AVWest Aircraft Pty Ltd v Bombardier Inc [No 3] - [2020] WASC 436

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   AVWEST AIRCRAFT PTY LTD -v- BOMBARDIER INC [No 3] [2020] WASC 436
CORAM:   ARCHER J
HEARD:   12 NOVEMBER 2020
DELIVERED          :   3 DECEMBER 2020
FILE NO/S:   CIV 2450 of 2017
CIV 1636 of 2020

BETWEEN: AVWEST AIRCRAFT PTY LTD
Plaintiff
AND
BOMBARDIER INC
Defendant

Catchwords:

Categories of discovery - Turns on its own facts

Legislation:

Nil

Result:

Orders for discovery made

Category: B

Representation:

Counsel:

Plaintiff	:	K de Kerloy & A Sadler
Defendant	:	A C Willinge & C L Pedler

Solicitors:

Plaintiff	:	Herbert Smith Freehills
Defendant	:	Ashurst Australia

Case(s) referred to in decision(s):

AVWest Aircraft Pty Ltd v Bombardier Inc [No 2] [2020] WASC 392
Fazio v Fazio [2012] WASCA 72
La Mela v Franklexis Pty Ltd [2020] WASCA 83
Roe v The State of Western Australia [2013] WASC 130
Singh v Friedman [2013] WASC 78
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

ARCHER J:

Introduction

These reasons deal with a dispute between the parties as to the categories of documents that ought to be discovered in these proceedings.

Background

In Avwest Aircraft Pty Ltd v Bombardier Inc[No 2],[1] I set out the background to these proceedings and the history of the litigation to date. For convenience, some of that background is repeated here.
[1] AVWest Aircraft Pty Ltd v Bombardier Inc[No 2] [2020] WASC 392 (AVWest [No 2]).
The defendant (Bombardier) is a manufacturer and seller of jet aircraft. The plaintiff (AVWest) has a business involving the purchase of jet aircraft manufactured by Bombardier for resale to third‑party buyers.
Between 2010 and 2015, AVWest and Bombardier engaged in extensive commercial dealings for the purchase of aircraft. In broad terms, AVWest made large up‑front payments of cash to Bombardier, and Bombardier sold aircraft to AVWest on generous terms. As part of the arrangement, Bombardier undertook to find third‑party buyers for the aircraft and to facilitate the sale of aircraft by AVWest to those buyers. Bombardier would then pay AVWest net profits and other amounts paid by AVWest to Bombardier on account of the purchase price for the aircraft.
A dispute arose between AVWest and Bombardier, in which AVWest alleged that Bombardier had refused to perform its contractual obligations under numerous written agreements and alleged oral agreements. Subsequently, AVWest also alleged, in the alternative to the alleged oral agreements, that Bombardier is estopped from departing from various pleaded assumptions or expectations.
AVWest commenced proceedings which have now reached the point where discovery can begin.
By extensive conferral, the parties have been able to agree on a large number of categories of documents to be discovered. I wish to gratefully acknowledge that their efforts have substantially narrowed the matters in dispute. The parties' remaining disputes are in relation to the appropriate date range of one of the categories, Category 1, and in relation to the contents of four sub‑categories of Category 1.

