Palmer v CITIC Ltd [No 3]
[2019] WASC 424
•21 NOVEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: PALMER -v- CITIC LTD [No 3] [2019] WASC 424
CORAM: KENNETH MARTIN J
HEARD: 22 OCTOBER 2019
DELIVERED : 22 OCTOBER 2019
PUBLISHED : 21 NOVEMBER 2019
FILE NO/S: CIV 2072 of 2017
BETWEEN: CLIVE FREDERICK PALMER
First Plaintiff
MINERALOGY PTY LTD
Second Plaintiff
AND
CITIC LTD
First Defendant
SINO IRON PTY LTD
Second Defendant
KOREAN STEEL PTY LTD
Third Defendant
FILE NO/S: CIV 1267 of 2018
BETWEEN: MINERALOGY PTY LTD
Plaintiff
AND
CITIC LIMITED
First Defendant
SINO IRON PTY LTD
Second Defendant
KOREAN STEEL PTY LTD
Third Defendant
Catchwords:
Practice and procedure - Application for categories of discovery - Categories agreed - Timing of discovery in dispute - Considerations of size of dispute and documents required to be discovered - Discovery orders made
Costs - Discovery categories application - Where parties agree to categories - Only dispute as to timing - Policy of court to encourage consensus and not punish parties for engaging in dialogue to reach agreement - Costs orders made
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Discovery and cost orders made
Category: B
Representation:
CIV 2072 of 2017
Counsel:
| First Plaintiff | : | Mr L Livingston & Mr T March |
| Second Plaintiff | : | Mr L Livingston & Mr T March |
| First Defendant | : | Mr S Free SC |
| Second Defendant | : | Mr S Free SC |
| Third Defendant | : | Mr S Free SC |
Solicitors:
| First Plaintiff | : | Alexander Law |
| Second Plaintiff | : | Alexander Law |
| First Defendant | : | Herbert Smith Freehills |
| Second Defendant | : | Herbert Smith Freehills |
| Third Defendant | : | Herbert Smith Freehills |
CIV 1267 of 2018
Counsel:
| Plaintiff | : | Mr L Livingston & Mr T March |
| First Defendant | : | Mr S Free SC |
| Second Defendant | : | Mr S Free SC |
| Third Defendant | : | Mr S Free SC |
Solicitors:
| Plaintiff | : | Alexander Law |
| First Defendant | : | Herbert Smith Freehills |
| Second Defendant | : | Herbert Smith Freehills |
| Third Defendant | : | Herbert Smith Freehills |
Case(s) referred to in decision(s):
Palmer v CITIC Ltd [2017] WASC 253
Palmer v CITIC Ltd [No 2] [2019] WASC 14
Palmer v CITIC Ltd [No 2] [2019] WASC 14 (S)
KENNETH MARTIN J:
I am dealing with the applications of the defendants in actions CIV 2072 of 2017 and CIV 1267 of 2018 (the CITIC parties) seeking discovery in respect of disputed categories of documents pursuant to O 4A r 2 and O 26 r 7(2) of the Rules of the Supreme Court 1971 (WA) (RSC). By their chamber summonses filed 9 September 2019 the CITIC parties seek orders that the respective plaintiffs (Mineralogy) provide discovery on numerous categories of documents, as attached to respective chambers summonses by 20 December 2019 (the applications). Various ancillary orders including costs orders are sought.
The applications, in so far as they relate to the proposed time frame and as to costs, are opposed.
The applications seek separate orders in both matters. But given the essentially identical nature of the applications it is convenient to deal with both actions together.
At the conclusion of a special appointment on 22 October 2019, having heard submissions from the parties' counsel, I gave brief oral reasons and made orders as in [50] of these reasons. This was done to provide the parties, particularly Mineralogy, with my decision on the applications sooner rather than later. I indicated that I would provide fuller reasons expanding on my summary oral reasons. These are those reasons.
Background
The applications are the culmination of what is now a somewhat lengthy dispute between the parties regarding categories of documents that Mineralogy should provide by way of discovery to the CITIC parties.
The same two actions have previously been the subject of my reasons in the context of an evaluation of the appropriateness of ordering preliminary issues. I resolved those applications in the negative; see Palmer v CITIC Ltd [2017] WASC 253, Palmer v CITIC Ltd [No 2] [2019] WASC 14 (Palmer [No 2]) and Palmer v CITIC Ltd [No 2] [2019] WASC 14 (S).
