Power to order inspections of plant and equipment

In Process Minerals International Pty Ltd v Consolidated Minerals Pty Ltd [2012] WASC 254 (PMI), the Supreme Court of Western Australia considered the power of the Court to make orders in proceedings before the Court allowing a party to inspect and sample the property of another party pursuant to Order 52 rules 2 and 3 of the Supreme Court Rules.

Order 52 rule 2(1) allows for the making of an order for the “detention, custody, preservation or inspection of any property” which is the subject matter of the dispute.  In PMI the plaintiff sought to inspect the defendant’s mining plant on the defendant’s property.

Order 52 rule 3(1) allows for the taking of samples, the making of any observation, or the trying of any experiment on or with any property and the observation of any process.  In PMI the plaintiff wanted to conduct extensive sampling of the defendant’s lump and fine processed magnesium ore at 19 distinct locations on the defendant’s mine site.

The Court confirmed that it had broad powers to make these types of order, but that in deciding whether to make such an order the Court would take into account a number of criteria.

These include:

  • there must be a substantial and genuine question to be tried;

  • there must be more than mere suspicion – the application must not be a  “fishing expedition”;

  • the proportionality of the application - if the benefit that the plaintiff would receive is outweighed by the cost involved then the Court will not make the order;

  • the state of the relationship between the parties and the possibility of a breach of confidentiality; and

  • workplace occupational health and safety concerns.

A primary concern of the Court is to prevent inefficiency and unnecessary costs in the conduct of litigation and accordingly a key consideration is whether the orders will save time and costs in the long run.

In PMI the inspection and sampling exercise, if ordered, would have cost an estimated $42,000 - $52,000 and would have involved shutting down the plant for up to four hours.

Further, in looking at the possibility of a breach of confidentiality, the Court took into account the poor state of the relationship between the parties who were strong trade rivals.

After weighing these considerations, the Court was not persuaded that the breadth of the inspection and sampling orders sought by the plaintiff were warranted and the plaintiff’s application was refused.

Lavan Legal comment

Commercial parties should be aware that it is possible in an appropriate case to apply to the court for inspection and sampling orders of this type.  Such an order can be a very effective mechanism for obtaining valuable and otherwise unobtainable evidence for trial.  The types of orders that the court can make are many and varied, depending upon the type of property or inspection in question.

However, the court will not make these orders lightly.  There must be a genuine reason connected with the litigation and not a mere fishing expedition.  Where necessary the court will attach conditions to the order to protect the commercial or intellectual property rights of the party affected by the order.  The applicant may be required to pay compensation in relation to any adverse property or commercial consequences arising from the sampling or inspection.

Any information obtained must be used only for the purposes of the litigation and not for any collateral purpose.