The disputed category

Category 1 is directed to documents that relate to alleged oral agreements pleaded in paragraphs 5, 6, and 74 of the Further Amended Consolidated Statement of Claim filed 15 September 2020 (Statement of Claim).
In Avwest [No 2], I summarised AVWest's pleading. Again, for convenience, some of that is repeated here.
In paragraph 5 of the Statement of Claim, AVWest pleads that an oral agreement was made between the parties on or about 18 September 2012. It pleads, in effect, that the parties orally agreed that, in consideration for specified acts by AVWest, all aircraft purchases (other than in relation to aircraft already resold to a third‑party buyer) would be on the terms pleaded in paragraph 6.
There are three terms pleaded in paragraph 6, which were described by the parties as the 'minimum net return term', the 'co‑operation term' and the 'replenishment term'. I will refer to them as the 'September 2012 Terms'.
AVWest pleads in paragraph 74 of the Statement of Claim that an oral agreement was made between the parties on 19 December 2014. It is alleged that a term of that agreement was that the September 2012 Terms would apply to the resale of specified aircraft.
AVWest pleads that the terms of the oral agreements were implemented and performed up to around April 2015. AVWest pleads, among other things, that Bombardier later manifested an intention not to be bound by the oral agreements.
Category 1 captures all documents relating to:
(a)the payment by [Bombardier] to [AVWest] of a shortfall or minimum return on realised profits upon the resale of aircraft purchased or to be purchased by [AVWest] from [Bombardier] to third‑party buyers;
(b)co-operation between the parties with respect to the marketing and resale of aircraft to be purchased by [AVWest] from [Bombardier] and sold to third party buyers; or
(c)the replacement of aircraft positions provided by [Bombardier] to [AVWest], including any rolling purchase programs agreed to for such aircraft.
The parties disagree as to the appropriate period to be specified for this category. AVWest submits that the period covered by Category 1 should be from 1 January 2012 to 30 September 2017. Bombardier agrees to the period commencing on 1 January 2012, but says it should not extend beyond 31 December 2015.
The parties agree that the documents in Category 1 include, but are not limited to, various sub‑categories of documents. The parties disagree as to whether the documents in Category 1 should include the documents in three sub‑categories (Sub‑Categories (d), (k) and (l)) and disagree about the scope of a further sub‑category (Sub‑Category (c)).
The sub‑categories are as follows, with the matters in dispute in bold:
(a)any contemporaneous Documents, including, but not limited to, any handwritten meeting notes, electronic file notes, or email exchanges, relating to conversations or meetings between:
(1)individuals representing, or acting on behalf of, [AVWest] and either (i) other individuals representing or acting on behalf of [AVWest] or (ii) individuals representing or acting on behalf of [Bombardier] or its related entities or (iii) individuals representing other third parties in relation to the alleged oral agreement; and
(2)individuals representing, or acting on behalf of, [Bombardier] and either (i) other individuals representing or acting on behalf of [Bombardier] or (ii) individuals representing or acting on behalf of [AVWest] or its related entities or (iii) individuals representing other third parties in relation to the alleged oral agreement.
(b)any Documents relating to the formation, existence, and/or implementation of the alleged oral agreement, which for the avoidance of doubt includes Documents relating to:
(1)[Bombardier] ever agreeing to discount a future sale in lieu of paying [AVWest] the alleged minimum net return;
(2)[Bombardier] ever agreeing to compensate [AVWest] in lieu of paying [AVWest] the alleged minimum net return, including by way of the application of deemed deposits, credit memoranda, reimbursements and services credits;
(3)[AVWest] ever agreeing with [Bombardier] not to sell its aircraft or aircraft positions below a certain amount, including because that would have triggered the payment by [Bombardier] of the alleged minimum net return;
(4)[Bombardier] ever paying [AVWest] the alleged minimum net return;
(5)[Bombardier] ever agreeing to, upon the resale to a third‑party buyer of any new Global 6000, 7000 or 8000 aircraft, which had initially been purchased by [AVWest], sell [AVWest] [Bombardier's] next available aircraft position for the same type of aircraft (Replenishment Sale); and
(6)the determination of the price to be paid by [AVWest] for any Replenishment Sale;
(c)any budgets, reports, internal finance documents, accounting records, pricing policies, audit statements, [production and sales and inventory levels (including forecasts)] or other Documents dated or created between 1 September 2012 and 31 December 2015 [30 September 2017] (and in the case of the pricing policies, from 1 September 2012 to present) relating to the actual or estimated revenue, expenses, [inventory levels] and/or profitability of the alleged oral agreement and all purchase agreements allegedly covered by the alleged oral agreement;
(d)[Documents dated or created between 1 September 2012 and present evidencing the key performance indicators and incentives for [Bombardier's] sales team or its agents for sales of the aircraft in [Bombardier's] Global 6000, 7000 and 8000 skyline, including in respect of [AVWest's] aircraft;]
(e)Documents evidencing any financial analysis conducted by [Bombardier] or its related entities on [AVWest];
(f)Documents between 18 September 2012 and present that evidence that [AVWest] was ready, willing, and able to perform the alleged oral agreement;
(g)'Deal sheets' relating to all purchases of aircraft positions by [AVWest] from [Bombardier] and the associated sale to third‑party buyers, being documents provide any [sic] assessment of those transactions and which evidence how any shortfalls on those transactions were reconciled;
(h)any Documents relating to the internal management of and/or processes regarding the alleged oral agreement; and
(i)any Documents between 1 January 2015 and 30 September 2017 relating to the review of the alleged oral agreement and the effect of the announced delays to [Bombardier's] Global 7000 program on the alleged oral agreement between [the parties];
(j)the corporate policies in place between 1 January 2012 and present setting up a chain of approvals which must be obtained prior to a purchase agreement being agreed and executed and, in relation to each aircraft position sold by [Bombardier] to [AVWest], all internal approvals obtained prior to the purchase agreement being agreed and executed;
(k)[Documents evidencing [Bombardier's] distributorship arrangements and on‑sale commitments with third-parties];
(l)[accounting policies or other Documents dated or created between 1 September 2012 and present evidencing the treatment by [Bombardier] of sales to [AVWest];] and
(m)Documents relating to any impacts which the alleged oral agreement between [the parties] had on [Bombardier's] Global 6000, 7000 and 8000 skyline or production program.

