Ealwin Operations Pty Ltd v Civil Mining & Construction Pty Ltd
[2023] VCC 2215
•8 December 2023
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
COMPLEX CASES LIST (FORMER EXPEDITED CASES LIST MATTER)
Case No. CI-20-05020
| EALWIN OPERATIONS PTY LTD (ACN 169 671 274) | Plaintiff |
| v | |
| CIVIL MINING & CONSTRUCTION PTY LTD (ACN 102 557 175) | Defendant |
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JUDGE: | JUDICIAL REGISTRAR BENNETT |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 November 2023 |
DATE OF RULING: | 8 December 2023 |
CASE MAY BE CITED AS: | Ealwin Operations Pty Ltd v Civil Mining & Construction Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2023] VCC 2215 |
RULING
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Subject:PRACTICE AND PROCEDURE
Catchwords: Discovery – s57 of the Civil Procedure Act 2010 (Vic) – application to cross-examine deponent of affidavit of documents
Legislation Cited: Civil Procedure Act 2010 (Vic) ss56 and 57; Evidence (Miscellaneous Provisions) Act 1958 (Vic) Pt III Div 9
Cases Cited:BSO Network Inc v EMClarity Pty Ltd [2020] QSC 186; Cahill v Kiversun Pty Ltd [2017] VSC 628; Ceneavenue Pty Ltd v Martin [2008] SASC 332; Mullett v Nixon [2015] VSC 727; Ren v Sinicorp Pty Ltd [2021] VSC 728; Scott v Johnson [2010] SASC 277; Singh v Singh [2011] VSC 82; Smith v Gould [2012] VSC 89; Yunghanns v Elfic Pty Ltd (2000) 1 VR 92
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Laird with Mr D Mence | T J Mulvany & Co. |
| For the Defendant | Mr M Robins KC with Mr A Morrison | Batch Mewing Lawyers |
JUDICIAL REGISTRAR:
1The defendant was engaged by the City of Newcastle under a head contract to construct a landfill. The plaintiff and defendant entered into a sub-contract in January 2019 pursuant to which the plaintiff was to provide the defendant with earthmoving equipment and associated labour for the landfill project. The plaintiff claims in this proceeding that the defendant failed to pay invoices issued by the plaintiff totalling approximately $550,000.
2By its counterclaim, the defendant alleges that, both prior to and during the sub-contract, the plaintiff made misleading or deceptive representations to the defendant in contravention of s 18 of the Australian Consumer Law,[1] upon which the defendant relied, and as a result of which the defendant has suffered loss and damage. Broadly speaking, those representations concern the average production rate of certain of the plaintiff’s excavators. The defendant’s case is that the average production rate actually achieved by those excavators was considerably less than what the plaintiff had represented and that the project was consequently delayed. The defendant claims damages of between $3.2 and $6 million.
[1]The counterclaim does not specify which version of the Australian Consumer Law is relied upon; cf Mikkelsen v Li [2023] VSCA 255 at [46]-[50], [78].
3The plaintiff, by request for interlocutory determination (“RID”) dated 4 September 2023, seeks an order pursuant to s 57 of the Civil Procedure Act 2010 (Vic) (“CPA”) that the defendant’s Mr Martin Binnie attend for cross-examination on his previous affidavits. Mr Binnie is the deponent of three affidavits in this proceeding regarding discovery, affirmed 2 June 2023 (“First Binnie Affidavit”), 13 June 2023 (“Second Binnie Affidavit”) and 10 November 2023 (“Third Binnie Affidavit”). Mr Binnie is the defendant’s Executive Manager of Governance, Risk and Assurance.
4Alternatively, the plaintiff seeks an order pursuant to s 56 of the CPA that the defendant’s solicitor responsible for the carriage of the matter file and serve an affidavit deposing to the searches conducted by the defendant in relation to the categories of documents set out in Annexure A to my 7 June 2023 orders. The application under s 57 was, however, the focus of the parties’ submissions.
5The defendant says that no such orders should be made. Its secondary position is that, if the Court is minded to grant some form of relief, it should order Mr Binnie, or a solicitor acting for the defendant, to make a further affidavit dealing with the discovery issues. Alternatively, the plaintiff should be given leave to serve interrogatories in relation to the steps taken by the defendant in making discovery, based on the approach of J Forrest J in Mullett v Nixon.[2] The defendant submits that each of these alternatives would permit the discovery issues to be addressed by less costly and burdensome means.
[2][2015] VSC 727, particularly at [69]-[73].
Background to the present application
6This application concerns two broad categories of documents. The first was described loosely as the “raw survey data” (“Survey Data”) and the second was described loosely as “CMC internal communications” (“CMC Communications”).
7The Survey Data is derived from surveying works performed on the landfill project by Centreline Surveying Pty Ltd (“Centreline”), which was engaged by the defendant. Broadly speaking, the Survey Data reveals the progress made by the excavators. It is therefore potentially relevant to the defendant’s counterclaim.
8It is necessary to say a little regarding the genesis of these two categories and some, but not all, of the recent history of the discovery issues in this proceeding.
9The plaintiff’s 4 September 2023 RID is not the first application in this proceeding in relation to discovery. On 30 May 2023, the plaintiff filed an RID seeking orders for specific discovery of certain categories of documents, which were set out in an annexure to the plaintiff’s proposed orders. That annexure included categories in respect of the Survey Data and the CMC Communications. As at 30 May 2023, when the trial was fixed for 3 July 2023, three affidavits of documents had previously been served by the defendant. The deponent was Mr Doug O’Brien, a project manager on the project. The defendant had also made informal discovery by email.[3] According to Mr Kift, the plaintiff’s solicitor, the defendant’s discovery as at 30 May 2023 contained “not a single internal communication passing between its lay witnesses or between those witnesses and senior management”.[4] In letters dated 9 July 2021 and 10 August 2021,[5] the plaintiff had requested discovery of, amongst other things, the defendant’s “internal communications”. A more specific request for internal communications of the kind presently in issue was made by the plaintiff in letters dated 18 May 2023 and 24 May 2023.[6]
[3]Mr Kift’s 4 September 2023 affidavit at [22]-[24].