More background to the actions for each matter may be seen at Palmer [No 2] [42] - [113]. However, it is sufficient for the purposes of the present applications to simply note Mineralogy's claim is for multibillion sums it alleges ultimately are due to it as a result of the failure of the CITIC parties to timeously pay to Mineralogy certain royalties in breach of covenants in two MRSLA agreements. The allegations are denied by the CITIC parties.
Material before the court
A significant amount of material was filed and served by the parties in the advancement of the applications.
For the CITIC parties, this included affidavits of Michael Keith Hamilton Pryse in each action sworn on 6 September 2019 (Pryse affidavits) - Mr Pryse being a solicitor of record in each matter.
Written submissions were also filed in each action on 9 October 2019 (CITIC party submissions).
Likewise for Mineralogy, affidavits of Sameh Morris Iskander, being a solicitor of record, were sworn on 30 September 2019 (Iskander affidavits). The Iskander affidavits together extend over 310 pages.
Mineralogy also filed written submissions in both actions on 16 October 2019 (Mineralogy submissions).
All of the above material was read and relied upon by counsel at the hearing of each application.
The applications
Despite an appearance of a wide ranging looming discovery dispute between the parties on the applications, on receipt of the Mineralogy submissions, it became apparent that the dispute would not be of the wide proportions anticipated.
By its submissions, as regards CIV 2072 of 2017, Mineralogy had stated at par 3:
[Mineralogy] consent to an order for discovery of categories 1 to 43, as sought by the defendants.
Likewise, in Mineralogy's submissions in CIV 1267 of 2018, it consented to discovery orders in terms of categories 1 to 3, 4 (as amended following conferral with the CITIC parties' lawyers), 5 to 8, 11 to 38 and 40 to 45. Mineralogy proposed amendments to category 39 - and stated it would consent to discovery in those terms if agreed to by the CITIC parties.
When the matters were heard on 22 October 2019, I was informed by senior counsel for the CITIC parties that all disputes as between the parties regarding categories of discovery had then been resolved (see ts 36 - 37).
The late accord meant that only two issues remained for my determination. First, the timing by which discovery should be ordered to occur and, secondly, the costs of the applications.
Timing of discovery
The parties' positions
The main issue ventilated at the hearing by counsel for both parties was the time that should be ordered for Mineralogy to provide discovery.
The disputed points by which the parties laid their timelines were that the CITIC parties sought discovery by 20 December 2019. However, Mineralogy sought a further period of five months in which to complete discovery - essentially seeking orders that its discovery should occur by mid‑March 2020.
The CITIC parties argue that Mineralogy has enjoyed the period since January 2019, when I published Palmer [No 2], to prepare to give its discovery. As a result, the CITIC parties say that the process of discovery should not be delayed any further and should proceed in a reasonably expedited manner.
By contrast, Mineralogy points to the conferral between the parties which occurred in mid‑2018 regarding the categories of discovery to be discovered. However, that conferral ceased shortly after then as the parties prepared for the applications that I dealt with in Palmer [No 2].
Mineralogy points to the Iskander affidavit which it relies upon to support its contention that discovery can only realistically be provided by mid‑March 2020.
By the Iskander affidavits, Mr Iskander, the principal of the solicitors of record for Mineralogy, deposes concerning his belief as to the proposed timeline for discovery. This belief is heavily based on Mr Iskander's experiences arising out of other litigation run in the Supreme Court of Queensland involving Mineralogy and which featured similar scale discovery requirements. He deposes at pars 8 - 11 of the Iskander affidavit filed in CIV 1267 of 2018 (and in identical terms to the Iskander affidavit filed in CIV 2072 of 2017):
8.On or about 3 August 2018 his Honour Justice Bond made orders for discovery in proceeding BS 6593/17 in respect of 43 categories of documents. Exhibited hereto and marked SMI-02 is a true and correct copy of his Honour's order made 3 August 2019.
9.On or about 21 November 2018 the plaintiffs in proceeding BS 6593/17 consented to amend the categories of documents to be disclosed and for discovery to occur by 29 January 2019. This resulted in discovery being required in respect of only 18 categories. Exhibited hereto and marked SMI-03 is a true and correct copy of his Honour's order of 21 November 2018.
10.On or about 29 January 2018, the Defendants disclosed approximately 36,000 documents to the plaintiffs based on the scheduled categories.