Legal principles

Order 26 of the Rules of the Supreme Court 1971 (WA) sets out the rules governing discovery and inspection. The relevant principles were helpfully summarised by Allanson J in Singh v Friedman.[2] Further observations were made by Martin CJ in Roe v The State of Western Australia.[3] I consider that those cases establish the following:
[2] Singh v Friedman [2013] WASC 78 [3] ‑ [4].
[3] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [12].
1.A party does not have an entitlement to general discovery.
2.The power to order discovery is discretionary.
3.To determine whether a class of documents may be relevant, the court should consider the pleadings, the conduct and admissions of the parties and the nature of the action.[4]
4.Relevance is not, however, the only factor the court must consider in the exercise of the discretion to order discovery. Determining whether to make a discovery order involves balancing two considerations:
(a)first, the desirability of the timely and cost effective disposal of litigation, including considerations of proportionality;
(b)second, the public interest in having available, subject to the rules of privilege, all evidence relevant to the issues in litigation.
5.It is a 'balancing of the likely forensic benefit to be obtained against the risk of cost and delay …, viewed in the context of the value, importance and complexity of the subject matter of the proceedings'.[5]
6.The balance will not fall in favour of discovery unless the cost and delay involved in the provision of that discovery is proportionate to the forensic benefit likely to be obtained.
7.In determining this, the court should consider, in a qualitative sense, the forensic significance of the issue in respect of which discovery is sought and the relevance of the documents sought to that issue.
8.The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings.
[4] In further support of this proposition, see also Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [5].
[5] Roe [13].

