Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2]
[2023] WASC 1
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DOWNER UTILITIES AUSTRALIA PTY LTD -v- ALINTA ENERGY TRANSMISSION (CHICHESTER) PTY LTD [No 2] [2023] WASC 1
CORAM: ARCHER J
HEARD: 3 NOVEMBER 2022
DELIVERED : 11 JANUARY 2023
FILE NO/S: CIV 1616 of 2022
BETWEEN: DOWNER UTILITIES AUSTRALIA PTY LTD
Plaintiff
AND
ALINTA ENERGY TRANSMISSION (CHICHESTER) PTY LTD
First Defendant
ALINTA ENERGY (CHICHESTER) PTY LTD
Second Defendant
Catchwords:
Application for pre–action discovery - O 26A r 4 - Proper construction of requirement that the applicant is unable to obtain sufficient information to enable a decision to be made - Admissibility of evidence relating to an arbitration - Proper construction of s 45(3) of the Construction Contracts (Former Provisions) Act 2004 (WA)
Legislation:
Rules of the Supreme Court 1971 (WA), O 26A r 4
Construction Contracts (Former Provisions) Act 2004 (WA), s 45(3)
Result:
Plaintiff's application for pre-action discovery allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | N Pane KC & B A Millar |
| First Defendant | : | S K Dharmananda SC & N L Pham |
| Second Defendant | : | S K Dharmananda SC & N L Pham |
Solicitors:
| Plaintiff | : | Ashurst Australia |
| First Defendant | : | Herbert Smith Freehills |
| Second Defendant | : | Herbert Smith Freehills |
Cases referred to in decision:
Seltsam Pty Ltd v McGuiness [2000] NSWCA 29, 15
Ajaka v Nine Network Pty Ltd (No 2) [2022] NSWSC 765
Australian Football League v Stadium Operations Ltd [2009] VSC 264
B J Bearings Pty Ltd v Whitehead [2016] VSC 44
Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 174
BWS v ARV [No 2] [2021] WASCA 62
Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304
Central Exchange v Anaconda Nickel [2002] WASCA 94; (2002) 26 WAR 33
Duro Felguera v Samsung [2016] WASC 119
Jones v Great Western Railway Co (1931) 144 LT 194, 15
Kane Constructions Pty Ltd v Sopov (2006) 22 BCL 92; [2005] VSC 237
Kelbush Pty Ltd v ANZ Banking Group [2016] WASCA 14 (2016) 49 WAR 374
Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14 (S)
Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; (2010) 239 CLR 531
Morton v Nylex [2007] NSWSC 562
New South Wales Solicitors Mutual Indemnity Fund v Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146
O'Donnell Griffin Pty Ltd v Davis [2007] WASC 215
Optiver Australia Pty Ltd v Tibra Trading Pty Ltd & Ors [2008] FCAFC 133 (2008) 169 FCR 435
Sundance Resource Ltd v Austsino Resources Group Ltd [2022] WASC 108
Telstra Corporation v Minister for Broadband [2008] FCAFC 7; (2008) 166 FCR 64
United Energy Ltd v Energy Risk Management Pty Ltd [1998] VSC 133
Vestas - Australian Wind Technology Pty Ltd v Lal Lal Wind Farm Nom Co Pty Ltd [2020] VSC 554
Waller v Waller [2009] WASCA 61
Table of Contents
Introduction
The potential causes of action
The application
Legal principles
The purpose of the rule
The requirements
First requirement – may have a cause of action
Fourth requirement – has not been able to obtain sufficient information to enable a decision to be made
The discretion
Costs
The issues
The potential Pre-contractual Claims – the first requirement: 'may have a cause of action' (Issue 1)
Discussion
The potential Interference Claims – the fourth requirement: unable to obtain sufficient information
Proper construction of the fourth requirement (and illustrations of its application) (Issue 2)
Hancock
Cases from other jurisdictions
Differences in the rules of other jurisdictions
Has Downer been unable to obtain sufficient information? (Issue 3)
Material relied on by Alinta
Mr Wood's evidence
Correspondence
Notices of Claim
Downer's submissions in this Application
Arbitration Letter
Alinta's submissions
Downer has already formed the view that interference occurred
The Aconex Documentation needs no context and explanation
Downer believes it has a prima facie case
Downer alleged that any private communication constituted interference
Downer's submissions
Conclusion
Uncontested requirements
Discretionary factors (Issue 4)
Proportionality
The burden on Alinta
Alinta's evidence
Downer's submissions
Discussion of burden
The value and importance of the claim
Likely forensic benefit to the decision
Conclusion on proportionality
Other relevant factors
The likelihood that a cause of action of the kind suggested will be found to exist
Whether there is any other adequate means, available to the intending plaintiff, of obtaining the information which it seeks
The nature and confidentiality of the documents proposed to be obtained
Whether the applicant is able to compensate the potential party for its cost of complying with the order
Whether there is any evidence of bad faith on the part of the applicant
Conclusion
ARCHER J:
Introduction
The plaintiff (Downer) and the defendants are parties to two engineer, procure and construct contracts (EPC Contracts). The EPC Contracts relate to the Chichester Solar Gas Hybrid Project in the Pilbara region. Downer is the Contractor under each EPC Contract. The defendants are the Principals. Although there are two defendants, I will refer to them collectively in the singular as 'Alinta'.
Both EPC Contracts provide for the appointment of a 'Superintendent'. The functions of the Superintendent include determining claims for extensions of time and delay costs, determining whether and when Practical Completion is achieved, issuing certificates confirming the achievement of milestones, assessing payment claims, and issuing payment certificates. Downer has valuable rights under the EPC Contracts that are connected to the exercise of these powers.
The EPC Contracts provide that, when performing his or her functions, the Superintendent must act honestly, fairly and reasonably.
Under the EPC Contracts, Alinta was required to appoint the Superintendent, and was permitted to appoint an employee to that position. Alinta appointed a Mr Knill, an employee, as Superintendent from 9 August 2019 to March 2020.[1] He was then replaced by another Alinta employee, a Mr Marshall.
[1] On 1 December 2020, Mr Knill was appointed to the different role of the 'Principal's Representative' (see EPC Contracts cl 40).
Downer alleges there are matters that suggest that, in the appointment to the role of Superintendent and the subsequent exercise of his functions, the Superintendent has ceased to be a free agent and has been improperly influenced by Alinta such that the assessment of Downer's rights under the EPC Contracts has been adversely impacted.
Downer says that it is concerned that the Superintendent has been improperly influenced by Alinta. It says its concern principally arises from certain documentation provided to Downer during the course of the EPC Contracts. Downer submits:[2]
(a)on its face, the documentation suggests that there have been discussions between the Superintendent and Alinta concerning Downer's rights, to which Downer was not privy (Overt Reference Documentation);[3] and
(b)the underlying metadata of certain documents sent by the Superintendent suggests that the authorship of the document and the author on the face of the document (i.e. the Superintendent) are not the same – that is, certain important letters purported to be issued by the Superintendent appear to have been prepared by persons whose interests are aligned with Alinta (Aconex Documentation).[4]
[2] Submissions in Support of Downer's Application for Pre-Action Discovery (Downer's Submissions) [11]. And see the affidavit of Matthew Phillip Wood affirmed 19 April 2022 (First Wood Affidavit) [43] - [46].
[3] Overt Reference Documentation is referred to in the First Wood Affidavit [47] - [64]. See also the description of some of these documents in Downer's Submissions [34] - [35] and [38].
[4] Aconex Documentation is referred to in the First Wood Affidavit [65] - [81] (and [56]) and the affidavit of Catherine Williams filed 16 June 2022. See also the description of some of these documents in Downer's Submissions [33] and [35] - [36].
Alinta accepts, for the purposes of this application, that this description is consistent with the documents.[5]
[5] ts 156.
Downer has repeatedly asked Alinta for an explanation and for underlying documents to address its concerns. Alinta has refused.[6]
[6] See the references in Downer's Submissions [39] - [41] and [45] - [46].
Downer seeks pre‑action discovery from Alinta. Downer asserts that it seeks this so that it may be in a position to determine whether to commence proceedings against Alinta in relation to Alinta's conduct concerning the appointment of the Superintendent and possible interference with the exercise of his functions.
The potential causes of action
Downer accepts that there may properly be communications between the Superintendent and Alinta to which Downer is not privy, particularly as the two people who have been appointed to the role of Superintendent under the EPC Contracts are both employees of Alinta. Downer accepts that private communications will not alone cause the Superintendent to have abandoned his impartiality and will not, in and of themselves, be fatal to the Superintendent's certification determinations.[7]
[7] Downer's Submissions [25].
Downer says that the question is whether the Superintendent has been party to representations that are of such a nature as to be calculated to influence him in arriving at his determination. If this is so, says Downer, then the other party must be afforded the opportunity of answering what is alleged against it.[8]
[8] Downer's Submissions [26].
Accordingly, Downer says that its concerns, and consequently the ambit of the documentation it seeks in this application, are directed to the nature and content of communications between Alinta and the Superintendent.[9]
[9] Downer's Submissions [28].
Downer submits that it is at least arguable that Alinta has improperly influenced the appointed Superintendent in the performance of the certification functions (and may not have appointed persons who could fulfil the role of the Superintendent in accordance with the terms of the EPC Contracts). It submits that it may have various causes of action.[10]
[10] Downer's Submissions [62] - [64].
The potential causes of action broadly fall into two categories. The first relates to Alinta's conduct at the time of entering into the EPC Contracts. Downer says that conduct may give rise to claims of misleading and deceptive conduct. The second category relates to Alinta's subsequent conduct and whether Alinta improperly interfered with the Superintendent’s functions. Downer says that that conduct may give rise to claims of breach of contract or a claim of misleading and deceptive conduct (during the project).[11]
[11] See Defendants' Submissions Opposing Plaintiff's Application for Pre-Action Discovery filed 5 September 2022 (Alinta's Submissions) [12] - [13] and ts 107.
I will refer to the first category as the potential 'Pre-contractual Claims' and the second category as the potential 'Interference Claims'.
There are currently three consolidated extension of time claims in dispute. Downer claims a total of $10,486,169 in delay costs. Alinta disputes the three extension of time claims and the delay costs claimed by Downer, and claims that Downer was late in completing work under the EPC Contracts.[12]Alinta claims that Downer is liable for liquidated damages that total $15,534,025.[13]
[12] First Wood Affidavit [31] - [36] and [40].
[13] First Wood Affidavit [40].
The application
By its Originating Summons dated 16 June 2022 (Application), Downer seeks an order that Alinta produce documents listed in categories 1 – 10 of Schedule 1 to the Originating Summons (Superintendent Documentation). The schedule is attached to these reasons as annexure A.
Legal principles
Applications for pre-action discovery are governed by O 26A r 4 of the Rules of the Supreme Court 1971 (WA). It relevantly provides:
4. Discovery from potential party
(1)This rule applies if a person who may have a cause of action against a person whose description has been ascertained (the potential party) wants -
(a)to commence proceedings against the potential party; or
(b)to take proceedings against the potential party in the course of an action to which the person is a party,
but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings.
(2)If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule.
(3)The application shall be supported by an affidavit and a copy of both shall be served on the potential party.
(4)On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party's possession and that may assist the applicant in making the decision.
The purpose of the rule
The purpose of the rule is to enable a prospective litigant to obtain documents that may assist in making a decision whether to commence proceedings.[14] It advances the interests of justice and case management principles by enabling the pursuit of a defendant in an appropriate case and enabling groundless cases to be identified as such before proceedings are commenced.[15]
The requirements
[14] BWS v ARV [No 2] [2021] WASCA 62 [31].
[15] Alinta did not dispute this – see ts 157 - 158.
