Lanco Resources Australia Pty Ltd v Griffin Energy Group Pty Ltd - [2016] WASC 322

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LANCO RESOURCES AUSTRALIA PTY LTD -v- GRIFFIN ENERGY GROUP PTY LTD [2016] WASC 322

CORAM: KENNETH MARTIN J

HEARD: 28 SEPTEMBER 2016

DELIVERED : 6 OCTOBER 2016

FILE NO/S: CIV 1298 of 2015

BETWEEN: LANCO RESOURCES AUSTRALIA PTY LTD
First Plaintiff
LANCO INTERNATIONAL PTE LTD
Second Plaintiff
LANCO INFRATECH LTD
Third Plaintiff
AND
GRIFFIN ENERGY GROUP PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
First Defendant
CARPENTER MINE MANAGEMENT HOLDINGS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Second Defendant
BRIAN McMASTER
Third Defendant
CLIFFORD ROCKE
Fourth Defendant
SCOTT KERSHAW
Fifth Defendant
MARK MENTHA
Sixth Defendant
(BY ORIGINAL ACTION)
GRIFFIN ENERGY GROUP PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
First Plaintiff by counterclaim
CARPENTER MINE MANAGEMENT HOLDINGS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Second Plaintiff by counterclaim
BRIAN McMASTER
Third Plaintiff by counterclaim
CLIFFORD ROCKE
Fourth Plaintiff by counterclaim
SCOTT KERSHAW
Fifth Plaintiff by counterclaim
MARK MENTHA
Sixth Plaintiff by counterclaim
AND
LANCO RESOURCES AUSTRALIA PTY LTD
First Defendant by counterclaim
LANCO INFRATECH LTD
Second Defendant by counterclaim
(BY COUNTERCLAIM)

Catchwords:

Practice and procedure - Discovery application - Discovery by categories - Discovery after exchange of witness statements - Most categories agreed - Disputation over certain categories - Direct relevance test applicable

Legislation:

Rules of the Supreme Court 1971 (WA), O 26 r 7

Result:

Plaintiffs' application rejected for unresolved discovery category

Category: B

Representation:

Original Action

Counsel:

First Plaintiff               :        Mr M Izzo
Second Plaintiff               :        Mr M Izzo
Third Plaintiff               :        Mr M Izzo
First Defendant               :        Ms R Higgins
Second Defendant               :        Ms R Higgins
Third Defendant               :        Mr M Robertson
Fourth Defendant               :        Ms R Higgins
Fifth Defendant               :        Ms R Higgins
Sixth Defendant               :        Mr M Robertson

Solicitors:

First Plaintiff               :        Allen & Overy
Second Plaintiff               :        Allen & Overy
Third Plaintiff               :        Allen & Overy
First Defendant               :        Ashurst Australia
Second Defendant               :        Ashurst Australia
Third Defendant               :        Colin Biggers & Paisley (Sydney)
Fourth Defendant               :        Ashurst Australia
Fifth Defendant               :        Ashurst Australia
Sixth Defendant               :        Colin Biggers & Paisley (Sydney)

Counterclaim

Counsel:

First Plaintiff by counterclaim     :        Ms R Higgins
Second Plaintiff by counterclaim    :        Ms R Higgins
Third Plaintiff by counterclaim     :        Mr M Robertson
Fourth Plaintiff by counterclaim     :        Ms Ruth Higgins
Fifth Plaintiff by counterclaim     :        Ms R Higgins
Sixth Plaintiff by counterclaim     :        Mr M Robertson
First Defendant by counterclaim     :        Mr M Izzo
Second Defendant by counterclaim :        Mr M Izzo

Solicitors:

First Plaintiff by counterclaim     :        Ashurst Australia
Second Plaintiff by counterclaim    :        Ashurst Australia
Third Plaintiff by counterclaim     :        Colin Biggers & Paisley (Sydney)
Fourth Plaintiff by counterclaim     :        Ashurst Australia
Fifth Plaintiff by counterclaim     :        Ashurst Australia
Sixth Plaintiff by counterclaim     :        Colin Biggers & Paisley (Sydney)
First Defendant by counterclaim     :        Allen & Overy
Second Defendant by counterclaim :        Allen & Overy

