Beijing Hua Xin Liu He Investment (Australia) Pty Ltd v Zeus Technology HQB Pty Ltd - [2022] WASC 415

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   BEIJING HUA XIN LIU HE INVESTMENT (AUSTRALIA) PTY LTD -v- ZEUS TECHNOLOGY HQB PTY LTD [2022] WASC 415
CORAM:   ALLANSON J
HEARD:   21 NOVEMBER 2022
DELIVERED          :   7 DECEMBER 2022
FILE NO/S:   CIV 2003 of 2020
BETWEEN:   BEIJING HUA XIN LIU HE INVESTMENT (AUSTRALIA) PTY LTD
Plaintiff
AND
ZEUS TECHNOLOGY HQB PTY LTD
Defendant
ZEUS TECHNOLOGY HQB PTY LTD
Plaintiff by counterclaim
BEIJING HUA XIN LIU HE INVESTMENT (AUSTRALIA) PTY LTD
Defendant by counterclaim

Catchwords:

Practice and procedure - Further discovery - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	SCM Wong
Defendant	:	C Mcintosh
Plaintiff by counterclaim	:	C Mcintosh
Defendant by counterclaim	:	SCM Wong

Solicitors:

Plaintiff	:	Squire Patton Boggs
Defendant	:	Irwin Legal
Plaintiff by counterclaim	:	Irwin Legal
Defendant by counterclaim	:	Squire Patton Boggs

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

Beecham Group Ltd v Bristol-Myers Co [1979] VR 273
Cazaly Iron Pty Ltd v Bowler [2006] WASCA 282
Re McGorm; Ex parte Co‑operative Building Society of South Australia (1989) 20 FCR 387
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218
Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd [No 4] [2009] WASC 17
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

ALLANSON J:

Introduction

On 12 July 2022, the defendant, Zeus Technology HQB Pty Ltd, applied by summons for orders for further discovery of documents in three categories. The summons was amended on 15 November 2022 (after submissions had been filed) to narrow the first category.
The plaintiff, Beijing Hua Xin Liu He Investment (Australia) Pty Ltd, was incorporated in Australia in 2010, as a wholly owned subsidiary of Beijing Hua Xin Liu He Investment Pty Ltd. The shareholding has since changed. In these reasons, I refer only to the Australian company (Beijing Australia).
Discovery orders had earlier been made at a strategic conference on 13 April 2021. Those orders required 'standard discovery', rather than by categories. At the strategic conference I elaborated on the meaning of that order: discovery was required of all directly relevant documents, being 'all the documents … on which each party intends to rely, all documents that adversely affect the party's own case, the documents that support another party's case, and the documents that adversely affect another party's case'.[1]
[1] ts 13 April 2021, 54.

The pleaded cases

The statement of claim

Beijing Australia filed a writ with statement of claim on 2 October 2020, and has not since amended its pleading.
Beijing Australia pleads that from at least April 2011 to June 2016, Beijing Australia and Zeus were in a business importing solar panels and associated equipment and LED electronic products into Australia from the People's Republic of China for sale in the Australian domestic market.[2]
[2] Statement of Claim [5].
Mr Xin Lu, the sole director of Zeus, was the company secretary and chief executive officer of Beijing Australia.[3]
[3] Statement of Claim [4].
In furtherance of the solar panel business, Mr Lu was responsible for and supervised all operational matters in Australia, including:
(a)the supply of Products from Beijing Australia to Zeus and documenting the supply of such Products;
(b)Beijing Australia issuing invoices to Zeus for the Products supplied to it by Beijing Australia;
(c)the payments made by Zeus to Beijing Australia for the Products and recording such payments;
(d)the maintenance of Beijing Australia's books and records and the the preparation of Beijing Australia's financial statements (Beijing Australia's Financial Records);
(e)the maintenance of Zeus's books and records and the preparation of Zeus's financial statements (Zeus's Financial Records); and
(f)reconciling Beijing Australia's Financial Records with Zeus's Financial Records.[4]
[4] Statement of Claim [6].
Beijing Australia pleads that between about 21 April 2011 and about 22 June 2016, when the relationship with Zeus ended, Beijing Australia supplied and Zeus accepted products with a combined value of $65,343,169.11, inclusive of GST and issued invoices to Zeus for supply of the stock. Zeus became liable to pay the amount the subject of the invoices.[5]
[5] Statement of Claim [7].
Beijing Australia pleads that at 30 June 2016, the outstanding balance of the invoices was $791,713 inclusive of GST.[6]
[6] Statement of Claim [9].
Beijing Australia pleads that it has demanded payment and Zeus has not paid. Beijing Australia claims that sum and interest.