[4]Ibid at [25].
[5]See Exhibit GAK-1 to Mr Kift’s 30 May 2023 affidavit at pages 16-17 (paragraph 11c) and 18-20 (paragraph 4).
[6]See Exhibit GAK-1 to Mr Kift’s 30 May 2023 affidavit at pages 34-36 (paragraphs 4-5 and 10) and 41-42 (paragraph 5c).
10By the time the specific discovery application came on for hearing before me on 6 June 2023, Mr Binnie had affirmed the First Binnie Affidavit in response to that application. The First Binnie Affidavit addressed the categories referred to in the annexure to the plaintiff’s proposed orders. The CMC Communications category referred to, inter alia, “Internal correspondence, communications …” relevant to certain topics. In paragraph 7.b. of the First Binnie Affidavit, Mr Binnie deposed to having found two emails matching this category.[7]
[7]The emails dated 10 December 2018 and 11 December 2018 identified in Exhibit MB-1 to the First Binnie Affidavit at pages 1-4.
11During the 6 June 2023 hearing, the parties reached agreement as to the resolution of the specific discovery application. The orders made by me on 7 June 2023 reflected that agreement. Annexure A to those orders, which was largely in the same terms as the annexure to the plaintiff’s proposed orders, contained categories of documents which were to be the subject of a further affidavit to be filed by the defendant. Paragraph 1 of Annexure A dealt with the Survey Data and required, amongst other things, that the further affidavit deal with “whether CMC has called for such data [ie the Survey Data] under its agreement with Centreline”. Paragraph 2 of Annexure A dealt with the CMC Communications.
12It is relevant to note that the defendant’s written submissions in response to the plaintiff’s 30 May 2023 RID – which were filed after the First Binnie Affidavit – emphasised that Mr Binnie had conducted thorough and careful searches and that the documents in question “do not exist”. In relation to the Survey Data and CMC Communications (inter alia), the defendant’s submissions stated:[8] “Mr Binnie swears that he has carefully and thoroughly searched for such relevant documents but they do not exist” and “This is entirely assertive speculation by Ealwin. … In any event, Mr Binnie has carefully searched for any further relevant documents but they do not exist.” Those submissions concluded by stating: “In short, CMC cannot discover that which it does not have – nemo dat quad non habet”.
[8]Defendant’s written submissions dated 2 June 2023 at [46].
13Pursuant to my 7 June 2023 orders, Mr Binnie affirmed the Second Binnie Affidavit, which enumerated some 75 documents. That affidavit was silent about whether the defendant had called for the Survey Data from Centreline. Before me, the parties disagreed about whether this meant that the defendant had not complied fully with the 7 June 2023 orders. I return to this below.
14According to Mr Kift, the Second Binnie Affidavit enumerated eight internal emails.[9] It appears that two of those emails[10] were the emails disclosed in the First Binnie Affidavit to which I have referred above. Only one of the eight emails was described in the Second Binnie Affidavit as a document “further” to those listed in the First Binnie Affidavit.[11] It is not apparent from the material before me whether, and if so when and how, the remaining five emails had previously been discovered.
[9]Mr Kift’s 4 September 2023 affidavit at [47(3)].
[10]The emails identified in the Second Binnie Affidavit Sch 1 Pt 1 at Items 9 and 10.
[11]The email identified in the Second Binnie Affidavit Sch 1 Pt 1 at Item 15E.
15The Second Binnie Affidavit stated that the defendant no longer had in its custody, possession or control what Mr Binnie referred to as “Inaccessible Microsoft Teams messages”. He deposed as to this material: “I have searched the Microsoft Teams database and to the extent messages were exchanged (which I am not aware of) they are inaccessible or destroyed”.[12]
[12] Second Binnie Affidavit Sch 2 at Item 7.
16The Second Binnie Affidavit also stated that the defendant no longer had in its custody, possession or control what Mr Binnie referred to as “Inaccessible text messages which were exchanged during the project”. He deposed:[13]
“(a)I have spoken to Grant Christensen and Jeremy Wilson of CMC who have told me, and I believe, that text messages from the relevant period have either been deleted or are otherwise inaccessible due to changes in mobile phones and/or mobile phone numbers;
(b)With respect to the text messages from other individuals no longer employed by CMC, the relevant phones would either be in that individual’s control, or, where the mobile phone/mobile phone number was retained by CMC, the data would have been wiped”.
[13] Ibid at Item 6.
17Although the present application was commenced on 4 September 2023, it did not progress for some time because the parties were awaiting the outcome of the defendant’s application, ultimately unsuccessful, for the transfer of the proceeding to the Supreme Court pursuant to the Courts (Case Transfer) Act 1991 (Vic).
18The Third Binnie Affidavit was filed on 10 November 2023 and enumerated 425 Survey Data documents. Those documents were provided by Centreline to the defendant in September 2023 in response to a request from the defendant’s solicitors in mid July 2023. The defendant also filed an affidavit of Mr Matthew Said of Centreline, affirmed 9 November 2023, which explained the process by which these documents were produced and provided to the defendant.
19In order to quell the disagreement referred to in paragraph 13 above, I will record here that I do not accept the defendant’s submission[14] that the Third Binnie Affidavit did not reflect a failure by the defendant to comply with the previous discovery orders. Whether or not the 425 documents ultimately are of probative value, or contain substantially the same information as other documents previously discovered, are questions upon which the experts appear to disagree and which are irrelevant to the issue of whether or not there was compliance with previous discovery orders.[15] The short point is that the Second Binnie Affidavit did not, contrary to paragraph 1 of Annexure A to my 7 June 2023 orders, deal with whether the defendant had called for the Survey Data from Centreline. When the defendant later made that call, it resulted in the discovery of 425 new documents.