11.Based on my experience as a solicitor and the scope, size and number of categories required to be disclosed relatively recently in proceeding BS 6593/17 and the similarity to the scope of categories in these proceedings, I do not believe that the plaintiffs will be able to complete discovery by 20 December 2019. I believe that the plaintiffs will be able to complete discovery by mid‑March 2020.
Mineralogy submits that as a result of its consent to the categories of discovery, its lawyers will be undertaking and managing discovery of some 86 categories of documents across both actions.
I was also informed by counsel for Mineralogy from the bar table that in order for such a large amount of discovery to be conducted, an external discovery provider would be utilised. Mineralogy says this will increase the efficiency of the discovery process. However, it will require additional time to instruct the provider (see ts 42).
Given a vast number of documents to be discovered, Mineralogy submitted that it would be unable to comply with an order in the terms as sought by the CITIC parties and, as such, would only have to pointlessly come back to the court in December 2019 to seek an extension of time. As such, it seeks that the time frame it proposes to alleviate the need for that foreshadowed application to be brought.
Disposition as to timing of discovery
Having heard the submissions, I am prepared, subject to one condition I will outline shortly below to allow Mineralogy until 14 February 2020 to provide its discovery in both actions.
I am persuaded that the task of completing discovery across both actions is a large one. The present litigation, as I have already discussed in Palmer [No 2], is, quite simply, vast across both actions. Providing Mineralogy's discovery is going to consume a lot of legal input resources to be devoted to be done properly. And unless discovery is done properly, that will affect the viability of both forthcoming trials that will no doubt be sought in the immediate wake of a completion of discovery.
Further to my determination of how to programme the timeline for discovery, as I would assess matters, there is no prospect at all of the actions being ready for trial or being able to be heard in the first half of 2020.
I also take into account that there is a downing of tools somewhat across the nation over the Christmas 2019/New Year 2020 period. This court has a summer recess - which is, I note, a recess from sitting, not a recess from writing - until the middle of January 2020.
On that basis, taken together, I am prepared to extend more time to mid‑February 2020 - which is not all the time that Mineralogy asked for. However, the condition to which I have alluded is that I will require an affidavit report by a solicitor of record for Mineralogy as to the progress of the discovery work in both actions to be filed by 19 December 2019. This affidavit should indicate to the court what work has been done towards completing the discovery task, relate the level of legal resources being devoted to giving discovery in both actions and outline where Mineralogy stands as at that point towards completing the exercise.
The motivation behind that, essentially, is that the Mineralogy information currently put before the court, by the Iskander affidavits, is, with respect, somewhat light on detail in terms of explaining the resources being devoted to the exercise - which falls exclusively on Mineralogy as regards giving discovery. By agreement of the parties the defendants are not providing discovery.
As mentioned, I also am cognisant of the time of year. I require an assurance that the work to be undertaken by Mineralogy is proceeding, and that a mid‑February 2020 target is being worked to and is achievable. The last thing I want is to get to the middle of February 2020 and then be told that the exercise has not turned out as anticipated and that more time is going to be required. If there is to be an issue in terms of a problem that needs to be dealt with, that issue should then be ventilated and dealt with, essentially, before Christmas 2019. Therefore, come mid‑December 2019, I expect to be told how the progression of Mineralogy's discovery is going, what resources have been devoted to it and, hopefully, that it is all on track for completion in both actions.
Subject to that condition, I am prepared to extend the time for Mineralogy to complete discovery of the agreed categories.
Costs
By its summonses in both actions, the CITIC parties seek orders that Mineralogy pay the CITIC parties' costs, as agreed or assessed.
As might only be expected, such orders were heavily contested by Mineralogy.
The parties' positions
Both parties relied on the history of the actions in their respective submissions on costs.
By oral submissions, senior counsel for the CITIC parties submitted that the CITIC parties had acted perfectly reasonably in seeking discovery by the applications and in the manner in which they had proceeded with conferral regarding the categories of discovery (ts 38). Senior counsel also submitted that, notwithstanding Mineralogy ultimately conceded to the categories of discovery as sought, it had initially resisted the applications and, as such, the CITIC parties should have their costs.