From the terms of O 26A r 4, in order to enliven the discretion of the Court, an applicant for pre-action discovery must establish:
1.that it 'may have a cause of action' against the potential party;
2.that it wants to commence proceedings against the potential party;
3.that it has made reasonable enquiries for the purpose of obtaining sufficient information to enable a decision to be made as to whether to commence proceedings;
4,that it has not been able to obtain sufficient information to enable such a decision to be made; and
5.there are 'reasonable grounds for believing' that the potential party has, or is likely to have, possession of documents that may assist the applicant in making the decision to commence proceedings.
In relation to the potential Pre-contractual Claims, Alinta disputes that Downer has established the first requirement (but does not dispute that the other requirements have been established).
In relation to the potential Interference Claims, Alinta disputes that Downer has established the fourth requirement (but does not dispute that the other requirements have been established).
First requirement – may have a cause of action
In relation to the first requirement, the Court of Appeal in BWS v ARV [No 2][16] said (citations omitted):
[16] BWS v ARV [No 2] [31] - [34].
31.… [T]he purpose of the rule is to enable a prospective litigant to obtain documents that may assist in making a decision whether to commence proceedings. It would defeat the purpose of the rule to require an applicant to demonstrate the actual existence of a cause of action as a condition to the exercise of the power - meaning that it is incorrect in principle to approach the rule with an undue emphasis on the demonstration of the prospective cause of action.
32.It is accepted that the words 'may have a cause of action against' the potential party in O 26A r 4(1) RSC:
1.Refer to a 'cause of action' as ordinarily understood, ie in the sense of facts or a combination of facts which give the right to sue.
2.Require an objective test - the court must make its own evaluation of the evidence and form an opinion as to whether, on the evidence, the applicant may have a cause of action against the potential party.
3.Do not require that the applicant have a prima facie cause of action.
33.There must, however, be some tangible backing or objective foundation that takes the existence of the cause of action beyond a mere allegation, suspicion or assertion. The applicant 'must demonstrate more than mere assertion, conjecture or suspicion, but does not have to positively establish the existence of a cause of action. What the applicant must produce is evidence showing that he, she or it may have a cause of action'. There must be evidence objectively indicating - beyond the mere assertion, conjecture or suspicion of the applicant - that all facts necessary to give rise to a right to curial relief may be able to be established.
34.Having regard to the principle of proportionality embodied in O 1 r 4B RSC, in applying O 26A r 4 RSC the nature and extent of the evidence reasonably required to establish that an applicant 'may have' a cause of action is to be assessed in the context of the character and the ambit of the relief sought.
Later, the Court reiterated what an applicant for pre-action discovery (in that case the respondent to the appeal) was required to establish:[17]
54.…The respondent was not required to adduce evidence whereby the inference ought to be drawn. Nor was the respondent required to adduce evidence whereby the inference prima facie ought to be drawn. In terms of the first aspect of O 26A r 4(1), it is enough that there are objective grounds from which the court can be satisfied that the respondent 'may' have a cause of action against the appellant. Mere assertion, conjecture or suspicion on the part of the respondent is insufficient. This means, relevantly, that the respondent must establish grounds upon which the court can be satisfied that the appellant may have made defamatory statements about the respondent.
[17] BWS v ARV [No 2] [54].
In Sundance Resource Ltd v Austsino Resources Group Ltd[18] Tottle J observed:
Speculation, suspicion, conjecture and inference are on a continuum and in practice very fine lines may separate what falls within the ambit of each of these concepts.
Fourth requirement – has not been able to obtain sufficient information to enable a decision to be made
[18] Sundance Resource Ltd v Austsino Resources Group Ltd [2022] WASC 108 [49], citing Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262, 275 (Spigelman CJ); Jones v Great Western Railway Co (1931) 144 LT 194, 202 (Lord MacMillan).
In relation to the fourth requirement, in New South Wales Solicitors Mutual Indemnity Fund v Hancock Family Memorial Foundation Ltd [No 2][19] (Hancock) McLure JA,[20] with whom Miller JA agreed) said (citations omitted):
The sufficiency of the information is an objective standard but it is determined by reference to the knowledge and circumstances of the particular applicant.
Sufficient information means no more than that which is reasonably necessary to enable the person to decide whether to commence or take proceedings. … Ordinarily, what is reasonably necessary is unlikely to extend beyond documents constituting or contemporaneously recording the material facts or information necessary to determine the material facts. It should not extend, for example, to the potential parties' subjective evaluation of its potential liability. …
… [T]he discretion is only enlivened in circumstances where the applicant has not made a decision to commence or take proceedings.
[19] New South Wales Solicitors Mutual Indemnity Fund v Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146 (Hancock) [14] - [15] and [17].
[20] As her Honour then was.
In that same case, Newnes JA said:[21]
What is sufficient information for the purposes of O 26A r 4 must depend upon the circumstances of the particular case and cannot, in the abstract, be reduced to specific documents, or categories of documents, or to information of a particular nature.
[21] Hancock [62].
The parties in this case agree that 'sufficient information' means no more than that which is reasonably necessary to enable the person to decide whether to commence or take proceedings. They agree that what is sufficient information must depend upon the circumstances of the particular case.[22] However, they disagree as to what is reasonably necessary in this case. The parties also disagree as to the value of decisions from other jurisdictions in view of textual differences in the applicable rules. I will discuss those cases when dealing with the issues.
The discretion
[22] Alinta's Submissions [8] - [9] and ts 84.
If the requirements are met, the Court's discretion arises. In BWS v ARV [No 2],[23] the Court of Appeal said that the discretion is not exercised as a matter of course and the court will commonly consider whether the order is reasonably necessary to achieve the proper administration of justice.
[23] BWS v ARV [No 2] [35].
The following non-exhaustive factors have been identified as relevant to the exercise of the Court's discretion:[24]
[24] The first eight factors were identified in Central Exchange v Anaconda Nickel [2002] WASCA 94; (2002) 26 WAR 33 [82] - [83] (Steytler J, as his Honour then was) and endorsed in Kelbush Pty Ltd v ANZ Banking Group [2016] WASCA 14 (2016) 49 WAR 374 [120] (Mitchell J, as his Honour then was, with whom Martin CJ and Buss JA, as his Honour then was, agreed). Mitchell J in Kelbush [121] added an additional factor, which I have numbered as the ninth factor in the list.
1.the likelihood that a cause of action of the kind suggested will be found to exist;
2.the nature and significance of that potential cause of action;
3.the likely effect, on the person against whom discovery is sought, of the making of an order of the kind contended for;
4.whether there is any other adequate means, available to the intending plaintiff, of obtaining the information which it seeks;
5.the nature and confidentiality of the documents proposed to be obtained;
6.the possible significance of the information contained within those documents to the decision whether or not to commence the contemplated proceedings;
7.whether the applicant is able to compensate the potential party for its cost of complying with the order;
8.whether there is any evidence of bad faith on the part of the applicant; and
9.the extent to which the cost and effort involved in undertaking discovery and inspection is proportionate to the likely value of the claim if successful.
In BWS v ARV [No 2],[25] the Court of Appeal said that the notion of proportionality was central to the exercise of the discretion. It said that the cost and delay involved in the provision of the pre-action discovery as sought should be proportionate to the forensic benefit likely to be derived and to the value and importance or complexity of the subject matter of the contemplated proceedings.
[25] BWS v ARV [No 2] [36].
The Court also pointed out that the power in O 26A r 4(4) is confined to requiring discovery of documents that may assist the applicant in making the decision whether to commence or take the contemplated proceedings. Accordingly, discovery should only be ordered of those documents actually relevant to a cause of action that the applicant may have.[26]
Costs
[26] BWS v ARV [No 2] [37].
In Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd[27] Martin CJ (with whom Buss JA[28] and Mitchell J[29] agreed) said:[30]
[T]he proper course in proceedings of this nature is to order, in the absence of any reason to the contrary, that the applicant for the indulgence of pre-trial discovery pay both the respondent's costs of the application and the respondent's reasonable costs of complying with any order for discovery made. Further, it is my view that the obligation to pay costs should not be deferred indefinitely merely because proceedings are subsequently commenced by the applicant against the respondent.
However, as a matter of principle, there should be a mechanism by which such an applicant can recoup not only the costs that it is ordered to pay to such a respondent, but also its own costs of the pre-trial discovery application if it commences proceedings against the respondent and it appears to the court responsible for those proceedings that such costs should be ordered to be paid to the applicant. In the present case, the best way of achieving this is to order that, subject to an order enabling recoupment of those costs, the current appellant pay the respondent's reasonable costs of compliance with the order for discovery and also the respondent's costs of the application before the master.
The mechanism by which those costs can be recouped would be by way of an order empowering the current appellant to make an application in the course of any subsequent proceedings for orders with respect to not only the costs that it is ordered to pay the respondent today, but also with respect to its own costs of the application before the master.
[27] Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14 (S) (Kelbush Costs Decision).
[28] As his Honour then was.
[29] As his Honour then was.
[30] Kelbush Costs Decision [2] - [4] (Martin CJ), [8] (Buss JA, as his Honour then was), [9] (Mitchell J, as his Honour then was).
The issues
As noted in the introduction, Downer's potential claims broadly fall into two categories, the potential Pre-contractual Claims and the potential Interference Claims.
In relation to the potential Pre-contractual Claims, Alinta disputes that Downer has established the first requirement (that it may have a cause of action). Alinta does not dispute that Downer has established each of the other requirements.
Downer accepts that, if it does not establish that it may have a cause of action in relation to the potential Pre-contractual Claims, it could not get discovery of documents that related only to that claim.[31]
[31] See ts 81. See also ts 109.
In relation to the potential Interference Claims, Alinta disputes that Downer has established the fourth requirement (that it has not been able to obtain sufficient information to enable it to decide whether to commence proceedings against Alinta). Alinta does not dispute that Downer has established each of the other requirements.[32]
[32] See ts 158 in relation to the first requirement.
The parties disagree as to the proper construction of the fourth requirement.
Finally, Alinta submits that, even if the power to order pre-action discovery is enlivened, the Court, in its discretion, should not order the discovery sought by Downer. Alinta submits that the task of giving the discovery sought by Downer would impose an onerous and costly burden on Alinta and that burden is out of proportion to any forensic advantage that Downer might obtain, and the value of the proceedings.[33]
[33] Alinta's Submissions [4].
Downer disagrees.
Accordingly, the following issues arise:
1.Has Downer established that it 'may have a cause of action' against Alinta in relation to the potential Pre-contractual Claims?
2.What is the proper construction of the fourth requirement?
3.Has Downer established that it has not been able to obtain sufficient information to enable a decision to be made as to whether to commence proceedings in relation to the potential Interference Claims?
4.Even if the power to order pre-action discovery is enlivened, should the Court exercise its discretion? In this regard, is such an order reasonably necessary to achieve the proper administration of justice? Would the burden on Alinta imposed by such an order be out of proportion to any forensic advantage that Downer might obtain, and the value of the proceedings?
The potential Pre-contractual Claims – the first requirement: 'may have a cause of action' (Issue 1)
Alinta disputes that Downer has established that it may have a cause of action in relation to the potential Pre-contractual Claims (the first requirement).
The potential Pre-contractual Claims are based on an allegation that, before entering into the EPC Contracts, Alinta put in place arrangements that would prevent the Superintendent from carrying out his functions under the EPC Contracts impartially, fairly, honestly and reasonably.[34] Downer submits that Alinta would have engaged in misleading conduct if it entered into a contract which stated that the Superintendent will act honestly, reasonably and fairly if Alinta did not intend that the Superintendent would act in that way.[35]
[34] Downer's Submissions [67] - [68] (see also [64]).
[35] ts 154.
Downer relies on the Overt Reference Documentation and Aconex Documentation to support its assertion that it may have a cause of action in relation to the potential Pre-contractual Claims.
