INPEX Operations Australia Pty Ltd v AIG Australia Ltd [No 3]
[2023] WASC 332
•29 AUGUST 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: INPEX OPERATIONS AUSTRALIA PTY LTD -v- AIG AUSTRALIA LTD [No 3] [2023] WASC 332
CORAM: LUNDBERG J
HEARD: 26 JUNE 2023
DELIVERED : 29 AUGUST 2023
PUBLISHED : 29 AUGUST 2023
FILE NO/S: CIV 1631 of 2020
(Consolidated with CIV 1620 of 2020)
BETWEEN: INPEX OPERATIONS AUSTRALIA PTY LTD (ACN 150 217 626)
Plaintiff
AND
AIG AUSTRALIA LTD ACN 004 727 753
First Defendant
ALLIANZ AUSTRALIA INSURANCE LTD (ACN 000 122 850)
Second Defendant
TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD (ARBN 000 438 291)
Third Defendant
SOMPO JAPAN INSURANCE INC. (ARBN 000 837 801)
Fourth Defendant
AIOI NISSAY DOWA INSURANCE COMPANY LTD (ARBN 096 302 466)
Fifth Defendant
MITSUI SUMITOMO INSURANCE COMPANY, LTD (ARBN 000 525 637)
Sixth Defendant
ZURICH AUSTRALIAN INSURANCE LTD (ACN 000 296 640)
Seventh Defendant
HDI GLOBAL SE (ARBN 134 049 951)
Eighth Defendant
XL INSURANCE COMPANY SE (ARBN 083 570 441)
Ninth Defendant
AAI LTD (ACN 005 297 807)
Tenth Defendant
CHUBB INSURANCE AUSTRALIA LTD (ACN 001 642 020)
Eleventh Defendant
SWISS RE INTERNATIONAL SE (ARBN 138 873 211)
Twelfth Defendant
CERTAIN UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 4444
Thirteenth Defendant
UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 1221 AND SYNDICATE 4000 (TOGETHER, MILLENNIUM CONSORTIUM 9128)
Fourteenth Defendant
UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 1861 FOR THE 2012 YEAR OF ACCOUNT
Fifteenth Defendant
UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 1183 FOR THE 2012 YEARS OF ACCOUNT
Sixteenth Defendant
THE UNDERWRITING MEMBER OF LLOYD'S SYNDICATE 2623
Seventeenth Defendant
HDI GLOBAL SPECIALTY SE (ARBN 129 395 544)
Eighteenth Defendant
GREAT LAKES INSURANCE SE (ARBN 127 740 532)
Nineteenth Defendant
PAN INSURANCE DESIGNATED ACTIVITY COMPANY
Twentieth Defendant
SCOR UK COMPANY LTD
Twenty-first Defendant
HELVETIA SCHWEIZERISCHE VERSICHERUNGS-GESELLSCHAFT AG
Twenty-third Defendant
THE UNDERWRITING MEMBER OF LLOYD'S SYNDICATE 2003
Twenty-fourth Defendant
CERTAIN UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 0623
Twenty-fifth Defendant
(BY ORIGINAL ACTION)
FILE NO/S: CIV 1729 of 2020
BETWEEN: INPEX OPERATIONS AUSTRALIA PTY LTD (ACN 150 217 626)
Plaintiff
AND
MITSUI SUMITOMO INSURANCE COMPANY, LIMITED
Defendant
Catchwords:
Practice and procedure - Applications for discovery by defendant insurers - Complex litigation - Onshore LNG Project - Discovery sought by categories in respect of various phases of the Onshore LNG Project - Whether categories relevant and proportionate - Discovery rulings set out in Redfern Schedule
Practice and procedure - Applications for discovery by defendant insurers in respect of allegations that plaintiff had no genuine commercial interest in JKC Assignment - Whether documents sought relevant to defendants' case as pleaded and argued on the application - Discovery requests largely refused
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4 B, and O 26 r 7
Result:
Applications for discovery allowed as to categories 1.1 to 1.10, in accordance with Redfern Schedule
Applications for discovery of categories 2.1, 2.2, 2.4 to 2.6 dismissed (with category 2.3 conceded and category 2.7 not pressed)Category: B
Representation:
CIV 1631 of 2020
Original Action
(Consolidated with CIV 1620 of 2020)Counsel:
Plaintiff : Mr R J Price First Defendant : Mr T Marskell & Mr B J Willesee Second Defendant : Mr T Marskell & Mr B J Willesee Third Defendant : Mr T Marskell & Mr B J Willesee Fourth Defendant : Mr T Marskell & Mr B J Willesee Fifth Defendant : Mr T Marskell & Mr B J Willesee Sixth Defendant : Mr A P Hershowitz Seventh Defendant : Mr T Marskell & Mr B J Willesee Eighth Defendant : Mr T Marskell & Mr B J Willesee Ninth Defendant : Mr T Marskell & Mr B J Willesee Tenth Defendant : Mr T Marskell & Mr B J Willesee Eleventh Defendant : Mr T Marskell & Mr B J Willesee Twelfth Defendant : Mr T Marskell & Mr B J Willesee Thirteenth Defendant : Mr T Marskell & Mr B J Willesee Fourteenth Defendant : Mr T Marskell & Mr B J Willesee Fifteenth Defendant : Mr T Marskell & Mr B J Willesee Sixteenth Defendant : Mr T Marskell & Mr B J Willesee Seventeenth Defendant : Mr T Marskell & Mr B J Willesee Eighteenth Defendant : Mr T Marskell & Mr B J Willesee Nineteenth Defendant : Mr T Marskell & Mr B J Willesee Twentieth Defendant : Mr T Marskell & Mr B J Willesee Twenty-first Defendant : Mr T Marskell & Mr B J Willesee Twenty-third Defendant : Mr T Marskell & Mr B J Willesee Twenty-fourth Defendant : Mr T Marskell & Mr B J Willesee Twenty-fifth Defendant : Mr T Marskell & Mr B J Willesee Solicitors:
Plaintiff : Allen & Overy First Defendant : Wotton + Kearney Lawyers (Sydney) Second Defendant : Wotton + Kearney Lawyers (Sydney) Third Defendant : Wotton + Kearney Lawyers (Sydney) Fourth Defendant : Wotton + Kearney Lawyers (Sydney) Fifth Defendant : Wotton + Kearney Lawyers (Sydney) Sixth Defendant : Gillis Delaney Lawyers Seventh Defendant : Wotton + Kearney Lawyers (Sydney) Eighth Defendant : Wotton + Kearney Lawyers (Sydney) Ninth Defendant : Wotton + Kearney Lawyers (Sydney) Tenth Defendant : Wotton + Kearney Lawyers (Sydney) Eleventh Defendant : Wotton + Kearney Lawyers (Sydney) Twelfth Defendant : Wotton + Kearney Lawyers (Sydney) Thirteenth Defendant : Wotton + Kearney Lawyers (Sydney) Fourteenth Defendant : Wotton + Kearney Lawyers (Sydney) Fifteenth Defendant : Wotton + Kearney Lawyers (Sydney) Sixteenth Defendant : Wotton + Kearney Lawyers (Sydney) Seventeenth Defendant : Wotton + Kearney Lawyers (Sydney) Eighteenth Defendant : Wotton + Kearney Lawyers (Sydney) Nineteenth Defendant : Wotton + Kearney Lawyers (Sydney) Twentieth Defendant : Wotton + Kearney Lawyers (Sydney) Twenty-first Defendant : Wotton + Kearney Lawyers (Sydney) Twenty-third Defendant : Wotton + Kearney Lawyers (Sydney) Twenty-fourth Defendant : Wotton + Kearney Lawyers (Sydney) Twenty-fifth Defendant : Wotton + Kearney Lawyers (Sydney) CIV 1729 of 2020
Counsel:
Plaintiff : Mr R J Price Defendant : Mr A P Hershowitz Solicitors:
Plaintiff : Allen & Overy Defendant : Gillis Delaney Lawyers Case(s) referred to in decision(s):
Bakewell v Anchorage Capital Master Offshore Ltd [2019] NSWCA 199
Billabong Gold Pty Ltd v Vango Mining Ltd [No 2] [2023] WASCA 58
Bluebottle UK Limited v Deputy Commissioner of Taxation [2007] HCA 54; (2007) 232 CLR 598
Cooperative Bulk Handling Ltd v Jennings Industries (1996) 17 WAR 257
Cove House Illiquid Investments DAC v YA Global Investments LP [2018] WASC 349
Deputy Commissioner of Taxation v Bluebottle UK Limited [2006] NSWCA 360; (2006) 68 NSWLR 558
Dover v Lewkovitz [2013] NSWCA 452
EWC Payments Pty Ltd v Commonwealth Bank of Australia [2014] VSC 207
Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451; [1966] 1 All ER 418
Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61
Maek Pty Ltd v Ibrahim [2022] WASC 285
National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (2004) 51 ACSR 129
Petrofina (UK) Ltd & Ors v Magnaload Ltd & Anor [1984] 1 QB 127; [1983] 3 All ER 35
Quenchy Crusta Sales Pty Ltd v LogiTech Pty Ltd [2002] SASC 374
Roe v The State of Western Australia [2013] WASC 130
Trendtex Trading Corporation v Credit Suisse [1982] AC 679
Upaid Systems Ltd v Telstra Corporation Ltd (No 2) [2014] FCA 1377
WorkCover Queensland v Amaca Pty Ltd [2012] QCA 240; [2013] 2 Qd R 276
Table of Contents
A. Introduction and summary
Overview
First part of the applications
Second part of the applications
Current pleadings
Hearing
B. Materials relied upon for the purposes of the applications
CAR Proceedings
EAR Proceedings
C. Relevant principles
D. First part of the applications - Categories 1.1 to 1.10
Overview
Nature of the proceedings
Categories 1.1, 1.2, 1.3, and 1.4
Category 1.5
Category 1.6
Category 1.7
Category 1.8
Category 1.9
Category 1.10
E. Second part of the applications - Categories 2.1 to 2.7
Concessions during the hearing
The pleadings
The parties' submissions
Disposition
Mitsui Sumitomo's position
F. Orders
First part of the applications
Second part of the applications
ATTACHMENT A
ATTACHMENT B
LUNDBERG J:
A. Introduction and summary
Overview
1These reasons concern contested discovery applications brought by the two sets of defendants in the consolidated proceedings entitled CIV 1631 of 2020 and CIV 1620 of 2020, which are referred to as the CAR Proceedings,[1] and by the defendant in the proceedings entitled CIV 1729 of 2020, referred to as the EAR Proceedings.[2] The applications seek discovery of documents across a number of categories, which came to be described in a Redfern Schedule, which runs to some 170 items.
[1] Chamber summons dated 24 May 2023 filed by the AIG Defendants (CAR Folio 63); Chamber summons dated 25 May 2023 filed by Mitsui Sumitomo (CAR Folio 68).