Conversely, counsel for Mineralogy submitted that the costs of the application should be ordered as costs in the cause(s) or, alternatively, that there should be no order as to costs (ts 44). By his submission, counsel for Mineralogy said that Mineralogy took reasonable steps to narrow the issues in dispute once it received the sought after information from the lawyers for the CITIC parties (ts 44). Counsel then put submissions focussing on specific aspects of correspondence that had passed between the parties' respective lawyers over several prior years to emphasise Mineralogy's position. As such, it was submitted that given reasonable steps had been taken by Mineralogy to narrow the categories the court should not impose any costs order on it and, rather, costs should depend on the ultimate outcomes of the actions or that there should be no order as to costs (ts 47).
In reply, senior counsel for the CITIC parties submitted that there was no logical basis for there to be no costs orders made. Hence, at an absolute minimum, there should be orders for costs in the cause (ts 48).
Disposition as to costs
As to costs, I first say that I am much encouraged and assisted by the fact - albeit delayed and late and albeit requiring applications by the CITIC parties - that the parties have, after an extended process of conferral (with some element of attrition involved), eventually reached agreement in respect of the categories of discovery in both actions.
The assistance such agreement provides to the court cannot and should not be under‑estimated. Significant public resources have been saved by avoiding dragging the court into long and tedious arguments over significant disputed categories of discovery.
Despite the eventual agreements and the cost submissions of Mineralogy, I am of the opinion that, in the circumstances, it is not appropriate that there be no order as to costs, as regards these applications.
The information put before me displays that a considerable amount of work needed to be done to get the parties to reach this point. Much of that work was done by the CITIC parties pressing these applications to a resolution. Effectively, the discovery categories that they asked for have, after an extended period of conferral and attrition back and forth, been mostly accepted, subject only to a few relatively minor modifications.
From experience in other commercial cases, these sorts of exercises, can take many days, if not longer, to finally resolve. It should be the policy of the court, viewed at a wider level, to strongly encourage parties to reach a point of consensus over discovery, rather than to punish or deflect parties from an ongoing dialogue towards achieving that agreement, as ultimately occurred here.
Nor do I think the process of attempting to attain the objectives of sensible and proportional case management outlined in O 1 r 4B RSC are assisted, for cases like this (where the amount at stake is in the billions and the respective documents are in the thousands) to descend too low into the minutiae of what was said in a particular exchanged lawyer's letter some time ago over a particular category. I suggest a broader approach than that is more likely to assist in efficient resolution. The CITIC parties should, of course, if they do win these trials, be fully remunerated at the end for all the work that they have done and were effectively required to do in the exercise of pursuing these applications.
But I correlatively, do not think that Mineralogy as plaintiff should be unduly punished by cost orders merely because it took time to get to the point of agreement on discovery categories. The situation can be adequately addressed by an order that the costs of the exercise be the CITIC parties' on a basis of an order for costs in the cause. However, I would add onto that a condition that the costs of the application be taxed, if necessary, on the basis of full indemnification for the costs associated with participating in the process.
The indemnity level of costs should be applicable on both sides of the ultimate causes, depending on whoever wins the war underlying this litigation at trial.
Final orders
As a result of the above, orders should issue in the following terms:
CIV 2072 of 2017
1.The plaintiffs are to give discovery by 14 February 2020 of the categories of documents found in the attached schedule (Discovery) to each application.
2.The plaintiffs are to file and serve an affidavit by a legal practitioner, by 19 December 2019 explaining the progress of the plaintiffs' ongoing work towards completing discovery, and which is to address:
(a)the categories of discovery that have been completed and the resources expended to achieve this;
(b)the categories of discovery which are yet to be completed and what resources will be allocated to achieve this; and
(c)the anticipated timing of completion of discovery in all categories and the reasons for this.
3.Costs of the application shall be costs in the cause of the action and payable on an indemnity basis.
4.The next directions hearing be listed on a date to be fixed by the court.
CIV 1267 of 2018
1.The plaintiff is to give discovery by 14 February 2020 of the categories of documents in the attached schedule (Discovery).
2.The plaintiff is to file and serve an affidavit by 19 December 2019 explaining the progress of the plaintiff's ongoing work towards completing discovery, and which is to address:
(a)the categories of discovery that have been completed and the resources expended to achieve this;
(b)the categories of discovery which are yet to be completed and what resources will be allocated to achieve this; and
(c)the anticipated timing of completion of discovery in all categories and the reasons for this.
3.Costs of the application shall be costs in the cause of the action and payable on an indemnity basis.
4.The next directions hearing be listed on a date to be fixed by the court.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin21 NOVEMBER 2019
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