Alinta submits that the evidence does not objectively support this allegation.[36] Alinta submits:[37]
In circumstances where both categories of correspondence were brought into existence – and dealt with matters arising – after the EPC contracts were made, the correspondence does not objectively support the allegation that, before the EPC contracts were made, Alinta put in place arrangements that, in effect, prevented the Superintendent from acting fairly, honestly and reasonably. No inference is open as to the existence or content of any such arrangements. There is no evidence to take the allegation beyond mere assertion, conjecture or suspicion. Mr Wood does not even depose to a belief that Alinta may have put in place the alleged arrangements before the parties entered into the EPC contracts.
[36] Alinta's Submissions [14].
[37] Alinta's Submissions [19].
Downer submits that the fact that the documents post-date the making of the EPC Contracts does not mean that they cannot support an inference as to conduct that pre-dated the making of the contracts. Downer points out that it is possible to prove allegations by circumstantial evidence.
Downer submits that[38]
… it is reasonable for Downer to assume that the Superintendent and Alinta began their relationship as they wished it to continue and, accordingly, behaved after contract in the same way they behaved prior to entry into the contract. That is, if there was interference by Alinta with the Superintendent throughout the project, it is reasonable to conclude that this behaviour of Alinta was planned at or about the time the EPC Contracts were signed (which expressly stated that the Superintendent could be an employee of Alinta).
[38] Plaintiff's Responsive Submissions filed 16 September 2022 (Downer's Reply) [18].
Downer notes that the Court of Appeal in BWS v ARV [No 2]said (citations omitted):[39]
It would defeat the purpose of the rule to require an applicant to demonstrate the actual existence of a cause of action as a condition to the exercise of the power – meaning that it is incorrect in principle to approach the rule with an undue emphasis on the demonstration of the prospective cause of action.
Discussion
[39] BWS v ARV [No 2] [31].
I make the following observations.
First, I accept that the fact that the documents post-date the making of the EPC Contracts does not mean that they cannot support an inference as to conduct that pre-dated the making of the contracts. Allegations may be proved by circumstantial evidence.
Second, I consider it irrelevant that, as Alinta submits, 'Mr Wood does not even depose to a belief that Alinta may have put in place the alleged arrangements before the parties entered into the EPC contracts'. It is for the Court to evaluate whether the applicant has established that it may have a cause of action. The beliefs of others cannot influence that evaluation.
Third, the Overt Reference Documentation provides a tangible and objective foundation for concern as to Alinta's interactions with the Superintendent during the EPC Contracts.
Downer submits:[40]
… we have a situation where the principal engages consultants … to perform a function and what we see from the materials referred to by Mr Wood is that that function may well have been to provide information to the superintendent and companies such as Alinta and Downer don’t do things by accident and don’t do things … on the spur of the moment.
There are usually position descriptions [that] will describe what each person or positions responsibilities are. There are usually procedures as to how a claim is to be assessed, those sorts of matters, so what we say in relation to this category is that the evidence of – or concern as to the superintendent’s conduct post-contract is sufficient to raise an inference that there may have been some planning to do it in that way precontract …
[40] ts 83.
I accept that, if Alinta did interfere with the Superintendent, it must have made a decision to do so at some point. Downer does not have to show that the decision to act in that way was made prior to the making of the EPC Contracts. However, it must show that it may have been made prior to the making of the contracts.
Fourth, the EPC Contracts expressly provided that the Superintendent could be an employee of Alinta.
These factors give rise to a suspicion that Alinta may have decided to interfere with the Superintendents before entering into the EPC Contracts. I also agree with Tottle J's observation that speculation, suspicion, conjecture and inference are on a continuum.[41]
[41] Sundance [49]
However, I am not satisfied that there is any objective evidence that takes the existence of the cause of action beyond suspicion. Accordingly, I would not order pre-action discovery in relation to the potential Pre-contractual Claims.
The potential Interference Claims – the fourth requirement: unable to obtain sufficient information
Proper construction of the fourth requirement (and illustrations of its application) (Issue 2)
As noted earlier, it is common ground that 'sufficient information' means no more than that which is reasonably necessary to enable the person to decide whether to commence or take proceedings. It is common ground that what is sufficient information must depend upon the circumstances of the particular case. However, the parties disagree as to what is reasonably necessary in this case. The parties also disagree as to the value of decisions from other jurisdictions in view of some textual differences in the applicable rules.
Before discussing cases from other jurisdictions, I will say more about the Western Australian case of Hancock, referred to earlier.
Hancock
In Hancock, McLure JA[42] summarised the background as follows:[43]
[42] As her Honour then was.
[43] Hancock [2] - [4].
2.…The second appellants are insurers who provided excess professional indemnity insurance to Mr C Fieldhouse, a solicitor who acted for the respondent. In August 1995 the respondent commenced legal action in this court against Mr Fieldhouse for breach of his professional duties (the action).
3.By a Deed of Release and Indemnity dated 22 September 1998 (Deed of Release) the respondent agreed that in the event of obtaining judgment in the action it shall not seek to enforce any judgment and any costs order made against Mr Fieldhouse 'beyond that paid or payable by Fieldhouse's professional indemnity insurers (including LawCover)'.
4.Mr Fieldhouse died in November 2007. In June 2008 the respondent sought an order for discovery of documents under O 26A r 4. The primary judge ordered the second appellants to discover the following documents:
(a)the documents that constitute the contract of insurance … between Fieldhouse and the Second Potential Parties in respect of the liability of Fieldhouse;
(b)any documents relating to whether the said contract of insurance … between Fieldhouse and the Second Potential Parties provides cover in respect of the liability of Fieldhouse including any document containing any admission or denial of cover either in full or part;
(c)any schedules or annexure forming part of the contract of insurance referred to in subparagraphs (a) and (b) above; and
(d)the Certificate of Insurance in relation to the said contract of insurance … between Fieldhouse and the Second Potential Parties.
The Court of Appeal unanimously dismissed the appeal. McLure JA (with whom Miller JA agreed) considered that the primary judge was wrong to make the order. However, her Honour dismissed the appeal, as her Honour was not satisfied that a substantial injustice would occur if the decision remained unreversed. Newnes JA considered that the primary judge was right to make the order.
Both McLure JA (with whom Miller JA agreed) and Newnes JA commented on the content of the fourth requirement. However, McLure JA did not find it necessary to consider whether there was sufficient information on the facts in that case. This was because her Honour considered that the respondent had already decided to commence proceedings against the insurer.[44]
[44] Hancock [24] - [25].
Newnes JA did consider whether there was sufficient information on the facts in that case. His Honour began by referring to some Federal Court decisions:[45]
63.In his reasons for judgment, the primary judge cited the following passage (among others) from the decision of the Full Court of the Federal Court in Telstra Corporation v Minister for Broadband (2008) 166 FCR 64, 80:
It is not necessary to resolve such tensions as there are in the decided cases in order to accept that on existing authority an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to a respondent and their possible strengths or to determine the extent of the respondent's breach and the likely quantum of any damages award: St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147.
64.The judgment of Hely J in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147, referred to by the Full Court, has been applied in a number of other cases in the Federal Court and was approved by the Full Court of the Federal Court in Echo Tasmania Pty Ltd v Imperial Chemical Industries PLC [2008] FCAFC 58 [43].
65.I do not, however, understand those cases to mean (nor do I understand the primary judge to have suggested) that, in order to make a decision whether to commence proceedings, a party is entitled to discovery of material of the kind mentioned, but rather to mean that in a particular case discovery of one or other of those kinds may be appropriate. As Hely J pointed out in St George Bank, whether an applicant has 'sufficient information' for the purposes of the Federal Court rule requires an objective assessment to be made and the rule contemplates that the applicant is lacking a piece (or pieces) of information reasonably necessary to decide whether to commence proceedings. Whether, therefore, an applicant is entitled to discovery to ascertain the defences available and their strength, or the extent of the respondent's breach, or the likely quantum of damages, or some other information, must depend upon the particular circumstances of the case.
[45] Hancock [63] - [65].
Newnes JA referred to the second appellants' contention that the information provided by the second appellants in the letter of 30 April 2008, together with the known fact of Mr Fieldhouse's death, provided the respondent with sufficient information to make a decision whether to sue the second appellants. His Honour said he did not accept that contention. He said:[46]
69.… The letter from the respondent's solicitors of 18 March 2008 specifically sought disclosure of the contracts of insurance between Mr Fieldhouse and his professional indemnity insurers 'so that [the respondent] can be satisfied that cover is provided in respect of the liability that is owed to [the respondent]'. In their reply, the solicitors for Mr Fieldhouse … did not, however, respond to the request for discovery nor did they say whether the excess policies covered the claim against Mr Fieldhouse.
70.I do not accept the submission on behalf of the second appellants that it was apparent from the letter of 30 April 2008 that the excess policies covered the claim. …
…
73.In this case, in my respectful opinion, the primary judge correctly found that the respondent did not have sufficient information to enable a decision to be made whether to commence proceedings against the second appellants. There is, as the primary judge pointed out, no information as to whether the insurance cover provided by the second appellants applies to the claim against Mr Fieldhouse. No purpose would be served by proceedings against the second appellants if it is clear that their insurance policy does not respond to the respondent's claim. Nor would any purpose be served by leaving it for the respondent to discover whether the policy responds to the claim through the interlocutory process after it has commenced proceedings against the second appellants. It is circumstances such as those that the rule is intended to avoid.
74.In my view, what the respondent reasonably requires to make a decision whether to commence proceedings against the second appellants is the contract of insurance and any other documents relating to whether the insurance cover applies to the respondent's claim. …
Cases from other jurisdictions
[46] Hancock [69] - [70] and [73] - [74].
Both parties referred to cases from other jurisdictions in their submissions. However, Alinta said, in effect, that statements of principle as to the operation of the rules in cases from other jurisdictions did not necessarily apply to O 26A r 4, as there were some significant differences in the applicable rules. I will discuss this in the next section.
The extracted passages from Hancock above include Newnes JA's reference to what was said by the Full Court of the Federal Court in TelstraCorporation[47] in paragraph 61. In the immediately preceding paragraph, the Court had said:[48]
The boundaries of the sufficiency criterion have been discussed in various cases. In Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391, Lindgren J held that r 6 was not necessarily rendered unavailable by the fact that the applicant already had available evidence establishing a prima facie case for the granting of relief. There might be matters of defence which could defeat a prima facie case. In C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864, Gyles J took the view, for the purposes of O 15A r 6(b), that a party was entitled to have more than a ‘bare pleadable case’ before deciding whether to undertake lengthy and expensive litigation of the kind contemplated in that case. Tamberlin J appears to have misstated this aspect of the reasons of Gyles J in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 2065 when he suggested that O 15A r 6 was ‘no longer appropriate’ when an applicant had enough information to meet the threshold of a bare pleadable case. However, as his Honour said, the purpose of preliminary discovery is not to procure documents that would strengthen an applicant’s decision to commence proceedings but rather to furnish it with information which is reasonably necessary to enable that decision to be made. In that connection he referred to his earlier decision in Matrix Film Investment One Pty Limited v Alameda Films LLC [2006] FCA 591.
[47] Telstra Corporation v Minister for Broadband [2008] FCAFC 7; (2008) 166 FCR 64.
[48] Telstra Corporation [60]. See also Morton v Nylex [2007] NSWSC 562 [33].
Downer referred to the Victorian case of B J Bearings Pty Ltd v Whitehead.[49] In that case, Hargrave J[50] discussed the pre-action discovery rule in the Supreme Court (General Civil Procedure Rules) 2015 (Vic), r 32.05. His Honour relevantly said (most citations omitted):[51]
(1)Rule 32.05 should be given a liberal or benevolent construction. Its object is to avoid the commencement of 'speculative suits' and instead 'to advance the administration of justice [by enabling] a prospective plaintiff … to make an informed decision whether to proceed or not upon proper material before issuing his proceeding.'
(2)The fact that an applicant for preliminary discovery already has enough evidence to establish a prima facie case against a proposed defendant does not mean that the applicant has sufficient information to enable it to decide whether to commence a proceeding. An applicant in that position may nevertheless 'need information to know whether the cost and risk of litigation is worthwhile.'[52] For example, an applicant with sufficient information to plead a prima facie case may prudently wish to obtain preliminary discovery about 'what defences are available to the respondent and the possible strength of those defences, or to determine the extent of the respondent's breach and the likely quantum of any damages award'.