[14]Defendant’s written submissions dated 23 November 2023 at [9].
[15]Cf defendant’s written submissions dated 23 November 2023 at [10] and [25].
Section 57 of the CPA – preconditions
20Section 57 of the CPA provides:
“Unless a court orders otherwise, any party to a civil proceeding may cross-examine or seek leave to conduct an oral examination of the deponent of an affidavit of documents prepared by or on behalf of any other party to that proceeding if there is a reasonable basis for the belief that the other party may be –
(a) misinterpreting the party’s discovery obligations; or
(b) failing to disclose discoverable documents.”
21It is apparent from the terms of s 57 that there are two alternative preconditions for a cross-examination order.[16] The first is that the Court is satisfied that there is a “reasonable basis” for believing that the relevant party (here, the defendant) may be misinterpreting that party’s discovery obligations. The second is that the Court is satisfied that there is a reasonable basis for believing that that party may be failing to disclose relevant documents. If at least one of those preconditions is satisfied, the Court has a discretion whether to permit cross-examination.
[16]See Mullett (supra) at [24] per J Forrest J.
22The preconditions for an order under s 56 are different. The Court must find that there has been: (a) a failure to comply with discovery obligations; or (b) a failure to comply with any order or direction of the court in relation to discovery; or (c) conduct intended to delay, frustrate or avoid discovery of discoverable documents.[17] This is a more stringent test because, whilst s 57 requires only a reasonable basis for the belief that the conduct in question may be occurring, s 56 requires a finding that the conduct has occurred. The threshold for the enlivening of the Court’s discretion under s 57 is relatively low.
[17]See Ren v Sinicorp Pty Ltd [2021] VSC 728 at [97]-[98] per Matthews AsJ.
23Accordingly, care must be taken not to confuse the two tests. Whilst the plaintiff relied heavily upon Ren v Sinicorp Pty Ltd,[18] which concerned an application under s 56(2)(j) of the CPA for dismissal of the plaintiffs’ claims and defences to counterclaim, I did not find that decision to be of assistance in determining the plaintiff’s primary application under s 57.
[18][2021] VSC 728.
24In determining the s 57 application, it is therefore necessary for me first to consider whether there is a reasonable basis for believing that the defendant may be misinterpreting its discovery obligations or failing to disclose discoverable documents. It is appropriate to consider this in relation to each category.
Survey Data
25Discovery of the Survey Data has been a source of disputation between the parties for some time. It is unnecessary for present purposes to go into the history and detail of that disputation beyond the background which I have set out above.
26The plaintiff’s position now is that, following the filing of the Third Binnie Affidavit, there remain only two Survey Data documents which have not been discovered, namely, “FLD” format files entitled “MS190713” and “Conform Subgrade” (“FLD Files”).[19] The basis for the plaintiff’s belief in the existence of the FLD Files is that they were referred to in an internal Centreline email dated 18 May 2020 which has previously been discovered by the defendant.[20]
[19]See Mr Kift’s 22 November 2023 affidavit at [7(b)].
[20]The email identified in the Second Binnie Affidavit Sch 1 Pt 1 at Item 15C.
27Mr Robins informed me during the hearing that the defendant does not have the FLD Files. Whilst I do not doubt that Mr Robins was properly conveying his instructions, I note that there is no sworn evidence from the defendant to that effect. Mr Robins also informed me that the defendant had not yet asked Centreline about the FLD Files, but that it would do so.
28Having regard to the abovementioned matters, I consider there to be a reasonable basis to believe that the defendant may be failing to disclose discoverable documents, namely, the two FLD Files.
CMC Communications
29There was a lack of precision about what the plaintiff treated as constituting CMC Communications for the purposes of this application.[21] I consider it appropriate to treat that category as comprising internal emails, Microsoft Teams messages and internal text messages[22] relevant to the topics in paragraphs 2(a) to (c) of Annexure A to my 7 June 2023 orders, namely:
“a.the meetings pleaded by the defendant in December 2018 and June-July 2019;
b.the elements of reliance and causation in the defendant’s misleading or deceptive conduct claim; and
c.the defendant’s decision to bring its misleading or deceptive conduct claim.”
[21]Paragraph 2 of Annexure A to my 7 June 2023 orders may be contrasted with paragraph 2 of the plaintiff’s written submissions dated 17 November 2023, which may in turn be contrasted with paragraph 4 of Mr Kift’s 4 September 2023 affidavit.
[22]I accept that it is appropriate for the terms “Microsoft Teams messages” and “text messages” to be understood in accordance with the broad definitions of those terms contained in the table at paragraph 4 of Mr Kift’s 4 September 2023 affidavit.
30Because the document category in paragraph 2 of Annexure A was agreed upon by the parties and embodied in my 7 June 2023 orders, no question arises on this application about the scope of discovery. That is to say, the present issue is not whether certain categories of documents should be made the subject of the defendant’s discovery obligations, but rather, whether the defendant has complied with its existing obligations to make discovery of documents within the categories in Annexure A. This is an important distinction which, as will be seen, appeared at times to be blurred in the defendant’s approach to this application.
31The plaintiff relied upon a number of matters which, it submitted, constituted a reasonable basis for the belief referred to in s 57 in respect of the CMC Communications.
32The plaintiff submitted that the following general matters supported the likely existence of considerably more internal documents than those discovered to date by the defendant:
(a) The project was a substantial one, worth over $20 million and extending over some 18 months.
(b) During the course of the project, litigation was contemplated by both parties. In those circumstances, the defendant was under a positive obligation to retain relevant communications.