The defence and counterclaim

The current defence pleading is a Further Re-Amended Defence, Set‑Off and Amended Counterclaim, filed on 30 July 2021.

The defence

Zeus denies that Mr Lu was the chief executive officer of Beijing Australia and pleads that Mr Lu was an unpaid company secretary of Beijing Australia, subject to the direction and control of the Managing Director of Beijing Australia, Ms Shan Chen, and not involved in the sale of the Beijing Australia product.[7]
[7] Defence [2].
Zeus pleads that Beijing Australia was in the business of importing solar panels and associated equipment and LED electronic products into Australia, and denies that Zeus was in that business.[8]
[8] Defence [4].
Central to the defence of Zeus is the plea that, in March/April 2011, Beijing Australia and Zeus entered an agreement, defined as the Debtor Insurance Agreement, by which Zeus agreed to assist and facilitate Beijing Australia obtaining debtor insurance cover with QBE Insurance.[9]
[9] Defence [5].
Zeus pleads that the agreement was made through their representatives, Mr Lu and Ms Chen. It was partly oral and partly written. Zeus relies on 'several discussions held between Ms Chen and Mr Lu in March and April 2011'.[10] Zeus also relies upon a written agency agreement, dated 9 April 2011, which Beijing Australia denies,[11] and which neither party has been able to produce. It is not in dispute that Zeus obtained a policy of debtor insurance with QBE Insurance.
[10] Defence [5.2].
[11] Reply and Defence to Counterclaim [4].
Beijing Australia requested particulars of the defence. Those particulars were provided, although not filed. They are attached to the affidavit of Mr Lee. Relevantly, Zeus stated that the Debtor Insurance Agreement was made in discussions between Mr Lu and Ms Chen by telephone on 6 April 2011 and 8 April 2011, and by an email to Ms Chen on 9 April 2011.[12]
[12] Affidavit of Louis Lut-Yui Lee, sworn 14 October 2022, LLL5.
Zeus pleads express terms of the Debtor Insurance Agreement as follows:
5.4.1the Plaintiff would be solely responsible for the importation, storage, transportation, and the selling of the Product to its customers and, in doing so, would also provide credit terms to many of its customers;
5.4.2the Defendant would take out a debtor insurance policy under its own name to obtain coverage for the Plaintiff in respect of any debtor losses that the Plaintiff might incur in relation to the sales to its customers;
5.4.3the Defendant would grant the Plaintiff's staff with access to its accounting software (Pronto) that enabled the Defendant to generate sales orders, stock and would issue invoices to the Plaintiff's customers in the Defendant's name;
5.4.4the Plaintiff would generate invoices to the Defendant in its own financial records (MYOB) in keeping with the sales information entered on Pronto;
5.4.5the Plaintiff's customers would pay the Defendant for invoices issued by the Plaintiff in the Defendant's name;
5.4.6the Defendant would, from time to time on-pay the Plaintiff the aggregate amounts that were received from the Plaintiff's Customers;
Zeus further pleads that, in order to assist in the performance of the Debtor Insurance Agreement, Mr Lu:
(1)gave Ms Chen authority to operate and access Zeus bank accounts, and thereby monitor and pay any amount owed to Beijing Australia;
(2)in January 2012, gave the Beijing Australia in-house accountant authority to view Zeus banking records;
(3)gave Beijing Australia staff access to its Pronto accounting records through its website portal so that they could directly conduct Beijing Australia's business;
(4)authorised Beijing Australia staff to directly contact QBE Insurance for purposes including carrying out credit checks and setting credit limits and terms.[13]
[13] Defence [6].
In answer to Beijing Australia's claim for $791,713, Zeus pleads that it completed a reconciliation of accounts between the invoices issued by Beijing Australia to Zeus, and invoices issued to the customers of Beijing Australia. Zeus pleads that there are no invoices evidencing the supply of product to it by Beijing Australia in the aggregate sum claimed. Zeus further pleads that, in breach of the terms of the Debtor Insurance Agreement, Beijing Australia had overcharged Zeus and wrongfully deducted $2,349,759.35 from its bank account.[14]
[14] Defence [8].
In particular, Zeus pleads that the sum of $791,713 includes four invoices, for a total of $378,541.18 that were provided to it for the first time on or about 30 October 2020, that were not created pursuant to the Debtors Insurance Agreement at the request of Zeus, that were not orders actually made by it, and that relate to four containers from Beijing Australia's parent company that were invoiced to Beijing Australia and delivered to different locations in Australia in or about June 2013.[15] Zeus pleads that some of the solar panels were not sold or delivered by Beijing Australia to Zeus, and the remaining panels were later sold by Beijing Australia to its customers.