[2] Chamber summons dated 25 May 2023 filed by Mitsui Sumitomo (EAR Folio 49).
2Initially, the requisite memorandum of conferral required by O 59 r 9 RSC was not filed in support of the defendants' chamber summonses. Appropriate memoranda were subsequently filed and served and the issues as to conferral were resolved through the good sense of all solicitors and counsel involved.
3Scheduling orders for discovery in the proceedings were initially made on 5 October 2022, with extensions and variations granted thereafter. All of these discovery orders were made by consent and were largely procedural in nature.
4Further, on 25 May 2023, the court made discovery orders by consent which required the defendants to give discovery of nine categories of documents listed at Annexure ATT-1 to the orders, and which required the plaintiff to give discovery of around 60 categories of documents listed at Annexure ATT-2 to the orders. In both cases, the parties were ordered to give discovery in accordance with an updated Document Management Protocol, which was Annexure ATT-3.
5Disputes as to some further proposed categories were insoluble and so the present applications have been filed to resolve them. The present applications are brought pursuant to O 26 r 7 of the Rules of the Supreme Court 1971 (WA) (RSC). The essential terms of O 26 r 7(3) RSC are:
(3)On an application, or at any time of its own motion in any proceedings, the Court, having regard to Order 1 rule 4B, may —
(a) order any or all of the parties to give discovery at that stage or at some specified future stage of the action;
(b) as to the documents to be discovered by any party —
(i) order that discovery be given of only those specified documents or specified classes of document;
(ii) order that discovery be given of only those documents that are directly relevant to any specified matter in question or to all matters in question;
(iii) order that discovery be given of all documents relating to any specified matter in question or to all matters in question;
(c) make orders as to which parties are to be given discovery by any specified party;
(d) order that any or all of the parties not give discovery at that stage of the action, or at all;
(e) order any or all parties to make, file and serve an affidavit verifying the party's list of documents discovered.
6The discovery applications do not rely on O 26 r 6 RSC, which is in any event, subject to O 26 r 7 RSC. The former provision may be invoked by a party to pursue further and better discovery. The discovery disputes in these proceedings are not yet at that stage.
7The discovery application filed in the EAR Proceedings is substantially similar to the discovery applications filed in the CAR Proceedings. The differences relate to the additional category in the EAR Proceedings pertaining to 'Further Costs and Expenses'. I will therefore focus these reasons on the discovery applications in the CAR Proceedings and make specific comment only where necessary to deal with the issues arising in the EAR Proceedings.
8These reasons should be read together with my earlier reasons in these actions, which were published on 3 March 2023 as Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2].[3] Those earlier reasons provide the necessary background to the factual and legal issues which arise in these actions, and will save me from repeating all of the complexities with which these actions are replete. For the purposes of consistency, I will also use the various definitions which appear in those earlier reasons. That said, to ensure these reasons are digestible, I will briefly summarise the context in which the discovery applications have been brought and argued.
[3] Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61.
9Each of the CAR Proceedings and the EAR Proceedings are concerned with claims under a particular insurance policy in respect of damage allegedly suffered at the onshore part of the Ichthys LNG Project (Onshore Facility), which is located near Darwin in the Northern Territory (Ichthys LNG Project). The plaintiff in both the CAR Proceedings and the EAR Proceedings is INPEX Operations Australia Pty Ltd, which I will refer to as Inpex Operations or the plaintiff. Inpex Operations is the project principal. It entered into an engineering, procurement, supply, construction and commissioning contract (EPC Contract) with JKC Australia LNG Pty Ltd (JKC) in relation to the Ichthys LNG Project. In general terms, the plaintiff alleges that damage occurred to the piping, equipment and other apparatus, and to the associated insulation systems, which form part of the liquefied natural gas facility.
10There are two insurance policies which underlie these proceedings. Inpex Operations claims an indemnity under both policies against damage to insured property in relation to specified coating and insulation systems on piping and equipment used in the facility.
(a)The first policy is pleaded in the CAR Proceedings, and is entitled the 'Constructions Risk - Material Damage Project Insurance Policy' which was entered into on or about 18 January 2013 (known as the CAR Policy). Inpex Operations is the named insured under this policy. JKC is also an insured within the relevant definition. The CAR Policy was obtained by Inpex Operations pursuant to its obligation to do so under the EPC Contract, to obtain and maintain an insurance policy to cover the Onshore Facility under construction, and to cause JKC and other contractors, to be added as additional insureds.
The insurer under the CAR Policy is a syndicate of some 25 insurance companies. I refer in particular to the first defendant which is AIG Australia Ltd and the sixth defendant which is Mitsui Sumitomo Insurance Company, Limited (Mitsui Sumitomo). For convenience, I will refer to the balance of the defendant insurers in the CAR Proceedings as the AIG Defendants.
(b)The second policy is pleaded in the EAR Proceedings and is entitled the 'Erection All Risks and Difference in Conditions Insurance' which was entered into on or about 14 February 2013 (known as the EAR Policy). The named insured under the EAR Policy is JKC, which has purportedly assigned its rights in this respect to Inpex Operations (the JKC Assignment).
There is only one insurer under the EAR Policy, namely Mitsui Sumitomo.
11In broad terms, the discovery applications pursued by the defendants are divided into two broad parts.
First part of the applications
12The first part of the applications, which contains multiple categories, seeks discovery of documents falling within ten descriptions, in respect of each and every item of Piping and Equipment which is alleged to be Damaged Property or is alleged to contain Damaged Property (all of which are defined terms). The ten descriptions, each of which has its own detailed definition with various sub-categories, are as follows:
(a)the Design, Construction and QA Documents (category 1.1);
(b)the Storage and Transportation Documents (category 1.2);
(c)the Installation, Assembly and Commissioning Documents (category 1.3);
(d)the Operations and Maintenance Documents (category 1.4);
(e)the Cause and Investigation Documents (category 1.5);
(f)the Repair and Rectification Documents (category 1.6);
(g)the Mitigation Documents (category 1.7);
(h)the Defect Remediation Documents (category 1.8);
(i)the Basis of Settlement Documents (category 1.9); and
(j)the Additional Costs and Expenses Documents (category 1.10), which were largely equivalent to the Further Costs and Expenses Documents category sought by Mitsui Sumitomo in the EAR Proceedings.
13The full definitions of these terms are set out in the Redfern Schedule which is Attachment B, with the additional definitions which were included in the defendants' applications set out in Attachment A.
Second part of the applications
14The second part of the applications relates specifically to what is referred to by the parties as the JKC Assignment. The JKC Assignment was purportedly effected by the deed of assignment between JKC and the plaintiff dated 15 October 2021.[4]
[4] CSOC, [74].
15Pursuant to that deed, and speaking generally, JKC assigned absolutely to the plaintiff free of all encumbrances all of its choses in action under the CAR Policy in respect of any Damage to or involving the I228 coating system, the FEF System and the Mineral Wool System, including JKC's choses in action which are the subject of Supreme Court of Western Australia proceeding CIV 1620 of 2020 (which is the action commenced by JKC as an insured against insurers under the CAR Policy).
16The validity of this assignment is contested by the defendants in these proceedings.
17There are seven categories of documents described within this second part, namely:
(a)communications between JKC and the Plaintiff about any claim for indemnity under the Policy by either or both of JKC and the Plaintiff in respect of the alleged Damaged Property (category 2.1);
(b)communications between JKC and the Plaintiff about the proposed terms of (i) the assignment which became the JKC Assignment; and (ii) Deed No. 21, Global Settlement Deed between JKC and the Plaintiff entered into on or around 15 October 2021 (category 2.2);
(b)Deed No. 21, Global Settlement Deed between JKC and the Plaintiff entered into on or around 15 October 2021 as executed (category 2.3);
(d)communications between Persons within the Plaintiff about (i) any claim for indemnity under the Policy by either or both of JKC and the Plaintiff in respect of the alleged Damaged Property; or (ii) the JKC Assignment (category 2.4);
(e)regardless of whether or not they were sent to any Person, Documents created by the Plaintiff about (i) any claim for indemnity under the Policy by either or both of JKC and the Plaintiff in respect of the alleged Damaged Property; or (ii) the JKC Assignment (category 2.5);
(f)communications between the Plaintiff and any of its professional adviser(s) about (i) any claim for indemnity under the Policy by either or both of JKC and the Plaintiff in respect of the alleged Damaged Property; or (ii) the JKC Assignment (category 2.6); and
(g)communications between the Plaintiff and any of INPEX Holdings Pty Limited, Ichthys LHG Pty Limited and INPEX Ichthys Pty Limited about (i) any claim for indemnity under the Policy by either or both of JKC and the Plaintiff in respect of the alleged Damaged Property; or (ii) the JKC Assignment (category 2.7).
Current pleadings
18The current pleadings in the CAR Proceedings consist of the consolidated statement of claim filed by the plaintiff dated 17 January 2022 (CSOC), the defence filed by the AIG Defendants dated 6 June 2022 (AIG Defence), the defence filed by Mitsui Sumitomo dated 24 June 2022 (CAR Mitsui Defence), the plaintiff's reply to AIG Defence dated 1 August 2022 (Reply to AIG) and the plaintiff's reply to the Mitsui Defence dated 1 August 2022 (CAR Reply to Mitsui).
19The current pleadings in the EAR Proceedings consist of the Statement of Claim filed by the plaintiff dated 4 March 2022 (SOC), the defence filed by Mitsui Sumitomo dated 17 June 2022 (EAR Mitsui Defence) and the plaintiff's reply dated 1 August 2022 (EAR Reply).
20I refer to and incorporate into these reasons the summary of the Ichthys LNG Project, the insulation systems, and the forms of damage allegedly suffered which are detailed at [27] - [38] of my earlier reasons published as Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2]. I also refer to and incorporate into these reasons the summary of the pleaded claims and defences which is found at [39] - [56] of those earlier reasons.
Hearing
21The discovery applications were heard for almost a full day on 26 June 2023. The parties managed the applications using a Redfern Schedule, in order to distil the points of commonality and the points of difference, together with a document which was handed up labelled 'Inpex - Redfern Schedule Analysis'. As foreshadowed with the parties, and with their agreement, my determination of these applications is to be found in the final column of the Redfern Schedule which accompanies these reasons, together with the reasons set out below.
22Following the hearing, a revised version of the Redfern Schedule was provided to the court, which included substantial further changes to the position of the parties.