The appropriate period for Category 1

AVWest submits that the period covered by Category 1 should be from 1 January 2012 to 30 September 2017. Bombardier agrees to the period commencing on 1 January 2012, but says it should not extend beyond 31 December 2015.
Bombardier notes that AVWest pleads that the alleged oral agreements were performed only up until around April 2015. Bombardier has agreed to extend the discovery period beyond the pleaded date of April 2015, to December 2015. It says, however, that it should not be extended beyond the end of the quarter in which its representative, a Mr Ercolanese, ended his employment with Bombardier. Mr Ercolanese was the person alleged by AVWest to have made the oral agreements on behalf of Bombardier. Bombardier says that he ceased being employed by Bombardier in 2015.[6] Bombardier submits that the period covered by Category 1 should not be extended beyond December 2015 because, after Mr Ercolanese ceased being employed, there 'can be no relevant discussion of the alleged oral agreement'.[7]
[6] Bombardier conceded that there is no evidence of this and properly drew my attention to an affidavit of Mr Roberts in which he said that Mr Ercolanese left Bombardier in February 2016. However, nothing turns on this.
[7] Amended Discovery Categories Table filed 6 November 2020 (Discovery Table).
There is evidence, however, that the parties did discuss the alleged oral agreements after December 2015. In its submissions, AVWest lists various meetings and documents (AVWest's List) deposed to by Mr Roberts (of AVWest) in an affidavit.[8] Included in that list are documents which suggest that Bombardier conducted at least one internal review of the contractual situation after that time. In particular (evidence citations omitted):[9]
Mr Roberts [of AVWest] wrote to Mr Ouellette [of Bombardier] on 1 December 2016, in which letter Mr Roberts reiterated the essential terms of the alleged oral agreement;
[O]n 5 December 2016, Mr Ouellette responded to Mr Roberts' letter. Mr Ouellette's email stated, 'following the receipt of your letter, our Corporate office has asked for a full review of this file'. Mr Ouellette's email of 19 December 2016 indicated that that review would not be carried out until January 2017.
[8] See Plaintiff's Outline of Submissions and List of Authorities in Support of its Position on the Disputed Discovery Categories filed 6 November 2020 (AVWest's Submissions) [29].
[9] AVWest's Submissions [29(c) and (d)].
Acknowledging that material, Bombardier proposes that there be discovery of all documents relating to the meetings and documents in AVWest's List, instead of extending the date range of Category 1.[10] The parties described the documents in this proposal as 'Category 2' documents. In oral submissions, Bombardier said, in effect, that Category 2 could also be extended to any review of the type foreshadowed by Mr Ouellette, in case there were others.[11]
[10] Defendant's Submissions with respect to Contested Discovery Categories (Bombardier's Submissions) [18].
[11] ts 328.
Bombardier also submits that (references to evidence omitted):[12]
The reasonableness and proportionality of any date range that is to be applied to Category 1 also needs to take account of the breadth of the proposed category and the fact that it includes, but is not limited to, all of the matters in the agreed sub‑categories. As the affidavit evidence filed on behalf of [Bombardier] shows, based on a preliminary assessment of the proper approach to discovery of Category 1, [Bombardier] will be required to consider 91,797 documents if the date range is limited to between 1 January 2012 and 31 December 2015 and would need to consider an additional 42,416 documents if that date range was extended to 30 September 2017. Based on the average rate of review, [Bombardier] estimates that the first level review of the additional documents will take approximately 100 days of human review time, with consequent additional cost to be incurred by [Bombardier] as a result.
[12] Bombardier's Submissions [16].
In oral submissions, Bombardier suggests a staged approach could be taken. It suggests that the position could be re‑evaluated after documents have been discovered under Category 2, or under Category 30. The latter requires discovery of any documents of which a party is or becomes aware that are adverse to a party's case, or which support the case of the other party. It submits that, after that discovery, the likely forensic benefit of extending the date range in Category 1 could be better assessed against the burden.
Bombardier also submits that, if there are documents after December 2015 that would fall within Category 1 if the end date was extended, they are likely to be privileged. The parties have been in dispute since July 2015, and Mr Ouellette had a legal role.[13]
[13] ts 327 ‑ 329.
In my view, the discovery period in Category 1 should be extended to the date sought by AVWest, of 30 September 2017.
First, the documents are sought to establish the existence of the alleged oral agreements and their terms. The documents sought are directly relevant to those issues. Those issues are of critical forensic significance. AVWest's primary claims are in relation to the oral agreements with the alternative claims of estoppel.
Second, conduct after the alleged agreements were made is admissible in determining whether a binding agreement had been reached and in identifying its necessary terms.[14] If there was an oral agreement as alleged by AVWest, an internal review by Bombardier of the contractual arrangements could provide strong evidence of it. So too would a documented decision to terminate or ignore such an oral agreement.
[14] Fazio v Fazio [2012] WASCA 72 [193] ‑ [195] (Murphy JA, with whom Newnes JA agreed). See also Pullin JA [10], [13]. This was recently endorsed by the Court of Appeal in La Mela v Franklexis Pty Ltd [2020] WASCA 83 [95].
Third, AVWest alleges that Bombardier began failing to honour the agreements in around 2015. It was around the time that most, if not all, of Bombardier's executives with whom AVWest's representatives transacted (and with whom AVWest says the alleged oral agreements were agreed) left their employment with Bombardier. AVWest's case theory is that the incoming executive team conducted a review and decided to change how it dealt with AVWest.[15] There is some documentary support for this theory, showing that in 2016 Bombardier intended to change its business model in a number of significant respects.[16]
[15] AVWest's Submissions [21] ‑ [22].
[16] AVWest's Submissions [23].
Fourth, AVWest cannot know what internal documents Bombardier created in 2016 and 2017 which would fall within Category 1. AVWest is only aware of the review in 2017 because Mr Ouellette emailed Mr Roberts about it. In my view, it is likely that Bombardier created a number of documents in 2016 and 2017 that dealt with the contractual arrangements between the parties, and of which AVWest is not aware. If there were oral agreements as alleged, it is likely that there would be documents referring to those agreements and indicating Bombardier's attitude to them. Mr Ouellette's email of 5 December 2016 is of itself sufficient reason to conclude that there is likely to be a significant forensic benefit to AVWest if the discovery period is extended as it seeks.