The counterclaim

[15] Defence [8.4].

In its counterclaim, Zeus repeats its defence and pleads that it authorised Beijing Australia to withdraw money from the Zeus bank account in the gross sum of $11,241,155.08 because of a mistake of fact in that Beijing Australia was only withdrawing sums corresponding to the amounts received by Zeus, from time to time, as the result of sales.[16] Zeus pleads the amount withdrawn exceeded the sum received by Zeus by $2,349,759.35.[17]
[16] Counterclaim [14.1].
[17] Defence [8.3], Counterclaim [14.1].
Zeus pleads that the mistake was caused by the failure of Beijing Australia's staff to accurately record in the Pronto accounting records the agreed price for the sale of a product, leading to differences between the agreed price recorded in the Pronto accounting records and the price recorded in the MYOB software.
The substance of the dispute, as explained by counsel for Zeus, is that Beijing Australia says it provided products to Zeus for Zeus to sell to customers in Australia. Zeus says its role was limited to holding the debtors' insurance policy in its name, and being, in name only, the supplier of the products. It does not, however, appear to be in dispute that Zeus received payment for products sold in Australia into its bank account.

The reply and defence to counterclaim

In its reply, and in the defence to counterclaim, Beijing denies that a Debtor Insurance Agreement was made to the effect alleged.[18]
[18] Defence to Counterclaim [4].
Beijing Australia pleads:
(i)Beijing Australia's Financial Records record the sale of Products by Beijing Australia to Zeus.
(ii)Zeus's Financial Records record the purchase of Products by Zeus from Beijing Australia.
(iii)Zeus's Financial Records record the sale of Products by Zeus to customers.
(iv)Zeus issued invoices to customers for the sale of the Products (Zeus Invoices).
(v)The Zeus Invoices included an amount in respect of Goods and Services Tax (GST).
(vi)Zeus received payments from Customers in respect of the Zeus Invoices.
(vii)Zeus was the named insured under QBE Insurance (Australia) Ltd trade credit insurance policy ….
(viii)The Insurance Policy records Zeus as being in the business of the sale of, among other things:
A.Solar Panels;
B.Solar Panels and Components; and
C.Solar Inverters, Solar Mounting Systems, Cables, Accessories, LED Lighting and Lighting Accessories.

The categories sought

Zeus seeks an order that Beijing Australia file and serve an affidavit stating whether the following documents have at any time been in its possession, custody or power and if not then in its possession, custody or power, when it parted with them and what became of them:
(i)All emails (with attachments, as the case may be) sent and/or received by Ms Shan Chen from the email address [gmail address stated] between about 1 January 2011 and about 22 June 2016, in respect of:
(a)The plaintiff's operations with the defendant;
(b)The plaintiff's involvement with the defendant;
(c)The plaintiff's access to and use of any of the defendant's internet banking and bank accounts;
(d)Any solar panel and/or LED products business carried on by the plaintiff and/or the defendant;
(e)Any debtor insurance agreement, arrangements and/or discussions between the plaintiff and/or the defendant;
(f)Purchase cost/s incurred by the plaintiff and/or the defendant for the Products;
(g)The plaintiff's access to and/or use of the defendant's Pronto accounting software (Software) and/or devices which contained the Software; and
(h)Any transfers of funds made by Ms Shan Chen from the defendant's bank account;[19]
(ii)All documents relating to the plaintiff's creation of invoice numbers 00011471 to 00011474, purchase orders 13CK18, 13CK19, 13CK21 and 13CK22, and delivery of Stock in Australia that is the subject of the said invoices; and
(iii)All signed delivery dockets for the period of 21 April 2011 to 22 June 2016.
[19] Zeus Technology originally sought all emails sent or received from the gmail account or from any other email accounts used by Ms Chen, employees, representatives and/or agents of the plaintiff between about 21 April 2011 and about 22 June 2016.
Zeus also seeks an order for inspection under O 26 r 8.
The categories of documents sought by Zeus are wide. But for category (iii), Zeus does not specify the particular document or class of documents sought, but seeks all documents 'in respect of' or 'relating to' particular topics.