B. Materials relied upon for the purposes of the applications
CAR Proceedings
23For the purposes of the discovery application brought in the CAR Proceedings, the AIG Defendants relied upon the affidavit of Mr Adam Przemyslaw Chylek sworn 24 May 2023 (Third Chylek Affidavit), the affidavit of Mr Chylek sworn 16 June 2023 (Fourth Chylek Affidavit), portions of the affidavit of Mr Chylek sworn 1 December 2022 (First Chylek Affidavit), namely paragraphs 5 to 29, and portions of the affidavit of David Jenaway sworn 24 October 2022 (October Jenaway Affidavit), namely paragraphs 28 to 33 and 48 and Attachments DAJ-1, DAJ -2 and DAJ-3.[5] The AIG Defendants relied upon a detailed outline of submissions dated 24 May 2023 (AIG Submissions), together with submissions in reply dated 16 June 2023 (AIG Reply Submissions).
[5] The First Chylek Affidavit had been filed by the AIG Defendants in relation to the split trial application which is the subject of the court's reasons published as Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2]. The Jenaway Affidavit had been filed by the plaintiff in relation to the same split trial application.
24Mitsui Sumitomo filed a short set of submissions dated 25 May 2023 in support of its discovery application in the CAR Proceedings (Mitsui Submissions), which confirmed that it sought identical discovery orders to those sought by the AIG Defendants.
25In opposition to the applications in the CAR Proceedings, the plaintiff filed a detailed outline of submissions dated 8 June 2023 (Plaintiff's Submissions). The plaintiff relied upon the affidavit of Mr Jenaway sworn on 8 June 2023, the affidavit of Mr Jenaway sworn on 23 June 2023, the October Jenaway Affidavit to which I have referred above, as well as to two attachments to earlier affidavits sworn by Mr Jenaway which attached the CAR Policy and the EAR Policy.[6]
[6] Specifically, Attachment DAJ-2 to the affidavit of Mr Jenaway sworn on 29 October 2021 filed in CIV 1631 of 2020 (which is the CAR Policy), and Attachment DAJ-1 to the affidavit of Mr Jenaway sworn on 29 October 2021 filed in CIV 1729 of 2020 (which is the EAR Policy).
EAR Proceedings
26In the EAR Proceedings, Mitsui Sumitomo filed a brief outline of submissions dated 25 May 2023 which confirmed the application was substantially similar to the discovery application pursued by the AIG Defendants in the CAR Proceedings, with some minor changes. The plaintiff filed a similarly brief outline of submissions in opposition and relied on the October Jenaway Affidavit and the affidavit of Mr Jenaway sworn on 29 October 2021.[7] No additional evidence was filed by Mitsui Sumitomo in the EAR Proceedings in support of its discovery application.
[7] The affidavit of Mr Jenaway sworn on 29 October 2021 filed in CIV 1729 of 2020.
27The possibility of an amendment to Mitsui Sumitomo's application was foreshadowed at the hearing by counsel (relating to the category 2 documents), but following the hearing the court was informed no formal amendment was sought.
C. Relevant principles
28The AIG Defendants recognise that the scope of the discovery sought by their application is broad and likely to be expensive and time-consuming. In this regard, the AIG Defendants properly accept the relevance of the principles expressed in Maek Pty Ltd v Ibrahim[8] and in Roe v Western Australia[9] concerning the power of this court to order discovery. The principles collected by Quinlan CJ in Maek Pty Ltd v Ibrahim, which I will apply in dealing with these applications, are as follows:[10]
[8] Maek Pty Ltd v Ibrahim [2022] WASC 285 [25] ‑ [27] (Quinlan CJ).
[9] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [11] (Martin CJ).
[10] Maek Pty Ltd v Ibrahim [25] (Quinlan CJ).
1. A party does not have a strict entitlement to an order for discovery.
2. The power to order discovery is discretionary.
3. The discretion is to be exercised having regard to the timely and cost effective disposal of litigation.
4. On the other hand, discovery has been described as promoting the ascertainment of truth in litigation and as an essential part of the proper administration of justice.
5. Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation'.
6. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings.
7. Relevance is not the only factor the court must consider in the exercise of the discretion to order discovery. But whether a document relates to a matter in question in the proceedings remains the descriptive criterion in O 26 of what documents should be discovered.
29The broad power in O 26 r 7 RSC is subject to these principles, as well as the principles enunciated in O 1 r 4A and r 4B RSC. These rules are focused on the elimination of delays in the progress of matters to a final trial, ensuring that the court's procedures, and the associated costs to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute, and those procedures, and the associated costs to the parties, are proportionate to the financial position of each party. Indeed, O 26 r 7(3) RSC in terms states that the court is to have regard to O 1 r 4B RSC.
30Dealing with the concept of proportionality, Martin CJ in Roe v The State of Western Australia explained that:
Those principles include and expressly embody the notion of proportionality, which requires a court, before ordering any interlocutory process, to assess whether the forensic benefit to be derived by that process is proportional to the cost and delay which will flow from the undertaking of the process, having regard to the value, importance and complexity of the subject matter in dispute and the financial position of the parties. [11]
[11] Roe v The State of Western Australia [10] (Martin CJ).
31In mounting the present discovery applications, the AIG Defendants (and Mitsui Sumitomo) embrace the need to justify the expense and delay which will be associated with the giving of the discovery which they seek from the plaintiff. As explained below, the defendants submit they have appropriately demonstrated that the categories they seek are relevant and not burdensome to the plaintiff. The defendants have drafted a series of categories which they contend are proportionate in the context of the nature of this litigation, the issues involved and the identity and nature of the parties.
32The concept of direct relevance is identified in O 26 r 7(3)(b)(ii) RSC. The application of this concept was traversed by the parties in their submissions. The observations made by Doyle CJ in Quenchy Crusta Sales Pty Ltd v LogiTech Pty Ltd[12] are particularly useful in this regard. His Honour stated as follows:
[12] Quenchy Crusta Sales Pty Ltd v LogiTech Pty Ltd [2002] SASC 374.
It is not wise to attempt to state in comprehensive terms the effect of the requirement that the document be 'directly relevant'. The adverb 'directly' is probably intended to emphasise the requirement of relevance, and to be used in the sense of requiring that the document be directly in point, excluding as sufficient indirect relevance which may be established through another linking circumstance. That is not to say, as I have already said, that a document is not directly relevant if it is merely a piece of circumstantial evidence. The point is that a document will not be directly relevant if, rather than tending to prove an issue on the pleadings, it merely tends to prove something that may be relevant to an issue.[13]
[13] Quenchy Crusta Sales Pty Ltd v LogiTech Pty Ltd [11].
33The present applications have not, however, been structured by the defendants on the basis of r 7(3)(b)(ii) RSC, but rather the defendants rely on r 7(3)(b)(i) RSC. The applications seek discovery be ordered of specified documents or specified classes of documents. Of course, the descriptive criterion that the documents be relevant to a matter in question remains, as appears in O 26 r 1(1) RSC.
34In any event, the defendants contend that the discovery they seek would meet the direct relevance test given the categories have been formulated by reference to pleaded issues.
35Ultimately, much turns on the manner in which the categories have been drafted by the defendants. The drafting of individual categories requires close scrutiny to see whether the category is appropriately tethered to the pleadings, or whether it is drafted in such broad language that it is untethered to the matters in question as determined by the pleadings, and simply floats along like a kite without a string.
D. First part of the applications - Categories 1.1 to 1.10
Overview
36The Redfern Schedule prepared by the parties identifies 170 line items of document requests which are the subject of these discovery applications. Putting to one side the categories which relate to the second part of the applications concerning the JKC Assignment, the Redfern Schedule identifies 149 line items which fall within the first part of the applications. There were amendments proposed to the Redfern Schedule during the course of the hearing[14] and after the hearing.
[14] For example, to items 63, 83, 89, 90, 93 and 106 (ts 282 – 284 and ts 232 - 233).
37The overall structuring of the categories has been thoughtfully undertaken to follow the life cycle of the Ichthys LNG Project, commencing with the design and construction stages, moving to storage and transportation, then installation, assembly and commissioning, following by operations and maintenance stages. Thereafter, the categories move into stages associated with the existence and cause of the alleged damage, repair and rectification, mitigation, remediation and costs. As I have noted above, the detail of individual subcategories requires scrutiny to ensure the appropriate degree of connection to the proceedings.
38The written submissions of the parties addressed a number of thematic issues across the various categories falling within the first part of the applications. In particular, the AIG Defendants' submissions divided the objections into three groups: the Relevance Objections, the Burden Objections and Duplication Objections.[15]
[15] AIG Submissions, [33].
39The Relevance Objections applied to the Mitigation Documents (which is category 1.7 in Annexure A to the AIG Defendants' chamber summons) and the Defect Remediation Documents (which is category 1.8). The Burden and Duplication Objections apply across a number of categories.
40I will record my decision in relation to the disputed categories in the first part of the applications in the Redfern Schedule. In this section of these reasons, I will provide a brief explanation for my approach to the disputed categories. First, it is appropriate to put the proceedings in some perspective. In doing so, I draw upon the affidavit evidence filed by the parties for the purposes of these applications.
Nature of the proceedings
41The Ichthys LNG Project and the Onshore Facility are of an enormous scale. These proceedings are necessarily complex and span a lengthy period of time, with the EPC Contract being executed in 2012 and completed modules being mobilised to the Darwin site between 2014 and 2016. Remediation of the alleged damage to the pain and insulation commenced in around 2017 and is ongoing.[16] There are 30,006 lines of piping coated with I228 (both insulated and uninsulated), 5,237 lines insulated with the FEF System, and 1,045 lines insulated with the Mineral Wool System. I accept for the purposes of these discovery applications that the paint and insulation works are broad in scope and have involved (and continue to involve) a substantial workforce across multiple contractors, and that the temporal and geographic expanse of the allegations in the proceedings is far-reaching.
[16] Plaintiff's Submissions, [49], [50], [52] and [60].
42It is quite apparent from the pleadings, from the parties' submissions and from the affidavits filed for these applications, that the volume of documents produced by the plaintiff, JKC and other third parties during the period of the project, which relate to the paint and insulation works, is also enormous. The plaintiff has adduced evidence to the effect that its document management platform currently holds over 19 million documents relevant to the Project (and this estimate does not appear to represent the universe of documents which may be relevant to the proceedings).[17]
[17] Plaintiff's Submissions, [49] and [53].
43The categories which have been drafted by the defendants, and which have been the subject of opposition and amendment by the plaintiff, are numerous and, in my view, expansive. One feature of the case which provides some reasonable justification for the expansive nature of the categories is the evident information asymmetry between the parties - the plaintiff is the repository of the documents and has a better understanding of the existence and location of the materials than the defendant insurers. The defendant insurers have thus drafted the categories in an expansive fashion in order to, they contend, capture all relevant documents in accordance with the pleaded issues.
44The plaintiff, as the owner or holder of the documents, has sought in these applications to explain to the court how the expansive categories are overly burdensome and require some limitations in various respects.
