr K de Kerloy Solicitor for the Applicant: Herbert Smith Freehills Counsel for the Respondents: Mr BC Roberts SC Solicitor for the Respondents: Cowell Clarke ORDERS WAD 76 of 2016 BETWEEN: KINGSPAN INSULATION PTY LTD (ACN 100 405 025) Applicant AND: AMALGAMATED METAL INDUSTRIES PTY LTD T/A AMETALIN (ACN 087 945 720) First Respondent MICHEL BOSTROM Second Respondent REFLEX INSULATION PTY LTD (ACN 136 829 840) Third Respondent NATHAN MARK MANSFIELD Fourth Respondent JUDGE: GILMOUR J DATE OF ORDER: 9 December 2016 THE COURT ORDERS THAT: 1. The interlocutory application be dismissed. 2. The respondents pay the applicant's costs of the interlocutory application to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GILMOUR J: 1 The respondents have applied for further and better discovery pursuant to r 20.14 of the Federal Court Rules 2011 (Rules). They rely on the affidavit of Jonathon Peter McRostie dated 11 August 2016. 2 Orders were made by consent on 11 April 2016 that, amongst other things: (a) the parties were to give standard discovery in accordance with Rule 20.14 of the Rules by 18 May 2016; and (b) inspection of documents discovered was to be completed by the parties by 8 June 2016. 3 On 20 May 2016, the applicant filed and served its list of documents, comprising: (a) 222 documents by way of general discovery; and (b) at least 30 documents falling within the categories of documents sought by the respondents, which include the most recent relevant test reports and technical data obtained by the applicant. Applicable principles 4 The following principles, which are not contentious, are substantially drawn from the parties written submissions. 5 Rule 20.11 of the Rules provides that a party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. 6 Rule 20.14(1) of the Rules provides that if the Court orders a party to give standard discovery, the party must give discovery of documents: (a) that are directly relevant to the issues raised by the pleadings or in the affidavits; (b) of which, after a reasonable search, the party is aware; and (c) that are, or have been, in the party's control. 7 In Metcash Trading Limited v Bunn [2010] FCA 8 at [8], Lander J stated that '[t]he extent of a party's obligation to give discovery is above all regulated by the pleadings'. 8 In Taylor v Saloniklis (No 3) [2014] FCA 744 at [30], Besanko J confirmed that '[I]t is well-established that the test for standard discovery results in a narrower class of documents being discoverable than the train of inquiry test formulated in Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55'. 9 Accordingly, r 20.14(1) of the Rules requires a party to discover only documents which are directly relevant to the issues raised by the pleadings, and not documents which may lead to a train of inquiry but are not directly relevant to an issue raised on the pleadings: Salim v Loh (No 2) [2005] FCA 1417 at [3] (French J). However, the scope of documents directly relevant to the issues raised by pleadings or in the affidavits under r 20.14(1)(a) is not necessarily a narrow one. 10 The Court has a broad discretion to order discovery and must balance considerations such as cost, time and possible oppression of the party required to produce the documents, against the importance of the documents and the likely benefits of their being produced: United Salvage Pty Ltd v Louis Dreyfus Amateurs SNC [2006] FCA 116. 11 A party will not be permitted to undertake fishing exercises by means of discovery. Pure speculation that the documents might exist or that something might turn up is not a sufficient ground for the making of an order for discovery of particular documents: Westpac Banking Corporation v Hingston [2010] FCA 528. 12 The respondents' submission is that there has not been compliance by the applicant with r 20.14, in that the applicant has not made discovery of the directly relevant documents that are sought in the application. Background The Product 13 The applicant manufactures and supplies thin flexible foil composite insulation products and high performance rigid foam insulation products, for building fabric and building services applications, including a product known as 'AIR-CELL lnsulbreak®', which is a thermo-reflective insulation product, marketed in both Australia and overseas, and is part of the 'AIR-CELL®' product range (Product). 14 The Product range comprises: (a) 'AIR-CELL lnsulbreak® 65', which has a nominal thickness of approximately 6.5 to 7mm and is identified by a product code of 'TB065'; and (b) 'AIR-CELL lnsulbreak® 80', which has a nominal thickness of 8 to 8.5mm and is identified by a product code of 'TB080'. Building product regulation 15 The Building Code of Australia (BCA) is the nationally recognised standard, adopted by all jurisdictions, which dictates the standards with which building work must comply. The BCA is published by the Australian Building Code Board (ABCB). "Statements" 16 A central issue raised on the pleadings and which is to be determined at trial is whether the statements pleaded at paragraphs 9(a) to 9(m) and 10(a) to 10(c) of the statement of claim if made as alleged or at all, were and are false and thereby misleading. 