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

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 582
Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
Fudlovski v JGC Accounting & Financial Services Pty Ltd [2014] WASCA 237
Hoyts Pty Ltd v Burns [2003] HCA 61; (2003) 77 ALJR 1934
Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101; (2013) 41 VR 149
Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [1999] QCA 276; (2001) 1 Qd R 276
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
Quenchy Crusta Sales Pty Ltd v Logi‑Tech Pty Ltd [2002] SASC 374
Robson v REB Engineering Pty Ltd (1997) 2 Qd R 102
Roe v The State of Western Australia [2013] WASC 130
Singh v Friedman [2013] WASC 78
Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 5) [2001] SASC 335
The Shell Petroleum Company Ltd v Commissioner of Taxation [2005] FCA 982
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

KENNETH MARTIN J: I am dealing with an aspect of the plaintiffs' chamber summons of 6 September 2016 seeking orders for discovery in respect of certain disputed categories of documents from the defendants. The application is expressed to be advanced pursuant to O 26 r 7 of the Rules of the Supreme 1971 (WA).
The unresolved category of documents is a category 4, found within schedule A to the plaintiffs' application. It seeks the discovery of:
All documents that discuss, evidence or directly concern the feedback from potential bidders for Griffin Coal regarding the geological information in the sale process of Griffin Coal.
Discovery of this category of documents is resisted by the defendants, essentially on the basis that it falls outside the range of documents which would have a direct relevance to presenting issues within the underlying litigation. The pursuit of these documents manifests within a broader range of disputation between the parties over more documents under the plaintiffs' earlier chamber summons of 12 August 2016 seeking the discovery of 14 identified categories about which the parties were then in dispute. A subsequent chamber summons of 6 September 2016 by the plaintiffs sought an additional eight categories of documents.
The first, second, fourth and fifth defendants also pursued an application for discovery orders, under their chambers summons of 12 August 2016. The schedule to that application identified 10 categories of documents sought from the plaintiffs, of which the defendants sought orders for discovery in respect of eight of those categories.
The categories of documents the subject of the three chamber summons reflected genres of requested documents about which the parties, at those times, could not agree upon. In what is major underlying commercial litigation that I have listed for a 15 day trial commencing on 7 March 2017, the parties had reached agreement in respect of numerous other categories of documents. That transpired pursuant to directions which were essentially agreed between the parties on 15 June 2016. Those directions concerning discovery were issued upon a basis that mutual discovery would follow the completion of parties' exchanges of trial witness statements - which was programmed to conclude in September 2016. That exchange of witness statements was programmed to occur before discovery in the objective of attempting to provide a better range of criteria to assess the direct relevance of documents required upon discovery, rather than opening up what might otherwise present, given the range of issues between the parties, as a documentary exercise of massive proportions.
At 15 June 2016 the parties had also agreed upon a protocol for the electronic exchange of documents which would apply for this litigation in the progression of the matter to trial.
My directions 16 to 19 made 15 June 2016 provided in these terms:
16.By 15 July 2016 any party (Requesting Party) who seeks discovery of documents from another party (Recipient Party) must serve on the Recipient Party (copied to all other parties) a list of the categories of documents in relation to which such discovery is sought. Such discovery must only be sought of documents that are directly relevant to a matter in issue in the action. The Plaintiffs have leave to request additional categories by 12 August 2016.
17.By 22 July 2016 each Recipient Party must inform each Requesting Party (copied to all other parties) as to which categories of documents, if any, the Recipient Party agrees to give discovery of. As regards any additional categories requested by the Plaintiffs, the date shall be 19 August 2016.
18.By 30 August 2016, each Recipient Party is to give discovery of those categories of documents which they have agreed to give, according to the terms of the agreed Protocol for Electronic exchange of Discovered Documents agreed on 3 November 2015 and are to serve their affidavits verifying their lists of discovered documents. As regards any additional categories requested by the Plaintiffs, the date shall be 16 September 2016.
19.If any dispute arises between a Requesting Party and a Recipient Party as to discovery in accordance with the preceding order, and that dispute has not been resolved after the parties' solicitors have conferred, then the Requesting Party must file and serve any application for discovery by 3 August 2016. As regards any additional categories requested by the Plaintiffs, the date shall be 19 August 2016.
It may be seen from the above that in the wake of an anticipated prior exchange of witness statements the parties agreed upon a regime of discovery by reference to categories of documents which were 'directly relevant to a matter in issue in the action'.
Whilst there has been a large measure of ensuing agreement between the parties over categories of documents to be discovered - the three chamber summonses which issued identify areas where, at least at that time, consensus over categories could not be reached.
I am pleased to say that by the time of the special appointment hearing fixed to resolve each of the three chamber summons, there had been many further accommodations sensibly reached between the parties over documents as a result of conferral.
The end position then is that either by further consensus, concession, deferral or by my rulings at the time, there now is only one unresolved residual discovery category issue. That is the additional category 4, arising from within the plaintiffs' chambers summons of 6 September 2016.
I should note that the parties in the lead up to the application have exchanged extensive written submissions concerning this category and the other (then) disputed categories of documents. That process has been helpful in terms of crystallising issues in contention. The parties' written positions were then augmented at the hearing by submissions from counsel.
I should also note at the outset that the third and sixth defendants have indicated, by way of a letter to the court from their solicitors of 31 August 2016, that, as between the parties, the third and sixth defendants have adopted the first, second, fourth and fifth defendants' categories of documents as filed and that, in terms of the applications for orders as to discovery, the third and sixth defendants will abide by the decision of the court in relation to those applications.
Before dealing with the residual category 4 issue it is necessary for me to canvass preliminary matters. First, I briefly examine the state of the law concerning requested categories of discovery that are assessed by reference to a template of the documents needing to be 'directly relevant' - rather than by the old general discovery regime which is governed by the more traditional Peruvian Guano standard. Second, I need to set out briefly the underlying range of pleaded issues arising between these parties upon the plaintiffs' claim and from the defendants' defences coupled to their counterclaim seeking a payment of $150 million plus interest from the plaintiff corporations under a Sale Agreement dated 14 December 2010.