Fifth, while a number of the documents created after December 2015 may be privileged, I do not accept that it is likely that all of them would be. In particular, I consider that it is likely that there were communications within Bombardier as to the contractual arrangements with AVWest for the purposes of running the business, rather than for the purposes of legal advice or for use in pending or contemplated litigation.
Sixth, the quantum of the claim is high. If AVWest succeeds in its claims in relation to the alleged oral agreements or estoppel, its damages are alleged to be US$400,000,000. The additional discovery costs that will be incurred by Bombardier by the extended date range, while substantial, are not disproportionate to the amount of the claim, or to the likely forensic benefit in the context of that amount.
Seventh, while the proceedings are not particularly complex, they are important. In particular, the parties continue to have a commercial relationship, and continue to deal with each other in relation to matters which might be covered by the alleged oral agreements if they were made.[17]
[17] AVWest's Submissions [25].
Having regard to these matters, I am satisfied that the additional costs and delay in discovery that will be caused by the longer time period is proportionate to the forensic benefit likely to be obtained from that longer period, and to the value and importance of the proceedings. I am satisfied that the likely forensic benefit outweighs the additional costs and delay.
I do not accept Bombardier's alternative proposal that there be discovery of all documents relating to the meetings and documents in AVWest's List, instead of extending the date range of Category 1. As I have said, AVWest cannot know what internal documents Bombardier created in 2016 and 2017 which would fall within Category 1. AVWest's List is self‑evidently limited to what it is aware of.
Nor do I accept Bombardier's proposal made in oral submissions of a staged approach. While I acknowledge that it was a useful and sensible suggestion, I consider that the likely forensic benefit of the documents is such that there should not be a staged approach.
Accordingly, I consider that Category 1 should cover documents within the date range proposed by AVWest.
The remaining disputes relate to various sub‑categories of Category 1.

Sub-Category (c)

Sub‑Category (c) is an agreed sub‑category of Category 1. The parties are in dispute about two aspects of this sub‑category.
First, the parties dispute the date range. This is the same dispute as the dispute in relation to Category 1 overall. For the same reasons, the date range should end on 31 September 2017.
Second, there is a dispute as to the scope of the documents. AVWest seeks to include the words underlined and in bold:
[A]ny budgets, reports, internal finance documents, accounting records, pricing policies, audit statements, [production and sales and inventory levels (including forecasts)] or other Documents dated or created [in the date range] (and in the case of the pricing policies, from 1 September 2012 to present) relating to the actual or estimated revenue, expenses, [inventory levels] and/or profitability of the alleged oral agreement and all purchase agreements allegedly covered by the alleged oral agreement.
I will refer to these as the 'Disputed Documents'.
Bombardier refers to the wide range of documents already captured by Sub‑Category (c). It submits that the Disputed Documents are of a different type.[18]
[18] ts 313 ‑ 314.
Bombardier submits that the time and cost of extending Sub‑Category (c) to the Disputed Documents is likely to be significant. It submits (references to evidence omitted):[19]
Obtaining documents relating to production and sales and inventory levels (including forecasts) would require [Bombardier] to obtain and review documents from within a number of teams within its business: Finance, Sales, Operations, Contracts, Program Management, Customer Account Manager, and Program COO Department. [Bombardier] currently employs a large number of personnel across these teams and at least 75 of those personnel are involved in preparing documents relating to production and sales and inventory levels (including forecasts). Production and inventory levels change as frequently as daily and the proposed sub-category spans a period of five plus years. Therefore, the number of people who could potentially hold documents relevant to [Bombardier's] production and sales and inventory levels (including forecasts) over the period, and the number of documents that could be involved, is potentially large. For these reasons, discovery of documents of this type ought only be required in the event that it could be identified that there was some clear and compelling forensic benefit to locating certain documents. No such benefit has been identified and, therefore, the proposed additions to the Sub-Category should be refused.
[19] Bombardier's Submissions [25].
Bombardier submits that, unless AVWest identifies some clear and compelling forensic benefit, the Disputed Documents should not be included in Sub‑Category (c).[20]
[20] Bombardier's Submissions [25].
AVWest submits that the Disputed Documents are relevant in two ways.[21]
[21] AVWest's Submissions [38] ‑ [39].
First, AVWest submits that the Disputed Documents are relevant to the replenishment term. AVWest submits (references to pleadings omitted):[22]
[AVWest's] case is that the oral agreements included a 'replenishment term'. [Bombardier's] documents relating to its actual and forecast production, sales and inventory levels are relevant to whether [Bombardier] adhered to allocating new or existing aircraft positions in production to [AVWest] as and when [AVWest's] aircraft positions were sold or expected to be sold. Such documents are relevant to the existence and implementation of the replenishment term in the oral agreements.
[22] AVWest's Submissions [38].
That is, AVWest says the Disputed Documents are relevant because they will show whether Bombardier allocated aircraft positions to AVWest as and when AVWest's aircraft positions were sold, or expected to be sold, to third‑party buyers. If it can be shown that Bombardier did this, this would support an inference that there was an oral agreement with a replenishment term as AVWest alleges.
In oral submissions, Bombardier said that the allocation of aircraft positions would not be recorded in documents which dealt with 'production and sales and inventory levels (including forecasts)'.[23]
[23] ts 314 ‑ 316.
There is no evidence either way. On the one hand, it is for AVWest to establish a likely forensic benefit. On the other hand, whether or not the allocation of aircraft positions would be recorded in the Disputed Documents is purely within the knowledge of Bombardier, and Bombardier did not adduce any evidence to support its submission. In my view, the absence of evidence from Bombardier can be taken into account in deciding whether AVWest has established a likely forensic benefit.
It is, however, unnecessary to decide whether AVWest has established this. That is because of the second submission made by Bombardier.
Bombardier's second submission was that, in any event, any document which did record any allocation of aircraft positions would be captured by paragraph (c) of Category 1.[24] That paragraph captures all documents relating to the replacement of aircraft positions provided by Bombardier to AVWest, including any rolling purchase programs agreed to for such aircraft.
[24] ts 316 ‑ 317. See also ts 338.
I accept this submission. If, for example, documents recording Bombardier's production, sales and inventory levels showed a build‑up of inventory which was then passed to AVWest each quarter, they will be discovered under paragraph (c) of Category 1.
The second way in which AVWest submits that the Disputed Documents are relevant is to the co‑operation term. AVWest submits (references to pleadings omitted):[25]
[AVWest's] case is that the oral agreements also included a 'cooperation term'. Documents setting out the production, sales and inventory levels will show how [AVWest's] positions were shown and managed by [Bombardier] vis‑à‑vis other third‑party positions.
[25] AVWest's Submissions [39].
I do not understand how the way in which AVWest's positions were shown and managed by Bombardier compared to other third‑party positions could be relevant to the co‑operation term. In any event, any such documents would be captured by paragraph (b) of Category 1. That paragraph captures all documents relating to co‑operation between the parties with respect to the marketing and resale of aircraft to be purchased by AVWest from Bombardier and sold to third‑party buyers.
I am not satisfied that the Disputed Documents will be of significant forensic benefit other than potentially in relation to the existence and implementation of the alleged replenishment term. If they are relevant to the existence and implementation of that term, they will be discovered under paragraph (c) of Category 1.
Having regard to all of the circumstances, I do not accept that Sub‑Category (c) should include the Disputed Documents.
That said, I would give AVWest leave to re‑agitate this issue after there has been discovery in accordance with these reasons. If the issue is re‑agitated, I would expect Bombardier to adduce evidence to support its submissions if it intends to maintain them.