(3)An applicant for preliminary discovery is entitled to be cautious before making a decision to embark upon costly litigation.[53] This approach is consistent with the policy underlying the rule. It is also, of course, consistent with the policy underlying the Civil Procedure Act 2010 generally, and the 'proper basis certification' requirements in s 42 of that Act in particular.
(4)In determining whether an applicant has in fact already decided to commence a proceeding, irrespective of the outcome of the application, the Court should not give too much weight to posturing in correspondence prior to the making of the application, particularly correspondence alleging the existence of a strong case but nevertheless seeking preliminary discovery by letter prior to making a formal application to the Court.
[49] B J Bearings Pty Ltd v Whitehead [2016] VSC 44.
[50] As his Honour then was.
[51] B J Bearings [19].
[52] Citing Optiver Australia Pty Ltd v Tibra Trading Pty Ltd & Ors [2008] FCAFC 133 (2008) 169 FCR 435, 443.
[53] Citing as an example United Energy Ltd v Energy Risk Management Pty Ltd [1998] VSC 133 [103] (and see also [28] - [36]). See also Australian Football League v Stadium Operations Ltd [2009] VSC 264 [62].
In discussing the requirement that the applicant does not have 'sufficient information to enable the applicant to decide whether to commence a proceeding', Hargrave J said:[54]
As noted above, the rule is not concerned with whether or not an applicant for preliminary discovery already has sufficient information to establish, if proved, a prima facie case against a proposed defendant. The relevant focus of the rule is on whether the applicant has sufficient information to enable it to decide whether to commence a proceeding. In this case, the information available to the applicant is hearsay, double-hearsay, inference from suspicious circumstances and knowledge that half of the issued shares in Ace are beneficially owned by someone other than Mr Reid. In these circumstances, a bold plaintiff may choose to commence proceedings and seek discovery. But, the applicant has been met with firm denials by Mr Whitehead and proffered undertakings which propose a diminution in its rights under the Deed Polls to restrain Mr Whitehead from involvement in Ace’s business. Moreover, Mr Whitehead appears to have a legitimate reason to be attending at Ace’s premises, because he presently has his own offices at the same address. In these circumstances, the applicant is adopting a cautious approach before making a decision to embark upon costly litigation, and should not be criticised for that.
It was submitted on behalf of Mr Whitehead that the applicant in this case has enough information to enable it to decide whether to commence a proceeding, and is being ‘unduly cautious’ in seeking preliminary discovery. I reject that submission. In the circumstances I have summarised, I accept Mr Gray’s evidence that the applicant requires preliminary discovery in order to determine whether to institute a proceeding against Mr Whitehead and, if so, against Ace and Mr Reid also.
[54] B J Bearings [33] - [34].
Like Downer, Alinta relies on cases from other jurisdictions. Alinta submits:[55]
In the context of the equivalent rule in New South Wales, it has been pointed out that pre-action discovery cannot be used to build up a case which an applicant has already decided, or could decide, to bring. That observation applies with equal force to O 26A r 4.
[55] Alinta's Submissions [8].
The cases Alinta cites in this regard are Morton v Nylex Ltd at paragraph 33[56] and Ajaka v Nine Network Pty Ltd (No 2) at paragraphs 48 - 51.[57]
[56] Morton [33].
[57] Ajaka v Nine Network Pty Ltd (No 2) [2022] NSWSC 765 [48] - [51].
In paragraph 33 of Morton, White J[58] relevantly said:
… The question is whether the applicant has insufficient information to be able to decide whether to institute proceedings; not merely to establish a cause of action. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action. However, unless the applicant is lacking something reasonably necessary to make a decision whether to institute proceedings, he or she is not entitled to preliminary discovery. An applicant must disclose what information he or she already has relevant to making such a decision, and identify what information is lacking. Preliminary discovery cannot be used to build up a case which an applicant has already decided, or could decide, to bring (Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (Lindgren J, Federal Court of Australia, 24 May 1996, unreported); St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at 154 [26]; Glencore International AG v Selwyn Mines Ltd (recs and mgrs apptd) (2005) 223 ALR 238 at 241 [15]; Matrix Film Investment One Pty Ltd v Alameda Films LLC [2006] FCA 591 at [15]-[19], [25]).
[58] As his Honour then was.
In paragraphs 48 - 51 of Ajaka, Rothman J discussed this paragraph, and whether there was any tension between the statement that the requirement of having insufficient information requires the Court to undertake an objective assessment of whether the information already possessed by the plaintiffs is sufficient, and the statement that preliminary discovery is not available where an applicant has already decided or could decide to bring the proceedings on the information already at hand. Rothman J said:[59]
In my view, there is, in reality, no tension between the two propositions. In the absence of a determination by an applicant for preliminary discovery that it shall take proceedings, the assessment, of whether the information already possessed by the applicants is sufficient for such a decision to be made, is determined by the Court objectively. However, where a decision has already been made to take the proceedings, it is unnecessary for the Court to assess the information already possessed.
Where an applicant for preliminary discovery has already formed the view that there is sufficient information for a proper basis to bring a claim for injunctive relief, for example, there is no occasion for the Court to assess the sufficiency of the information upon which that decision is based.
[59] Ajaka [50] - [51].
Alinta appeared to rely on this last sentence as support for the proposition that an applicant will have sufficient information if it can plead its potential cause of action. I accept that this will be so in some cases. However, Alinta does not dispute that there will be cases where an applicant for pre-action discovery is entitled to discovery to ascertain the defences available and their strength, or the extent of the respondent's breach, or the likely quantum of damages. I will say more about this in the next section.
Alinta also relied on Vestas - Australian Wind Technology Pty Ltd v Lal Lal Wind Farm Nom Co Pty Ltd,[60] a Victorian case. The plaintiff in Vestas sought both injunctive relief and pre-action discovery. Delany J refused to order pre-action discovery because his Honour considered that the plaintiff had failed to prove it did not have sufficient information. His Honour said:[61]
In summary it is dismissed because the criteria in r 32.05(b) are not made out:
(a)There is a clear tension between the application for injunctive relief and the application for pre-action discovery. Having determined that it has a proper basis upon which to seek an interlocutory injunction, the Contractor cannot establish that it does not have sufficient information to enable it to decide whether to commence a proceeding in the Court to obtain the same relief, based upon the same substantive cause of action that it would be obliged to bring in order to obtain the injunction that it seeks;
(b)As communicated to the Principal and to others in correspondence and Notices under the EPC Contract, the Contractor has already decided that it has a Claim against the Principal. It has given Notice pursuant to clause 39 that it intends to make and to pursue that Claim. That Claim, is the same claim in respect of which it seeks pre-action discovery. For the reasons given, having determined to make and pursue such a Claim the contractor does not require the documents that it now seeks in order to decide whether to issue a proceeding.
(c)Separately, the Contractor has not made all reasonable enquiries. It has not exhausted the Notice of Dispute process that it has initiated seeking the same documents.
[60] Vestas - Australian Wind Technology Pty Ltd v Lal Lal Wind Farm Nom Co Pty Ltd [2020] VSC 554.
[61] Vestas [118].
Like this case, Vestasinvolved an EPC Contract. The person responsible for performing the certification role was the 'Principal's Representative'.[62] To avoid confusion, I will refer to that person in their role as the certifier as the 'Certifier'.
[62] Under the EPC Contract in this case, the 'Principal's Representative' and the 'Superintendent' were different roles – see cl 37 and cl 40.
The Contractor in Vestas said it became concerned about the possibility of the Principal being improperly involved in the exercise of the certification role when it discovered a reference to ‘HSF comments’ (being a reference to Herbert Smith Freehills, the solicitors for the Principal) in the document properties of three documents issued by the Certifier when performing the certification role.
The Contractor sought explanations and documents. The Principal and Certifier refused to provide either. The Contractor also lodged a Notice of Claim.
The following facts were significant to Delany J's conclusion that the Contractor already had sufficient information.
1.The detailed content of the Notice issued by the Contractor, the claim that the alleged breach would entitle the Contractor to accept repudiation of the contract, and the provision of the Notice to the Security Trustee.[63]
2.The Contractor had brought an application for injunctive relief.[64]
3.The Contractor had asserted in its correspondence that:
a.any comments provided by the Principal's solicitors (HSF) to the Certifier which were not simultaneously communicated to the Contractor constituted interference;[65] and
b.the effect of the conduct was to render the Certifier's determinations as void and of no effect.[66]
[63] Vestas [94] – set out below.
[64] Vestas [95] - [99] – set out below.
[65] Vestas [86] - [88] and [95] - [101], set out below.
[66] Vestas [86] - [88].
The significance of these facts can be seen from the following observations made by Delany J (citations omitted):
93.The Contractor is correct that having sufficient information to make a Claim under the EPC Contract does not necessarily mean that the Contractor has sufficient information to decide whether to commence a proceeding. They are two quite different decisions. It is also true, as the Contractor submits, that the language of clause 39.2 and the notices given by the Contractor pursuant to it, are equivocal as to the issue of whether a proceeding will be brought.
94.But the reader of the 4 June 2020 notice is left in no doubt that the Contractor has sufficient information to bring a proceeding. By reference to the correspondence of 30 March and 11 May 2020, the Contractor identifies the clause of the Contract alleged to have been breached. The clause 39.2(b) notice particularises the breach in significant detail. The breach is alleged to be such as to entitle the Contractor to accept repudiation of the EPC Contract. It is described as a Principal Default within the meaning of the Tripartite Agreement. The clause 39.2(a) notice was given to the Security Trustee as notice of a Principal Default. The language used in the clause 39.2(a) notice, the significance of such a notice in accordance with clause 39 and the fact the notice was copied to each of those persons, are all consistent with the proposition that the Contractor has sufficient information to bring a proceeding.
95.As stated above, it was submitted on behalf of the Principal that an application for an interlocutory injunction necessarily involves the existence of a prima facie underlying case and that having determined to bring such an application the Contractor cannot satisfy the r 32.05(b) criteria. …
96.Responding to these arguments the Contractor submitted that the existence of a prima facie case did not disentitle it to an order pursuant to r 32.05. That is undoubtedly the case, as was recently observed in Pandolfo. Relying upon Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd the Contractor submitted that an order for pre-action discovery should nevertheless be made so as to enable it:
(a)to evaluate the extent of the breaches by the Principle's [sic] Representative and, also;
(b)the strength of defences that might be available when what is currently known by the Contractor to have occurred is seen in context.
…
99.As noted by Lindgren J in Alphapharm, it would impose an artificial constraint to exclude pre-action discovery in cases where the basis of the application is to seek to identify a matter of defence. But the submissions to the effect that the Contractor needs pre-action discovery so as to identify defences and the extent of breach do not sit comfortably with the fact that, by its interlocutory injunction application, the Contractor has already decided to issue proceedings, without knowing of the existence or otherwise of either context defences as discussed in Baulderstone or the detail of the extent and nature of the alleged breach.
100.Furthermore, the submissions are not sustainable when the Contractor's substantive case is a 'no private communications' case.
101.In such a case, the notion of obtaining documents so as to ascertain the existence and evaluate the strength of possible defences falls away. The 'possible defences' reason for requiring pre-action discovery falls away because the Contractor already knows there have been private communications to which it has not been copied.
Alinta accepts that the second of the facts found to be significant by Delany J does not exist in this case - Downer has not brought an application for injunctive relief. However, Alinta submits that Downer's correspondence and Notices of Claim show that, like the plaintiff in Vestas, Downer had been contending that any private communication constituted interference.[67] As will be seen, I do not accept this.
Differences in the rules of other jurisdictions
[67] ts 134.