Applicable discovery principles: categories of directly relevant documents

There was no disagreement between the parties concerning legal principles to be applied in assessing the present applications. The parties' respective written submissions helpfully collect the leading case authorities. Nevertheless, it is convenient to briefly collect the principles. In the first place, I note the observations of Allanson J in Singh v Friedman [2013] WASC 78 [3] ‑ [6], which were later referred to with approval by the Chief Justice in Roe v The State of Western Australia [2013] WASC 130.
At [1] of his reasons in Singh v Friedman Allanson J explained he was dealing with the process of discovery by reference to proposed categories of documents to be discovered, rather than general discovery. He then explained at [3] ‑ [4] and [6]:
A party does not have a strict entitlement to an order for discovery: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904, 910; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd[2005] WASC 60 [6]. The power to order discovery is discretionary. The discretion is to be exercised having regard to the timely and cost effective disposal of litigation: Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1 [7]; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [6]. 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: Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 321. Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation': Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121, 128. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings: Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028, 1065.
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. To determine whether a class of documents may be relevant, the court should consider the pleadings, together with the conduct and admissions of the parties and the nature of the action: Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [5].
…
The defendants rely, at times, on the potential burden of discovery and whether it is disproportionate. In deciding whether to order discovery, the court must consider how best to attain the objects set out in O 1 r 4B, and must consider the cost to the parties and whether the discovery sought is proportionate to the value, importance and complexity of the subject matter in dispute, and the financial position of the parties. In the absence of evidence, save for those instances where the description of the documents supports an inference regarding the burden of compliance, it is difficult for the court to make a proper assessment of proportionality.
Two weeks after that decision the Chief Justice delivered his reasons in Roe, where he said at [2] ‑ [3]:
No order for general discovery has been sought or made and indeed such orders are increasingly rare, particularly in the CMC list. Rather, discovery and inspection has been given by each of the defendants without the need for a specific order, and in the case of the defendants against whom the application is brought, namely the first and seventh defendants, discovery has been given in the form of a series of tranches by reference to categories which evolved during discussion between the parties and in some cases with some prompting from the Court.
That is a process which is to generally be encouraged. It is a sensible and practical process which enables discovery to proceed in a manner which is proportionate to the issues in the case and which best serves the interests of the parties and most particularly the interests of justice.
The Chief Justice then observed at [10] ‑ [13]:
The contemporary principles that govern the provision of discovery are conveniently set out in the defendants' submissions which I adopt: Singh v Friedman [2013] WASC 78 [3] - [4] (Allanson J). Put shortly, it is now established that general discovery is no longer regarded as a right. Rather, the extent of the obligation to give discovery and the entitlement to discovery will be fashioned having regard to the general principles that are articulated in the Rules of the Supreme Court 1971 (WA) and in particular the principles enunciated in O 1 r 4A and r 4B. 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.
In the context of discovery, this means that when issues arise with respect to the breadth of the discovery to be ordered, the ambit of discovery will be determined taking into account the cost and delay associated with the provision of discovery over a broader ambit, as compared to the forensic benefit likely to be derived from the provision of discovery over that broader ambit. Unless the cost and delay involved in the provision of that discovery is proportionate to the forensic benefit likely to be derived from a broader ambit of discovery, and to the value and importance or complexity of the subject matter of the proceedings, a narrower ambit of discovery will be ordered.
The only proposition I would add to the principles enunciated in the defendant's written submissions is the proposition that at least in cases such as this, when general discovery has not been sought or ordered, adjectival or indirect relevance of itself will no longer determine whether or not a document will be ordered to be discovered, and in particular the approach to general discovery enunciated in cases like Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 will no longer guide the court in relation to issues with respect to informal discovery.
Rather, those issues will be determined by the balancing of the likely forensic benefit to be obtained against the risk of cost and delay in the manner that I have described, viewed in the context of the value, importance and complexity of the subject matter of the proceedings. In that context, the forensic significance of the issue in respect of which discovery is sought and the relevance of the documents sought to that issue, in a qualitative sense, will be pertinent to the proper disposition of any application for discovery.
By reference to Martin CJ's observations in [13] from Roe above, it is necessary for me in due course to look briefly at the underlying framework of the present dispute between the parties as reflected by the pleadings and particulars.
A point of differentiation in terms of how the discovery process has been conducted within the present case, in contrast to the decisions of Allanson J and Martin CJ, is that here the parties have proceeded after their pleadings in accord with my directions to first exchange the witness statements from their proposed witnesses for trial and then to embark upon the task of mutually rendering discovery of agreed categories of documents. So, lest it be overlooked later, I will repeat that the present is not a case of general discovery being evaluated under a 'line of enquiry' Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 approach, as undertaken by the Court of Appeal in Fudlovski v JGC Accounting & Financial Services Pty Ltd [2014] WASCA 237 [2], [14], and [25], in relation to the categories of documents sought under an application made for further and better discovery.