Sub-Category (d)

In Sub‑Category (d), AVWest seeks documents evidencing the key performance indicators and incentives for Bombardier's sales team and agents in respect of all sales of Global 6000, 7000, and 8000 aircraft.
Bombardier submits that AVWest has not explained how these documents could be relevant to the co‑operation term, and has not adduced any evidence from which it could be inferred that these documents could be relevant to the co‑operation term.[26] Bombardier also submits that the co‑operation term may not even be in issue as it is common ground that, if the alleged oral agreements were made, they were not complied with. Bombardier said that the primary dispute will be whether the alleged oral agreements had been made.[27]
[26] ts 317 and see also Bombardier's Submissions [28].
[27] See ts 318 and Bombardier's Submissions [27].
AVWest submits that these documents should be discovered because Bombardier has denied the allegation that it manifested an intention not to, and does not intend to perform, the alleged oral agreement.[28] It submits (reference to the pleading omitted):[29]
Documents which evidence the KPIs and incentives of [Bombardier's] sales team or its agents are relevant to the cooperation provided by [Bombardier] to [AVWest] for the marketing and resale of aircraft, being one of the terms of the oral agreements (i.e. the 'cooperation term' referred to above). The incentivisation given to [Bombardier's] employees to market [Bombardier's] positions versus [AVWest's] positions and as compared with positions of other third-party sellers and with positions of customers dealing directly and only with [Bombardier] (and how they changed over time) is relevant to the existence and implementation of the cooperation term, the 'minimum net returns term' and the replenishment term and the subsequent manifestation of [Bombardier's] intention to not abide by such terms.
In short, how did the incentives differ between [Bombardier's], [AVWest's] and other third-party's aircraft positions? Documents relevant to that question will be relevant to the existence and implementation of the terms of the alleged oral agreements.
[28] AVWest's Submissions [41].
[29] AVWest's Submissions [42] ‑ [43].
In oral submissions, AVWest explained that, if the alleged oral agreements were made, it is to be expected that there would be key performance indicators reflecting the terms. AVWest said that one would expect, for example, there to be a bonus for each position sold, but, in relation to those that had been sold to AVWest, there would be an additional bonus for every on‑sale to a third party, evidencing the co‑operation term and whether the alleged oral agreements were made.[30]
[30] ts 303 ‑ 304.
In my view, the relevance of such documents is plain. They would plainly be relevant to whether there was a co‑operation term. I also accept AVWest's submission that they would be relevant to whether the alleged oral agreements were even made.
Bombardier submits that the sub‑category goes well beyond what could possibly be relevant. It notes that it would capture every key performance indicator, and every incentive for any member of the sales team or any agent for sales of any Global 6000, 7000 and 8000 aircraft over the entire period. It notes that there is no suggestion that every single member of the sales team and every single agent was involved with AVWest.[31]
[31] ts 317.
Bombardier submits that the task of locating and preparing any such documents for production is likely to be burdensome. It says (references to evidence omitted):[32]
[Bombardier's] sales team and agents work largely by reference to individual contractual arrangements; there are no overarching policies which control these matters. Currently, [Bombardier] has 28 sales directors who are involved in selling Global 6000, 7000, 8000, and 7500 aircraft (being the models of aircraft purchased by [AVWest] and which are relevant to its claims). Therefore, the discovery exercise would involve identifying the individual contract of every member of the sales team and every agent over a period of more than eight years, and [Bombardier] would be required to continue to undertake that exercise up until trial. Each of these documents would then need to be redacted to remove commercially and personally sensitive information. Where information was commercially or personally sensitive and relevant an additional version of the document would need to be created for disclosure into the confidentiality ring. Such a process, when balanced against the relative forensic benefit of any such documents, would, in [Bombardier's] submission, be disproportionate.
[32] Bombardier's Submissions [29].
I accept that Sub‑Category (d) is expressed more broadly than is justified. It goes well beyond documents that may be of forensic benefit.
In my view, the scope of Sub‑Category (d) should be narrowed so that it only captures documents of more obvious relevance. This would include documents which evidence key performance indicators and/or incentives in relation to the on‑sale of aircraft that had been sold.
In my view, if the sub‑category was limited to documents of more obvious relevance, the burden on Bombardier would not be disproportionate to the forensic benefit likely to be obtained.
As neither party proposed this, I will give the parties an opportunity to be heard as to whether it would be appropriate to include the sub‑category in more limited terms and, if so, what those terms should be. Alternatively, the parties may prefer to postpone further consideration of this sub‑category until after there has been discovery in accordance with these reasons.