45This court properly underscores on regular occasions the necessity for the processes and steps involved in modern litigation to be undertaken, and the powers of this court to be exercised, having regard to the principle of proportionality. That said, the court also recognises that this principle must be tailored by reference to the value, importance and complexity of the subject matter in dispute and the financial position of the parties.
46The present contested discovery applications are brought within proceedings which are undoubtedly large scale in nature, involve well-resourced litigants who are represented by experienced counsel and solicitors, and which involve a contest over enormous sums of money. It cannot be doubted that the plaintiff must have been well aware in commencing these proceedings that the obligations of discovery which would fall upon it would, on any view, be costly and require considerable resources in order to discharge. The claims advanced by the plaintiff are, after all, in the order of billions of dollars and the primary pleadings in both the CAR Proceedings and the EAR Proceedings raise a multitude of complex issues.
47The task, as I see it, is to balance these matters, recognising that while relevance is the descriptive criterion in O 26 RSC as to the scope of the documents which should be discovered, the ultimate test is whether discovery is necessary for fairly disposing of the proceedings. Satisfaction of the low threshold of relevance in the line of enquiry sense will not necessarily justify an exercise of the discretion to order discovery and, even in large scale litigation, some limits must be drawn around the scope of the discovery which is ordered, lest the making of orders for the provision of documents by categories blur into an order which is tantamount to one for the provision of general discovery.
48In addition, an analysis of individual categories of discovery which are contested by the parties cannot be undertaken with blinkers on, having no regard to the balance of the discovery to be given by the plaintiff pursuant to other categories. This is a particularly important matter to bear in mind in this case given the potential for documents to fall within multiple categories, such that a decision to decline to order one particular contested category does not equate to an outcome which excludes an entire category of potentially relevant material. The overall extent of the discovery needs to be assessed holistically in a case such as this.
49One aspect of the contested categories which is notable is the inclusion of 'communications' and the manner this should reasonably be achieved. I certainly accept the defendants' submission that email communications are often an important source of relevant information in large originations and I can reasonably infer that on a project of this nature, there is likely to be relevant material within the emails sent and received by project personnel. The capturing of emails as part of the discovery process must be controlled, either in terms of limiting the identity of the persons whose inboxes are to be reviewed, or as to time periods, or otherwise. Sensibly, as I note below in these reasons, the plaintiff has suggested limitations as to the breadth of the emails to be reviewed.
50Practically, I also consider it appropriate to recognise that it would be unusual in large scale litigation for the scope of the discovery to be a static concept, somehow fixed and certain at the outset of the proceedings, and unchanging through until trial. More commonly, the parties are able, in the early stages of the proceedings (and certainly before there has been extensive discovery exchanged), to identify from the pleadings and their respective understanding of matters, and thereby to assess, the principal documentary material which will be required for the disposition of the proceedings. That identification and assessment will no doubt be reassessed by the parties as the litigation processes progress and as initial tranches of discovery are provided. The parties are then able to request additional discovery as the matter progresses, utilising the procedure in O 26 r 6 RSC and the court's inherent jurisdiction where necessary to properly pursue further discovery.[18]
[18] As explained by Smith J in Cove House Illiquid Investments DAC v YA Global Investments LP [2018] WASC 349 at [27] – [29].
51I have approached my consideration of these applications consistently with the above observations, including on the basis that it is ambitious to expect that the discovery which is now ordered will represent the final distillation of documentary categories necessary for the fair disposition of these matters.
Categories 1.1, 1.2, 1.3, and 1.4
52Across categories 1.1 (Design, Construction and QA Documents), 1.2 (Storage and Transportation Documents), 1.3 (Installation, Assembly and Commissioning Documents) and 1.4 (Operations and Maintenance Documents),[19] the plaintiff opposes the provision of discovery by reference to the description which commences:
[19] Items 3, 33, 40 and 47
…all Documents created during the Period which record or evidence the physical condition or appearance (or any change in the physical condition or appearance) of the Piping and Equipment whilst being….
53The plaintiff proposes an alternative formulation, which maintains the language drafted by the defendants, but gives primacy to the repositories which contain the documents.[20] There are some subsidiary issues which arise in terms of the drafting as well.
[20] As explained in Plaintiff's Submissions, [69] and at the hearing, ts 274 - 277.
54During the course of the hearing, the defendants opposed the plaintiff's alternative formulation. However, following the hearing, the parties provided the court with a revised Redfern Schedule which included the following indication in relation to category 1.1(a) (with similar statements in categories 1.2(a), 1.3(a) and 1.4(a)):
The Defendants accept the Plaintiff's proposed category (aa), subject to the addition of an item 27 to address the Communications Issue as follows:
27. Documents that are or were communications (or attachments to communications) received by or sent from any of the Specified Email Accounts.
On the basis the amendment to the Plaintiff's proposed category (aa) is made, the Defendants do not press their category as drafted
55The 'Communications Issue' amendment introduces a limitation on each of the categories which had been sensibly proposed by the plaintiff through Mr Jenaway's affidavit sworn 23 June 2023.
56There is an additional subsidiary issue concerning the limiting phrase - 'in respect of Coating or Insulation'. That phrase should be included in categories 1.1 to 1.4, which I understand was a phrase proposed by the plaintiff and ultimately agreed by the defendants.[21]
[21] ts 267.
57Given the revised position adopted by the defendants following the hearing, several of the points agitated by the parties in their submissions in writing and at the hearing have now fallen away. It nonetheless remains necessary for the court in respect of these categories, as for all categories in which the defendants and the plaintiff have reached full or close agreement, to be satisfied that its discretion should be exercised to order the discovery which is proposed. Given the sophisticated nature of the parties and the fact they are advised by counsel and solicitors, the court would be naturally slow to withhold its orders in respect of categories which are wholly agreed.
58I am satisfied the categories should be allowed in the form proposed by the plaintiff. The court's decision in respect of categories 1.1, 1.2, 1.3 and 1.4 (items 3 to 52) is specified in the Redfern Schedule.
Category 1.5
59Category 1.5 (Cause and Investigation Documents)[22] has similarities with categories 1.1 to 1.4.
[22] Item 53.
60Again, at the hearing there was considerable debate in relation to the formulation of the headline subcategory, with the defendants pressing for the drafting which appears in paragraph (a) and the plaintiff's developing alternative subcategories which focused on the repositories of the documents (referred to as (aa) and (bb) as a fallback).
The Defendants accept the Plaintiff's proposed category (aa) and press for the Plaintiff's category (bb) to be included as item 29 of category (aa) as follows:
29. Documents that are or were communications (or attachments to communications) received by or sent from any of the Specified Email Accounts.
On the basis the amendment to the Plaintiff's proposed category (aa) is made, the Defendants do not press their category as drafted
61Again, given the revised position adopted by the defendants following the hearing, some of the points agitated by the parties in their submissions in writing and at the hearing have now fallen away.
62The court's decision in respect of category 1.5(a) (item 53) is specified in the Redfern Schedule.
63Further, unlike categories 1.1 to 1.4, this category incorporates a number of subcategories, which are found in items 55 and 57 to 62 of the Redfern Schedule (noting that items 54 and 61 have been agreed and ordered already, items 59 and 60 have now been agreed, and item 56 is dealt with below).
64That leaves items 55, 57, 58 and 62 in respect of which the defendants' position changed following the hearing, as set out in the revised Redfern Schedule. In respect of these items, the defendants no longer press for their original categories but accept the plaintiff's alternative category as appears in the Redfern Schedule.
65The court's decision in respect of items 55, 57, 58 and 62 is specified in the Redfern Schedule.
66There is further issue in category 1.5, which arises specifically in item 56 (and which also arises in respect of other items as identified below). This subcategory seeks 'Documents created by the Plaintiff about any alleged Damaged Property, regardless of whether or not they were sent to any Person'. This descriptor is intended by the defendants to capture memoranda, file notes or drafts that were prepared but never distributed beyond their author.[23] It is submitted by the defendants that these documents are likely to reveal observations, opinions and analysis by the individuals within the plaintiff which may not necessarily be communicated to another person. The defendants propose a staggered approach to the discovery of these documents to reduce the burden on the plaintiff (which embraces an alternative position suggested by the plaintiff).
[23] AIG Reply Submissions, [116].
67As noted, the drafting issue which arises in item 56 also arises in various other categories, namely category 1.6(d) (Repair and Rectification Documents), category 1.7(d) (Mitigation Documents), category 1.9(f)(vi) (Basis of Settlement Documents) and category 1.10(g) (Additional Costs and Expenses Documents).[24] The subcategories are found in items 67, 81, 124 and 139.
[24] As explained in Plaintiff's Submissions, [80] – [82].
68I accept the defendants' submission that these various categories have been drafted to pick up internal memoranda, file notes and drafts that were prepared but never sent. I also accept that documents falling in these subcategories may include relevant information which may not otherwise be found in material which was communicated to other persons. However, the burden which the expansive drafting of these categories places on the plaintiff is disproportionate in my view, even in the context of this litigation (and even if a staggered approach is adopted as outlined by the plaintiff as part of its alternative position). The formulation of these subcategories is simply inadequately tethered to subject matter which is relevant to the proceedings, and so, while I consider the subcategories may capture some relevant material, it would not be an appropriate exercise of the court's discretion in my view to include these categories within the discovery orders. By drafting the subcategories in the manner which they have, the defendants would require the plaintiff to undertake a search for documents with no proper signposts to direct the plaintiff's endeavours. I fear that would be a wasted exercise.
69The court's decision in respect of items 56 and 81 is specified in the Redfern Schedule. The requests in those items are not allowed. However, the plaintiff has proposed sensible alternative formulations in respect of items 67, 124 and 139, which limit the search parameters and reduce the burden which would otherwise arise, and which I consider should be allowed.
Category 1.6
70Category 1.6 (Repair and Rectification Documents)[25] also has similarities with categories 1.1 to 1.4 as well as 1.5, in terms of the parties' approach. Once again, following the hearing, the defendants' position changed as appears in the revised Redfern Schedule.
[25] Items 63 to 76.
71The court's decision in respect of category 1.6 (item 63) is specified in the Redfern Schedule, having regard to the revised position adopted by the defendants.
72The plaintiff maintains its objection to additional subcategories in category 1.6 as is apparent from the revised Redfern Schedule. I refer to items 68, 70, 72, 74, 75 and 76. I accept the cogency of the plaintiff's submissions as to burden in relation to these items but also recognise the plaintiff has proposed some alternative language as fall back positions. I understand the plaintiff's position to be that, without these amendments, the subcategories would simply be too burdensome. I agree with the plaintiff's submission. I reach that view having regard to the extensive discovery which the plaintiff will otherwise be required to give which I assess as having a high likelihood of capturing documents falling in these specific subcategories. Additionally, I accept the submission made by the plaintiff as to the additional time and cost likely to be involved in searching for documents falling specifically in these subcategories (as drafted by the defendants) relative to the overall utility to the progress of the litigation and the advancement of the defendants' position.[26] Accordingly, I consider it appropriate to allow discovery of these subcategories only on the basis of the alternative formulation proposed by the plaintiff. I understand the defendants have essentially conceded this.