Whilst dealing with legal principles, it is also helpful to note, at this point, what has been usefully said about the concept of a document 'directly relevant' to a matter in issue. Whilst I note The Shell Petroleum Company Ltd v Commissioner of Taxation [2005] FCA 982 [14] (Crennan J) and Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [1999] QCA 276; (2001) 1 Qd R 276 [7] (QCA), of particular assistance are the observations of Doyle CJ in Quenchy Crusta Sales Pty Ltd v Logi‑Tech Pty Ltd [2002] SASC 374. The South Australian Chief Justice had observed:
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 [11].
See also Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 5) [2001] SASC 335 (Bleby J applying earlier observations of Demack J in Robson v REB Engineering Pty Ltd (1997) 2 Qd R 102, 104 ‑ 105).
Regard must also be had to the conduct of the case by the parties and the nature of the action. As to that wholly uncontroversial proposition, see observations of Master Newnes (as he then was) in Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [5].
One last matter arises concerning the particular circumstances of the present case, where the parties approach discovery having the benefit of exchanged witness statements from the likely trial witnesses. Whilst it is true that the content of a witness statement does not of itself set the parameters of the relevance for an issue in civil litigation and it is primarily the parties' pleadings and particulars which do deliver that framework, that does not mean that the information following from the exchanged witness statements is to be ignored. In the modern era, where undertaking and completing the process of discovery has now become an increasingly burdensome obstacle to a matter reaching trial (in terms of consuming time and resources and the associated heavy expense inhibiting matters from progressing to an earlier trial hearing), there should be no inhibition for a court in appropriate circumstances to have regard to the prospective content of a witness statement if it can cast light upon whether an associated range of documents is of direct relevance. The proportional forensic evaluation as to worth and cost which the court needs to balance, having regard to the potential forensic utility of requested documents in looming litigation, may require that scrutiny. That is the approach I have taken here by reference to scrutinising a number of paragraphs the parties have referred me to in the parties' exchanged witness statements.