The evidence

The parties read these affidavits.
(1)affidavit of Xin Lu, sworn 12 July 2022;
(2)affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022;
(3)affidavit of Shan Chen, affirmed 22 June 2021 (Beijing Australia's first affidavit of discovery, filed 5 July 2021 with an affidavit of Ning Cao, translator, affirmed 5 July 2021).[20]

Mr Lu

[20] Ms Chen made two supplementary affidavits of discovery, on 3 March 2022 and 10 September 2022, that were not read in the application.

Mr Lu is the sole director of Zeus.
Mr Lu deposed that, in discovery given on 22 June 2021, Beijing Australia included about 28 emails sent to and received from the gmail address of Ms Chen. Zeus also discovered emails from, or sent to, the gmail address.
Mr Lu deposed to his belief that Zeus discovered emails related to matters including those set out in the proposed category for further discovery, (i)(a) to (h) that had not been discovered by Beijing Australia. Mr Lu attached 83 pages of emails,[21] some of which are email chains where one of the emails is from the gmail address.
[21] Affidavit of Xin Lu, sworn 12 July 2022, XL1.
Mr Lu deposed to his belief that Beijing Australia kept 'Zeus invoices and signed Zeus delivery dockets' at its Queensland office. He deposed that Beijing Australia carried on an Australian business known as Zeus Appollo Solar. Mr Lu deposed that, on a potential sale, a Beijing Australia employee would generate a sales order in the name of Zeus and email that order to Zeus, along with a request for a Zeus invoice and delivery docket for that order. Beijing Australia would deliver or supply the products to its customer, and have that customer sign a corresponding delivery docket confirming the products were received. Beijing Australia kept signed delivery dockets as 'proof of delivery'.[22]
[22] Affidavit of Xin Lu, sworn 12 July 2022 [9].
Mr Lu attached 278 pages of copies of emails, sales order records, and pro forma invoices and blank delivery dockets created by Zeus.[23] The invoices and delivery dockets are in the name of Zeus and generated from Zeus' Pronto system.[24] The emails requesting a 'pro forma' are from an email account in the name 'zeusappollosolar'.
[23] Affidavit of Xin Lu, sworn 12 July 2022, XL2.
[24] Affidavit of Xin Lu, sworn 12 July 2022 [12].
There is other evidence in the affidavit of Mr Lee that Zeus Appollo Pty Ltd was one of three separate companies related to the business of Beijing Australia and Zeus. But there is no evidence about the relationship between the companies, and neither party pleaded the business of Zeus Appollo Solar as a material fact.
Mr Lu deposed to his belief that the delivery dockets signed by the customer relate to issues raised in the defence and counterclaim. Mr Lu states that he believes the signed delivery dockets are relevant to 'various issues' raised in the defence, including:
(1)whether Beijing Australia was in the business of importing the products;
(2)whether Mr Lu was involved in the sale of the products;
(3)the performance of the alleged Debtor Insurance Agreement;
(4)arrangements between Zeus and Beijing Australia in relation to the creation of sales orders, stock, invoices from Zeus to customers, invoices from Beijing Australia to Zeus, and any background as to the timing and amount of payments made from Zeus' bank account to Beijing Australia.
Mr Lu also adduced evidence about the four invoices, in relation to which Zeus seeks further discovery.
Mr Lu attached emails, discovered by Zeus, attaching import and shipping documents which appear to correspond with Order Numbers in the four disputed invoices.[25] Beijing Australia did not discover any of those documents.
[25] Affidavit of Xin Lu, sworn 12 July 2022, XL4.
The attached documents include an invoice to Beijing Australia from its parent company, a packing list, packing declarations, freight debit notes, bills of lading for consignment to Redset Group Pty Ltd, and two bills of lading 'to order of shipper' (Beijing China).