(c) The Executive General Manager of the defendant, Mr Grant Christensen, said in his witness statement that all emails are “fully backed up and searchable for a minimum of seven years” and that there is “a Microsoft Teams channel which is unique to [each] project and includes secure/confidential internal reporting, photos and videos, detailed procurement records, controlled documents and project controls documents”.[23]
(d) Mr Christensen says the following at paragraph 10.6 of his witness statement, which suggests that there are likely to be CMC Communications “that track the fallout referred to by Mr Christensen”:[24]
“There is no doubt that internally it [ie the delays allegedly caused by the plaintiff] became a big problem in the boardroom with the owners of CMC. The scale of the time, cost and potential reputational impacts to CMC as a direct result of Ealwin’s underperformance was what I would call a major exception to the business-as-usual ups and downs of construction projects that we navigate at the corporate level in CMC”.
[23]Witness statement of Grant Christensen dated 7 December 2022 at [3.7]-[3.9].
[24]Mr Kift’s 4 September 2023 affidavit at [56].
33The plaintiff also submitted that I should be sceptical of the manner in which Mr Binnie had gone about the task of discovery. In this regard, the plaintiff submitted:
(a) Whilst the defendant had asserted that the First Binnie Affidavit was “conclusive”, and Mr Binnie had deposed in that affidavit that he had made “thorough and careful searches”, a significant volume of further documents had later been discovered in the Second Binnie Affidavit and Third Binnie Affidavit. Mr Laird submitted that the Court should therefore lack confidence in assertions as to the conclusiveness of Mr Binnie’s affidavits. (As to the defendant’s previous such assertions, see paragraph 12 above.)
(b) Mr Binnie “make[s] clear” that “he applied a ‘relevance’ test in selecting which documents Ealwin could and could not see”.[25] The basis for this submission is not apparent to me. Whilst it may be assumed that a deponent will generally, because of the nature of the discovery exercise, be required to make judgements about relevance, I can see nothing in the Second Binnie Affidavit which “make[s] clear” that Mr Binnie has done what the plaintiff says.
(c) The Second Binnie Affidavit does not clearly and unambiguously explain the extent of his searches regarding the CMC Communications.[26] Whilst I accept that that is so, and that the Court is consequently unable to form a view about whether those searches were satisfactory, I note that the 7 June 2023 orders imposed no such requirement upon Mr Binnie.
(d) Mr Binnie does not say when certain documents were “deleted” or became “inaccessible or destroyed” (see paragraphs 15-16 above) despite the requirement in the 7 June 2023 orders that he do so. Nor does he say why they were destroyed, particularly in circumstances where litigation was already anticipated as at the end of the project in April 2020.
[25]Ibid at [57].
[26]Ibid at [57].
34As to emails, the plaintiff relied on the following additional matters:
(a) To date, the defendant has discovered a total of only 8 emails passing between its lay witnesses, in contrast to hundreds of emails between the defendant’s employees and external persons.
(b) The Second Binnie Affidavit discovered only one such email.[27]
(c) Two of the defendant’s lay witnesses, Mr O’Brien and Mr van Hamond, had clearly been active on email, as evidenced by the defendant’s discovery of 196 external emails from Mr O’Brien and 70 from Mr van Hamond.
(d) Mr Christensen’s evidence as to the defendant’s email accounts, to which I referred at paragraph 32(c) above, was “unvarnished” in that it was given before the present discovery disputes between the parties had blown up.
[27]See Sch 1 Pt 1 at Item 15E.
35As to Microsoft Teams messages, the plaintiff relied on the following additional matters:
(a) The contents of the Second Binnie Affidavit to which I have referred at paragraph 15 above.
(b) Having regard to the evidence of Mr Christensen in paragraph 32(c) above, it was clear that the defendant would have maintained a Microsoft Teams channel for this project.
(c) By referring to the Microsoft Teams messages in Schedule 2 of the Second Binnie Affidavit, Mr Binnie was implicitly accepting that any such messages were required to be discovered.
(d) It was likely that the Microsoft Teams channel would have been backed up in some way, such as to the cloud or to a server.
(e) The Second Binnie Affidavit does not seek to explain how or why the messages are said to be inaccessible or destroyed. Further, there is no suggestion that Mr Binnie is an information technology specialist or otherwise experienced in the retrieval of such data.
36As to text messages, the plaintiff relied on the following additional matters:
(a) The contents of the Second Binnie Affidavit to which I have referred at paragraph 16 above.
(b) It is apparent from the Second Binnie Affidavit that there were text messages during the relevant period. The question is therefore not whether such text messages were exchanged, but rather, whether they remain available. I add for completeness that there is a further question, namely, whether any of those text messages relate to the topics contained in Annexure A to my 7 June 2023 orders.
(c) It is reasonable to assume that text messages would have been backed up to the cloud or elsewhere, particularly given Mr Christensen’s evidence discussed at paragraph 32(c) above.
(d) Again, there is no suggestion that Mr Binnie is an information technology specialist or otherwise experienced in the retrieval of such data.
(e) Mr Binnie’s affidavit is vague as to what he asked the other employees about their text messages and what they told him.
(f) Whilst Mr Binnie spoke to Mr Christensen and Mr Wilson, it does not appear that he spoke to the defendant’s other two lay witnesses (Mr O’Brien and Mr van Hamond) at all. However, Mr Robins informed me, and Mr Laird did not dispute, that Mr O’Brien and Mr van Hamond are no longer employed by the defendant. That being so, I accept Mr Robins’ submission that Mr Binnie should be understood to have been referring to Mr O’Brien and Mr van Hamond in paragraph (b) of the passage set out in paragraph 16 above.
37The defendant made a number of general submissions in response to the plaintiff’s contention that there was a reasonable basis for the belief required by s 57.
38First, the defendant submitted that the plaintiff was relying upon “self-serving speculations and assertions by [its] solicitor”, none of which were probative of any failure by the defendant to properly discover the CMC Communications.[28] The defendant submitted that the plaintiff needed to establish “by way of credible evidence” that there was a reason to doubt the adequacy of the defendant’s discovery in respect of those documents, and that there was no factual foundation for such doubt.[29]
[28]Defendant’s written submissions dated 23 November 2023 at [11].