Essential issues in the litigation

The revised pleadings as between the parties are extensive, currently reflected by a further amended statement of claim (FASOC) of the plaintiffs filed 22 June 2016 of some 64 paragraphs culminating in a claim for relief under s 82 and s 87 of the Trade Practices Act 1974 (Cth) for damages and/or compensation and ancillary relief by way of variations to the text of multiple clauses within the parties' Sale Agreement. On behalf of the first, second, fourth and fifth defendants there is a re‑amended defence and counterclaim pleading (READACC) filed 12 July 2016 of some 82 paragraphs and 12 schedules (schedules A to L) across 67 pages.
The third and sixth defendants are separately represented. They have filed a distinct defence and counterclaim pleading, also of 12 July 2016, on behalf of Messrs McMaster and Mentha (of 72 pages, including 12 schedules).
I will begin what is an unduly brief summary of the plaintiffs' claims by using the plaintiffs' written submissions of 19 September 2016. This is but a commencement of a 'high level' overview towards what are undoubtedly complex underlying commercial disputes of considerable forensic dimension and financial magnitude:
5.The plaintiffs in these proceedings are the purchasers, under a sale agreement dated 14 December 2010, of the shares in The Griffin Coal Mining Company Pty Ltd (GCMC) and Carpenter Mine Management Pty Ltd (CMM) (collectively, Griffin Coal), which owned and operated a coal mine in the Collie Basin in Western Australia. The tenements held by Griffin Coal included coal mining leases located in areas known as Muja, Ewington I, Ewington II, West Ewington, Stockton, Allanson and Muja South.
6.The first and second defendants are the vendor companies under the Sale Agreement. The third to fifth defendants were the administrators of both the vendor companies and Griffin Coal. The sixth defendant was the administrator of GCMC alone.
7.The plaintiffs allege, that in the course of the sale process conducted by the administrators from August 2010, the defendants engaged in misleading or deceptive conduct, contrary to s 52 of the Trade Practices Act 1974 (Cth), by failing to disclose to them the contends or existence of two sets of reports prepared by Jon Barber Consulting ('JBC') relating to the resources and reserves of Griffin Coal. Those reports comprised:
(a)a report, prepared in accordance with the JORC code, in relation to Ewington I and Ewington II's resources and reserves (JBC Ewington Report); and
(b)a report, prepared in accordance with the JORC code, in relation to Muja South's resources and reserves (JBC Muja South Report).
8.The plaintiffs' case is that, had those reports been disclosed, the plaintiffs would have taken them into account in their technical and financial modelling during the bid process, and made a bid substantially lower than the bid they in fact made. Specifically, it is alleged that, instead of the purchase price of $740 m provided for in the sale agreement, the plaintiffs would have paid no more than $220 m.
It may be seen from the above brief summary by the plaintiffs that alleged misleading and deceptive conduct of the defendants by omission, in failing to make available two JBC reports, is said on the plaintiffs' case to have delivered reliance and loss ramifications for the plaintiffs exceeding half a billion dollars.
The first, second, fourth and fifth defendants' responding written submissions filed 20 September 2016 identify the primary misleading and deceptive conduct claims of the plaintiffs in like terms, by reference to an alleged omission from the due diligence process of the two JBC reports. However, the defendants' submissions note that the first, second, fourth and fifth defendants counterclaim, as against the first plaintiff (LRA) and the third plaintiff (LIL) under the Sale Agreement, the 'second tranche of the Deferred Consideration', which is $150 million together with interest and costs.
These defendants identify three principal issues in the litigation, namely:
(a)whether the Griffin parties' conduct was misleading or deceptive;
(b)whether the Lanco parties relevantly relied on conduct of the Griffin parties; and
(c)whether any loss arose and can be established.
As regards those three principal issues the defendants assert, respectively:
6.First, as to misleading or deceptive conduct, the Griffin Parties contend as follows. One of the Barber reports, concerning Muja South, was never received by any of the Griffin Parties and cannot, accordingly be relied upon to found a claim in misleading or deceptive conduct against them. Further, each of the Barber reports contain statements that should not be construed as a statement to the effect that a certain amount of coal is in the ground, but instead as an opinion of one JORC assessor as to such matters, based upon a range of assumptions, clearly identified in the assessment [footnote 1 referring to defence paragraphs 36(3), 39(f), 40(c), 48(f); 53(b) and 54(d)]. In this regard, a JORC assessment is no more than one opinion, which is a function of the assumptions on which it is predicated and the views of its author. It is well accepted that different outcomes will be reached by different JORC assessors [footnote 2 referring to subpara 55(b) of the defence]. In any event, all of the geographical and economic information upon which the JORC statements relied was in the transaction data room, with the result that all assumptions could be readily checked by interested parties. Put differently, the matters relied upon as being 'misleading or deceptive' are matters which would have been readily apparent upon a reading of the material in the data room by any competent and appropriately informed prospective purchaser. Still more is this so in respect of any bidder serviced by a team of advisors, and in particular to a party of Lanco's sophistication [footnote 3 referring to subpara 24(d) of the defence and request 3 being the request for further and better particulars of paragraph 24(d) of the defence dated 10 August 2015]. In these circumstances, the statements were not misleading, as they were not likely to convey the representations alleged or, in any event, were not likely to lead a purchaser who had access to the data room, and was properly advised, into error.
7.Secondly, as to reliance, all the documentation passing between the vendors or any of them and the purchasers made it clear that: (a) no reliance should be placed upon documents in the data room being the most recent documents available; and (b) prospective purchasers should make their own enquiries [footnote 4 of the submissions referring to defence paragraph 23, 31A, 39(h), 40(d) and (e), and 44(c)]. Further, even if there was any reliance placed upon those matters, they … would not have been likely to have had any material impact upon the price offered.
8.Thirdly, as to loss, it is not apparent how the Lanco Parties can or will substantiate the notion that a lower bid would have been made, or what would the conditions of the bid have been.
For scenarios of alleged misleading or deceptive conduct by silence or by omission, the written submissions of the defendants make reference to the importance of that assessment needing to be rendered in an overall context, referring to leading High Court authorities Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 582 [190] (McHugh J) and Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357. Also noted are the observations applying those principles by the Full Federal Court in Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135, 152 (Besenco J) and by the Court of Appeal of Victoria in Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101; (2013) 41 VR 149 [159] (Vickery AJA).
After that highest of levels perspective regarding the dispute, it is now possible to advance to evaluate the parties' respective contentions concerning disputed document category 4.