Mr Lee

Mr Lee is a lawyer employed by the solicitors for Beijing Australia.
Mr Lee attaches records of the Australian Securities and Investments Commission in respect of both Beijing Australia and Zeus. In particular, in the period 21 April 2011 to 22 June 2011, both companies shared the principal place of business at premises in Welshpool, and Mr Lu was the only officer of Beijing Australia resident in Western Australia.
Mr Lee also attached an email from Mr Lu to Ms Chen, dated 7 May 2014, which sets out a business structure in Australia that included three companies - Zeus Appollo Pty Ltd, Sino Australia Renewable Energy Pty Ltd and Solamine Pty Ltd - as well as the parties, all managed by the same staff team. None of those companies is mentioned in the pleadings.[26]
[26] Affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022, LLL3.
Mr Lee sets out the documents delivered to Beijing Australia or its agents by Mr Lu between 16 and 27 June 2016 including electronic documents and nine boxes of hard copy documents. He deposes that Beijing Australia has discovered all documents delivered by Mr Lu in June 2016.[27]
[27] Affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022 [10], [14].
The chamber summons for discovery, filed by Zeus, originally sought discovery of documents from four email accounts conducted by Ms Chen. Mr Lee briefly describes all four accounts. The only account for which Zeus now seeks discovery, Ms Chen's gmail account, is described as not ordinarily used for Beijing Australia business, but was used a small number of times when her primary business account could not be accessed.[28]
[28] Affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022 [16(b)].

Mr Lee deposed that at least 1,997 emails had been discovered from Ms Chen's email accounts, the majority being from the primary business account.
As to category (ii), Mr Lee, in effect, confirms that, other than those documents discovered in the affidavit of Ms Chen of 21 June 2021, Ms Chen has searched for the documents described in this category and does not have them. Beijing Australia has issued a subpoena to BDO East Coast Partnership and QBE Insurance to obtain documents responding to this category, and only QBE Insurance has produced documents in response. There is no evidence before the court about what documents were produced by QBE Insurance.
I was told from the bar table, and it is apparent on the face of the subpoena, that employees of BDO were appointed as Joint and Several Administrators of Redset Group Pty Ltd. The subpoena to QBE was for documents related to claims against the debtor's insurance policy with Zeus in relation to Redset Group.

Ms Chen

Ms Chen is a director of Beijing Australia. She was the deponent of affidavits of discovery filed by Beijing Australia. Only one of those affidavits was read in the application.
Ms Chen deposed that Beijing Australia has made all reasonable enquiries, including of its employees and agents, to identify all documents of any description whatever relating to any matter in question in this action that are or were in its possession, custody or power. She deposed that, save for additional documents which are to be collected and reviewed, to the best of her knowledge, information and belief, neither Beijing Australia, nor its practitioner, nor any other person on its behalf, had then, or ever had possession, custody or power over any document of any description whatever relating to any matter in question in this action, other than the documents listed.
The affidavit listed a category of documents, 'emails sent to and from the plaintiff's employees in the period 2010 to on or around 16 June 2016', that were last in the possession of Beijing Australia on or around 16 June 2016. Ms Chen deposed that she did not know what had become of them or who currently had them in their possession or power.

