Perth Airport Pty Ltd v Qantas Airways Ltd - [2019] WASC 460

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PERTH AIRPORT PTY LTD -v- QANTAS AIRWAYS LTD [2019] WASC 460
CORAM:   LE MIERE J
HEARD:   11 DECEMBER 2019
DELIVERED          :   17 DECEMBER 2019
FILE NO/S:   CIV 3147 of 2018
BETWEEN:   PERTH AIRPORT PTY LTD
Plaintiff
AND
QANTAS AIRWAYS LTD
First Defendant
JETSTAR AIRWAYS PTY LTD
Second Defendant
AIRLINK PTY LTD
Third Defendant
NETWORK AVIATION PTY LTD
Fourth Defendant
EXPRESS FREIGHTERS AUSTRALIA PTY LTD
Fifth Defendant

Catchwords:

Practice and procedure - Quantum meruit - Application for discovery - Relevance - 'Train of inquiry' test - Whether the cost and burden of giving discovery is disproportionate to the forensic benefit derived from the process - Turns on own facts

Legislation:

Nil

Result:

Qantas give discovery of PAPL's category 17 documents
Qantas give discovery of PAPL's category 12(d) documents by 17 April 2020
PAPL give discovery of Qantas' category 12 documents

Category: B

Representation:

Counsel:

Plaintiff	:	Mr S Uthmeyer & Mr P Walker
First Defendant	:	Mr B Kremer & Mr E M Heenan
Second Defendant	:	Mr B Kremer & Mr E M Heenan
Third Defendant	:	Mr B Kremer & Mr E M Heenan
Fourth Defendant	:	Mr B Kremer & Mr E M Heenan
Fifth Defendant	:	Mr B Kremer & Mr E M Heenan

Solicitors:

Plaintiff	:	DLA Piper Australia - Melbourne
First Defendant	:	MinterEllison
Second Defendant	:	MinterEllison
Third Defendant	:	MinterEllison
Fourth Defendant	:	MinterEllison
Fifth Defendant	:	MinterEllison

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

Commonwealth v Northern Land Council (1993) 176 CLR 604
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
Mann v Paterson [2019] HCA 32
Mulley v Manifold (1959) 103 CLR 341
South Australian Harbors Board v South Australian Gas Co (1934) 51 CLR 485

LE MIERE J:

Summary

By letter of 25 October 2019, the defendants (Qantas) applied for orders for discovery in accordance with a minute dated 25 October 2019. By a letter of 28 October 2019, the plaintiff (PAPL) applied for orders for discovery in accordance with a minute of 28 October 2019. As a result of conferral the parties have reached agreement on all but the following three matters. First, PAPL seeks discovery of documents described as PAPL's category 17 documents. Qantas has not agreed to discover those documents. Secondly, PAPL seeks discovery of documents described as PAPL's category 12(d) documents by 31 January 2020. Qantas agrees to give discovery of those documents but not before 17 April 2020. Thirdly, Qantas seeks discovery of documents described as Qantas' category 12 documents. PAPL resists discovery of those documents.
For the reasons which follow I will make orders that:
1.Qantas give discovery of PAPL's category 17 documents;
2.Qantas give discovery of PAPL's category 12(d) documents by 17 April 2020; and
3.PAPL give discovery of Qantas' category 12 documents.

PAPL's category 17 documents

PAPL seeks an order for discovery of documents relating to the fees or prices charged to Qantas by other Australian airports. This includes calculations relating to the weighted average cost of capital (WACC) for aeronautical agreements with those other airports. Where available, comparable transactions may be relevant to the court's determination of a fair and reasonable price for aeronautical services.
The form of the order sought by PAPL is as follows:
Any internal modelling, building block model, or spreadsheet relating to the calculation, determination, derivation or setting of fees or prices actually charged, to the Qantas Group since 1 July 2011 for aeronautical pricing at Brisbane, Sydney, Melbourne, Adelaide, Alice Springs, Cairns, Canberra, Darwin, Gold Coast, Hobart, Launceston, Newcastle, Sunshine Coast, and Townsville airports including calculations of the implied or real WACC for aeronautical agreements.[1]
[1] Plaintiff's' minute of proposed orders dated 28 October 2019.
Qantas does not dispute the relevance.
I am satisfied that the category 17 documents are in the possession, custody or power of Qantas and relate to matters in question in this proceeding and are therefore discoverable. Qantas does not contend otherwise. Qantas does not submit that the cost and burden of giving discovery of the category 17 documents is disproportionate to the forensic benefit to be derived by the process. Qantas submits that it would be unfair to require Qantas to give discovery of the plaintiff's category 17 documents if the plaintiff does not give discovery of the Qantas category 12 documents. In its terms, that is not a good or sufficient reason for resisting discovery.
Qantas should give discovery of the plaintiff's category 17 documents.