17 The applicant has pleaded in the statement of claim that the first respondent has made statements to the following effect: (a) the Product does not comply with the BCA, being Volumes 1 and 2 of the National Construction Code (para 9(a)); (b) the Product does not comply with the BCA for use as a pliable building membrane intended for sarking and weatherproofing (para 9(b)); (c) the Product does not comply with the sarking and thermal break requirements of the BCA (para 9(c)); (d) the Product does not comply with AS/NZS 4859.1 (para 9(e)); and (e) the applicant does not test the Product's duty ratings in accordance with the BCA and therefore cannot claim that the Product complies with the BCA (para 9(g)). 18 The applicant has alleged that each of the statements alleged to have been made by the first respondent were and are false, and thereby misleading and deceptive. 19 The first respondent has denied that any of the statements alleged at paragraphs 9(a), 9(b), 9(c), 9(e) and 9(g) were and are false, and thereby misleading and deceptive. The first respondent intends to prove at trial that the statements are true. Further discovery sought 20 The respondents seek orders for further and better discovery of documents in three categories: (a) testing reports or technical data in connection with the Product's performance and/or compliance with the BCA or the Australian Standards; (b) communications, including internal memoranda, notes and emails, prepared or received by the applicant in connection with the Product's performance and/or compliance with the BCA or the Australian Standards; and (c) any communications between the applicant and SAI Global, the ABCB or JAS-ANZ relating to the application for any CodeMark certification. 21 Each category is without any date or time period limitation. 22 The respondents submit that the three categories of documents sought in the application tend to prove or disprove the issues directly relevant on the pleadings on the following basis: (a) Documents in Category 1 and Category 2 are directly relevant to the issue of whether the Product complies with the BCA. The Product's compliance as against the deemed to satisfy provisions and/or whether the Product is an alternative solution under the BCA is a matter of fact, ultimately determined at trial by reference to performance standards of the Product as exhibited in testing. (b) Specifically, documents in Category 1 and Category 2 are directly relevant to the issue of whether the Product complies with the BCA for use as a pliable building membrane intended for sarking and weatherproofing. This is again a question of the performance standards of the Product, which is to be determined as a matter of fact ultimately determined at trial by reference to performance standards of the Product as exhibited in testing; (c) Further, the documents in Category 1 and Category 2 are directly relevant to the issue of whether the Product complies with the sarking and thermal break requirements of the BCA. This is again a question of fact to be determined by reference to the Product's characteristics, which is a question of fact that will be determined according to the testing of the Product as against the requirements of the BCA; (d) Likewise, the documents in Category 1 and Category 2 are directly relevant the issue of whether the Product complies with AS/NZS 4859.1 as a matter of fact, because the allegation at paragraph 9(e) of the statement of claim is the analogous question of compliance (or otherwise) with the relevant Australian Standard. AS/NZS 4859.1 is the standard that governs the materials for the thermal insulation of buildings; and (e) Documents in Category 1, Category 2 and Category 3 are directly relevant to the issue of the extent to which the applicant tests the Product's duty ratings as against the provisions of the BCA and therefore the allegations at paragraph 9(g) of the statement of claim as to whether the applicant can or cannot it tests its Product as against the requirements of the BCA and AS/NZS 4859.1. 23 The respondents submit that the Court can be satisfied there is a reasonable basis for believing that further documents as sought in Category 1, Category 2 and Category 3 exist (and have not been discovered) on the basis that: (a) it is apparent that the applicant has obtained CodeMark Certificates pertaining to the Product bearing the following dates: (i) 7 April 2006; (ii) 19 December 2008; (iii) 12 April 2013; and (iv) 4 October 2013; (b) the earliest of the reports as discovered by the applicant is dated 19 January 2014; (c) no similar reports have been discovered which are contemporaneous with the dates of the CodeMark Certificates listed above; (d) technical testing reports undertaken in connection with the Product are necessary to achieve CodeMark Certificates. This is evident from the requirements in part 5.2 entitled "Product Evaluation" of the CodeMark Scheme Rules which includes at 5.2.1 that: "Certification