Fortescue Limited v Element Zero Pty Limited (No 2)

This case began as a commercial dispute about technology development, confidential information and a competing start-up. Fortescue sued Element Zero and several individuals connected with it. The Court recorded that Element Zero was a start-up registered in December 2022 with technology to convert metal ores such as iron and nickel into pure metal using intermittent renewable energy.

Fortescue alleged that two former technical employees, Dr Kolodziejczyk and Dr Winther-Jensen, had undertaken confidential research and development work while employed by Fortescue. According to the Court's summary of the pleaded case, that work concerned a direct electrochemical reduction process using, among other things, an ionic liquid electrolyte. Fortescue said this work generated confidential information belonging to it. It also alleged that confidential information useful for a green iron pilot plant had been taken before those employees left Fortescue in November 2021.

Fortescue further alleged that the respondents later commercialised and used an electrochemical reduction process, designed and operated a green iron pilot plant, and used Fortescue's confidential information in that work and in patent applications filed in Element Zero's name. Those were serious allegations, but they were still allegations. The judgment in this case did not finally decide whether Fortescue would prove them.

The immediate issue was procedural. Fortescue was concerned about preserving evidence at the start of the case. It therefore applied without notice for search orders. The duty judge heard the ex parte application on 9 May 2024, considered affidavits and submissions, and indicated there appeared to be a strong prima facie case, a real risk that information might be destroyed or hidden if advance notice were given, and substantial prejudice if orders were not made. After practical issues were addressed, search orders were made on 14 May 2024.

Those orders were significant. They were directed to Element Zero, Dr Kolodziejczyk, Dr Winther-Jensen and occupants of three identified premises. They permitted entry to premises and required disclosure of the whereabouts of listed things, including documents, devices, storage media and online accounts. They also required passwords and other means of access to be provided so the search party and independent experts could access and preserve relevant material. The orders were then executed. Hard copy material was seized and devices were imaged.

After the searches had been carried out, the first, second and fourth respondents filed an interlocutory application on 21 June 2024 seeking to set the search orders aside ab initio or, alternatively, to set them aside or vary them for the future. They also sought related orders for delivery up and return of material seized and records created during execution.

The Court had to decide whether there was a sufficient reason to disturb the search orders. That required consideration of the principles governing search orders, sometimes called Anton Piller orders, and the special obligations that apply when a party seeks relief ex parte.

The Court referred to the established preconditions for this kind of order. In substance, there must be a very strong or strong prima facie case, the potential or actual damage to the applicant must be very serious, and there must be clear or sufficient evidence that the respondent has important evidentiary material and that there is a real possibility it may be destroyed or made unavailable before an inter partes hearing can occur. The Court also referred to rr 7.42 and 7.43 of the Federal Court Rules 2011 (Cth), which recognise the Court's power to make search orders and set out the relevant requirements.

Just as important was the duty of candour. Because the respondents were not present when Fortescue first sought the orders, Fortescue had to bring to the Court's attention all material facts and put the absent parties' likely case squarely before the judge. The Court emphasised that this means more than avoiding direct misstatement. The applicant must coherently express the known facts in a way that allows the Court to understand what might be said against making the orders.

The respondents' challenge focused on five broad complaints. First, they said Fortescue had overstated and misrepresented the strength of its prima facie case. Secondly, they said there was no real risk of destruction of documents. Thirdly, they alleged material non-disclosure on the ex parte application. Fourthly, they argued that Fortescue's surveillance before obtaining the orders was excessive and unnecessarily intrusive. Fifthly, they said the form and scope of the search orders was inappropriately broad and resulted in excessive capture of their information.

The Court also noted an important procedural point for businesses and advisers. An application to set aside a search order is not simply a fresh appeal against the original decision. The party seeking discharge bears the onus of showing some reason why the order should be set aside. That matters in practice because once a search order has been executed, the Court is dealing with a different procedural landscape from the one that existed when the order was first sought.

Markovic J dismissed the interlocutory application to set aside the search orders. The first, second and fourth respondents were ordered to pay Fortescue's costs of that application. The Court also vacated order 22(b) and order 23 of the orders made on 14 May 2024, directed the parties to confer about proposed redactions to the reasons, and listed the proceeding for case management.

The practical result was that the respondents' challenge failed and the search orders remained in place. The Court was not persuaded to discharge them on the grounds advanced. That means the arguments about overstatement of the prima facie case, absence of destruction risk, material non-disclosure, excessive surveillance and overbreadth did not succeed in obtaining the relief sought.

For business readers, the most important point is what the outcome does and does not mean. It does mean the Court was satisfied there was not a sufficient basis to set aside the search orders in the circumstances of this interlocutory dispute. It does not mean the Court finally determined that Fortescue owns the relevant technology, that confidential information was in fact misused, or that any pleaded copyright, contract, Corporations Act or misleading conduct claim has been proved.

The judgment therefore reinforces the procedural principles around search orders rather than resolving the substantive commercial controversy. A business should read the case as authority on the grant and discharge of urgent evidence-preservation orders, and on the duty of candour in ex parte applications, not as a final ruling on the underlying intellectual property and confidential information claims.