Alinta says, in effect, that statements of principle as to the operation of the rules in cases from other jurisdictions do not necessarily apply to O 26A r 4, as there are some significant differences in the applicable rules.
In particular, Alinta submits that the Victorian pre-action discovery rule discussed in B J Bearings and Australian Football League (and in Vestas, the case relied upon by Alinta) is different to O 26A r 4 in a significant respect.[68]
[68] ts 122.
Rule 32.05 of the Supreme Court (General Civil Procedure Rules) 2015 (Vic) provides:
32.05Discovery from prospective defendant
Where -
(a)there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description the applicant has ascertained;
(b)after making all reasonable inquiries, the applicant has not sufficient information to enable the applicant to decide whether to commence a proceeding in the Court to obtain that relief; and
(c)there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had in that person's possession any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist the applicant to make the decision -
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).
For ease of reference, I will refer to this rule as the 'Victorian Rule' and the Western Australian rule O 26A r 4 as the 'WA Rule'.
Alinta notes that the Victorian Rule does not refer to the pre-condition in the WA Rule that the applicant 'wants' to commence proceedings. Alinta submits that the significance of the word 'wants' in the WA Rule is shown by McLure JA's observations in Hancock.[69]
[69] ts 122 - 124
In Hancock, McLure JA analysed the requirements of the WA Rule. I earlier set out her Honour's observations in relation to the fourth requirement.[70] Her Honour also commented, among other things, on the subjective nature of the second requirement (that the applicant 'wants to commence proceedings against the potential party')[71] and the scope and relationship of that requirement and the fourth requirement. On this latter point, her Honour said:[72]
It is also necessary to consider the scope and relationship between the requirement that the applicant wants to commence or take proceedings against the potential party and the requirement that the applicant does not have sufficient information to enable a decision to be made as to whether to commence or take proceedings. The first of the two requirements (which has no equivalent in the Federal Court rule) places a limitation on the extent to which an applicant can fish for information. As the applicant must show that it wants to commence or take proceedings against the potential party, it follows that if the missing information supports its claim, proceedings would be commenced or taken. The conditions enlivening the discretion are not met if the applicant requires the information in order to determine whether or not it wants to take proceedings.
[70] See under the heading 'Legal principles'.
[71] Hancock [14].
[72] Hancock [16].
Alinta submits:[73]
So her Honour has identified that that desire element in our rule places a limit on the extent to which you can obtain information. That is to say her Honour has identified that you need to be able to say, “I’m missing this information.”
[73] ts 124.
Alinta submits that, because Downer could plead a case, it was not missing information, and so could not satisfy the fourth element.[74]
[74] ts 124.
I do not accept this. In my view, McLure JA was simply pointing out that the WA Rule does not permit an applicant to fish for documents in order to decide whether it wants to commence proceedings. If the applicant might decide not to commence proceedings even if it obtained the missing information, it would not meet the second requirement.
There are plainly differences in the rules, and caution is required.[75] There are, however, considerable similarities.[76] In my view, the 'want' requirement in the WA Rule does not make inapplicable the observations from the other jurisdictions.
[75] Hancock [9].
[76] And see Waller v Waller [2009] WASCA 61 [3] - [4] (Martin CJ).
In any event, Alinta accepts what was said by Newnes JA in Hancockthat, in the circumstances of some cases, an applicant for pre-action discovery is entitled to discovery to ascertain the defences available and their strength, or the extent of the respondent's breach, or the likely quantum of damages.[77]
[77] See ts 129.
That is, Alinta accepts that there will be cases in which the fourth requirement will be met because the applicant for pre-action discovery lacks information to enable it to ascertain the defences available and their strength, or the extent of the respondent's breach, or the likely quantum of damages. Alinta submits, however, that this case was not such a case.
Has Downer been unable to obtain sufficient information? (Issue 3)
Alinta contends that Downer already has sufficient information in relation to the potential Interference Claims.[78] Alinta claims that this can be seen from Downer’s correspondence prior to the Application being made, Mr Wood's affidavits, Downer's submissions in this Application, and a letter sent by Downer after the Application was made.
Material relied on by Alinta
Mr Wood's evidence
[78] ts 158.
Alinta first referred to the evidence of Mr Wood in his first affidavit. Mr Wood said that:[79]
1.the Aconex Documentation indicated that some correspondence said to have been authored by the Superintendent had been authored by Alinta (or a consultant or agent of Alinta);
2.the Overt Reference Documentation indicated there had been private communications between Alinta (or a consultant or agent of Alinta) and the Superintendent;
3.the combined documentation indicated that Alinta has influenced the Superintendent in the performance of those functions such as to procure the outcomes of certifications made by the Superintendent.
[79] See First Wood Affidavit [43] - [44] and [111] - [115].
However, Mr Wood made it plain that this was only his preliminary view. He said, among other things:[80]
Downer has attempted to obtain documentation from Alinta which would explain what appears to be improper interactions between the Superintendent and Alinta regarding the Superintendent's certification role, and the fact it appears that [Alinta] (and [its] consultants or agents) have authored correspondence that is purportedly the work of the Superintendent.
…
… Despite numerous approaches to both Alinta and HSF explaining Downer's concern regarding the performance of the Superintendent's role and requests to provide explanations and documentation, Downer has not been able to obtain any information from Alinta that might assist it to confirm or deny the preliminary views I have reached ….
[80] First Wood Affidavit [111] and [115].
Alinta does not contend that anything in Mr Wood's second affidavit[81] supported its submission. Alinta acknowledges that Mr Wood's statements in his second affidavit were expressed in tentative terms. However, Alinta submits that this was a 'walking back' of his evidence. It appears that Alinta contends that Mr Wood did this in order to bolster the case for pre-action discovery.[82]
[81] Affidavit of Matthew Phillip Wood filed 16 September 2022 (Second Wood Affidavit).
[82] See ts 144.
I do not accept this. Mr Wood made plain, in his first affidavit, that he was expressing only preliminary views and was acknowledging that further information could show that his preliminary views were wrong.
Alinta also appeared to rely on Mr Wood's affidavits in support of an assertion that Downer had been contending that any private communication constituted interference. I do not accept this. At no point, in either affidavit, did Mr Wood assert that any private communication would constitute interference, regardless of context or content.
Correspondence
Alinta next referred to correspondence in which Downer had raised its concerns in varying degrees.[83] I will set out the high points, from Alinta's point of view, below, adding bold italics to indications of uncertainty and underlining more emphatic statements.
Letter to Superintendent
[83] Alinta's Submissions [25] - [35].
The first series of statements were made in a letter to the then Superintendent Mr Marshall dated 1 December 2021:[84]
[84] First Wood Affidavit page 995.
6.It has become apparent that throughout the Projects there has been interference and involvement by the Principal and its agents in the determinations that were required to be undertaken by you under the Contracts. It appears that your judgment is controlled by the Principal.
7.We have recently identified numerous instances where determinations, which require consideration and appraisal by you, appear to have been dictated by the Principal. Further, the metadata on Project correspondence (which is accessible on Aconex) shows that key items of correspondence signed by you were in fact authored by the Principal, or the agents directly working for the Principal.
…
10.If it were found that letters signed by you were in fact merely representing the wishes of the Principal, this could amount to misleading or deceptive conduct. The Contractor reserves its rights in this respect.
11.We request that you please provide to us any and all communication passing between the Principal and you in relation to your role under the Contracts.
Urgent Request Letter
The second series of statements were made in a letter dated 1 December 2021 to the then Principal's Representative Mr Knill in a letter dated 1 December 2021 (Urgent Request Letter):[85]
[85] First Wood Affidavit page 1011.
17.In this regard, the Principal is under an obligation to ensure that the Superintendent fulfils his duty set out in the EPC Contracts, and further, that the Principal does not seek to improperly influence the Superintendent. Courts in Australia have recognised that any communications between a principal and superintendent concerning the certification activities required by the superintendent under a contract, which are not disclosed to the contractor, potentially give rise to an actionable breach against the principal by the contractor (see Vestas Australia Wind Technology v Lal Lal Wind Farm Nom Co Pty Ltd [2020] VSC 554).
…
30.There are repeated instances in the Project correspondence issued by the Superintendent that suggest that there have been private discussions between the Superintendent and the Principal. Two examples are …
31.This correspondence suggests private communications have occurred between the Principal and the Superintendent.
…
44.The authoring of documents by the Principal or the Principal's agents and presenting these documents as being those of the Superintendent is a serious matter. Downer cannot currently conceive of circumstances that would explain this situation.
45.For example, Mr Ghosh and Mr Lombard are based in Western Australia, whereas (we understand) both you and Mr Marshall are based in New South Wales. Accordingly, and in view of Western Australia's border controls, there is little prospect of Mr Ghosh and Mr Marshall or Mr Lombard and Mr Marshall having used the same computer. Equally, it is no explanation to state that Mr Ghosh or Mr Lombard provided a template document or draft for Mr Marshall to review and finalise or vice versa, as this would clearly amount to interference with the impartiality, fairness and independence required of the Superintendent.
46.If the metadata is accurate, and it is correct that you drafted the Invitation Letter, this is deeply troubling.
47.Clause 12.9 of the TXL EPC Contract requires the Superintendent (acting fairly, honestly and reasonably) to determine any claim for an extension of time. The Superintendent must issue his determination within 15 Business Days, and there is no possibility for the Superintendent to extend the 15 Business Day time period. Further, there is no ability in clause 12.9 for the Superintendent to seek input from the Principal on any claim made by Downer under clause 12. Notwithstanding the process set out by clause 12.9, if the metadata regarding the Invitation Letter is accurate, on receipt of Downer's EOT Claim for SP1 you saw fit to write a letter inviting yourself to provide submissions and presented this invitation as having come from the Superintendent.
48.It would be a substantial breach of the EPC Contracts if the Principal has, in fact, authored letters that are presented to Downer as being letters from the Superintendent. It would also amount to misleading or deceptive conduct.
49.In view of the evidence, we consider the conclusions drawn by Downer regarding interference with the Superintendent to be reasonable. Nonetheless, given the seriousness of these matters we invite you to provide an explanation and documentary evidence that would serve to challenge Downer's conclusions.
…
54.We also ask that you please provide to us documentary evidence and explanation that:
(a) demonstrates that the Principal (and its agents) has not sought to improperly influence the Superintendent in relation to the Superintendent's role under the EPC Contracts;
(b)demonstrates that there's not been any private communications between the Principal (and its agents) and the Superintendent in relation to the Superintendent's role under the EPC contracts; and
(c)demonstrates that processes and procedures have been in place to ensure that the Superintendent has fulfilled his duty to act fairly, honestly, reasonably and independently when fulfilling functions under the EPC Contracts.
Alinta relied on paragraphs 17, 30 - 31 and 54 of this letter for an assertion that Downer had been contending that any private communication constituted interference. I do not accept this.
Paragraph 17 uses the word 'potentially'. Paragraphs 30 - 31 simply state that the Overt Reference Documentation suggests that private communication occurred. Paragraph 54 asks about private communications 'in relation to the Superintendent's role under the EPC contracts'.
Other correspondence
Alinta acknowledges that other correspondence was expressed in more tentative terms. However, similarly to its submissions in relation to Mr Wood's second affidavit, Alinta submits that the more tentative correspondence was later in time and involved a 'watering down' of language. Again, it appears that Alinta contends that Downer 'watered down' its language in order to bolster its case for pre-action discovery.[86] I do not accept this. The correspondence does not show a consistent decrease in the certainty with which assertions were expressed over time. There are several examples in the correspondence to Mr Marshall of 1 December 2021 and in the Urgent Request Letter of assertions being expressed as to what the documents appeared to indicate.
Context
[86] See ts 140 - 141.
Further, the correspondence must be considered in the context in, and the purpose for, which it was sent.[87] The letters were sent in the context of the parties being engaged in numerous disputes, with each side no doubt seeking to advance its contractual position. It can be inferred that Downer's purposes included seeking to advance and protect its contractual position, to preserve its rights, to obtain documents to address its concerns, and to present itself confidently.