Category 4: 'Feedback'

The plaintiffs pursue this category of documentation from the defendants on the basis of written submissions, which provide in the submissions filed 19 September 2016, in terms:
31.This category seeks documents that discuss, evidence or directly concern the feedback from potential bidders for Griffin Coal regarding the geological information in the sale process of Griffin Coal.
32.The significance of the non-disclosure of geological information, being the contents and existence of the JBC Reports, is at the heart of this case. The Defendants deny the materiality of the differences between the JBC Reports on the one hand and the earlier JORC reports on the other insofar as concerns the resources and reserves of Griffin Coal (Defences, para 55), and also insofar as concerns matters such as the strip ratio, waste mining cost, and ash content (Defences, para 55B). In that context, feedback from potential bidders concerning geological information is directly relevant for at least three reasons.
33.First, any such feedback will indicate the extent to which the geological information provided by the Defendants was important for a consideration of whether to make a bid and the amount of such a bid. This is directly relevant to the plaintiffs' claim that they relied on the resource and reserve statements in the earlier JORC reports in making a bid, a claim which is denied by the Defendants (Defences, para 61(a)) and which is met with the positive allegation that the sole reliance on the earlier JORC reports and the coal parameters contained in the Long Term Mine Plan would have been unreasonable (Defences, para 61(e)(i)). It is worth noting that evidence already served by the Defendants discloses the existence of feedback that would bear on these issues. Thus, an email that was attached to Ms Cowan's witness statement (GEG.100.005.6154) states:
'Feedback so far has highlighted the importance of the geological information in the sale process and this is something interested parties are particularly interested in'.
34.Secondly, as noted above, an issue between the parties concerns the Defendants' awareness of the materiality of the impact that the estimates contained in the JBC Reports had on the coal parameters of Griffin Coal. In this connection, it should be noted that Mr McAlister deposes at ([96]) that he considered the JBC Ewington Report was irrelevant to potential bidders. Any feedback from bidders regarding geological information will bear on the Defendants' awareness of the significance to bidders of this information.
35.Thirdly, the feedback is directly relevant to an assessment of the relevant counterfactual ie what would have happened had the JBC reports been disclosed to bidders. Mr McMaster has deposed that, had Lanco bid $220 m (being the maximum amount of the bid it is pleaded it would have made had the JBC Reports been disclosed ‑ (Statement of Claim, para 62(c)), he would not have accepted that bid but would have negotiated with two under bidders, Atlantic and GVK, to secure the best price he could (McMaster at [134]). The feedback from bidders, including but not limited to Atlantic and GVK, in regard to the importance to them of geological information may be used to determine the extent to which any bids made were affected by the conduct of the Defendants in failing to disclose the lower estimates of resources and reserves contained in the JBC Reports.
However, the defendants uniformly resist any discovery in this additional category. Under the first, second, fourth and fifth defendants' written submissions of 23 September 2016, they contend at the outset that such material is not directly relevant to any matter in issue and then submit:
25.… The relevance and materiality of the JORC reports that were disclosed (and the geological information they covered) is not in dispute. The steps a bidder subsequently takes with, or in respect of, those reports and how the information in them should be approached is in dispute. However, this category does not go that issue.
26.Similarly while the materiality of the JBC Reports and their impact on the information in the data room, is in dispute, this category does not capture documents that go to that issue. Feedback from bidders about geological information not arising from the JBC reports cannot go to a consideration of whether the JBC Reports would have had a material impact on their (or specifically the Lanco Parties') consideration of the material in the data room.