Sub-Category (k)

By Sub‑Category (k), AVWest seeks discovery of all documents evidencing Bombardier's distributorship arrangements and on‑sale commitments with third parties.
AVWest notes that there is some evidence that Bombardier entered into various distributorship or resale arrangements with third parties and that it subsequently determined to end such arrangements and to focus on 'direct marketing'.[33] It submits (footnote omitted):[34]
[Bombardier's] case is focussed on the premise that the oral agreements (which is the basis for [AVWest's] resale arrangement) did not exist or are not enforceable under New York law (which it says applies). The existence of comparable arrangements and the termination of them (or settlement of any disputes arising out of the termination of them) is relevant to the existence of, implementation of and intention not to abide by, the oral agreements the subject of these proceedings.
[33] See AVWest's Submissions [23] and [45].
[34] AVWest's Submissions [45].
It is apparent from this submission that the asserted relevance is indirect and speculative. That is, AVWest seeks documents which show that Bombardier entered into oral agreements with other parties, and terminated them. AVWest would then rely on any such documents to support the inference that Bombardier did this with AVWest.
AVWest also seeks to rely on a statement made by a Mr Nemes of Bombardier that 'there are corporate policies setting up a chain of approvals which must be obtained prior to a purchase agreement being agreed and executed'.[35] AVWest submits that:[36]
The flavour of Mr Nemes' evidence is that these policies were invariably followed, both in respect of [AVWest] and third parties more generally. That being Mr Nemes' evidence, [AVWest] ought to be entitled to discovery of documents which evidence whether these policies were followed in respect of [AVWest] and third parties more generally.
[Bombardier] appears to accept this insofar as [AVWest] is concerned (see sub‑category (j) which is agreed) but not insofar as third‑parties are concerned.
[35] AVWest's Submissions [46].
[36] AVWest's Submissions [47] ‑ [48].
Bombardier submits that the reliance on Mr Nemes' evidence is misconceived for a number of reasons. In particular, it says that AVWest has misunderstood, and taken out of context, what Mr Nemes was saying. It points out that the full context is as follows:[37]
I am aware, from performing my role at Bombardier, that for a new prospective customer, Bombardier generally follows certain steps in relation to the sale of an aircraft. I have set out below my understanding of these steps. These steps may not all be followed in the case of a repeat customer and may vary depending on the type of aircraft sold and how far into the future the proposed delivery date is. Separate and apart from these steps, I am aware that there are also corporate polices setting up a chain of approvals which must be obtained prior to a purchase agreement being agreed and executed.
[37] Bombardier's Submissions [34].
I accept that AVWest is relying on a single sentence in Mr Nemes' affidavit. Nevertheless, that sentence is 'Separate and apart from these steps, I am aware that there are also corporate polices setting up a chain of approvals which must be obtained prior to a purchase agreement being agreed and executed' (emphasis added).
There is no evidence before me as to whether Bombardier intends to adduce evidence that one reason to reject AVWest's allegations is that Bombardier would not have acted in the way alleged because it would have been inconsistent with its policies. Nor is there any evidence as to whether Bombardier intends to adduce evidence that one reason to reject AVWest's allegations is that Bombardier did not enter into oral agreements.[38] If Bombardier did intend to adduce that evidence, the documents sought in Sub‑Category (k) would be more obviously and directly relevant, and likely to be of greater forensic benefit.
[38] And see ts 305.
Bombardier also submits:[39]
[I]t is likely that any documents which would respond to this category would be highly commercially sensitive and, as such, significant burden would be involved in disclosing the documents as redactions would need to be applied including, potentially, through liaison with the counterparty.
[39] Bombardier's Submissions [36].
I accept this submission.
Further, I note that if Bombardier is, or becomes aware of, any documents that support AVWest's case, it will discover them under Category 30. This would include, for example, documents that show it had oral agreements with parties other than AVWest which it terminated, sought to terminate, or ceased to comply with, in and after 2015.
At this stage, I am not satisfied that documents in Sub‑Category (k) should be discovered. If, however, Bombardier indicates an intention to adduce evidence to the effect I have described, the issue may be revisited afresh.