[26] Plaintiff's Submissions, [77] – [78],
73The court's decision in respect of items 68, 70, 72, 74, 75 and 76 is specified in the Redfern Schedule. Further, the court's decision in respect of items 71 and 73, where there has been a degree of agreement to an alternative formulation, is also specified in the Redfern Schedule.
Category 1.7
74Category 1.7 (Mitigation Documents) is largely opposed by the plaintiff on the ground of relevance. The plaintiff submits the defendants' formulation exceeds the pleading.[27] On my assessment, the plaintiff's concerns as to the excessive breadth of the category can largely be addressed by incorporating the date limitation and the removal of the 'prevent further Damage' language. The defendants appear to accept the date limitation, but not the further limitation, as I read the revised Redfern Schedule.
[27] Plaintiff's Submissions, [88] – [98].
75The defendants thus propose a revised chapeau as follows:
Mitigation Documents means all Documents which record or evidence any actions, steps or measures to be undertaken, or which have been undertaken, to rectify or repair at any time prior to 1 October 2017 any alleged Damaged Property or to prevent further Damage from occurring to any alleged Damaged Property or to any Insured Property including, without limitation, the following…
76The plaintiff's proposed chapeau is as follows:
Mitigation Documents means
all Documents which record or evidencein respect of any actions, steps or measures to be undertaken, or which have been undertaken, to rectify or repair at any time prior to 1 October 2017 any alleged Damaged Propertyor to prevent further Damage from occurring to any alleged Damaged Property or to any Insured Property including, without limitation, the following…
77On my assessment, absent both limitations proposed by the plaintiff, the objections outlined in the plaintiffs' written submissions as to the impermissible breadth of the category have considerable force.[28] The date limitation is, in my view, plainly required given the form of the pleading at AIG Defence, [100]. The removal of the further language is also required to bring the category within the case as pleaded, in my view.[29]
[28] Plaintiff's Submissions, [90] - [99]
[29] As submitted by the plaintiff in the Plaintiff's Submissions, [97(b)].
78There is an element of duplication in many of the subcategories in category 1.7 relative to category 1.6 and I see no cogent reason to exercise the court's discretion to order discovery of categories in those circumstances.[30] The distinctions between category 1.7 and category 1.6 drawn by the defendants do not strike me as having particular substance.[31] Generally speaking, courts should not make orders for discovery that are unnecessary and redundant on the basis that they are duplicative,[32] and particularly not where extensive discovery is otherwise being ordered as part of the discovery regime. It is open to infer that this duplication will add an additional burden to the plaintiff's obligations, with no apparent utility. I will not allow discovery to be ordered of categories 1.7(a), (b) and (d) to (m) (items 78, 79 and 81 to 90).
[30] Plaintiff's Submissions, [107] – [111 and ts 293.
[31] AIG Reply Submissions, [131] – [136].
[32] Upaid Systems Ltd v Telstra Corporation Ltd (No 2) [2014] FCA 1377, [41] (Yates J).
79It will be open to the defendants to make appropriate application in due course, if required, to pursue further discovery of the categories I have classified as duplication. The defendants may be able, with more precision once the initial discovery has been provided, to identify the classes of documents falling within the mitigation description which are relevant to the proceedings.
80As to the balance of the subcategories in category 1.7 (items 80, 91 and 92) , I repeat my reasons in relation to category 1.6 above and consider it appropriate to order discovery of these subcategories only on the basis of the alternative formulation proposed by the plaintiff. I understand the defendants have essentially conceded this.
81The court's decision in respect of the items in category 1.7 is specified in the Redfern Schedule.
Category 1.8
82I turn now to category 1.8 (Defect Remediation Documents). The defendants confirmed during the course of the applications that they do not press for categories 1.8(g) or 1.8(h) at present.[33] The plaintiffs have agreed categories 1.8(c) and 1.8(e), and I note that category 1.8(f) was previously ordered.
[33] AIG Reply Submissions, [127]
83As to the balance of the categories, I do not accept the plaintiff's contentions that these categories seek irrelevant documents, but I do accept the criticisms as to the burden which will fall upon the plaintiff (but the latter issue can be addressed by narrowing the categories, as has been proposed).
84As to the complaint about a lack of relevance, I accept as arguable at this stage the defendants' contention that the categories are necessary given the LEG Exclusion 2/96 which has been pleaded by the defendants (including category 1.8(m)). I outlined that exclusion clause in my earlier reasons.[34] In my view, the categories proposed by the defendants have utility in that they are directed at documents which pertain to issues of repair, rectification and mitigation, whether they arise in the context of Damage or Defect. Put simply, at this stage of the proceedings, I am not prepared to disallow discovery in this category on the grounds of relevance given the complex issues arising on trhe pleadings as a result of the LEG Exclusion.
[34] Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [43].
85The court's decision in respect of the items in category 1.8 is specified in the Redfern Schedule.
Category 1.9
86The court's decision in respect of the items in category 1.9 (Basis of Settlement Documents) is specified in the Redfern Schedule. I repeat the reasons set out above.
Category 1.10
87The court's decision in respect of the items in category 1.10 (Additional Costs and Expenses Documents) is specified in the Redfern Schedule. I repeat the reasons set out above.
E. Second part of the applications - Categories 2.1 to 2.7
88These categories seek documents concerning the JKC Assignment.
Concessions during the hearing
89Certain concessions were made during the hearing which I should record. The plaintiff accepted that it would discover documents falling with category 2.3, which essentially requires the discovery of a complete and unredacted copy of the Global Settlement Deed.[35] Further, the AIG Defendants elected not to press category 2.7.[36] I did not apprehend there to be any modification of the parties' positions following the hearing through the revised Redfern Schedule.
[35] ts 259 (it having been confirmed by the AIG Defendants that the words 'all Documents which record or evidence' in the chapeau to category 2 did not require any broader reading of category 2.3 itself).
[36] ts 261 – 262 (which I took to apply equally to the position of Mitsui Sumitomo).
The pleadings
90I will first deal with the application filed by the AIG Defendants in the CAR Proceedings. I will address the Mitsui Sumitomo applications at the conclusion of this section of these reasons.
91The parties are in dispute in these proceedings as to whether the JKC Assignment was valid and enforceable. The plaintiff submits that the AIG Defendants' discovery requests concerning the JKC Assignment are 'well wide of the mark', in that they seek documents not relevant to the pleaded issues, and represent a fishing expedition with no sound basis in the pleadings.[37] The AIG Defendants maintain the requests, submitting they are directed precisely towards the facts and circumstances of the JKC Assignment, including why it was effected and for what commercial purpose.
[37] Plaintiff's Submissions, [25] – [30].
92The resolution of this second part of the discovery applications requires an analysis of the pleadings to distil the issues in contest between the parties. The primary pleadings to which regard is required in this respect are, in the CAR Proceedings, the CSOC, the AIG Defence, the Reply to AIG and the Reply to Mitsui.
93In the CAR Proceedings, the plaintiff pleads the occurrence of the JKC Assignment in straightforward terms,[38] leaving it to the defendants to assert issues as to the validity (which they have done).[39] The plaintiff pleads that it is entitled at law to the choses in action of JKC against the insurers under the CAR Policy in respect of the Damaged Property and that the plaintiff is entitled to pursue those claims and choses in action in its own name.[40]
[38] CSOC, [72] – [77].
[39] In conformity with the approach outlined in EWC Payments Pty Ltd v Commonwealth Bank of Australia [2014] VSC 207 (Elliott J).
[40] CSOC, [76].
94In the AIG Defence, the AIG Defendants assert that the JKC Assignment was not effective, valid or enforceable at law or equity for the reasons set out in the AIG Defence at [74], which is extracted below:
[74] The Defendants deny the allegations in paragraph 74 of the Statement of Claim and say further that:
(a) the purported JKC Assignment was entered into by reason of the entry of the plaintiff and JKC into a deed of settlement between them known as “Deed No. 21” which was also entered into on 15 October 2021;
(b) the JKC Assignment purports to assign bare causes of action from JKC to the plaintiff in circumstances where the CAR Policy is composite insurance as alleged in paragraphs 1(a) to (c), 4(c) to (d) and 5(b) above with each of the plaintiff and JKC insured for their respective rights and interests;
(c) the plaintiff does not have any genuine commercial interest in the purported assignment by reason of the matters alleged in paragraph 68 above; and
(d) by reason of any lack of genuine commercial interest, the purported JKC Assignment was not valid and enforceable at law or in equity.
95It is apparent from AIG Defence [74] that the plea to the effect there is a lack of genuine commercial interest is directly tied to the plea at AIG Defence [68]. The AIG Defendants plead at [68] as follows:
[68] The Defendants deny paragraph 68 of the Statement of Claim and say further that:
(a) repeat paragraphs 1(a) to (c), 4(c) to (d), 5(b), 40 and 67 above;
(b) under the CAR Policy, any entitlement of the plaintiff and JKC to indemnity (which is denied) is limited to the indemnifiable loss (such loss denied) they have suffered in their own right and interest;
(c) in the case of the plaintiff, any such loss (which is denied) is that suffered as agent of IJV and as the delegate of the Downstream Operator by reason of the Damage alleged in the Statement of Claim (such Damage not admitted);
(d) in the case of JKC, any such loss (which is denied) is that suffered as the contractor under the EPC by reason of the Damage alleged in the Statement of Claim (such Damage not admitted); and
(e) says that the plaintiff has not pleaded any loss (which is not admitted) of the types alleged in sub-paragraphs (c) and (d).
96By way of reply, the plaintiff denies [68] and [74] of the AIG Defence, and in further answer to [74(c)] - [74(d)] of the AIG Defence, the plaintiff pleads out the basis of its genuine commercial interest. For completeness, I will set out the terms of the Reply at [12], but note that other than passing references in the written submissions, the AIG Defendants did not rely upon [12(b)] to sustain the discovery categories:[41]
[41] ts 239.