Notices of Claim
[87] See the discussion in Australian Football League [57] - [63] and, quoted above, B J Bearings [19(4)].
Alinta also referred to the Notices of Claim issued by Downer on 21 December 2021. These stated that Downer had a claim on the basis that Alinta had failed to ensure that the Superintendent had fulfilled his duty to act honestly, fairly, reasonably and independently, and, or alternatively, that Alinta had improperly influenced the Superintendent.[88]
[88] See, for example, First Wood Affidavit page 1104 [5].
The notices added that, as a consequence of the matters raised, Downer was deprived of the opportunity to have its claims properly considered and determined and there was no proper basis for Alinta to seek to impose liquidated damages for Downer’s failure to achieve practical completion on time.[89]
[89] First Wood Affidavit page 1104 [7] - [8].
Alinta submits that the allegations in the Notices were expressed without caveat and without any tentativeness.[90] I accept that the allegations in the Notices were expressed in definite terms. However, the context is important. These were Notices of Claim. That is, notices of what Downer sought to allege under the EPC Contracts.
[90] ts 139 - 140.
Downer submits it was entirely reasonable to issue notices of claim to preserve its future position because the terms of the EPC Contracts require that, if the Contractor wishes to make a Claim against the Principal, the Contractor must give the Principal reasonable notice of the Claim within 30 days after the Contractor became aware or ought reasonably to have become aware of the event or circumstances on which the Claim is based.[91]
[91] Clause 33.7 – see the First Wood Affidavit page 154. See also cl 34 on page 155 - 156.
That Downer felt it needed to issue the Notices to preserve its future position suggests that Downer believed that time had begun to run or that it could be found that time had begun to run. That is, the filing of the Notices suggests that Downer believed it could be said that it knew, or ought to have known, of the relevant events or circumstances.
The content of the Notices are consistent with Downer's belief that there had been interference. The content also suggests that Downer believed it could prove that there had been private communications and that some documents purporting to be authored by the Superintendent were authored by Alinta (or its contractors and agents). However, as noted earlier, Downer's belief that there had been interference and having sufficient information to enable it to decide whether to commence proceedings are two different things.
Downer's submissions in this Application
Alinta contends that Downer's submissions in this Application show that it already has sufficient information to enable it to decide whether to commence proceedings.[92]
[92] Alinta's Submissions [40] - [41].
Alinta refers to Downer’s submission that, on an objective evaluation of the evidence, it is 'at least' arguable that Alinta has improperly influenced the Superintendent in the performance of their functions.[93] Alinta asserts that this submission suggests that Downer already has sufficient information to enable it to decide whether to commence proceedings. Alinta submits that '[t]his is placed beyond doubt by Downer’s acceptance in its submissions that – if the application is dismissed – it may still commence proceedings against Alinta based on the information currently available to it'.[94] Alinta submits that this 'confirms the true purpose of Downer’s application: it is an attempt to supplant or duplicate the ordinary discovery process, and to test the strength of the opposing case in detail'.[95]
[93] Downer's Submissions [62].
[94] Alinta's Submissions [41], referring to Downer's Submissions [101(b)].
[95] Alinta's Submissions [41].
I do not accept this. Having regard to the submissions as a whole, I accept the submissions of senior counsel for Downer as to the purpose of those submissions. In essence, Downer sought to demonstrate the consequences that would flow if Downer did commence proceedings based on the information it currently has. That is, Downer sought to illustrate why it said it did not have sufficient information by showing what could happen if it brought proceedings without that sufficient information. In short, Downer said it could lead to an inadequately particularised statement of claim (depending on what it chose to allege), significant amendments to the pleadings, or the discontinuance of the proceedings.[96]
Arbitration Letter
[96] See Downer's Submissions [101] - [102] and ts 112 - 113.
On 20 July 2022, Downer sent a letter to Alinta[97] (Arbitration Letter).
[97] Affidavit of Ante Golem filed 6 September 2022 (Golem Affidavit), Annexure AG-22 page 151.
In the Arbitration Letter, Downer referred to two invoices sent to it by Alinta following adjudication determinations (Determinations), totalling over $17 million. Downer asserted that the Determinations were liable to be quashed for jurisdictional error. Downer wrote, among other things:
The Determinations acknowledge there is a body of law that requires the Superintendent to act independently, though the Determinations state that no factual evidence is provided indicating that the Superintendent was not acting independently. This statement is inexplicable and shows the adjudicator failed to consider the material provided to him. (For instance, it may have been open to the adjudicator to not accept the evidence that was provided, but to state there is no evidence is plainly wrong.)
Alinta submits that it is possible to infer from this that Downer believed that it was open to the adjudicator to find that the evidence supported a conclusion of lack of independence.[98] I accept this is a possible inference. However, the Arbitration Letter also stated:
Downer does not know whether the Superintendents performed their roles in accordance with the EPC Contracts, but has raised suspicions that they did not.
The legal proceedings commenced by Downer seek documentation that will demonstrate whether, in fact, the Superintendents performed their role fairly, honestly, reasonably and independently.
[98] ts 45.
I accept that the metadata shows that someone other than the Superintendent authored the Aconex Documentation. However, this does not exclude the real possibility of an innocent explanation (such as someone else merely formatting the document or creating a template).
Alinta does not contest this. Alinta's proposition is, rather, that Downer has enough to plead a case of breach of contract. Alinta says this is not a case where Downer needs to know the strength of Alinta's defences.[124] Alinta says that an example of a case where an applicant would need to know the strength of defences would be where there was a potential claim under an insurance policy, and the applicant wanted to know whether there was going to be reliance on a fraud exclusion to defeat the claim.[125] This example is analogous to the factual circumstances in Hancock. It will be recalled that Newnes JA considered that the putative plaintiff reasonably required, to make a decision whether to commence proceedings, documents relating to whether the insurance cover applied to the putative plaintiff's claim.
[124] ts 128 - 129 and 148 - 149.
[125] ts 149 - 150.
Alinta says that Downer also has enough to plead a case of misleading conduct during the performance of the contracts, as this too is based on the allegation that someone other than the Superintendent authored the Aconex Documentation.[126]
[126] ts 150.
I do not accept that the Aconex Documentation needs no context. The metadata of the Aconex Documentation indicates that someone other than the Superintendent authored some of the Superintendent's documents. I will refer to a person so indicated as the 'Metadata Author'. I did not understand Alinta to dispute that a person who merely prepared and supplied a template would be a Metadata Author. In my view, Downer needs to know whether Metadata Authors have meaningfully contributed to the substance of a document before it can be said to have sufficient information to enable a decision to be made.
Before leaving this topic, I note that Alinta does not contend that the Overt Reference Documentation did not need context. This was, with respect, sensible. The Overt Reference Documentation does not include private communications or state that there have been such communications. Rather, it simply contains sentences that suggest that there may have been private communications. Downer does not know whether there were private communications, let alone whether, if there were such communications, the communications were innocuous.
Downer believes it has a prima facie case
Alinta further contends that Downer believes it has a prima facie case.[127]
[127] See, for example, Alinta's Submissions [32].
Having regard to all of the material, and its context, I would infer that Downer believes:
1.there have been private communications between the Superintendent and Alinta (or its contractors and agents);
2.some documents purporting to be authored by the Superintendent were authored by Alinta (or its contractors and agents);
3.it has a prima facie case of both of these alleged facts;
4.if proceedings were instituted and Alinta did not adduce any evidence to explain or contextualise the alleged facts (being the party within whose knowledge this information lay), Downer may be able to establish that there had been interference by inference from those alleged facts, in the absence of explanation.
This does not necessarily mean that Downer has sufficient information to enable it to decide whether to commence a proceeding.[128] As noted by Hargrave J in B J Bearings, a party may still need information to know whether the cost and risk of litigation is worthwhile. In my view, this statement is simply a matter of logic, and is not attributable to the textual differences in the rules of the two jurisdictions.
Downer alleged that any private communication constituted interference
[128] See, as set out earlier, Telstra Corporation [61], B J Bearings [19(2)], and Vestas [96].
Alinta relied on the reasoning of Delany J in Vestas. Alinta contends that, like the plaintiff in Vestas, Downer had been contending that any private communication constituted interference.[129]
[129] ts 134.
When this proposition was advanced by Senior Counsel for Alinta in oral submissions, this exchange occurred:[130]
ARCHER J: Do you think though, looking at the … correspondence and notices as a whole, that their position is any private communication is a problem? I had interpreted it as being a couple of state – well, one statement I recall said that but for the most [part] it was – this is what we think, this is what we infer, this is what it looks like, tell us why we shouldn’t think this. You’re not telling us why we shouldn’t think this. This is troubling.
DHARMANANDA, MR: Yes, that – that’s probably a fair characterisation of it, with these observations, your Honour, which is some of the language is pretty trenchant.
ARCHER J: Can you take me ‑ ‑ ‑
DHARMANANDA, MR: I will take your Honour to that.
[130] ts 134.
Senior Counsel then embarked upon a detailed exploration of the evidence. Much of that evidence is not relevant to Alinta's assertion that Downer alleged that any private communication would be interference. It appears that Alinta bases its assertion on references to private communications in the evidence of Mr Wood[131] and in the Urgent Request Letter.[132]
[131] ts 135 - 136.
[132] ts 137 - 138 and 146, referring to paragraphs 17, 30, 31 and 54 of the letter.
I have already explained why I do not accept that that evidence supports Alinta's assertion.
Downer's submissions
Downer submits that none of the documents in the Overt Reference Documentation or Aconex Documentation on their face establish material facts, nor do they provide information necessary to determine those material facts.
Downer offers as an example the two letters dated 29 July 2020 which are Annexures MPW-21 to Mr Wood's first affidavit.[133] Downer submits:[134]
[133] First Wood Affidavit, Annexure MPW-21 pages 839 - 842.
[134] Downer's Reply [9] - [13].
9.… On their face, those letters suggest Alinta had engaged with the Superintendent as evidenced by the Superintendent writing that Alinta wished to use its time to clarify information in connection with Downer's extension of time claim. Interference is inferred. Those letters do not, however, evidence the material facts concerning interference with the Superintendent's independence. Material facts would include, for example:
(a)when the interaction between the Superintendent and Alinta occurred;
(b)whether the interaction was written or verbal;
(c)which individual(s) from Alinta interacted with the Superintendent; and
(d)the content of what was said during the course of the interaction between Alinta and the Superintendent.
10.As to the Aconex Documentation which suggests authorship of Superintendent correspondence by individuals other than the Superintendent, what are the material facts that arise from identifying the metadata (including the author) of the documents? As far as Downer is aware, there is none. The metadata supports an inference that someone other than the Superintendent authored a document but further information is needed to plead that someone other than the Superintendent authored the document.
11.For example, Downer does not know why an individual such as Trevor Lombard, who Downer understands acted for Alinta alone, appears to have authored letters sent by the Superintendent. There may be a suite of material facts underpinning the reasons for the authorship. There may very well be a reasonable explanation - but Downer does not know this and so far no such explanation has been given.
Downer refers to the discussion in Kane Constructions Pty Ltd v Sopov[135] as to the circumstances in which a court may conclude there has been interference with a superintendent. In Kane, Warren CJ said that, in relation to the principal, 'interference will arise where there is an attempt to lead the superintendent astray in the interests of the principal; and where there is correspondence and communication of an improper character between the principal and the superintendent'.[136] Downer submits that determining either of these things in this case would require a consideration of the correspondence. Downer submits that this explains why Downer's position is, in effect 'I have concerns, but I need to see the correspondence to be able to form a view'.[137]
[135] Kane Constructions Pty Ltd v Sopov (2006) 22 BCL 92; [2005] VSC 237.
[136] Kane Constructions [624] (citations omitted).
[137] ts 79.