under the CodeMark Scheme shall rely on the combined evidence of Product conformity through testing and the existence and maintenance of a Product Quality Plan. The method of evaluation shall include testing of a sample or samples that are representative of the Product as used or installed, with factory and/or construction site audits, sufficient to ensure that compliance is being achieved and is capable of being maintained". (e) The CodeMark is a voluntary building product certification scheme providing one form of evidence that can be used to demonstrate that a building product complies with the BCA. (f) The CodeMark certification process and the CodeMark rules are administered by ABCB. There are specific "CodeMark certification bodies" accredited to undertake the certification process, which includes SAI Global. The accreditation and review of the CodeMark certification bodies is undertaken by JAS-ANZ. 24 It is the respondents' evidence based upon its experience in the insulation industry that: (a) in order for the applicant to obtain the CodeMark Certification at any time, technical data, testing reports and other similar information would necessarily be produced by the party applying for the CodeMark Certification to the certifying body; and (b) the information provided to the certifying body is necessary in order to demonstrate the performance of the product so that the certifier can assess whether the requested certification is to be provided by way of the CodeMark certificate. Consideration 25 The issue in the present case is whether the Product about which statements were made by the respondents complies with the BCA or the relevant Australian Standards. 26 The applicant does not dispute that testing reports referrable to the relevant product, contemporaneous with the dates of the alleged false statements or reasonably bearing on them, are directly relevant to the matters in issue. 27 The applicant has in fact discovered, amongst other things: (a) the CodeMark Certificates of Conformity for the relevant period (i.e. from the known date that the impugned materials have been circulated by the respondents to the date that the statement of claim was filed by the applicant); (b) technical testing reports prepared by Acronem Consulting Australia Pty Ltd referred to at paragraph [4] of Mr McRostie's affidavit; and (c) the most recent reports and certificates demonstrating the performance of the Product pursuant to the relevant standards specified in the BCA. 28 The applicant has also discovered an 'Appraisal and Certification' report prepared by Acronem Consulting Australia Pty Ltd dated 19 January 2014 (Acronem Report). A copy of this was produced to the Court. This report discloses, contrary to the respondents' submission, that the earliest report discovered by the applicant is not one dated 19 January 2014. Also adduced were testing reports relevant to the Product which are dated between September 2009 and October 2012. These are the underlying reports which support the relevant CodeMark Certification of the Product. 29 I accept the applicant's submission that reports earlier in time to those already discovered are neither contemporaneous with the dates of the alleged false statements nor could they be reasonably bearing on them. They are not directly relevant and it would be oppressive to require discovery of them. 30 The applicant accepts, correctly in my view, that reports underpinning relevant CodeMark certification are directly relevant to the issues in the case. 31 The reports relevant to the certification for the Product the subject of the applicant's claims have been discovered. I do not regard earlier reports relating to a "similar" product or earlier version of the product as being so relevant. Nor am I persuaded that documents which relate to testing under the AS/NZ 4200.1 standard are directly relevant. 32 There is reference to a product failing this test at p 43 of the Appraisal and Certificate Report. It is not the Product but an earlier product known as AstroFoil. This product has been superseded and is of no relevance to the issues in the case. That there is an issue on the pleadings whether the Product is required to comply with AS/NZ 4200.1 does not effect this conclusion. Whether the Product was required to comply with this Standard and if it is so required whether it does comply are issues which, in the normal way, can be fought out at trial. 33 Furthermore it is not disputed that communications with relevant testing bodies concerning the Product's performance and/or compliance with the BCA or the relevant Australian Standards or relating to CodeMark certification are contemporaneous with the dates of the alleged false statements or reasonably bearing on them are directly relevant. Reasonable searches complying with the requirements of r 20.14(3) of the Rules were conducted by the applicant and the directly relevant documents which were found have been discovered. Orders 34 The interlocutory application will be dismissed with costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 9 December 2016