McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd (No 2) - [2017] VSC 640

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST

S ECI 2014 000497

McCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD (ACN: 002 929 017)	Plaintiff
v
SANTAM LTD (REGISTRATION NUMBER 1918/001680/06)	First Defendant

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JUDGE:	VICKERY J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 September 2017
DATE OF JUDGMENT:	22 September 2017
CASE MAY BE CITED AS:	McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors (No 2)
MEDIUM NEUTRAL CITATION:	[2017] VSC 640

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PRACTICE AND PROCEDURE – Appointment of special referee – Questions as to discovery of documents and inspection of documents in a large document case referred to special referee – Reference conducted as a facilitation process rather than an adversarial process – Adoption of special referee’s report – Special referee’s report adopted in part – Further questions put to the special referee to give his opinion and report thereon – O 50 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) – Validation process in TAR considered.

PRACTICE AND PROCEDURE – Discovery in a large document case – Use of predictive coding technology – Technology Assisted Review (‘TAR’) – Orders for TAR made in accordance with the recommendations of the special referee following a facilitation process conducted with the parties in a reference under O 50 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) – Special referee’s report adopted in part – Further questions put to the special referee to give his opinion and report thereon – Validation process in TAR considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T J Margetts QC & Ms A J Golding	Baker McKenzie
For the First Defendant	Ms P A Neskovcin QC & Mr B G Mason	Holding Redlich

HIS HONOUR:

Background

On 2 December 2016 the Court delivered its judgment in this proceeding on the use of Technology Assisted Review (‘TAR’ or predictive coding technology) to assist the Plaintiff (‘McConnell Dowell’) in complying with its discovery obligations in the proceeding, which had generated a very large volume of documents for review.[1]
[1]McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors(No 1) [2016] VSC 734 (‘McConnell Dowell (No 1)’).

Simply stated, TAR is a type of software that can be trained by a human to distinguish between relevant and non-relevant documents.[2]
[2] Pyrrho Investments Limited v MWB Property Limited [2016] EWHC 256 (Ch) [19]–[24].

In 2014, McConnell Dowell issued proceedings in the Technology Engineering and Construction (TEC) list against the First Defendant, (‘Santam’), the Second Defendant, QBE Underwriting Ltd as managing agent for QBE Syndicate 386 and QBE Syndicate 1886 and the Third Defendant, Liberty Mutual Insurance Company.

The proceeding involves a large claim involving tens of millions if not hundreds of millions of dollars arising from the design and construction of a natural gas pipeline in Queensland.

The construction contract at the centre of this case and an associated arbitration generated approximately 4 million potentially relevant documents. These have…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSC 640
Decision Date: 22 September 2017

CaseChat Overview and Summary

McConnell Dowell Constructors (Aust) Pty Ltd sought to recover damages from Santam Ltd for alleged breaches of contract and other related claims. The dispute centred on the discovery of documents and the inspection of documents, particularly in relation to the use of Technology Assisted Review (TAR) in a large document case. The matter was heard in the Supreme Court of Victoria. The court was tasked with determining whether the orders for TAR were appropriate and whether the validation process in TAR was adequately considered. The court also had to decide whether the special referee’s report should be adopted in part and if further questions should be put to the special referee.

The court examined the process by which the special referee was appointed and the manner in which the facilitation process was conducted. It assessed whether the reference was appropriately managed as a facilitation process rather than an adversarial process. The court then considered the recommendations made by the special referee regarding the use of TAR and the validation process. The court noted the importance of ensuring that the use of TAR was not only efficient but also fair and that the validation process was robust enough to maintain the integrity of the discovery process.

In its reasoning, the court adopted the special referee’s report in part but found that further questions needed to be put to the special referee to provide a comprehensive opinion on the matter. The court concluded that the orders for TAR were appropriate, provided that certain conditions were met, including a thorough validation process. The court emphasised the need for transparency and fairness in the use of TAR, ensuring that all parties had an opportunity to understand and challenge the process. The final orders included specific directions for the implementation of TAR, ensuring that the validation process was sufficiently rigorous and that all parties were given adequate notice and opportunity to respond.

Orders