Downer further submits that, like the circumstances in B J Bearings, it is required to draw inferences from the documents which suggest that there must have been private communication. In addition, as in B J Bearings, there have been firm denials.[138]
[138] ts 91.
Downer refers to Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd[139] to illustrate that not all private communications are improper, and much depends upon the content and context. Downer says that this is why it cannot properly determine whether to commence proceedings until it has the documentation it seeks.[140] Downer says, in effect, that until it knows the content of the communications between the Superintendent and the relevant parties on Alinta’s behalf, it cannot assess whether there is a benign explanation or whether the communications were improper interference. It says it is impossible, on the information it currently has, to assess whether the communications impacted the Superintendent’s ability to perform his role honestly, fairly and reasonably, and whether the Superintendent was affected or influenced by Alinta so that he could no longer be impartial.[141]
[139] Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 174. See, in particular, at [93] - [99].
[140] ts 93 - 94.
[141] See ts 110 - 111, Downer's Submissions [91] and Downer's Reply [31] - [33].
Downer notes that, in Vestas, there was a reference to ‘HSF comments’ (being a reference to the solicitors for the Principal) in the document properties of three documents issued by the Certifier when performing the Certification Role. There is nothing of that nature in the Overt Reference Documentation.
Downer says it also needs the documents to enable it to assess the extent of any breaches. Downer says it does not have sufficient information at the moment to assess whether it is worth commencing the proceedings. It says:[142]
[T]his is one of those cases where it is appropriate to provide pretrial discovery in relation to matters which go to testing the extent of the breach and the defences that could be made in response to the allegation.
[142] ts 113.
Downer further submits that the evidence shows that it has not yet made a decision to commence proceedings.[143] Mr Wood has deposed that a decision has not yet been made.[144]
Conclusion
[143] Downer's Reply [26].
[144] First Wood Affidavit [116]. See also the Second Wood Affidavit [11] - [12].
In the above discussion, I explained why I reached the following conclusions.
1.I do not accept that the Aconex Documentation needs no context.
2.Although Downer could be said to believe it has a prima facie case (in the sense I have outlined), this does not necessarily mean that Downer has sufficient information to enable it to decide whether to commence a proceeding.
3.I do not accept, having regard to evidence as a whole (and its context), that
a.Downer had been contending that any private communication constituted interference; or
b.Downer believed that the potential causes of action were proved by the materials it currently has available to it.
4.Further, I do not accept that Downer's submissions indicated that the Application was brought for a purpose other than to obtain sufficient information to enable it to decide whether to commence a proceeding.
5.In relation to the Adjudication Letter, I accept that it was possible to infer from that letter that Downer believed that it was open to the adjudicator to find that the evidence supported a conclusion of lack of independence. However, having regard to that letter in its context, I do not accept that Downer believed that the potential causes of action were proved by the materials it had available to it.
I am satisfied that Downer has established that it has not been able to obtain sufficient information to enable a decision to be made as to whether to commence proceedings.
It is reasonably necessary that Downer know whether, among other things, the Metadata Authors contributed to the substance of the Aconex Documentation. It is reasonably necessary that it know whether or not there were private communications, and whether any such communications were innocuous. To adapt the words of Newnes JA in Hancock, no purpose would be served by proceedings against Alinta if the Metadata Authors simply created templates for the Aconex Documentation. No purpose would be served by proceedings against Alinta if there were not, in fact, private communications, or if any such communications were innocuous. Nor would any purpose be served by leaving it to Downer to discover these things through interlocutory processes after commencing proceedings. It is circumstances such as those that the rule is intended to avoid.
Accordingly, I find the fourth requirement to be established.
Uncontested requirements
Alinta does not dispute that the other requirements of O 26A r 4 have been met in relation to each of the potential claims. Downer wants to commence proceedings against the potential party.[145] It has made reasonable enquiries for the purpose of obtaining sufficient information to enable a decision to be made as to whether to commence proceedings.[146] There are reasonable grounds for believing that the potential party has, or is likely to have, possession of documents that may assist the applicant in making the decision to commence proceedings.
[145] First Wood Affidavit [115].
[146] First Wood Affidavit [82] - [117].
Discretionary factors (Issue 4)
Proportionality
As noted earlier, in BWS v ARV [No 2],[147] the Court of Appeal said that the notion of proportionality was central to the exercise of the discretion. It said that the cost and delay involved in the provision of the pre-action discovery as sought should be proportionate to the forensic benefit likely to be derived and to the value and importance or complexity of the subject matter of the contemplated proceedings.
[147] BWS v ARV [No 2] [36].
Consistently with that language, Alinta submits that the burden of the discovery sought in this Application is out of proportion to the forensic benefit likely to be obtained and the value and importance of the proceedings proposed to be commenced by Downer.[148]
The burden on Alinta
Alinta's evidence
[148] Alinta's Submissions [51].
A partner of Alinta's firm of solicitors, Mr Golem, deposes as follows:[149]
I caused Ms Banovic [another solicitor in the firm of lawyers acting for Alinta] to contact persons at Alinta to ascertain the number of electronic documents that are likely to be available for review based on the personnel involved in the Project and relevant to the Proposed Categories that Downer seeks. I am informed by Ms Banovic and verily believe that, based on her inquiries of Alinta personnel, Alinta’s preliminary searches have identified 433,401 potentially relevant electronic documents. Having been instructed by Ms Banovic and the filtering processes set out above, I estimate that the refined collection of electronic documents (excluding hard copy documents) to be reviewed is likely to be approximately 250,000 documents.
[149] Golem Affidavit [40] and [42].
Mr Golem estimates that the cost to review that number of documents would likely be $2,406,280.
Downer's submissions
Downer submits that Alinta's estimate of the number of documents is inadequately explained. It submits:[150]
[150] Downer's Reply [41].
(a)Mr. Golem does not provide any search parameters he or Ms Banovic applied to ascertain [the figure of 433,401];
(b)Mr. Golem deposes that "documents responsive to the Proposed Categories are likely to be held by at least 10 – 15 personnel"[151] without reference to:
(i)who those 10 – 15 personnel are;
(ii)why it is "at least" 10 – 15 personnel who hold documents and any reason for that number increasing – that is, is Alinta not currently aware who interacted with the Superintendent?
(c)Mr Golem does not explain why any of the documents would need to be assessed for privilege.
[151] Golem Affidavit [24(a)].
Downer also submits that Mr Golem does not explain how it was estimated that, of the 433,401 documents, 250,000 documents would need to be reviewed. Downer further notes that there is no indication of the inquiries that were made and the responses to those inquiries, and no indication of the volume of the document repositories.[152]
[152] ts 101.
A partner of Downer's solicitors, Mr Blycha, affirmed an affidavit setting out his views of the scope of the discovery sought, and responding to a number of Mr Golem's claims.[153]
[153] Affidavit of Matthew Ian Blycha filed 16 September 2022 (Blycha Affidavit).
In particular, Mr Blycha said:[154]
No search parameters are provided for these resulting figures of potentially responsive documents or relevant custodians.
Without understanding the search parameters, it is difficult for me to provide detailed comments on the numbers or conclusions reached in the Golem Affidavit. However, based on my experience, those numbers and costs appear excessive. This is illustrated by some general calculations regarding documents responsive to each category. Based on the numbers outlined by Mr Golem, there are, on average, 43,340 potentially responsive electronic documents per category. Where many categories are defined by custodian and/or date range, this seems high. For example, it seems difficult to comprehend how 43,340 documents can be sent over a 10 Business Day time frame (categories 8 and 10) or how categories that are limited to the appointment, retainer or engagement of a specific third party or Superintendent (categories 3 to 6) can result in that number of documents.
It is also not clear to me how and why these potentially relevant 433,401 electronic documents could be refined to a database of approximately 250,000 electronic documents, but no further, without a detailed review of each individual document by the HSF legal team. In my experience, there are other possible electronic methods for the further reduction of this database before a detailed legal review seeking to identify issues like those of privilege, are required.
In my opinion, based on the wording of the categories of documents the focus of any inquiry should be the Alinta email accounts of the Superintendent, namely, the email accounts of Mr Timothy Knill and Mr Hamish Marshall. To the extent these individuals have a folder within their email account entitled 'Chichester Project', or similar, this should be a focus of any review. Further, to the extent the Proposed Categories require the production of documents from custodians other than the Superintendent, such people are likely to be identified by a discussion with the Superintendent.
[154] Blycha Affidavit [13] - [16].
Downer further submits that:[155]
[I]f the Superintendent has not acted improperly, and has corresponded through "formal channels" as he proclaims, there is no reason for Alinta to apply a broad brush to the categories. The question of who interacted with the Superintendent should not be a difficult question for Alinta to answer.
[The two people who were appointed as Superintendent] carried out specific certification functions under the EPC Contracts. As part of that role they and Alinta should be able to say with whom they spoke and from whom they received materials to execute their certification functions.
[155] Downer's Reply [44] - [45].
In addition, Downer contended that some of the correspondence sent by Alinta and the Superintendent after Downer raised its concerns suggests that there would be no documents relating to those concerns.[156] On further exploration of this contention, Downer accepted that, at most, a letter written by the Superintendent implied that there had not been any private communications with Alinta or Alinta's agents.[157]
[156] Downer's Reply [41] and [46].
[157] ts 113 - 117. This was a letter dated 1 December 2021 from the Superintendent – see the First Wood Affidavit, Annexure MPW-36.
Downer further submits that, on the facts, the categories of documents are confined to particular recipients and time periods. It set out in its submissions a table showing how each category was limited.[158] This submission was supported by Mr Blycha's affidavit.[159] Downer says there is no reason why those parameters could not be expressly noted in the category descriptions in an order for pre-action discovery.[160]
[158] Downer's Reply [48]. See also ts 101 and 106 - 109.
[159] Blycha Affidavit [8] - [9].
[160] ts 106.
Downer further submits that, if the extent of the burden is considered too high, the categories could be limited to four people, being the two Superintendents (Mr Knill and Mr Marshall) and two of the consultants who appeared to have authored some of the Superintendent's documents (Mr Ghosh and Mr Lombard).
Discussion of burden
I make the following observations.
First, I do not accept Alinta's initial contention that the burden of compliance would be $2.5 million.
During the hearing of the Application, Alinta did not contest that Mr Golem's affidavit did not contain the detail that would allow the opinion to be evaluated or tested. It did not contest that this had been drawn to its attention by the affidavit of Mr Blycha and Downer's written reply submissions in the Application. It did not contest that it had not sought to file a further affidavit.[161]
[161] ts 145 - 146.
Senior Counsel for Alinta said, in effect, that if the categories were limited as outlined by Downer, it could 'certainly not continue to say that [discovery would cost] two and a half million dollars, but it would be a sizeable amount, based upon what we know.'[162]
[162] ts 146.
Second, a number of the categories are of very limited scope.
The number of people who could be inconvenienced in relation to all of the categories is said to be 'at least 10-15'.[163] In the absence of any basis to support that the numbers could be higher than 15, I consider I should treat the number as 10-15.
[163] ts 159.
Alinta contends that category 1 is broad.[164] I agree that the scope of the type of documents sought is relatively broad and the time period is broad. However, it is limited in scope to documents (my emphasis):[165]
passing between Alinta and/or any Consultants and the Superintendent in connection with the exercise of any power by the Superintendent concerning:
(a)any certification made, or required to be made by the Superintendent under the EPC Contracts; and
(b)any assessment or determination made, or required to be made, by the Superintendent under the EPC Contracts.
[164] ts 159 - 160.
[165] Downer's Reply [48 row 1]
I accept that the Superintendent is regularly required to exercise these powers during the life of the EPC Contracts. Nevertheless, the scope is limited to documents relating to the exercise of those powers.
Further, and more significantly, the scope of category 1 is limited to documents sent or received by the two Superintendents.
Alinta contends that category 2 is broad.[166] I agree that the time period and the number of potential people involved are broad. However, it is limited in scope to (my emphasis):[167]
All Documents prepared by Alinta or any Consultants for or on behalf of the Superintendent relating to any certification, assessment or determination issued by the Superintendent under the EPC Contracts.