[29]Ibid at [14], [24].
39There does not appear to be any authority in which specific consideration has been given to the evidentiary approach to be taken to the requirement of a “reasonable basis” for the belief referred to in s 57 of the CPA. However, it seems to me that some assistance may be derived from cases concerning similar provisions.
40Scott v Johnson[30] is referred to in Williams, Civil Procedure Victoria[31] as “a decision on a similar provision [to s 57 of the CPA] under the South Australian Supreme Court Civil Rules 2006”. In Scott, the plaintiff challenged the adequacy of the defendant’s list of documents and sought orders under r 145 of the South Australian Supreme Court Civil Rules 2006. Rule 145(1) provided:
“If there is reason to doubt whether a party has fully complied with the party’s obligations to disclose and produce documents under this Part, the Court may make orders the Court considers appropriate to ensure that the obligations have been fully complied with and, if necessary, to enforce those obligations.”
[30][2010] SASC 277.
[31]At [I 29.01.775].
41Examples of the types of orders which the Court may make under r 145(1) are set out in r 145(2), and include requiring a person to appear for examination.
42White J in Scott set out a passage from his reasons in the earlier case of Ceneavenue Pty Ltd v Martin,[32] in which his Honour had considered how an applicant might establish the doubt referred to in r 145(1). White J said: [33]
“[An applicant] may also satisfy the evidential onus by pointing to the documents which one would expect to have come into existence in the circumstances of the case by reason of ordinary commercial practice or experience, by reference to the pleadings themselves or by reference to other documents already disclosed.”
[32][2008] SASC 332.
[33]Ibid at [12]; Scott (supra) at [8].
43In BSO Network Inc v EMClarity Pty Ltd,[34] Brown J appears to have accepted the plaintiffs’ contention, advanced by reference to Ceneavenue, that commercial practice or experience was a proper basis upon which the Court might infer the objective likelihood that certain classes of documents, including internal communications, existed.[35]
[34][2020] QSC 186 at [21], [33], [39], [47], [61]. Her Honour was satisfied that there was the requisite objective likelihood in respect of some, but not all, of the classes of documents sought by the plaintiffs.
[35]The relevant provision in BSO Network was r 223(4) of the Uniform Civil Procedure Rules 1999 (Qld), which provided that certain orders could be made if “it appears that there is an objective likelihood that” a party’s duty of disclosure has not been complied with or a specified document or class of documents exists or existed.
44Whilst I am cognisant that the provisions in Scott and BSO Network were worded differently to s 57, I can see no reason why ordinary commercial practice or experience should not be capable of constituting a “reasonable basis” for the purposes of s 57. Accordingly, whilst more than mere speculation is required, it is not always necessary that the reasonable basis be constituted by direct evidence. I therefore do not consider the position to be as stringent as that contended for by the defendant in the submissions to which I referred in paragraph 38 above.
45Secondly, the defendant submitted that the present application constituted a “speculative fishing expedition for documents”[36] and emphasised authorities such as Cahill v Kiversun Pty Ltd, in which Gardiner AsJ stated:[37]
“The task for the Court is to ensure discovery remains proportionate and limited to documents which are directly relevant to the issues in dispute. The obligation on the Court is to ‘focus’ on the real issues in dispute and, in particular, to discard any broad based discovery notions based upon the Peruvian Guano ‘train of inquiry’ test”.
[36] Defendant’s written submissions dated 23 November 2023 at [24].
[37][2017] VSC 628 at [33].
46In my view, Cahill does not assist the defendant. It did not relate to s 57 of the CPA or to cross-examination about compliance with existing discovery obligations. Rather, it was an application for discovery of additional categories of documents. In seeking to rely upon this passage, the defendant has conflated the question of the scope of discovery – which is not in issue in this case – with the question of the defendant’s compliance with its existing discovery obligations.
47Thirdly, Mr Robins submitted that, in considering the plaintiff’s complaints about his client’s discovery, the Court should take account of the fact that the plaintiff had itself discovered no text messages and only about 20 emails. I do not consider this submission to have great force. The Second Binnie Affidavit appears to proceed upon the basis that text messages were exchanged on the defendant’s side and that the issue is whether they are available. Further, I accept that the evidence of Mr Christensen set out in paragraph 32(d) above constitutes a basis for inferring that there was likely to have been significant internal communication on the defendant’s side in relation to the plaintiff’s alleged “underperformance”. I have not been pointed to any similar evidence of the plaintiff’s witnesses which would suggest the likelihood of such communication on the plaintiff’s side.
48Fourthly, the defendant emphasised that it is a tightly controlled private company rather than a public company, and submitted that the plaintiff’s approach assumed “an artificial rigour in record keeping by [the defendant] for which there is no evidentiary basis”.[38] Mr Robins stressed that the defendant’s lay witnesses are not lawyers and should not be treated as having acted with a lawyerly focus upon the creation of written records. I will return to this submission below.
[38]Defendant’s written submissions dated 23 November 2023 at [24].
49Having regard to all of these matters, my conclusions in relation to the s 57 preconditions are as follows:
(a) As to emails, I accept that the matters set out at paragraphs 32, 33(a), 33(c), and 34 above constitute a reasonable basis for a belief that the defendant may be misinterpreting its discovery obligations or failing to disclose discoverable documents. In particular, given what Mr Christensen says about the significance ascribed by the defendant internally to the plaintiff’s “underperformance” (see paragraph 32(d) above), ordinary commercial practice or experience suggests that there are unlikely to have been only 8 discoverable internal emails – at least some of which do not even deal with that topic – a fortiori in circumstances where two of the witnesses appear to have been active email users. Contrary to the defendant’s submission recorded in paragraph 48 above, I do not consider this to involve the application of an artificial rigour to the defendant’s record-keeping or to imbue the defendant’s executives with a lawyerly approach to record creation.
