Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (No 2)
[2021] FCA 532
•19 May 2021
FEDERAL COURT OF AUSTRALIA
Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (No 2) [2021] FCA 532
File number: NSD 1144 of 2019 Judgment of: ALLSOP CJ Date of judgment: 19 May 2021 Catchwords: PRACTICE AND PROCEDURE – interlocutory application for non-party discovery – where non-party refused to produce documents informally – where non-party holds documents as former agent of a party to the proceeding – whether non-party’s reasonable legal costs incurred in complying with non-party discovery order should be borne equally by the parties to the proceeding – whether non-party’s reasonable costs of production should be costs in the cause Legislation: Federal Court Rules 2011 (Cth) rr 20.23 and 20.24 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance – Insurance List Number of paragraphs: 17 Date of last submissions: 17 May 2021 Date of hearing: Determined on the papers Counsel for the Applicant: Mr D L Williams SC with Mr P Mann Solicitor for the Applicant: Clayton Utz Counsel for the Respondent: Mr J C Conde Solicitor for the Respondent: HWL Ebsworth Lawyers ORDERS
NSD 1144 of 2019 BETWEEN: UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (NSW)
Applicant
AND: ALLIANZ AUSTRALIA INSURANCE LIMITED
Respondent
ORDER MADE BY:
ALLSOP CJ
DATE OF ORDER:
19 MAY 2021
THE COURT ORDERS THAT:
1.Subject to Order 2, by 20 May 2021, in accordance with rr 20.23 and 20.24 of the Federal Court Rules 2011 (Cth), Marsh Pty Ltd (Marsh) is to give discovery of the documents identified in the Schedule to the interlocutory application filed by the respondent on 19 May 2021.
2.Subject to further order, Marsh is to be paid its reasonable legal costs of complying with Order 1 (estimated to be not more than $60,000–$70,000).
3.Subject to further order, the costs in Order 2:
(a)are to be paid, in the first instance, by the respondent directly to Marsh; and
(b)are then to be borne 50% by the applicant and 50% by the respondent, to be effected by the applicant paying the respondent 50% of the costs in Order 3(a) within 21 days after the respondent presents the applicant with written confirmation of having made payment of those costs, such costs to be costs in the cause for each party in the suit.
4.The requirement in rr 20.23(2) and 20.23(3) to file and serve an affidavit accompanying the application for non-party discovery be dispensed with.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ALLSOP CJ:
This matter involves a claim on the respondent insurer, Allianz Australia Insurance Limited, by the applicant, the Uniting Church in Australia Property Trust (NSW), in relation to claims brought against Uniting Church arising from alleged sexual abuse occurring in connection with schools run by the Church. The claims relate to policies dating back to 1999, with conduct relevant to the issues in dispute dating back to the 1980s.
The proceeding was commenced in the Insurance List on 11 July 2019. Since late 2019, the parties have been undertaking discovery, the deadline for which has been extended to September 2021 largely as a result of the large number of documents to be discovered and the challenging form in which the documents have been stored. The information and documentary tasks have been enormous. The parties have cooperated appropriately.
Since February 2020, the parties have also been negotiating non-party discovery with six entities that are said to be in possession of documents relevant to issues raised in the proceeding. All but one of the non-parties has produced the relevant documents informally, without the need for a formal application for non-party discovery under r 20.23 of the Federal Court Rules 2011 (Cth).
In March 2021, the parties informed the Court that Uniting Church’s former broker and claims manager, Marsh Pty Ltd, had refused to produce the documents in its possession on an informal basis. Despite further discussion between the parties and Marsh, and as a result of Marsh’s ongoing refusal to produce the documents informally, Allianz filed an interlocutory application for non-party discovery pursuant to rr 20.23 and 20.24 of the Rules.
It is the parties’ joint position that the documents held by Marsh are documents that belong to Uniting Church, as Marsh was an agent of Uniting Church at all relevant times. The parties submit that Marsh is obliged to provide Uniting Church with all documents pertaining to its activities as Uniting Church’s agent. It is unclear the basis upon which Marsh has resisted the provision of Uniting Church’s own documents. According to the parties, Marsh has insisted that its own lawyers conduct a review of Uniting Church’s documents before providing the documents to either party to the proceeding.
Uniting Church says that it has issued written requests for Marsh to provide the documents in its possession on five separate occasions and, despite these requests, the documents have not been forthcoming. Uniting Church had proposed that Marsh engage in an informal regime whereby files are provided to Uniting Church’s lawyers in the first instance so that they may be discovered by Uniting Church in the ordinary course. This informal mechanism of non-party discovery has been used in relation to the other five non-parties in possession of Uniting Church’s documents.
