Court blocks FMG report access

Fortescue Metals Group has failed to get its hands on a crucial engineering report at the heart of a legal dispute with Canadian company TransAlta Corporation.

The Supreme Court of Western Australia dispute relates to Fortescue’s decision last year to terminate an agreement with TransAlta to purchase power from the South Hedland power station due to performance concerns.

As part of the pre-trial discovery process, Fortescue has been seeking access to a draft performance report compiled by engineering company Black & Veatch, along with a series of emails and draft letters.

TransAlta sought orders to restrict the iron ore miner’s access, arguing the material was covered by legal professional privilege as it included advice from law firm Squire Patton Boggs. 

Justice Rene Le Miere has granted Fortescue access to the email communication, but says the performance report is privileged.

The two parties entered into a power purchase agreement in 2014, while TransAlta also signed a development deed with Horizon Power at the same time to build a power plant in the Pilbara.

Squire Patton Boggs was TransAlta’s legal adviser to the transaction with Fortescue.

In March last year, the Canadian company engaged Black & Veatch to develop a test procedure and calculate performance test results.

Justice Le Miere said client legal privilege was waived on a number of emails sent between TransAlta and its lawyers due to the fact that Black & Veatch had been copied into the communication.

“For TECH (TransAlta) to disclose the legal advice to B&V for B&V to draft and send a letter to TPI (Fortescue) for the purpose of advancing TECH's contractual dispute with TPI concerning the testing procedure is inconsistent with maintaining the confidentiality that attracts the legal advice privilege,” he said.

“I find that TECH has waived privilege in the emails and draft letters.”

Fortescue was also seeking a redacted version of the draft report.

However, Justice Le Miere said the draft performance report was privileged.

“I am not satisfied that a reader of the reports redacted in the manner proposed by TPI would not ascertain the nature and content of the legal advice sought or given as asserted by Ms Pratt (Squire Patton Boggs counsel),” he said.

“The draft performance reports are privileged.

“Neither the reports nor redacted versions may be inspected by TPI.”

Justice Le Miere said whether the draft performance reports were in accordance with the overall plant performance was a major issue in the legal action.

Norton Rose Fulbright is representing TransAlta and Corrs Chambers Westgarth is Fortescue's legal counsel.