(b) As to Microsoft Teams messages, I accept that the matters set out at paragraphs 32, 33(a), 33(c), 33(d) and 35 above constitute a reasonable basis for a belief that the defendant may be misinterpreting its discovery obligations or failing to disclose discoverable documents.
(c) As to text messages, I accept that the matters set out at paragraphs 32, 33(a), 33(c), 33(d) and 36[39] above constitute a reasonable basis for a belief that the defendant may be misinterpreting its discovery obligations or failing to disclose discoverable documents.
[39] Save where I have indicated otherwise in my reasons in that paragraph.
50In light of these conclusions, the Court’s s 57 discretion is enlivened and it is necessary to determine how it should be exercised. It is appropriate to do this by reference to each of the two categories.
Exercise of the s 57 discretion
51The defendant characterised the orders sought by the plaintiff as “extraordinary and extreme further discovery orders” and “onerous and extreme orders”.[40] Against the background of this characterisation, it further submitted that orders for interlocutory cross-examination “are rare, and are rightly made sparingly and only where there is a strong factual foundation to justify it and there is a proper forensic purpose to do so”.[41] The plaintiff disputed these submissions.
[40] Defendant’s written submissions dated 23 November 2023 at [1] and [12].
[41] Ibid at [15].
52In support of the abovementioned characterisation of orders under s 57, the defendant relied particularly upon two paragraphs from the decision of J Forrest J in Mullett.[42] In that case, the plaintiff sought orders for cross-examination of one of the defendants under s 57 of the CPA, as well as orders for specific discovery by all three defendants of further documents falling within certain classes.
[42]Mullett (supra) at [11] and [24].
53In the first of the two paragraphs relied upon by the defendant, J Forrest J simply set out the preconditions for an order under s 57, by reference to the statutory text.[43] That paragraph provides no support for the defendant’s characterisation.
[43]Ibid at [24].
54In the second paragraph relied upon by the defendant, after having referred in the preceding paragraph to the changes introduced by the CPA, his Honour stated:[44]
“… the obligations on a party to make discovery have narrowed rather than expanded. This was for good purpose. Satellite discovery fights and the costs of discovery have become a blight on the legal profession – in terms of cost, delay and reputation”.
[44]Ibid at [11].
55In the following paragraph of his reasons,[45] J Forrest J referred to the demise of the Peruvian Guano[46] “train of inquiry” test and to the limited categories of discovery now set out in s 26 of the CPA and r 29.01.1(3) of the Supreme Court (General Civil Procedure) Rules 2015 (“Supreme Court Rules”). I note that these matters concern the scope of a party’s discovery obligations.
[45]Ibid at [12].
[46]Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55 at 63.
56I do not consider either of the paragraphs relied upon by the defendant, or the decision in Mullett generally, to support the defendant’s characterisation. Further, whilst the CPA reflects the conclusion of the Victorian Law Reform Commission (the “Commission”) that the scope of discovery should be narrowed,[47] the Commission also recommended strengthening the tools available to the Court to deal with discovery abuse and default.[48] The CJR Report relevantly stated:[49]
“Abuse of discovery and sanctions
The commission remains of the view that tougher and broader sanctions for discovery abuse will encourage the parties and practitioners to take their discovery obligations seriously and assist to establish acceptable norms for the conduct of discovery. More clearly defined sanctions will also encourage parties to work towards the efficient resolution of discovery issues and discourage the use of discovery as an adversarial tool. …
In light of comments made by Victoria Legal Aid we have clarified the proposed sanctions. Provisions have been incorporated to explicitly permit the court to order indemnity costs against a party or a lawyer who aids and abets any discovery default, and also to enable the court to compel a person to give evidence in connection with a discovery default.”
[47]Victorian Law Reform Commission, Civil Justice Review Report (“CJR Report”), March 2008 at page 466; see also the recommendations at pages 474 and following. The Explanatory Memorandum to the Civil Procedure Bill 2010 indicates that that Bill was based upon the CJR Report.
[48]In the explanatory memorandum to the Civil Procedure Bill 2010, the introductory section to part 4.3 (headed “Disclosure and Discovery”) refers to the CJR Report and states that “The Bill implements the Commission’s recommendations with respect to case management reforms and sanctions for discovery abuse”.
[49]CJR Report at 473.
57Recommendation 89 in the CJR Report was that “The court should have broad and express discretion to deal with discovery default.”[50] The recommendation also contained a draft provision,[51] the first part of which is broadly consistent with s 56 of the CPA, and the second part of which is virtually identical to s 57.
[50]Ibid at 476.
[51]Ibid at 476-477.
58The present application concerns a dispute about a party’s compliance with its existing discovery obligations,[52] a matter in respect of which the CPA, based upon the Commission’s recommendations, has expanded the Court’s powers. It does not concern a dispute about the scope of a party’s discovery obligations,[53] a matter in respect of which the Commission recommended a narrower approach. This militates in my view against the defendant’s characterisation of s 57 orders as “extraordinary and extreme” or “onerous and extreme”.
[52]Namely, the defendant’s obligation to discover documents falling within the categories in Annexure A to the 7 June 2023 orders.
[53]For example, a dispute about the particular documents, or particular categories of documents, which the defendant should be ordered to discover.
59In addition to being unsupported by Mullett and inconsistent with the CJR Report, the defendant’s characterisation of s 57 orders is in my view inconsistent with observations in other authorities.