27.A significant practical question also arises in relation to the scope of work that would be required to respond to such a category: it does not naturally lend itself to narrowing through electronic keyword search terms and is likely to require a manual review of a very large volume of documents. The category is broad enough to require review to be undertaken of correspondence with entities who otherwise have no relevance to the matter. As a result, if ordered to give discovery of this category, the Griffin Parties would be required to undertake significant additional work. The Griffin Parties consider that it would take five weeks, and possibly more, to provide discovery of this category unless it is significantly limited.
The dispute about this category of bidder 'feedback' document narrowed after that point. Under a letter of 27 September 2016 from the plaintiffs' solicitors to the defendants' solicitors, the plaintiffs proposed a reduction to the ambit of this category of additional discovery in cl 3(b) of their correspondence (see page 86 within attachment DAJ‑4 to the second affidavit of David Ashley Jenaway sworn 27 September 2016).
The ambit of their request was now truncated to only seek:
[a]ll documents that discuss, evidence or directly concern the feedback from potential bidders for Griffin Coal regarding the geological information in the sale process of Griffin Coal, limited to potential bidders who were granted access to any online data room in connection with any part of the sale process of Griffin Coal.
Nevertheless, the defendants' response to that narrower request, by the correspondence from Ashurst Australia of 28 September 2016 (see par 2.1) reiterated the defendants' objections of principle - even to the narrowed request ‑ again primarily on the basis that the category did not 'relate to a matter that is directly relevant in the proceeding'.
During the course of verbal submissions from counsel, I was advised by Ms Higgins for the defendants, that there were still at least 100 parties that would fall within the truncated category of having had access to the electronic data room. During verbal submissions, Ms Higgins elaborated upon the resistance to the truncated request - identifying, essentially, three tiers of difficulty. First, she identified, correctly in my view, the non‑specific word 'feedback' was a noun of such breadth that it may carry with it dragnet consequences. Second, she identified, in effect, the inadmissibility problem from an evidentiary perspective - in terms of any subjective views from potential bidders at the time whose outside circumstances could be infinitely diverse and thereby lack any basis for a legitimate or helpful comparison to the particular sophisticated bidding position of the plaintiff entities - who were and are substantial, well resourced, well advised multi‑national energy resource asset acquirers.
In that context, counsel also drew my attention to what she contended, in effect, had been a misplaced reliance by the plaintiffs upon an affirmative plea within the READACC at par 61(e)(i) (responding to par 61 of the FASOC). The defence plea reads in terms:
61.As to paragraph 61, the first, second, fourth and fifth defendants:
…
e.say further that:
i.a potential bidder or prospective bidder in the position and circumstances of the plaintiffs (as alleged herein) would not, acting reasonably and with due care and diligence, have relied in entering into the Sale Agreement solely on the SRK Reports and MMC Reports, the resource and reserve estimates therein and parameters contained in the GCMC Long Term Plan, and would instead have conducted and relied upon its own due diligence, investigations, enquiries, advice, experience, knowledge and the advice of consultants it engaged to offer opinions, advice and assistance in the due diligence process;
The defendants say that the plaintiffs have misunderstood that plea. Contentions of the plaintiff entities to the effect that feedback concerning geological information from parties accessing the electronic data room would be potentially relevant (and directly so) are, the defendants submit, wholly misconceived, as the plea under par 61(e)(i), properly understood, whilst affirmative in character, is of an objective character and not subjective in its tenor as regards reliance by others. In other words, the defendants' par 61(e)(i) seeks to engage by reference to the objective template of the law in terms of a need for a party who contends that they have been misled or deceived by conduct to demonstrate their reliance conduct can be objectively assessed as reasonable. Hence it is put in effect by the defendants that embarking upon any enquiries about subjective 'feedback' from other bidder entities who never progressed to be successful tenderers would only be an exercise in inadmissible futility.