The Court's orders about publication and redactions also show that confidentiality management remained important after the interlocutory application was decided. That is common in cases involving technical information, internal records and seized electronic material.

For businesses that create valuable know-how, this case is a reminder that legal protection starts well before litigation. If your company wants to preserve the option of urgent court relief, it helps to be able to identify exactly what information is confidential, who had access to it, what contractual and policy obligations applied, and what evidence suggests copying, retention or misuse. Vague claims about general know-how are much harder to turn into a strong prima facie case than specific evidence about documents, systems, projects and access histories.

The case also shows why information governance matters. Search orders can extend to hard copy records, laptops, phones, portable drives, cloud accounts and email accounts. Businesses should assume that if a dispute escalates, the Court will want a practical and technically workable process for identifying, preserving and reviewing material. That means sensible device policies, access controls, offboarding procedures and records of who worked on what can all become important.

If your business is considering applying for a search order, the lesson is caution and preparation. Search orders are exceptional. The Court described them as extraordinary remedies used where there is no adequate alternative way of ensuring justice and where there is a high risk that evidence will be destroyed, hidden or removed if the respondent is warned. An applicant must therefore prepare evidence carefully, frame the order tightly and present the absent party's likely response fairly. Overreach can create serious problems.

If your business is on the receiving end of a search order, the lesson is not to confuse frustration with a legal basis for discharge. The Court noted that the moving party bears the onus on an application to set aside. In practice, that means objections about breadth, surveillance, non-disclosure or lack of destruction risk need to be supported by evidence and linked to the legal principles governing discharge. Immediate legal advice, careful preservation of material and disciplined engagement with the independent lawyer or computer expert are essential.

For founders, senior employees and technical staff moving between businesses, the case is also a warning about transition risk. The Court's summary of Fortescue's allegations involved former employees, technical development work, pilot plant information and later commercialisation through a new venture. Whether or not those allegations are ultimately proved, the dispute shows how quickly questions about ownership, confidentiality and permitted use can become urgent and expensive. Clean exits, clear contractual terms and careful separation between old and new workstreams are commercially safer than trying to sort things out after litigation starts.

The search orders in this case were broad in the practical sense that they dealt with both physical and electronic material. The Court recorded that the recipients had to permit entry to premises, permit searches for and inspection of listed things, disclose the whereabouts of listed things in their possession, custody or power, and disclose the whereabouts of computers, smartphones, tablets, drives, storage devices and online accounts where relevant documents were or might be stored.

The orders also required the recipients to do all things necessary to enable access, including opening physical or digital locks and providing passwords, access credentials and other means of access. Independent lawyers and independent computer experts had defined roles in taking custody of specified things, searching devices and accounts, making copies and removing items in accordance with the terms of the orders.

That level of detail matters for businesses because it shows what a modern search order can look like in a technology dispute. Evidence is often spread across local devices, cloud systems, messaging tools and email accounts. A business that stores critical information in multiple systems should understand that a court order aimed at preserving evidence may need to address all of those environments.

The respondents argued that the form and scope of the orders was inappropriately broad and resulted in excessive capture of their information. The Court ultimately dismissed the discharge application, but the fact that this issue was argued is itself useful. It shows that breadth and proportionality remain live issues in search-order practice, especially where devices and accounts may contain mixed personal, commercial and legally sensitive material.

The respondents also challenged Fortescue's surveillance before the ex parte application, describing it as excessive and unnecessarily intrusive. The Court's orders show that this complaint did not lead to discharge of the search orders. Even so, businesses considering urgent relief should read that part of the case as a reminder that pre-application conduct can come under close scrutiny later.

The proceeding was commenced on 30 April 2024. Fortescue made its ex parte application for search orders on 9 May 2024. Interim suppression orders were made that day and the matter was adjourned to 14 May 2024, when the search orders were made. The orders were then executed, with hard copy material seized and devices imaged.

On 30 May 2024, the matter came before Logan J as duty judge and parts of the search orders were varied, with directions also made for pleadings and for the filing of the discharge application. Fortescue filed an amended statement of claim on 17 June 2024. The first, second and fourth respondents filed their discharge application on 21 June 2024. Markovic J heard the application in August 2024 and delivered judgment on 4 October 2024, dismissing the application and ordering costs against the first, second and fourth respondents.

The Court also directed that the reasons first be disclosed only to the parties and their legal advisers, with the parties to confer about redactions before publication. The proceeding was then listed for further case management. That confirms the substantive dispute continued after this interlocutory ruling.

This page is based on the Federal Court decision in Fortescue Limited v Element Zero Pty Limited (No 2) [2024] FCA 1157, delivered by Markovic J on 4 October 2024. The decision concerns an application to set aside ex parte search orders and records that the application was dismissed.

The judgment clearly identifies the parties, the nature of Fortescue's pleaded claims, the respondents' grounds for seeking discharge, the governing principles for search orders, the duty of candour on ex parte applications and the final orders made. The safest reading for business owners is that this case is about the procedural standards for obtaining and resisting search orders, not a final determination of the underlying intellectual property and confidential information dispute.