Further discovery

There is a public interest in the court having available all evidence relevant to the issues in the litigation. But relevance is not the only factor the court must consider in the exercise of the discretion to order discovery. A party does not have a strict entitlement to an order for discovery. The power to order discovery is discretionary. The discretion is to be exercised so as best to ensure the attainment of the objects set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA), including the timely and efficient disposal of the business of the court.
The court has specific power under O 26 r 6 to make an order requiring a party to make an affidavit stating whether any document specified or described in the application, or any class of document specified or described is, or has at any time been, in its possession custody or power, and if not then in its possession custody or power when it parted with it and what has become of it. While that is the form in which the chamber summons is expressed, the statement of the categories of discovery sought are not consistent with that rule.
The court may also order further discovery in the exercise of its inherent jurisdiction. The principles that apply in an application, either under O 26 r 6 or in the court's inherent jurisdiction were summarised by Murphy JA in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd:[29]
3First, the court has, in its inherent jurisdiction, the power to order further and better discovery: Benjamin v Pulfer (Unreported, WASC, Library No 6618, 4 March 1987) 3 ‑ 4.
4Secondly, the court's inherent jurisdiction is exercised according to the former practice of the Court of Chancery: Kent Coal Concessions Ltd v Duguid[1910] 1 904, 915, 916; Kent Coal Concessions Ltd v Duguid[1910] AC 452, 453. That practice was that an affidavit of documents by a party was conclusive as to the relevant documents in the possession, custody or power of that party unless the insufficiency of the discovery appeared from an admission in the pleadings by the party from whom discovery was sought, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constituted an admission by that party of a discoverable document, or where the party had excluded documents under a misconception of the case. Insufficiency could not, however, be demonstrated by a contentious affidavit from the party seeking to challenge the discovery. See British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369; [1912] AC 709; Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 343. Thirdly, O 26 r 6 and its predecessors were introduced to relax the Chancery rule, and to allow a challenge to discovery based on a contentious affidavit seeking discovery of particular documents, or a particular class of documents: Mulley v Manifold, 343.
5Fourthly, the introduction of O 26 r 6 enlarged, but did not modify, the court's inherent jurisdiction: Kent Coal Concessions Ltd v Duguid[1910] 1 KB 904, 915. Thus, if a party applies pursuant to both O 26 r 6 and the court's inherent jurisdiction, but the O 26 r 6 application is for some reason irregular, providing that the criteria for the exercise of the inherent jurisdiction are satisfied, an order may be made under the inherent jurisdiction for discovery, including for a particular class of documents.
6Fifthly, under the inherent jurisdiction, where the insufficiency of a party's discovery appears from the party's pleadings, or its affidavit of documents, or the documents referred to therein, or any source constituting an admission by that party of a discoverable document, the test is whether the court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed. That is also the test that is to be applied under O 26 r 6. See Beecham Group Ltd v Bristol Myers Co [1979] VicRp 27; [1979] VR 273, 276, 278 - 279; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd[2005] WASC 60 [3].
7Sixthly, under the inherent jurisdiction, it is not necessary to infer the existence of a particular document to ground an order for further and better discovery, where it appears that a party has excluded documents under a misconception of the case: Mulley v Manifold, 343; British Association v Nettlefold.
8Seventhly, although the misconception of the discovering party is relevant to the exercise of the court's inherent jurisdiction, it is also, in my view, a factor which may assist in the drawing of inferences for the purposes of determining an application under O 26 r 6.
[29] Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 [3] ‑ [8].
Although the chamber summons referred to both sources of power, the description of the categories of documents was not consistent with an application under O 26 r 6. Beijing Australia did not, however, argue against the admissibility of the affidavit of Mr Lu contesting the affidavit of discovery.
I will deal with the application as a matter in the court's inherent jurisdiction, while also noting that the affidavit of Mr Lu was received without objection.
In an application for further discovery, the court must have reasonable grounds for believing that there are documents or any class of documents, specified or described in the application, which should have been discovered pursuant to the existing order. To justify making an order, Zeus must identify the document or class of documents in issue and satisfy the court that there is a 'reasonable ground for being fairly certain' that the document is relevant and is or has been in Beijing Australia's possession.[30]
[30] Beecham Group Ltd v Bristol-Myers Co [1979] VR 273, 278 - 282; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3].
The court will not speculate as to relevance. Relevance may appear from the nature of the document described, or there must be a prima facie case as to the contents of the documents before an order for further discovery will be made.[31]
[31] Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd [No 4] [2009] WASC 17; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60.
Relevance alone is not sufficient. The court has a discretion whether to order further discovery.
In exercising its discretion, the court should have regard to the principles of case flow management set out in O 1 r 4A and r 4B, and the ultimate aim of the attainment of justice. The court should have regard, among other things, to the likely relevance and importance of the documents, in relation to the issues in the proceeding, and the likely time, cost and inconvenience of searching for and disclosing the documents. The court should order discovery of the particular documents only if discovery is necessary for fairly disposing of the action.
There are two particular aspects of the present dispute.
First, Zeus apparently accepted that Beijing Australia will not now have some of the documents it seeks (in particular, in category (iii)), but presses for an affidavit stating whether the documents described in its application have at any time been in Beijing Australia's possession custody or power, when Beijing Australia parted with them, and what has become of them.
Second, Zeus questions whether Beijing has made adequate searches and inquiry.
A party obliged to make discovery should search diligently to identify all discoverable documents in the party's possession, custody or power. What are reasonable enquiries will depend on the circumstances of each case including the necessity for the discovery. It is not necessary to go to such lengths as would be oppressive.[32]
[32] Re McGorm; Ex parte Co‑operative Building Society of South Australia (1989) 20 FCR 387, 389; Cazaly Iron Pty Ltd v Bowler [2006] WASCA 282 [103].
I take into account that the matters in issue in this action relate to the period 2011 to 2016.