[12]The plaintiff denies paragraph 74(c) and (d) of the AIG Defence and, in further answer thereto, says that it had a genuine commercial interest in acquiring, by the JKC Assignment, all of JKC's choses in action under the CAR Policy in respect of any Damage to or involving the I228 coating system, the FEF System and the Mineral Wool System, including JKC's choses in action the subject of the JKC Proceedings, by reason of the following matters:
(a) the matters pleaded in paragraphs 1(d), 4, 5(b), 6, 7-17, 22(c), 29(c) and 34(c) of the statement of claim and in paragraphs 3 and 10(c)-(k) hereof;
(b) further or alternatively, prior to and at the time of the JKC Assignment:
(i) JKC had on foot against the Insurers (or the majority of them) the JKC Proceedings in this Honourable Court being proceedings CIV 1620 of 2020 commenced by writ, under which writ JKC was seeking relief under or arising from the CAR Policy for or connected to Damage relating to the I228 coating system, the FEF System and the Mineral Wool System used in the Project;
(ii) there was a likely or reasonable prospect that pursuit of the JKC Proceedings by JKC would involve JKC raising many or some of the same factual contentions (or similar factual contentions) raised by the plaintiff in its statement of claim herein (including contentions not admitted by the Insurers);
(iii) there was a likely or reasonable prospect that the pursuit of the JKC Proceedings by JKC would involve JKC raising for determination many or some of the same contentions of law including as to the construction of the CAR Policy (or similar contentions) as raised or to be raised by the plaintiff in CIV 1631 of 2020;
(iv) the relief being sought by JKC in the JKC Proceedings covered the same type of relief being sought by the plaintiff in the then separate proceeding in CIV 1631 of 2020, including indemnity in accordance with the Basis of Settlement;
(v) the plaintiff did not have any control over the manner in which JKC was, or would in the future, conduct the JKC Proceedings;
(vi) the plaintiff stood to benefit from conducting the JKC Proceedings and in seeking a consistent interpretation and application of the CAR Policy as between the JKC Proceedings and the plaintiff's then separate proceeding in CIV 1631 of 2020;
(vii) there was a likely or reasonable prospect that recovery by JKC in the JKC Proceedings, or in a settlement thereof, of monies payable by the Insurers under the CAR Policy (including indemnity in accordance with the Basis of Settlement) would or may reduce the amount of money able to be recovered by the plaintiff under its then separate proceeding in CIV 1631 of 2020 having regard to the limits, sub-limits and provisions of the CAR Policy generally;
(viii) there was a likely or reasonable prospect that if the JKC Proceedings were successful, that success would likely result in:
(A) JKC being awarded and recovering in accordance with the Basis of Settlement (including the full Reinstatement Value) for the Damage claimed and proved, and then being obligated to hold a substantial amount of the money recovered for the plaintiff and/or IJV as co-insureds under the CAR Policy;
(B) consequent remittance of a substantial sum of money to the plaintiff and/or IJV;
(C) application of those monies by the plaintiff and/or IJV towards the replacement or repair of the Insured Property; and
(D) consequent improvement of the Onshore Facility and its operations, which facility and operations were (and remain) under the possession and management of the plaintiff; and
(ix) further, and by reason of the matters under (i) to (viii) above, the plaintiff had a genuine and substantial interest in the success of the JKC Proceedings and in the enforcement of JKC's claim against the Insurers; and
(c) further or alternatively, the assignment under the JKC Assignment supported and/or enlarged the rights that the plaintiff had already acquired, as an Insured, under the CAR Policy as well as the plaintiff's legal claims on foot in CIV 1631 of 2020 at the time of the assignment
97In essence, the plaintiff pleads through [12(a)(i)] - [12(a)(vi)] of the Reply to AIG that it had an insurable interest in the property, including the right, under the CAR Policy, to recover in its name the full Reinstatement Value (subject to any deductibles). Further or in the alternative, through [12(b)] Reply to AIG, the plaintiff pleads that, at the time of the assignment, the plaintiff had on foot its own claim against insurers for relief under or arising from the CAR Policy related to the Damaged Property. Thus, the plaintiff asserts there were overlapping claims (between the plaintiff's claims and those commenced by JKC), overlapping claimed relief, an absence of control by the plaintiff over the JKC proceedings, and potential benefit to the plaintiff in obtaining control of the JKC proceedings.
98Further, the plaintiff pleads that the assignment supported and/or enlarged the plaintiff's existing rights under the CAR Policy as well as the plaintiff's existing legal claim against the insurers (see [12(c)] Reply to AIG).
99The parties' pleadings implicitly recognise that the assignment which is relied upon by the plaintiff falls within the second category of cases which are exceptions to the general rule prohibiting the assignment of bare rights of action, as identified by the Court of Appeal in Billabong Gold Pty Ltd v Vango Mining Ltd [No 2].[42] That category describes an exception where the right of action is not annexed or ancillary to a property right. In respect of cases within this category, the rule does not apply if the assignee of the subsisting cause of action itself has a genuine and substantial interest, or a genuine commercial interest, in enforcing the claim that is otherwise distinct or separate from the interest merely derived from the assignment itself.
[42] Billabong Gold Pty Ltd v Vango Mining Ltd [No 2] [2023] WASCA 58 [126] (Quinlan CJ, Murphy and Beech JJA).See also Dover v Lewkovitz [2013] NSWCA 452, [17].
100The origins of the category stem from the following observations of Lord Roskill in Trendtex Trading Corporation v Credit Suisse:[43]
[43] Trendtex Trading Corporation v Credit Suisse[1982] AC 679, 703 (Lord Roskill).
But it is today true to say that in English law an assignee who can show that can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance. ...
If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance.
101The precise boundaries of this concept are not well-defined. There are numerous examples in the authorities of what is and what is not a genuine commercial interest, which provide some assistance in understanding the boundaries. Whether a genuine commercial interest can be demonstrated is a mixed question of fact and law, which will depend upon the facts and circumstances of each case.[44]
[44] Bakewell v Anchorage Capital Master Offshore Ltd [2019] NSWCA 199 [72] (Bell P).
102Ultimately, each case must be considered on its own facts in order to assess whether the interest is a genuine commercial interest. Some basal propositions can be noted to assist the analysis:
(a)The whole of the transaction must be looked at in determining whether an assignee has a genuine commercial interest.[45] The concept is to be applied in a broad and practical way.[46]
[45] Trendtex Trading Corporation v Credit Suisse, 703F; EWC Payments Pty Ltd v Commonwealth Bank of Australia [66]; Bakewell v Anchorage Capital Master Offshore Ltd [72].
[46] Billabong Gold Pty Ltd v Vango Mining Ltd [No 2] [131] (Quinlan CJ, Murphy and Beech JJA).
(b)The concept refers to a commercial interest which receives ancillary support from the assignment.[47]
[47] National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (2004) 51 ACSR 129 (Lindgren J).
(c)The interest itself need not be one which is enforceable at law or in equity.[48]
[48] WorkCover Queensland v Amaca Pty Ltd [2012] QCA 240; [2013] 2 Qd R 276 [66] (Gotterson JA).
(d)The interest should represent more than an interest that would be held by a person who is an intermeddler with the disputes of other.[49]
[49] EWC Payments Pty Ltd v Commonwealth Bank of Australia [76].
(e)So long as the asserted commercial interest is both genuine and distinct from the assignment itself, there is no reason in principle to give a limited ambit to the notion of a sufficient commercial interest.[50]
[50] Billabong Gold Pty Ltd v Vango Mining Ltd [No 2] [131].
The parties' submissions
103In essence, the plaintiff opposes the defendants' requests for the reason that the various layers of communications which are sought in categories 2.1 to 2.7 are not relied upon in the pleadings and in any event could not impact the interpretation and legal effect of the CAR Policy and the various agreements involved. In the alternative, it is submitted that the requested documents are not directly relevant and the categories are so broad as to capture irrelevant documents. Finally, the plaintiff submits the categories are excessive and not warranted in that the categories are not confined to those created or sent prior to the assignment.
104The AIG Defendants urge upon the court the submission that the extent to which the JKC Assignment is in issue on the pleadings goes well beyond the interpretation and effect of these documents.[51] The AIG Defendants submit that the categories sought are directed towards the facts and circumstances of the assignment including why it was effected and the relevant commercial purpose.[52]
[51] AIG Reply Submissions, [78].
[52] AIG Submissions, [43].
105In argument, the AIG Defendants highlighted the nature of the CAR Policy as a composite insurance policy, being (it was submitted) in effect several contracts of insurance bundled into one instrument. Indeed, a central component of the AIG Defendants' pleaded position that the JKC Assignment fails because the plaintiff lacks a genuine commercial interest is that the CAR Policy is one of composite insurance for the respective rights and interests of each insured. A composite insurance policy is to be contrasted with a joint insurance policy.
106That being so, it was submitted by the AIG Defendants that any entitlement under the policy was limited to the indemnifiable loss in the particular entities' own right and interest. Delineation between the insureds and the loss claimed becomes important in such a policy, it was argued. Allied to this, the AIG Defendants relied upon the proposition summarised in Deputy Commissioner of Taxation v Bluebottle UK Limited [53] that an assignee acquires no greater right than was possessed by his assignor and simply stands in the shoes of the latter.
[53] Deputy Commissioner of Taxation v Bluebottle UK Limited [2006] NSWCA 360; (2006) 68 NSWLR 558 [88] (Mason P, Santow and Batsen JJA); affirmed on appeal Bluebottle UK Limited v Deputy Commissioner of Taxation [2007] HCA 54; (2007) 232 CLR 598.
107To be clear, the AIG Defendants do not assert that the instruments which purported to effect the JKC Assignment were in any respect shams.[54] The focus of the AIG Defendants' position is on the subject matter of the assignment. The AIG Defendants refer to the broader settlement which the assignment was apparently a part of, and posed a question as to what the commercial imperative for the transaction was, what was the value of the chose in action being assigned, and how it was to be valued for the purposes of the assignment.[55]
[54] ts 240.
[55] ts 241.
108This analysis of the CAR Policy was rejected by the plaintiff as being inconsistent with established principle, with reference made by counsel to the approach exemplified in cases such as Cooperative Bulk Handling Ltd v Jennings Industries,[56] endorsing the English decision of Petrofina (UK) Ltd & Ors v Magnaload Ltd & Anor[57] and the much earlier authority of Hepburn v A Tomlinson (Hauliers) Ltd.[58] Counsel for the plaintiff recognised that resolution of this issue was not appropriate within the context of the current application, but laid down a marker as to the conventional analysis he submitted underpinned the plaintiff's position more broadly.
[56] Cooperative Bulk Handling Ltd v Jennings Industries (1996) 17 WAR 257.
[57] Petrofina (UK) Ltd & Ors v Magnaload Ltd & Anor [1984] 1 QB 127; [1983] 3 All ER 35.
[58] Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451; [1966] 1 All ER 418.
109In essence, counsel for the plaintiff relied upon the principle of insurance law that a person under a composite insurance policy with a limited interest in the property which has been damaged can nonetheless claim the entire value of the property. In the event the entire value of the property claimed and recovered exceeds the particular loss covered by the claimant, they will hold the remaining amount on trust for the other insured persons.[59]
[59] ts 253.