The means by which the parties should obtain the relevant documents from Marsh was discussed at the last case management hearing held on 21 April 2021. Prior to that case management hearing, Allianz had sought to file and serve a subpoena to produce on Marsh. During the case management hearing, I raised concerns about the appropriateness or otherwise of obtaining the documents by way of subpoena as opposed to an application for non-party discovery. In response to my concerns, Allianz handed up a draft application for non-party discovery. I did not make the orders sought in that draft application on 21 April 2021 because the application had not yet been served on Marsh and the parties sought an opportunity to discuss with Marsh an appropriate deadline for it to give discovery.
On 17 May 2021, the solicitor for Allianz contacted my chambers confirming that Marsh would be in a position to produce the relevant documents in its possession by 19 May 2021.
On 19 May 2021, Allianz filed an interlocutory application for non-party discovery in substantially the same form as the application handed up on 21 April 2021. The application seeks the following orders:
1.Subject to order 2, by 19 May 2021, in accordance with rr 20.23 and 20.24 of the Federal Court Rules 2011 (Cth), Marsh Pty Ltd (Marsh) is to give discovery of the documents identified in the Schedule.
2.Subject to further order, Marsh is to be paid its reasonable legal costs of complying with Order 1 (estimated to be not more than $60,000-70,000).
3.Subject to further order, the costs in order 2:
a. are to be paid, in the first instance, by the respondent directly to Marsh;
b. are then to borne 50% by the applicant and 50% by the respondent, to be effected by the respondent paying the applicant 50% of the costs in order 3(a) within 21 days after the respondent presents the applicant with written confirmation of having made payment of those costs; and
c. after that time will be costs in the cause.
The email communication sent by Allianz’s solicitor to my chambers on 17 May 2021 indicated that the parties are in agreement as to the form of orders 1 and 2, and the schedule listing the categories of documents to be produced by Marsh. On the basis of the discussion I had with counsel for both parties during the last case management hearing, I consider it appropriate to make orders 1 and 2 in the proposed form. Given that the interlocutory application was not filed until 19 May 2021, the time for compliance with order 1 will be extended by one day.
I will dispense with the requirement under rr 20.23(2) and 20.23(3) of the Rules that the application for non-party discovery be served with an affidavit stating the facts on which the applicant relies. The facts supporting the application were sufficiently outlined during the case management hearing held on 21 April 2021. Further, the non-party to whom the application is directed (Marsh) is familiar with the proceeding, the content of the application for non-party discovery and the categories of documents sought.
The parties are in disagreement as to who should pay Marsh’s costs of compliance with the order for non-party discovery, being the subject of proposed order 3.
Allianz proposes that it pay Marsh’s reasonable legal costs at first instance, and that Uniting Church then reimburse it for 50% of those costs within 21 days of written confirmation of payment. Allianz makes this submission on the basis that the documents to be produced by Marsh are required by both parties in the proceeding. It points to the fact that Uniting Church should have been in a position to compel Marsh to produce the documents in the course of Uniting Church’s own discovery and, save for “some limited correspondence”, Uniting Church was unable to reach an agreement with Marsh, and has determined not to take steps to compel production of the documents in Marsh’s possession.
Uniting Church submits that Allianz should pay Marsh’s reasonable costs of production in the first instance, and further submits that Marsh’s costs should thereafter be costs in the cause. Uniting Church makes these submissions on the basis that it has already incurred the costs of discovery (including the collection, review and processing of documents) in relation to the other five non-parties who were agents and brokers of Uniting Church, thereby avoiding the need for a non-party discovery application to be filed in relation to these entities.
It is somewhat unclear whether Uniting Church proposes that the costs paid by Allianz in the first instance should become costs in the cause, or if Uniting Church proposes that any further costs incurred by Marsh should be costs in the cause. At this stage and in circumstances where neither party presently intends to join Marsh as a party to the proceeding, it is unclear what further costs would be incurred by Marsh after the relevant documents have been produced.
As an interim position, pending any resolution of the proceeding and an order for costs or agreement in any settlement, I consider it appropriate that Allianz pay Marsh’s reasonable legal costs of complying with the non-party discovery order (said to be between $60,000 and $70,000) and that Uniting Church pay 50% of those costs within 21 days of written confirmation from Allianz that is has made the relevant payment to Marsh.
The costs of the non-party discovery, borne equally by Allianz and Uniting Church, should then constitute costs in the cause for each party in the proceeding. I therefore propose to make the following order 3:
(3)Subject to further order, the costs in order 2:
(a)are to be paid, in the first instance, by the respondent directly to Marsh; and
(b)are then to be borne 50% by the applicant and 50% by the respondent, to be effected by the applicant paying the respondent 50% of the costs in Order 3(a) within 21 days after the respondent presents the applicant with written confirmation of having made payment of those costs, such costs to be costs in the cause for each party in the suit.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop. Associate:
Dated: 19 May 2021
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