The categories now sought

The gmail account

The first two categories, in paragraphs (i)(a) and (b), are described in such wide terms (Beijing's involvement and operations with Zeus) that they would include all documents in the more closely described paragraphs (i)(c) to (h).
It is not in dispute, in this action, that Beijing Australia and Zeus were in business together. The dispute regards the nature of that business or 'involvement'. The business relationship apparently included at least three other entities, none of which has been pleaded as relevant to this dispute. On the evidence before me in this application, there are grounds to believe that the operation of Zeus Appollo Pty Ltd may be relevant.
In an application for further discovery, the court must have reasonable grounds for believing that there are relevant documents which have not been discovered pursuant to the existing order. That is, the court must not only be satisfied that there are further emails on Ms Chen's personal email account, but that their content is relevant to the pleaded issues. The difficulty for Zeus' application is that it requires the court to assume that there are relevant documents, without any evidentiary foundation. It is not sufficient for the court to be satisfied that there are likely to be emails that refer to the conduct of Beijing Australia and its business with Zeus in the period 2011 to 2016. The court must also be satisfied that the content of those emails is directly relevant.[33]
[33] I determined at an earlier hearing that discovery would be by reference to direct relevance.
The emails which Mr Lu attached to his affidavit, as XL 1, are not sufficient to prove that Beijing Australia did not disclose documents relevant to the questions that arise in these proceedings. The emails which Mr Lu attached, and which were sent from or received in the gmail account, are not themselves relevant. They show that the gmail account may include emails that are part of email chains where other emails in the chain are (or attach) potentially relevant documents. But the potentially relevant emails were sent on other accounts. Beijing Australia has discovered at least 1,997 emails from accounts used by Ms Chen.[34] Zeus has not shown that the relevant emails have not been discovered.
[34] Affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022 [18(a)].
The purpose of the discovery process must be kept in mind. It is a process for the fair and just determination of the issues between the parties, not an end in itself. I am not satisfied that the task of searching five years of personal emails is reasonably required for that purpose where there is no evidence to suggest that any relevant communication to or from Ms Chen would not have been discovered by the discovery on her other accounts.

The four invoices

Zeus seeks discovery of all documents relating to the plaintiff's creation of invoice numbers 00011471 to 00011474, purchase orders 13CK18, 13CK19, 13CK21 and 13CK22, and delivery of Stock in Australia that is the subject of the said invoices. Again, the request does not come within O 26 r 6 and must be considered under the inherent jurisdiction of the court to order further discovery.
Beijing Australia does not dispute the relevance of the documents in this category, but says that it has discovered all documents in its possession, custody and control that are relevant to the category. It has adduced evidence that Ms Chen has searched for the documents exhibited by Mr Lu as XL 4, and does not have them.[35] It further issued subpoenas to BDO and QBE (its insurer). QBE produced documents. There is no evidence that either party has, as yet, uplifted the documents returned.
[35] Affidavit of Louis Lut-Yiu Lee, sworn 14 October 2022 [45].
Were the Zeus application framed with some greater particularity, within the terms of O 26 r 6, it might call for the exercise of the court's discretion to make an order in terms of that rule. But the order sought is in general terms - all documents relating to the creation of the invoices and the delivery of the stock in Australia. Documents that would come within the order sought come within the terms of the discovery order made on 13 April 2021, to the extent that they are directly relevant. Beijing Australia has made an affidavit of discovery that it does not have possession, custody or control of any documents other than those listed.
Zeus submits that it is incumbent on Beijing Australia to provide specifics of the search that it carried out. As I understand the principles on an application for further discovery, the affidavit of discovery is conclusive except in limited circumstances. There is no obligation on Beijing Australia to provide specific details of the search it carried out. The insufficiency of the discovery may appear from an admission in the Beijing Australia pleadings, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constitutes an admission by Beijing Australia of a discoverable document, or where the party had excluded documents under a misconception of the case. Zeus has not shown in any of those ways that the affidavit of discovery is insufficient.
I am not satisfied that an order should be made in terms of the chamber summons.