110It is instructive to set out in some more detail the above propositions. This is most readily done by reference to Franklyn J's reasons in Cooperative Bulk Handling Ltd v Jennings Industries. Franklyn J held as follows:
In the present case the proper construction of the policy in my opinion is that the intention of the parties was to insure the interests of the insured parties in the contract works, arising out of their engagement as sub-contractors insured by the owner to cover the whole risk, by insuring contractors and sub-contractors in respect of loss of or damage to the whole or any part of the contract works by whatever cause. The insurance is property cover of the nature found in Petrofina. It is based on the commercial convenience of the avoidance of litigation between the various insured for loss or damage, whether accidental or otherwise, and to allow the common goal of completing the contract works to be achieved without the resulting disruption. That this is so, in my view, is evident from the fact that it was the owner who took out the insurance and from the description of the risk and property insured. It is also of significance that the insured risks do not lead to a conclusion that the respondent is insured only against liability. It seems clear to me that on its proper construction it is insured against damage to and loss of property for which, for the time being, it is responsible, as well as for materials incorporated or to be incorporated into the contract works belonging to it or for which it is responsible. This is consistent with the nature of the respondent's insurable risk against property. That it includes indemnity against liability does not alter its nature. That liability might attach to an insured for property loss was taken into account at the time of entry into the contract of insurance when the contracting parties insured according to their common intention. The very nature of the insurable risk as identified in Imperial Oil and Petrofina makes clear that the potential for liability for damage to the insured property and the need to avoid the same is one of the circumstances which give rise to the sub-contractors' insurable interest in the property.[60] (underlining added)
[60] Cooperative Bulk Handling Ltd v Jennings Industries (1996) 17 WAR 257, 274.
111Franklyn J continued:
In my view, [for] the reasons expressed in Petrofina and by His Honour the learned trial Judge, the respondent has an insurable interest in the whole of the contract works. Its "respective right and interest" in the insured property is in the whole thereof. By the terms of the policy it is insured in respect thereof against "loss damage or liability to the extent and in the manner herein provided", the promise of indemnity being "that if ... the property (or any part thereof) ... be damaged or lost by any unforeseen cause other than causes specifically excluded the insurers will pay and make good all such loss up to an amount ...". That right to indemnity exists under the property policy whether or not the loss or damage be occasioned by the negligence of the respondent and it matters not that the respondent has no proprietary interest in the damaged property. Absent its right to indemnity being excluded by some provision of the policy, it is entitled to be indemnified under the property cover in respect of the damage sustained. In my view that clearly carries with it the right to be indemnified in respect of any sum it might be called on to pay in the event of the damage being a result of its own negligence. That was the intention of the parties to the policy, evidenced by its terms. The respondent's liability to a co-insured or to another insured under the composite policy in respect of loss of or damage to the insured property is one of the risks against which it is insured.[61] (underlining added)
[61] Cooperative Bulk Handling Ltd v Jennings Industries, 275.
112There is obviously a contest between the parties as to the proper application of some fundamental principles of insurance law, which will also require close examination of the terms of the insurance policies in issue in these proceedings. The present discovery contests are not the occasion to resolve these matters. I will proceed on the assumption, without deciding, that the respective contentions advanced by the parties are arguably correct and assess the discovery requests accordingly.
25Mitsui Sumitomo proposed costs orders in the same terms as the AIG Defendants.
Relevant principles
26I will explain the parties' positions in a little more detail below, but first I should set out the principles I consider are applicable to the exercise of the costs discretion in a matter such as the present, drawing on the authorities and principles which formed part of the submissions filed by the parties:
(a)It is trite that the court has a wide discretion to award costs.[91] The discretion regarding costs has been described as 'absolute, unconfined or unfettered, although a discretion that must be exercised judicially, not arbitrarily or capriciously, or on grounds unconnected with the litigation'.[92]
[91] Supreme Court Act 1935 (WA), s 37.
[92] Frigger v Lean [2012] WASCA 66 [53].
(b)Without limiting the court's general discretion, the court will generally order that the successful party to any action or matter recover his costs.[93] That is, costs will generally abide the event. Costs generally follow the event because such an order is intended, at least to the extent that the costs incurred were not unreasonable or unreasonably incurred, as compensation (and vindication) for the successful action.[94] Importantly, an order for the payment of costs by one party is compensatory in nature, not for the purpose of punishment.
[93] Rules of the Supreme Court 1971 (WA), O 66 r 1(1).
[94] Latoudis v Casey (1990) 170 CLR 534; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [30] - [31].
(c)Further, if the court is of opinion that the conduct of a party either before or after the commencement of the litigation has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.[95]
[95] Rules of the Supreme Court 1971 (WA), O 66 r 1(2).
(d)Where an interlocutory application is wholly successful or wholly unsuccessful, generally it may be expected that the costs of the application will follow the event of the interlocutory application 'because respectively the making of, or resistance to, the interlocutory application is seen as the proximate cause of the incurring of the costs of the interlocutory application'.[96]
[96] Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd (No 2) [2021] SASC 75 [10] (Blue J).
(e)The rationale for an order that an unsuccessful applicant on an interlocutory application pay the respondent's costs of the application 'relates to the way in which interlocutory proceedings are intended to advance the final hearing'. A failed interlocutory application 'is one which will, irretrievably, have cost the respondent money and justice generally requires that the respondent be indemnified for those costs, regardless of the outcome of the substantive proceedings'.[97]
[97] Athavle v State of New South Wales [2021] FCA 1075 [116] (Griffiths J).
(f)Where the outcome of an interlocutory application is not readily characterised as being wholly successful or wholly unsuccessful, such as where there is a mixed result on the application, it may be appropriate to order that the costs of the application be in the cause. In such a circumstance, the costs of the application may be seen as part of the overall costs of the action and so should follow the event of the action.[98] Put another way, the application may be seen as a necessary step in the litigation for both parties such that the party who is ultimately successful in the proceedings should recover those costs.
[98] Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd (No 2) [9] (Blue J).
(g)In circumstances involving a mixed result on an interlocutory application, it may be possible for the court to assess costs on an issue by issue basis, although in interlocutory applications this exercise is likely to be more difficult than in assessing the appropriate costs outcome on an issue by issue basis in the action itself.
(h)The central and overriding principle in assessing costs is that of doing substantial justice to the parties in each particular case, there being 'no better test than the test of what is fair and just between the parties'.[99]
[99] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 [5] as cited in G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Butterworths) (Dal Pont) at [6.15].
(i)In approaching the task of achieving substantial justice on costs issues, an evaluation as to the costs outcome in a particular matter is not necessarily arithmetic in character.[100] It need not necessarily descend to a tabulation of wins and losses during the course of the application and the hearing. It need not involve an exercise of counting the pages of the transcript, the submissions or the reasons which are devoted to particular issues. It is more often a process appropriately undertaken as a matter of overall impression, involving a holistic assessment of the various issues involved, the significance of the issues, the time consumed by those issues, and the degree of intellectual engagement required by the issues.[101] It is not usually appropriate, and it is often not possible, for the court to 'engage in a minute analysis of the evidence bearing upon issues for which particular parties have succeeded and failed'.[102]
[100] Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [2020] NSWSC 553 [118] (Robb J).
[101] Saraceni v Mentha [2013] WASC 95 (S) [9]; Chen v Chan (No 2) [2009] VSCA 233 [10(5)].
[102] Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [120] (Robb J).
Disposition
27In my view, a sensible and indeed a just and fair approach to the costs issues on the Discovery Applications is to categorise the applications into two discrete parts, being:
(a)Categories 1.1 to 1.10 (consisting of items 1 to 149 of the Redfern Schedule); and
(b)Categories 2.1 to 2.7 (consisting of items 150 to 170 of the Redfern Schedule).
28I will address the second set of categories first.
29Without question, the plaintiff enjoyed almost complete success in resisting the applications insofar as Categories 2.1 to 2.7 are concerned. These categories concerned the request for discovery of documents concerning the JKC Assignment issue. The AIG Defendants were unsuccessful in pursuing these categories notwithstanding the presence of a plea which at least raised the want of genuine commercial interest in the assignment. In stark contrast, Mitsui Sumitomo could not point to an express plea in its pleading in this regard and its pursuit of these documents was more readily disposed of. I addressed these categories in my reasons at [88] to [127].
30It is my impression that the proportion of the hearing spent addressing Categories 2.1 to 2.7, as well as the necessary preparation required by the parties, was less than half of the overall applications. I say this because the level of detail inherent in Categories 1.1 to 1.10 was far greater, those categories required greater focus on drafting issues associated with the categories, those categories involved several layers of questions being addressed including as to relevance and proportionality, and those categories covered a much larger number of line items in the Redfern Schedule. My assessment in this regard is really one of impression rather than some mathematical exercise, but I am fortified in adopting this impressionistic approach given the principles I have referred to above and given all counsel before me spoke with one voice about the need to avoid a process of tabulating wins and losses and eschewing an arithmetical undertaking.
31My best assessment is that the proportion of the Discovery Applications devoted to the second set of categories (Categories 2.1 to 2.7) was around 40% in total. That leaves the balance of the time and work, and thus costs, of 60% having been devoted to Categories 1.1 to 1.10. In respect of these categories, there was ultimately mixed success for the parties across the 149 items, but I should record that I considered it appropriate to incorporate the plaintiff's proposals to modify those categories and to allow some categories only on the basis proposed by the plaintiff. I also formed the view that several of the contested categories should not be allowed. A further significant feature of the course of the contested applications was the modification of the defendants' position during and after the hearing itself, which is a matter in respect of which I made comment in my reasons. I refer for example to my comments at [54], [57], [61] and [70] of the reasons.
32I therefore do not consider the present Discovery Applications (in their entirety at least) fall into a category in which it is appropriate to order that costs be in the cause, as described in [21(f)] above. Rather, the plaintiff's submissions accord with my assessment of the course of the discovery applications and the outcome which was achieved. That is to say, the plaintiff enjoyed greater success in resisting these applications. This is evident in part from the marked‑up document relied upon by the plaintiff at the hearing on Friday, which is Attachment A to these reasons. The marked‑up comments on that document, particularly the red squares, signify the respects in which the plaintiff was successful or substantially successful in its position on the particular line items. The document reflects the greater success of the plaintiff in respect of four of the six 'buckets' of documents which had been identified by the AIG Defendants (being buckets 2, 4, 5 and 6, with Categories 2.1 to 2.7 forming part of bucket 5). This greater success in resisting the applications should sound in the award of costs in favour of the plaintiff. The manner in which this should be done, to achieve a measure of justice between all parties, is to analyse the applications by reference to the two broad categories involved (as identified at [22] above) and by reference to my assessment as to the outcomes associated with those categories.
33I am of the view that, had the only discovery requests before the court concerned Categories 2.1 to 2.7, a reasonable exercise of the costs discretion would have been to award the plaintiff its costs of that application. Indeed, it would have been obtuse to order anything else in those circumstances.