A final point emphasised on the part of the defendants in resisting this additional category of documents is effectively that the request carries with it considerations of undue oppression to the defendants with the proceeding now only some six months away from trial, even in relation to the truncated basis of the category - by reference to a need to investigate communications from at least 100 other potential sources of 'potential bidders and their feedback'. The sheer scale of that requested exercise must be measured against the overall volume of other documents to be produced in the lead up to what is now a trial commencing in early March 2017. In effect, the submission is that the burden of this task, were it to be imposed, would be greatly disproportionate to any potential benefits arising out of the exercise from a forensic perspective to the plaintiffs.
Verbal submissions from counsel for the plaintiffs, Mr Izzo, sought to counter the admissibility pitfall which the defendants' submissions had highlighted. This was on the basis that any bidder feedback would nevertheless still be admissible, even though the legal template of an objective assessment, in terms of reasonable reliance, led me to suggest there would be a more viable basis for expert evidence to be received as to how purchasing assessments by resource acquirers like the plaintiffs would be approached, in the international context. I did not understand that proposition to be challenged. But the plaintiffs nevertheless submitted that they would be assisted by having this information and that it was information that was, from a discovery perspective, 'directly relevant'.
A final factor to be injected into the rival positions which was discussed verbally, is that the present arguments towards alleged misleading and deceptive conduct, leading the plaintiffs to make an offer for the Collie coal assets of $740 million (ultimately accepted) ‑ and which is said to be more than half a billion dollars greater than what would otherwise have been made had the relevant JBC reports been made available for inspection in the data room - is that the underlying circumstances are wholly hypothetical. It is accepted that the relevant JBC reports were not available in the electronic data room to anyone. Hence, there was no underlying potential for assessments to be made about the impact of that missing JBC material upon third parties (in a context of arguments about reasonable reliance). In other words, as the circumstances were that no other parties had that JBC information, the present is a case of missing information no one had (from a bidding perspective). Thus, assessing hypothetical positions by reference to 'feedback' from potential bidders who had viewed data that was available in the electronic data room - carries no capacity to generate any specific admissible feedback about the information that was not there for anyone to view or evaluate. This, on my assessment, is a significant forensic consideration.

Determination

Upon my assessment the documents sought under the plaintiffs' additional category 4, even truncated to the extent seen in the Allen & Overy correspondence of 27 September 2016, are not directly relevant and so, not discoverable. I would, in effect, accept all the submissions raised in opposition to the production of such a category of documents as articulated by the defendants.
On my assessment there would be real admissibility concerns in relation to subjective 'feedback' emanating from other bidders whose circumstances may be significantly divergent to those of the plaintiffs. Such material carries potential to 'set the hounds running' down an expensive, protracted and ultimately inadmissible journey of enquiry, in my view.
But without rendering any more definitive ruling upon that proposition before trial, for me the overwhelming obstacle against allowing this requested category, albeit truncated, is that it is a category that carries with it time, resourcing and cost burdens, which I assess as forensically disproportionate in value and expense to the utility of anything possibly turned up as a result of the considerable work that would be imposed by requiring documents of this ilk to be searched for by the defendants.
So then, applying forensic considerations associated with a proportionate allocation of resources, my conclusion is that the requested category falls outside the bounds of what could reasonably be imposed by way of a category of discovery at this point in time, in a lead up to the trial.
Furthermore, the defendants' submissions in respect of the objective legal standard contended for under the READACC plea under par 61(e)(i) must be accepted (save of course that the plaintiffs will be permitted to give evidence about their own subjective reliance conduct and upon the counter‑factual hypothesis of what they otherwise would have done - see generally Hoyts Pty Ltd v Burns [2003] HCA 61; (2003) 77 ALJR 1934 [54] ‑ [57] (Kirby J) - albeit in a tortious personal injury scenario).
Beyond all that the plaintiffs have at their disposal the more orthodox and legitimate mechanism for addressing the objective threshold of showing their objectively reasonable reliance upon the conduct they complain of by expert evidence favouring their case, if that evidence is found. This is a case where I would assess that all parties have the resources, both financial and legal, and expert, at their disposal in order to address such issues by expert evidence if it is available.
Accordingly, I must in the end reject the plaintiffs' application in respect of additional document category 4.