[166] ts 144.
[167] Downer's Reply [48 row 2].
I accept that category 2 as a whole is broad. However, its scope is well defined.
Alinta contends that category 5 is broad.[168] I do not accept this. It is limited to the documents prepared at and about the date on which each of the two Superintendents was appointed. It is limited to documents concerning the role of the Superintendent under the EPC Contracts.
[168] ts 144 - 145.
Alinta also contends that category 6 is broad. However, this was based on an interpretation of its scope that was unintended.[169]
[169] ts 161 - 162.
Alinta does not contend that categories 3 and 4 are broad.
Third, Downer would pay the reasonable costs of compliance.
Fourth, I accept that discovery would still burden Alinta. It would involve some time and effort by those required for interviews, and would intrude into Alinta's privacy.[170]
[170] ts 159.
However, the number of people who could be inconvenienced is, in my view, likely to be limited to 10-15. It was not clear from Mr Golem's evidence the likely time burden that would be imposed on each of those 10-15 people. Downer submits that Mr Golem's affidavit suggests that it might take three hours per person.[171] Alinta did not contend this was incorrect.
[171] ts 103, referring to the Golem Affidavit [24], but no doubt intending to also refer to [25].
In addition, the nature of the EPC Contracts and the evidence suggests that Alinta is a large and well-resourced organisation. Consistently with that, the evidence in this case suggests that the Aconex database is not unsophisticated.
The value and importance of the claim
Given the nature of the potential claims, it is not possible to estimate their likely value. The parties did not try to. Alinta submits that the value of the potential claims cannot be assumed to be the $15 million in liquidated damages.[172] Downer does not contest this, but notes that, if it succeeded in showing that the Superintendent's independence has been compromised, Alinta may lose its entitlement to retain the liquidated damages it has.[173] Although a precise estimate is impossible, I consider the value of the potential claims is likely to be in the millions.
[172] Alinta's Submissions [52] - [56]. See also ts 131.
[173] See Downer's Submissions [79] - [83], ts 63 and 101 - 102.
As to importance, Downer submits the potential causes of action go to the heart of a contractor’s right to impartial assessment of claims. Crucial rights hinge on the Superintendent's determinations of those claims. Since the Application was served, Alinta has recovered from Downer more than $15 million, alleged to be owed by Downer for delay liquidated damages under the EPC Contracts. Downer further submits[174] that a failure by a Superintendent to act in accordance with functions under a contract can have a cumulative and influential effect upon the performance of the contract.[175]
[174] Citing Kane Constructions [611].
[175] See Downer's Submissions [79] - [83].
I accept these submissions. I note that Alinta did not suggest otherwise.
Likely forensic benefit to the decision
Downer submits that the documents sought are of critical significance. It submits that, without them, it will remain unclear whether there has been improper interference and the degree of any improper interference by Alinta with the certification functions. It notes that, if the Superintendent’s impartiality has been compromised, any determinations issued by the Superintendent in purported fulfillment of the certification functions could be held to be void and of no effect, from which various remedies may follow.[176]
Conclusion on proportionality
[176] Downer's Submissions [91].
Having regard to all of these factors, I consider that the burden on Alinta in complying with an order for pre-action discovery would not be out of proportion to the forensic benefit likely to be obtained and the value and importance of the potential proceedings.
Other relevant factors
Alinta does not suggest that there are any other relevant factors weighing against the exercise of the discretion. Nevertheless, I will briefly discuss them.
The likelihood that a cause of action of the kind suggested will be found to exist
The circumstances do not permit an accurate assessment to be made as to the likelihood that the Superintendent Documentation will support one or more of the potential causes of action. Too little is known about the context. It may be that there is a benign explanation for the Overt Reference Documents and Aconex Documents.
Nevertheless, in light of the extent to which it appears that other people were authoring documents said to be written by the Superintendent, I consider that there is a reasonable likelihood that the Superintendent Documentation will support one or more of the potential causes of action.
This is a factor in favour of exercising the discretion.
Whether there is any other adequate means, available to the intending plaintiff, of obtaining the information which it seeks
There are no other means by which Downer could obtain the information.
This is a factor in favour of exercising the discretion.
The nature and confidentiality of the documents proposed to be obtained
Downer submits that the documents are unlikely to be confidential. Downer further submits that, to the extent that any documents to be produced are confidential, the level of protection will be higher than simply the implied undertaking, by operation of the Confidentiality Undertaking proposed in Schedule 2 to the Originating Summons.[177]
[177] Downer's Submissions [88] - [90].
This is a factor in favour of exercising the discretion.
Whether the applicant is able to compensate the potential party for its cost of complying with the order
Downer is able to compensate Alinta for its reasonable costs of complying with the proposed discovery.
This is a factor in favour of exercising the discretion.
Whether there is any evidence of bad faith on the part of the applicant
Alinta did not contend that this was a relevant factor.[178]
[178] See ts 120 - 121 in relation to Alinta's Submissions [57] - [58]
Conclusion
Having regard to all of these factors, I consider that an order for pre-action discovery in relation to the potential Interference Claims is reasonably necessary to achieve the proper administration of justice. Accordingly, I would allow the plaintiff's Application for pre-action discovery in relation to those claims.
I will hear from the parties as to the appropriate orders to reflect these reasons. The parties should confer as to the wording of the categories of documents to reflect:
1.the parameters set out in Downer's reply submissions;[179]
2.the clarification provided during the hearing as to the scope of category 6;[180] and
3.Downer's success in relation to only the potential Interference Claims.
[179] See Downer's Reply [48].
[180] See ts 161 - 162.
I will also hear from the parties as to costs, but would invite the parties to have regard to the comments of Martin CJ (with whom Buss JA and Mitchell J agreed) in Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd.[181]
[181] Kelbush Costs Decision.
Annexure A – Schedule 1 of the Originating Summons
A. Defined Terms
| Alinta | The Defendants or a Related Party (including any of their employees) and/or any agent acting on behalf of the Defendants. |
| Contractor | Has the same meaning as in the EPC Contracts. |
| Consultants | Any person or entity engaged by Alinta to perform services in relation to the Project and/or the EPC Contracts, including Engenium (now Stantec) and E3 Advisory. |
| Downer | Downer Utilities Australia Pty Ltd. |
| Document/s | Has the same meaning as in order 26 r 1A of the Rules of the Supreme Court of Western Australia 1971 (WA). |
| EPC Contracts | Both of the Solar Farm EPC Contract and the Transmission Line EPC Contract. |
| Invitation letter | Letter dated 7 October 2021 purportedly from the Superintendent to Downer regarding a request for the Principal to make submissions on Downer's claim for an extension of time and payment of delay costs (Ref. AETC-DOW-0174). |
| Letter dated 1 December 2021 | Letter dated 1 December 2021 from Ashurst both to Alinta Energy Transmission (Chichester) Pty Ltd and Alinta Energy (Chichester) Pty Ltd regarding the Chichester Solar Gas Hybrid Project. |
| Principal | Has the same meaning as in the EPC Contracts. |
| Related Party | Has the same meaning as in s 228 of the Corporations Act 2001 (Cth). |
| Superintendent | Has the same meaning as in the EPC Contracts, being Mr Timothy Knill and Mr Hamish Marshall, as each of the individuals appointed to the role of Superintendent. |
| Solar Farm EPC Contract | EPC Contract for Chichester Solar Farm between Alinta Energy (Chichester) Pty Ltd and Downer Utilities Australia Pty Ltd dated 9 August 2019. |
| Transmission | EPC Contract for Chichester Transmission Line between Alinta |
B. Categories of Documents
All Documents passing between Alinta and/or any Consultants and the Superintendent in connection with the exercise of any power by the Superintendent concerning:
(a)any certification made, or required to be made, by the Superintendent under the EPC Contracts; and
(b)any assessment or determination made, or required to be made, by the Superintendent under the EPC Contracts.
All Documents prepared by Alinta or any Consultants for or on behalf of the Superintendent relating to any certification, assessment or determination issued by the Superintendent under the EPC Contracts.
All Documents passing within Alinta and between Alinta and Mr Knill and/or Mr Marshall relating to the appointment, retainer or engagement of Mr Knill and/or Mr Marshall to the role of the Superintendent in the following periods:
(a)9 May 2019 – 9 October 2019 (inclusive), being the months before and after the appointment of Mr Knill to the role of the Superintendent; and
(b)20 December 2019 – 20 May 2020 (inclusive) being the months before and after the appointment of Mr Marshall to the role of the Superintendent.
All Documents passing between Alinta and/or any Consultants and Mr Knill and/or Mr Marshall concerning how each of Mr Knill and/or Mr Marshall were to perform the role of the Superintendent under the EPC Contracts, including any requests by the Superintendent as to how the Superintendent should exercise his functions under the EPC Contracts.
All Documents prepared or received by Alinta concerning the role of the Superintendent under the EPC Contracts, including documentation prepared or received concerning processes or procedures that Alinta could or would establish regarding the Superintendent's performance of his functions under the EPC Contracts, and/or the requirement for the Superintendent to maintain independence.
All Documents regarding the appointment, retainer or engagement by Alinta of Engenium (now Stantec) and/or E3 Advisory (and any persons engaged by those parties) in connection with the Project and/or the EPC Contracts.
All Documents passing between Alinta and/or any Consultants and the Superintendent regarding the Milestone Certificates, Payment Certificates and determinations referenced in paragraph 40 of the Letter dated 1 December 2021, including any preliminary comments or draft assessments of the items mentioned in paragraph 40 of the Letter dated 1 December 2021. Paragraph 40 of the Letter dated 1 December 2021, being a letter sent by Ashurst to Alinta requesting documentation relating to the functions performed by the Superintendent under the EPC Contracts referred to the following items and their metadata authorship:
(a)Payment Certificates signed by Mr Marshall as Superintendent;
(b)Milestone Certificates, Payment Certificates and two determinations made by Mr Marshall as Superintendent in respect of extension of time claims made by Downer for inclement weather events Ref. AETC-DOW-0144 and Ref. AETC-DOW-0148;
(c)The Certificate of Practical Completion for Separable Portion 1 for the Transmission Line EPC Contract signed by Mr Marshall as Superintendent; and
(d)The Invitation Letter signed by Mr Marshall as Superintendent.
All Documents passing within Alinta and between Alinta and/or any Consultants and the Superintendent between 1 December 2021 and 10 December 2021 (inclusive) regarding the Letter dated 1 December 2021, including any correspondence or communications in connection with the request at paragraph 54 of the Letter dated 1 December 2021 which sought documentary evidence and an explanation that:
(a)demonstrates that the Principal (and its agents) has not sought to improperly influence the Superintendent in relation to the Superintendent's role under the EPC Contracts;
(b)demonstrates that there has not been any private communications between the Principal (and its agents) and the Superintendent in relation to the Superintendent's role under the EPC Contracts; and
(c)demonstrates that processes and procedures have been in place to ensure that the Superintendent has fulfilled his duty to act fairly, honestly, reasonably and independently when fulfilling functions under the EPC Contracts.
All Documents regarding the Invitation Letter (AETC-DOW-0174) dated 7 October 2021 and its preparation including all Documents evidencing communications within Alinta and between Alinta and/or any Consultants and the Superintendent regarding the Invitation Letter on or prior to 7 October 2021.
All Documents regarding the issuance of the Certificate of Practical Completion under the Solar Farm EPC Contract created between 15 November 2021 and 26 November 2021 (inclusive) including any Documents evidencing communications within Alinta and between Alinta and/or any Consultants and the Superintendent regarding this Certificate of Practical Completion. The Certificate of Practical Completion (SUP-AETC-0004) issued under the Solar Farm EPC Contract is dated 25 November 2021.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KH
Associate to the Honourable Justice Archer
6 JANUARY 2023
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