Time for Qantas to give discovery of plaintiff's category 12(d) documents

This issue arose in the wider context of delay by Qantas in giving discovery. On 9 September 2019, I ordered that by 24 September 2019 Qantas give discovery of a number of documents, including a first tranche of documents responsive to categories 10, 12, 15 (or so much of them as are agreed) of PAPL's Discovery Request and advise PAPL of the date by which the remainder of Qantas' discovery will be able to be completed. On 24 September 2019, Qantas gave discovery of a tranche of documents and informed PAPL that Qantas' best estimate for completion of discovery of the remaining categories was 31 January 2020. On 8 November 2019, Qantas gave discovery of a second tranche of documents. Qantas was due to give discovery of a third tranche of documents on 17 December 2019.
Ms Beverley Newbold is the solicitor responsible for the conduct of this proceeding on behalf of Qantas. Ms Newbold has experience in running, supervising and managing large scale litigation for corporate entities including ASX listed entities. Many of the matters she has been involved in raised complex discovery issues and technology needs. She is familiar with the steps involved in collecting data and providing discovery in large scale litigation. Ms Newbold has deposed to the process which has been followed by Qantas' solicitors, MinterEllison, to prepare for and give discovery. Ms Newbold has given evidence in relation to those matters as follows.
MinterEllison has set up a computerised database that holds 242,724 documents, of which around 175,000 are potentially responsive to, and are to be reviewed under, the categories agreed to date (but excluding categories 12(d), 17 and 20). There is a team of six to seven junior lawyers and paralegals, plus three to four senior or experienced lawyers, plus two specialist discovery technology managers who manage the database, coordinate document production and provide technical support to the reviewers.
A two‑stage review system is used. The junior lawyers and paralegals conduct a first level review. The senior lawyers conduct a second level review of the documents identified as potentially responsive in the first level review and conduct spot checks of documents identified as irrelevant in the first level review to ensure no responsive documents have been missed.
The second level reviewers must also review documents for confidentiality and privilege, and, where necessary, mask information that is either responsive, but falls within the two limbs of the confidentiality regime, or is non‑responsive, but confidential, or is privileged. This has proved an intensive process, as many documents that PAPL seeks about Qantas' 'profitability' for Perth routes also contains highly commercially sensitive information.
As at 4 December 2019, 91,576 documents remained to be reviewed by first level reviewers, and 7,638 documents to be reviewed by second level reviewers (not including documents responsive to categories 12(d), 17 and 20).
Based upon the experience of the reviewers to date, Ms Newbold's best estimate, assuming an extremely demanding workload for the reviewers (which assumes they will proceed three times as fast as to date, and with minimal leave over the Christmas and New Year period), and at a significant cost to Qantas, is that review of the documents will not be completed until early to mid‑March 2020.
It is not yet known how many additional documents will need to be reviewed under categories 17 (if ordered) and 20 (which Qantas will discover). Searches using keywords supplied by PAPL have revealed that there are 16,352 unique additional documents responding to category 12(d). Ms Newbold's best estimate is that those documents will take an additional three to four weeks to review.
Qantas has proposed a minute of orders that would have a fourth tranche of discovery provided by 31 January 2020, and the final tranche by 17 April 2020.
Qantas resists the fixing of any earlier date. Qantas submits it is not fair, reasonable or responsible to require Qantas to conclude discovery by a date that it cannot meet.
PAPL has not led any evidence to contradict Ms Newbold's evidence. Counsel for PAPL criticised the approach taken by MinterEllison and in particular the process described by Ms Newbold of partially redacting documents to mask highly commercially sensitive information which is not responsive to the PAPL agreed discovery categories. Counsel submitted that that is not necessary because of the confidentiality regime which restricts access to discovered documents to the plaintiff's external solicitors, barristers, experts and specified internal legal counsel all of whom have signed or will be required to sign a confidentiality undertaking. I do not accept the criticism. I find that the process being undertaken by MinterEllison is appropriate.
Counsel for PAPL submitted that Minter Ellison should employ further lawyers and other resources to the discovery process which would enable Qantas to complete the process by 31 January 2020. There is no evidence that it is feasible to do that. Ms Newbold has described the process which involves a second level review by more senior lawyers or lawyers more familiar with the confidentiality issues and the issues in the litigation. There is no evidence, and I am not willing to infer, that MinterEllison may deploy or recruit additional senior lawyers and that they may become sufficiently familiar with the confidentiality issues and issues in the litigation in a sufficiently short time to complete full discovery by 31 January 2020. Furthermore, Ms Newbold has sworn:
… conducting the second level review exercise as I have described it, if able to be completed in 11 weeks, will cost Qantas approximately $640,000 (ex GST). That is in addition to the costs of the first level review (involving 6 ‑ 7 first level reviewers), and does not include any other costs of the client's time, or costs associated with the Minters legal technology team or associated staff, nor database and processing charges.
I consider that, based on my experience, the above exercise is already a larger (and more expensive) discovery review process than would ordinarily be required for a matter of this dollar value or complexity.[2]
[2] Affidavit of Beverley Ruth Newbold affirmed 6 December 2019 [33] ‑ [34].
I consider that, even if it were feasible to deploy or engage additional staff resources to complete the discovery by 31 January 2020, the cost and burden of doing so is disproportionate to the benefit to PAPL of completing the task in that time.