The delivery dockets

Zeus seeks discovery of all signed delivery dockets for the period of 21 April 2011 to 22 June 2016. The documents are said to relate to three issues: whether Beijing Australia sold stock to Zeus; whether Beijing Australia carried on the business; and the extent to which the alleged debtor insurance agreement was performed.
Zeus relies on the affidavit of Mr Lu as to the process which Zeus followed when it thought it had made a sale of the products. It submits that the process included a blank delivery docket provided to Beijing Australia for later completion. Mr Lu's evidence was that the signed documents were kept by Beijing Australia at its Queensland office. Zeus contends that Beijing Australia should give discovery of any completed delivery dockets.
The documents attached by Mr Lu as examples of the process show requests for proforma documents were sent from the email zeusappollosolar, invoices were prepared in the name of Zeus Technology Pty Ltd but with the heading Zeus Appollo, and delivery dockets were also prepared in the name Zeus Technology. Mr Lu deposes that Beijing Australia employees carried on an Australian business known as Zeus Appollo Solar, but that is not pleaded.
It is not in issue in the proceedings that Beijing Australia was in the business of importing the products. Both parties plead that it was. Neither party raises in the pleading that Mr Lu was involved in the sale of products.
As I understood the submission of counsel for Zeus, the signed delivery dockets (or at least the retention of those documents by Beijing Australia) are relevant to proving the performance of the Debtor Insurance Agreement, because they are indirect evidence that Beijing Australia provided after sales service and processed warranty claims. I am unable to see the relevance of the signed dockets to those matters on the current pleading, and in particular, without a pleading as to the constitution and activities of Zeus Appollo.
This is another instance where Zeus challenges the adequacy of the searches and inquiries carried out by Beijing Australia. Mr Lee deposed to his belief, on information from Ms Chen, that she has caused searches to be conducted for signed delivery dockets and Beijing Australia does not have the documents. The copies of signed delivery dockets which Beijing Australia had and discovered were those obtained from Mr Lu in June 2016.
Zeus, in effect, questions the thoroughness of the search. But, the affidavit is conclusive save in limited circumstances. Mr Lu's evidence was that the dockets were kept at the Queensland office. Beijing put on evidence, through Mr Lee, that it has specifically searched its Queensland office and no dockets were located. The offices in Western Australia were established after June 2016. There is no evidence to support an inference that documents relating to the period 2011 to 2016, other than those provided by Zeus and which have been discovered, were stored in Perth.
Counsel for Zeus agreed that what Zeus was really after was evidence that these documents existed and were previously in the possession of Beijing Australia. He said that, for each of the several thousand signed delivery dockets, he wanted Beijing Australia to give evidence on affidavit as to when that document was last in its possession. In effect, he wanted evidence that would enable the retention policy that Beijing Australia applied to signed delivery dockets to be inferred.
I cannot see how the signed delivery dockets are directly relevant to either party's pleaded case. In addition, neither party has pleaded a case, or adduced evidence, which enables me to understand the significance of documents requested by or issued in the name of Zeus Appollo. I made it clear that the strategic conference in this action, that discovery would be confined to directly relevant documents.
The exercise sought by Zeus, to require Beijing Australia to inquire and state on affidavit when each of those documents was last in its possession, must be considered by reference to the likely relevance and importance of that exercise, in relation to the issues in the proceeding, and the likely time, cost and inconvenience of searching for the information in relation to each document. If Zeus wishes to establish whether Beijing Australia had a document retention policy, provided after sales service, or dealt with warranty claims, there are other means available to it.

I am not satisfied that the discovery sought is necessary to fairly dispose of the issues between the parties in this action.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KK
Associate to the Honourable Justice Allanson
7 DECEMBER 2022