34Further, if the only discovery requests before the court had concerned Categories 1.1 to 1.10, a reasonable exercise of the costs discretion would have been to order that costs be in the cause, notwithstanding the additional success achieved by the plaintiff relative to the defendants and recognising that I am of the view the so‑called 'communications issue' is not as significant to the overall outcome as has been submitted by the defendants. I would have adopted this course with respect to the costs on these categories because, although I assess the plaintiff as having achieved some greater success in this regard, the essential and inherent nature of the applications, being an occasion for the court to rule on the scope of the numerous discovery categories required for this extremely large case, is that they were essentially a necessary step in the overall critical path of the litigation. Seen through this prism, the better view is that the party which is ultimately successful in the action should be entitled to recover their costs of this aspect of the matter.
35Putting the foregoing together and assessing the Discovery Applications as a whole, and recognising there was some overlap in argument between the two broad categories (as to questions of principle), I propose to exercise the costs discretion to award the plaintiff 40% of its costs of the applications in any event, with the remaining part of the plaintiff's costs and 60% of the defendants' costs being costs in the cause. That represents an appropriate disposition of the matter to reflect the success achieved by the plaintiff in resisting the applications but recognising that the balance of the costs should fall to the party or parties which are ultimately successful in the proceedings.
C. Whether special costs orders should be made?
36The plaintiff sought an order for special costs orders pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) (Uniform Law) in respect of the Discovery Applications. The defendants support the making of such orders given the costs orders in question will have application to all parties.
37The orders sought are as follows:
5.In respect of the costs referred to in Orders 3 and 4, any assessment by the taxing officer of the costs payable is to be done:
(a)without reference to the limits imposed by:
(i)the maximum allowable hourly and daily rates in Table A of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022;
(ii)Item 10 in Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022; and
(b)with due allowance for the length and complexity of the submissions and affidavit evidence.
38Section 141(3) of the Uniform Law provides as follows:
(3)Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do any or all of the following -
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
39The scale which applies to the work carried out by the practitioners engaged by the plaintiff and the defendants is the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 (2022 Costs Scale). The relevant item of the 2022 Costs Scale is extracted below:
40Table A to the 2022 Costs Scale identifies the maximum allowable hourly and daily rates for practitioners of varying seniority. For example, the hourly rate for a senior practitioner (being a practitioner admitted to practice on his or her own account for 5 years or more) is $506 per hour. For a junior practitioner, the rate is $374 per hour. The daily rate for senior counsel is $6,930 per day and for junior counsel it is $4,730 per day.
41The parties in effect seek orders to have the limits in item 10 and in Table A removed for the purposes of the cost assessment process for the Discovery Applications. In considering the application for these special costs orders, I must have regard to the following principles:
(a)The specific principles applicable to the determination of the special costs application are those expressed by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy [No 2],[103] among other authorities. Although the court was dealing with the predecessor legislation in that case, the current provision is in the same terms as the repealed provision. Accordingly, the principles expressed as applicable to the predecessor provision continue to apply.[104]
(b)The provision operates, in effect, to give the party the opportunity to recover those costs which have been reasonably and properly incurred where, in the court's opinion, the scale is inadequate because of the unusual difficulty, complexity or importance of the matter. These elements are to be addressed as matters of impression, rather than as matters of detailed evaluation, precision or science.[105]
(c)In general terms, the provision is protective of the party who benefits from the costs order, and serves the administration of justice, by facilitating, within the limits imposed by the statutory criteria, the operation of the general principle that a successful party is entitled to its costs of the litigation.[106] Of course, an order under s 141(3) does not, of itself, mean that the party will recover all of the costs it has incurred, or seeks from the other parties. It is the task of a taxing registrar to consider the reasonableness and necessity for the work undertaken and to make a judgment about the remuneration reasonably required.[107]
(d)As to the statutory criteria, the court may make an order under s 141(3) if satisfied of two things. First, that the amounts allowed under the relevant scale item are inadequate in the sense that there is a fairly arguable case that the bill of costs may tax out at an amount which is greater than the amount allowable under the scale (because of the limits expressed within the scale). Second, that the inadequacy of the costs allowable arises because of the unusual difficulty, complexity or importance of the matter.
(e)For the purposes of assessing whether to exercise the powers conferred by s 141(3), it will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that a greater amount should be allowed than that which is allowable under the relevant determination.[108] Further, a special costs order will not be warranted simply by reference to the effort of the successful party, which may have been disproportionate in all of the circumstances.
(f)As to the second criterion referred to above, the following passage from the Court of Appeal's decision in Sino Iron Pty Ltd v Mineralogy [No 2] is apposite:
[103] Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S).
[104] City of Bayswater v Viva Energy Australia Pty Ltd [No 2] [2022] WASC 384 (S) [25]; C H Leaman Investments Pty Ltd v Tuesday Enterprises Pty Ltd as trustee for The Steele Investment Trust [2022] WASC 447 (S) [9]; and Bolt v Bolt [2023] WASC 162 (S) [128].
[105] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
[106] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
[107] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
[108] Sino Iron Pty Ltd v Mineralogy [No 2] [11]; and Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [7] (Le Miere J).
[15]The word 'unusual' in s 280(2) of the Act qualifies only the 'difficulty' of the matter, and not its 'complexity' or 'importance'. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the court. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases: Wainwright v Barrick Gold of Australia Limited. Also, the reference to 'importance' in this context allows the court to have regard to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties, or because of the significance of the issues to other prospective parties, or to the public or community generally: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq).
(g)Archer J discussed the meaning of the word 'importance' in this statutory context in BCBC Singapore Pte Ltd v Pt Bayan Resources Tbk [No 5].[109] Her Honour noted that cases in which importance had been demonstrated included cases involving the risk of significant professional damage, test cases, or cases which involved enormous sums of money. This approach must be tailored where special costs orders are sought in relation to a particular interlocutory application. In those circumstances, the relevant assessment is focused on the particular application before the court, and its significance, rather than the entirety of the proceedings.
[109] BCBC Singapore Pte Ltd v Pt Bayan Resources Tbk [No 5] [2023] WASC 116 [75] - [79].
42As to the first criterion in s 141(3), it is necessary for the court to form an assessment as to whether it is fairly arguable that a taxing registrar may find that the costs incurred by each of the parties in doing work that was necessary and reasonable to prepare for and appear at the hearing of the contested applications may be allowed in an amount greater than those amounts allowed in item 10 of the 2022 Costs Scale.
43In my view, and approaching the issue as a matter of impression, I consider it is fairly arguable that the amount of costs allowable under the 2022 Costs Scale (having regard to the time and other limits in item 10(a)) would be inadequate having regard to the bills of costs I anticipate the parties would prepare if the scale limits were not applied. The Discovery Applications represented the first occasion in this litigation in which the parties were before the court agitating for discovery orders, and undoubtedly required a considerable volume of preparation work, in terms of assembling schedules, preparing affidavits, taking instructions as to the documents which were to be sought, briefing counsel, preparing submissions and attending the full day hearing in June 2023. Multiple counsel were briefed by the principal protagonists to the applications and extensive submissions were filed by the parties.
44I do not have a draft bill of costs from any of the parties in relation to the costs orders, but I have the affidavit of Mr Jenaway sworn on 6 September 2023. Mr Jenaway deposes to the number of practitioners involved in the application from the Allen & Overy side, the various charge out rates of the practitioners and counsel, and the approximate time spent by the practitioners in dealing with the applications. As I indicated at the hearing on 7 September 2023, the matters deposed to by Mr Jenaway are consistent with my own experience in such matters and reflect the level of energy and work I would expect to have been required in order to properly deal with the applications.
45I have little doubt that the costs would exceed the scale limits for the plaintiff, and can reasonably infer that this is so with respect to the AIG Defendants and Mitsui Sumitomo, but it is ultimately only necessary that I be satisfied it is fairly arguable that this would be so. I am so satisfied.
46As to the second criterion, I have considered whether the inadequacy of the costs allowable in respect of item 10 arises because of the unusual difficulty, complexity, or importance of the matter. I approach these issues as matters of impression rather than matters of detailed evaluation, precision, or science. On this approach I find the second criteria to have been satisfied insofar as I accept the inadequacy of the scale amount arises because of the importance of the contested discovery applications, as well as because of the complexity of the applications. The complexity is evident from the primary reasons on these applications, as well as the reasons published by the court on the split trial applications in March 2023. These contested applications for discovery were also obviously important in the context of the litigation as a whole, given the evident need for the defendants to pursue this material (given their information asymmetry relative to the plaintiff) and equally for the plaintiff to respond to the requests, which were quite extensive in nature as is evident from the Redfern Schedule attached to the primary reasons.
47Accordingly, I am of the opinion that it is fairly arguable that the amount of costs allowable in respect of the contested discovery applications (having regard to the maximum allowable amounts in item 10 to the 2022 Cost Scale) would be inadequate, and that this arises because of the importance and complexity of the particular application.
D. Orders
48For the foregoing reasons, I will order as follows:
In CIV 1631 of 2020 (and CIV 1620 of 2020):
1.The defendants pay 40% of the plaintiff's costs of and incidental to the first to fifth and seventh to twenty-fifth defendants' discovery application dated 24 May 2023 and the sixth defendant's discovery application dated 25 May 2023 (the Discovery Applications) in any event, to be assessed if not agreed.
2.The balance of the plaintiff's costs and 60% of the defendants' costs of and incidental to the Discovery Applications be in the cause.
3.In respect of the costs referred to in Orders 1 and 2, any assessment by the taxing officer of the costs payable is to be done:
(a)without reference to the limits imposed by:
(i)the maximum allowable hourly and daily rates in Table A of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022;
(ii)Item 10 in Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022; and
(b)with due allowance for the length and complexity of the submissions and affidavit evidence.
4.The defendants pay the plaintiff's costs of and incidental to the hearing on 7 September 2023.
In CIV 1729 of 2020:
1.The defendant is to pay 40% of the plaintiff's costs of and incidental to the defendant's discovery application dated 25 May 2023 (the Discovery Application) in any event, to be assessed if not agreed.
2.The balance of the plaintiff's costs and 60% of the defendant's costs of and incidental to the Discovery Application be in the cause.
3.In respect of the costs referred to in Orders 1 and 2, any assessment by the taxing officer of the costs payable is to be done:
(a)without reference to the limits imposed by:
(i)the maximum allowable hourly and daily rates in Table A of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022;
(ii)Item 10 in Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022; and
(b)with due allowance for the length and complexity of the submissions and affidavit evidence.
4.The defendant pay the plaintiff's costs of and incidental to the hearing on 7 September 2023.
ATTACHMENT A[110]
[110] Annexure to the Plaintiff's Further Submissions filed 22 September 2023.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SAO
Associate to the Honourable Justice Lundberg9 OCTOBER 2023
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