Qantas discovery category 12 documents

The differences between the parties concerning Qantas' category 12 documents have mostly been resolved. The remaining disputes concern [12(f)] and [12(l)(iv)].
Category 12(f) is:
Any:
(i)board papers, board minutes and reports provided to the board of PAPL;
(ii)documents sent to or by the Chief Executive Officer of PAPL and Chief Financial Officer of PAPL from time to time, and any PAPL adviser; or
(iii)documents considered by the Finance Investments Committee, Capital Planning Group;
created on or after 1 July 2011 showing any sales or issuing of equity in, or raising capital for, PAPL, including:
(i)the date of sale or issue; and
(ii)~~the price or value of the equity; and~~
(iii)any return on ~~valuation of the~~ equity in PAPL;
The original text is the description of the documents sought by Qantas. The marked up amendments show the amendments proposed by PAPL.[3]
[3] Defendant's minute of proposed orders filed 6 December 2019 containing amendments.
Category 12(l)(iv) is:
(i)…
(ii)...
(iii)...
(iv)the return on ~~valuation or pricing of~~ equity (or any part of the equity) in PAPL, including any document referring to the price to earnings multiple of PAPL, multiple of asset base, or enterprise and that were sent to or by the Board of PAPL, the Chief Executive Officer of PAPL, the Chief Financial Officer of PAPL, PAPL's any member of PAPL's finance Team who reports directly to the Chief Financial Officer, any member of the Financial Investments Committee, any member of the Capital Planning Group or any PAPL adviser;
(v) …
Again, the unamended text is the description proposed by Qantas and the marked up amendments are the amendments proposed by PAPL.
Qantas says that the documents it seeks are discoverable and in the interests of fairness the court should exercise its discretion to order discovery of those documents. PAPL submits that the documents are not directly relevant and are not discoverable.
In the absence of directions to the contrary, the 'train of inquiry' test, as propounded in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co[4] (Peruvian Guano) and adopted in Australia[5] is the test of general application for discovery in this court.
[4] Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55.
[5] Commonwealth v Northern Land Council (1993) 176 CLR 604; Mulley v Manifold (1959) 103 CLR 341, 345.
In this action PAPL seeks orders that Qantas pay to PAPL unpaid amounts for aeronautical services provided to Qantas. PAPL says that the unpaid amounts are to be calculated by reference to the fair and reasonable price for those services. Alternatively, PAPL seeks orders for restitution of the unjust enrichment received by Qantas at its expense.
Qantas says that PAPL's claim is for a quantum meruit, and that a quantum meruit of this kind involves the award of a reasonable remuneration or a reasonable sum for the services to the provider of the services. Qantas submits that this is usually assessed by reference to 'the market value of the services rendered'.[6]
[6] Qantas refers to Mann v Paterson [2019] HCA 32 [92]; Gageler J citing South Australian Harbors Board v South Australian Gas Co (1934) 51 CLR 485, 501.
Qantas submits that, based on the evidence of Ms Newbold and its expert Joel Cook, an economist, that in calculating the actual return that should be obtained for services provided it is relevant to consider the actual costs of providing them. This involves considering PAPL's actual costs of capital. Qantas' case, based on the evidence of Mr Cook and Ms Newbold is that, amongst other things, the price or value of PAPL's equity and the valuation of the equity in PAPL are relevant to methodologies that might be employed in determining the actual return that should be obtained by PAPL for the services it has provided, or at the least may directly or indirectly enable Qantas to advance its own case or to damage the case of PAPL.
PAPL has not led any evidence to contradict the evidence of Ms Newbold or Mr Cook. They have not been cross‑examined. Counsel for PAPL invited the court to give no or little weight to the relevant evidence of Mr Cook on the basis of publications tendered in evidence. That is not something the court should do on an interlocutory application. Counsel for PAPL invited the court to give minimal weight to the evidence of Ms Newbold on the ground that her relevant evidence is based on what she has been told by Mr Cook. I decline that invitation. On an interlocutory application a witness is entitled to give evidence of the sort adduced. Furthermore, Ms Newbold's evidence is, in part, confirmed by Mr Cook.
I find that the documents sought by Qantas are, on the pleadings as they presently stand, discoverable. PAPL has not pleaded how the fair and reasonable price payable to PAPL by Qantas is to be determined. In its statement of claim PAPL says that the fair and reasonable price will be provided after discovery and expert evidence. PAPL has not disclosed what methodology or methodologies are to be applied in determining the fair and reasonable price. In those circumstances, and having regard to the evidence of Mr Cook and Ms Newbold, the documents sought by Qantas are relevant to matters in issue in this action or, at the least, directly or indirectly enable Qantas to advance its own case or damage the case of PAPL.
PAPL has not submitted that the contentious documents are so voluminous or for any other reason giving discovery of those documents will place an undue burden on PAPL. The discovery sought by Qantas is necessary for fairly disposing of the proceedings.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MS
Associate to the Honourable Justice Le Miere
17 DECEMBER 2019