60The first such authority is Singh v Singh,[54] upon which the plaintiff relied. Singh involved an application by the plaintiff that the defendant make further discovery of categories of documents. There does not appear to have been any application for cross-examination under s 57. After concluding that it was appropriate to order further discovery, Mukhtar AsJ stated:[55]
“I am concerned that disputations may arise later if the defendant says that having brought the documents over there is nothing answering the description of the documents sought. I have to assume that properly advised the defendant will act conscientiously. I mean no disrespect to the defendant or his advisors when I say to avoid interlocutory skirmishes, I will direct the defendant to file an affidavit that states precisely what steps were taken to obtain the documents, from who, by what means, and a description of the exercise undertaken by him to search for the documents as sought. As I mentioned in argument, in modern litigation, my view is not to have unduly argumentative correspondence about discovery but to invoke powers under s 57 of the Civil Procedure Act and allow cross examination or an oral examination of the deponent.”
[54] [2011] VSC 82.
[55] Ibid at [32].
61The defendant contended that Singh provided no assistance in the present case, because his Honour’s observations about s 57 were at best obiter dicta and were neither binding nor persuasive. Mr Robins also submitted that, in any event, they were “trumped” by what was said by J Forrest J in Mullett. It will be apparent from my earlier discussion of Mullett that I do not accept the latter submission.
62The purpose of the observations made by Mukhtar AsJ about s 57 is not apparent from the reasons in Singh. It may be that his Honour was foreshadowing the prospect of cross-examination if the defendant filed an insufficient affidavit. Whilst I accept that his Honour’s reference to s 57 was obiter and not binding, I disagree with the submission that it was not persuasive. On the contrary, and having regard to the extent, content and tone of much of the correspondence regarding discovery in the present proceeding, I consider his Honour’s observations to be not only persuasive but also particularly apposite to the present case.
63The second such authority is Smith v Gould,[56] which involved a claim pursuant to Part IX of the Property Law Act 1958 (Vic) for orders and declarations as to the parties’ interests in a pool of assets. Zammit AsJ heard applications by both parties for further discovery and an application by the plaintiff for leave to conduct an oral examination of the defendant pursuant to s 57. The applications for further discovery were resolved by consent on a number of bases, including that the defendant would file a further affidavit in relation to allegedly deficient aspects of his discovery. This left her Honour to deal with the s 57 application.
[56] [2012] VSC 89.
64Zammit AsJ made the following observation in relation to s 57:[57]
“It would be appropriate to grant such leave [to cross-examine] if the Court wanted to extinguish any doubt that there has been incomplete discovery by any party, or if the integrity of the discovery process is in question”.
[57]Ibid at [50]. Her Honour ultimately declined to order cross-examination, including because she did not consider the s 57 preconditions to be satisfied and because of the potential for cross-examination to distract the parties from preparation for trial, which was only 6 weeks away: see at [54], [57] and [59].
65This observation seems to me to be broadly consistent with what was said by Mukhtar AsJ in Singh. Both passages indicate that cross-examination under s 57 may in appropriate cases assist the Court in cutting through outstanding issues in relation to the sufficiency or integrity of discovery. Section 57 is in my view likely to be particularly useful in cases, such as the present, where there have already been a number of attempts at complying with discovery obligations and there is ongoing legitimate disputation about whether compliance has occurred. In such circumstances, s 57 has the potential to further the overarching purpose in s 7 of the CPA, although it will be necessary to ensure that the scope of the cross-examination is kept within appropriate limits.
66For these reasons, I reject the defendant’s characterisation of s 57 orders as “extraordinary and extreme” or “onerous and extreme”. I also note that that characterisation is inconsistent with the statement in Williams, Civil Procedure Victoria[58] that s 57 ought “not be treated as reserved for exceptional cases”.
[58]At [I 29.01.775]. The statement in question is immediately followed by a reference to Australian Securities Commission v Zarro (No 2) (1992) 34 FCR 427 at [104], but this reference appears to be erroneous. It appears that the reference is intended to be to the decision of O’Loughlin J in Auspine Ltd v H S Lawrence & Sons Pty Ltd [1999] FCA 1749 at [104]. In that paragraph of Auspine, O’Loughlin J referred to the decision of Drummond J in Zarro at page 431, in which Drummond J referred to his decision to allow cross-examination as “this exceptional course”. (See also Finance Sector Union of Australia v Commonwealth Bank of Australia Limited [2000] FCA 1389 at [15].)
67The defendant’s further submission regarding the rarity of interlocutory cross-examination (see paragraph 51 above) was founded upon authorities dealing not with cross-examination under s 57 of the CPA, but with the broader question of when cross-examination should be permitted on interlocutory applications pursuant to r 40.04 of the Supreme Court Rules.[59] I agree with Mr Laird’s submission that these authorities are of little utility for present purposes.
[59]The defendant relied upon Matthews v SPI Electricity Pty Ltd [2013] VSC 422 at [28]-[29] per Derham AsJ; Yunghanns v Elfic Pty Ltd (2000) 1 VR 92 at [18] per Warren J; and PG Nominees Pty Ltd v WBHO Infrastructure Pty Ltd [2020] VSC 48 at [31]-[32] per Ierodiaconou AsJ.
68An example of the difficulty with the defendant’s reliance upon such authorities is demonstrated by the following passage from Yunghanns v Elfic Pty Ltd,[60] which was set out in the defendant’s written submissions:
“… it is undesirable except in special compelling circumstances for a court to permit a party to have the opportunity at an interlocutory stage to cross-examine an opposing party upon an issue of fact that goes to the core of the proceeding. To do so enables the party seeking to cross-examine to have, in effect, a dress rehearsal of a vital component of evidence to be ventilated at trial”.
[60](2000) 1 VR 92 at 98 [18] per Warren J.
69With respect, the defendant’s reliance upon this passage was inapposite for several reasons. First, Yunghanns did not involve an application pursuant to s 57. Secondly, Yunghanns did not involve cross-examination as to whether an affidavit of documents complied with discovery obligations. Thirdly, the proposed cross-examination in the present case would concern neither “an issue of fact that goes to the core of the proceeding” nor “a vital component of evidence to be ventilated at trial”. Fourthly, because the defendant is not calling Mr Binnie as a witness at trial, there can be no “dress rehearsal” of the kind referred to in Yunghanns.