Sub-Category (l)

By Sub‑Category (l), AVWest seeks discovery of 'accounting policies or other Documents dated or created between 1 September 2012 and present evidencing the treatment by [Bombardier] of sales to [AVWest]'.
Bombardier is willing to discover policies that specifically deal with AVWest. AVWest wants all policies, noting that many policies that apply to it are unlikely to specifically name it.
AVWest submits that general policies will show how sales to AVWest and to other third parties were treated. It submits this will evidence whether the alleged oral agreements existed.[40] In oral submissions, AVWest offered a hypothetical example of a policy that says, 'where you have entered into an arrangement which repeats, we are going to have to account for future revenues from that repeating arrangement'.[41] I accept that documents of this nature would be relevant.
[40] AVWest's Submissions [51].
[41] ts 309.
Bombardier submits that:[42]
[AVWest] presses for discovery by reference to the broader category and, in those circumstances, the category is unduly broad and oppressive and would capture a vast amount of information with no, or very limited, relevance to any matter in issue in the proceedings. [Bombardier] is a large company that operates across multiple industries. Such companies, by their nature, tend to have a large number of very long policy documents that may be responsive to the category but would have no forensic benefit. The time and cost involved in responding to a discovery category of all such documents over an eight year period would be wholly disproportionate to any forensic benefit that would be obtained and should be refused.
[42] Bombardier's Submissions [40].
I accept that Sub‑Category (1) is expressed more broadly than is justified, and goes well beyond documents that may be of forensic benefit.
Bombardier helpfully proposed a number of alternative solutions.[43] I am attracted to aspects of those proposals, with some modification.
[43] ts 321 ‑ 322.
As this was not a matter that was fully argued, I would invite the parties to confer and endeavour to agree a more limited sub‑category of documents that would be expressly directed to the specific issues. Alternatively, the parties may prefer to wait until after there has been discovery in accordance with these reasons. A hybrid solution would be to limit the scope to documents relating to revenue recognition in relation to sales to AVWest, to capture the hypothetical example, and then revisit a broader category after the first tranche of discovery.
Having regard to all of the circumstances, I consider that the documents in Sub‑Category (l) as it is currently expressed should not be discovered. I will, however, hear from the parties as to whether documents of a more limited scope should be discovered, now or later.

Conclusion

For the reasons I have given, I consider that:
1.the date in Category 1 (and Sub‑Category (c)) should extend to 30 September 2017;
2.Sub‑Category (c) should not include the words sought by AVWest;
3.Sub‑Categories (d) and (l) should not be included in their current terms;
4.Sub‑Category (k) should not be included.
I will hear from the parties as to whether they propose a more limited scope of Sub‑Categories (d) and (l), as to the form of orders and as to costs.
Finally, I note that there appears to be a typographical error in the wording of Sub‑Category (g) ('being documents provide any') and invite the parties to correct it.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SW
Associate to the Honourable Justice Archer
3 DECEMBER 2020