70Accordingly, whilst I agree with the defendant that an order under s 57 should only be made when there is a proper forensic purpose for such an order, I do not agree that such orders “are rare, and are rightly made sparingly and only where there is a strong factual foundation” (cf paragraph 51 above).
71Having discussed the parties’ competing approaches to the exercise of the Court’s s 57 discretion, I turn now to consider how I should exercise that discretion here.
Survey Data
72I concluded above that there is a reasonable basis to believe that the defendant may be failing to disclose discoverable documents, namely, the two FLD Files. I do not consider that conclusion to be an appropriate basis upon which to permit cross-examination of Mr Binnie in relation to the Survey Data, for several reasons.
73First, I do not consider that it would be an appropriate use of s 57, or consistent with the overarching purpose in the CPA, for the plaintiff to cross-examine Mr Binnie about the discovery of any of the Survey Data other than the two FLD Files. In circumstances where the 425 documents enumerated in the Third Binnie Affidavit have now been discovered, there would be little utility in permitting cross-examination about their belated discovery as Mr Laird proposed.
74Secondly, the FLD Files were referred to in Centreline internal communications and it is apparent from the affidavit of Mr Said that the FLD Files were created by Centreline. In those circumstances, it seems unlikely that Mr Binnie would have any relevant direct knowledge as to the existence or location of the FLD Files.
75Thirdly, Mr Robins has indicated that the defendant will make enquiries of Centreline as to the FLD Files. In light of those proposed enquiries, and given that there are only two such files, permitting the cross-examination of Mr Binnie does not seem to me to be a proportionate means of seeking to address the potential deficiency in the defendant’s discovery.
76Fourthly, if the FLD Files remain outstanding after enquiries have been made of Centreline, the issue could more appropriately be addressed – if necessary – by requiring Mr Binnie or the defendant’s solicitor to file and serve an affidavit deposing to the enquiries made of Centreline and the results of those enquiries.
CMC communications
77Mr Laird submitted that the CMC Communications were important in light of the financial magnitude of the counterclaim. He further submitted that they had the potential to shed light on what the defendant was saying internally about the geotechnical conditions at the site, the delays in the project, the allegedly misleading and deceptive conduct of the plaintiff, and the consequences of that conduct.[61] I accept those submissions.
[61]See also Mr Kift’s 4 September 2023 affidavit at [21].
78Mr Laird also noted that, if the defendant had failed to preserve critical documents in circumstances where it knew that litigation was contemplated, Division 9 of Part III of the Evidence (Miscellaneous Provisions) Act 1958 (Vic) may become relevant. Accordingly, he submitted that it was necessary to address the question of whether such failure had occurred. I also accept that submission.
79A number of further matters to militate in favour of permitting cross-examination of Mr Binnie in relation to the CMC Communications. First, a significant amount of the parties’ time, and the Court’s time, has been taken to date in dealing with discovery issues. Secondly, the extent, content and tone of the parties’ correspondence in relation to discovery suggests that further correspondence and/or affidavits are unlikely to resolve the current issues in a timely or cost-effective manner. Thirdly, the defendant has already filed six affidavits dealing with discovery. Fourthly, the proceeding is listed for a 15-day trial on 3 June 2024, after the adjournment of several previous trial dates. Ongoing disputation in relation to discovery issues has the potential to jeopardise that trial date.
80I am not attracted to the defendant’s suggestion that I should instead permit the plaintiff to interrogate the defendant. There are a number of reasons why that is so. First, interrogatories are rarely administered in the Commercial Division of this Court.[62] Mullett was a proceeding in the Common Law Division of the Supreme Court. Secondly, Mullett does not form a sound basis for the contention that interrogatories should be ordered here in relation to the discovery steps taken by the defendant. The interrogatories ordered by J Forrest J went not to the question of the defendants’ compliance with their discovery obligations, but to one of the substantive issues in the proceeding.[63] Thirdly, having regard to the procedural history of this matter and the somewhat combative approach taken by the parties, there seems to me to be a significant risk that interrogatories will simply give rise to further disputes about their terms and the adequacy of the answers to them.
[62]See section G.11 of the Commercial Division’s Omnibus Practice Note PNCO 2-2022.
[63]Mullett (supra) at [29], [71].
81The defendant indicated concern about the scope of any cross-examination. Mr Kift’s affidavit lists the topics about which the plaintiff wishes to cross-examine.[64] As stated earlier, I do not consider it appropriate for there to be cross-examination about the Survey Data. As to the CMC Communications, some of the topics identified by Mr Kift appear to be more relevant than others. However, given that I have not heard the parties specifically in relation to the topics, I will not express any conclusions here about their permissibility. Broadly speaking, the cross-examination should be directed to ascertaining whether there are further discoverable documents which have not yet been produced and if so, how they may be located and produced. I will not permit a wide-ranging cross-examination about matters of peripheral relevance to the attainment of those objectives.
[64] Mr Kift’s 4 September 2023 affidavit at [61].
82Accordingly, I consider it appropriate to make orders broadly of the kind sought in paragraphs 1, 3 and 4 of the proposed orders circulated by the plaintiff on 4 September 2023. The parties should seek to provide my chambers, by 4.00pm on 15 December 2023, with agreed minutes of proposed order to reflect these reasons. Competing minutes may be provided in the event that agreement cannot be reached. In preparing the minutes, the parties should liaise with my associate regarding potential listing times for the cross-examination of Mr Binnie.
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Certificate
I certify that these 25 pages are a true copy of the ruling of Judicial Registrar Bennett delivered on 8 December 2023.
Dated: 8 December 2023
Tae Fabricato
Associate to Judicial Registrar Bennett
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