Wheelahan v City of Casey
[2012] VSC 10
•30 January 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION & PLANNING LIST
No. 9776 of 2008
| MATTHEW JOHN WHEELAHAN AND THERESA WHEELAHAN | Plaintiffs |
| v | |
| CITY OF CASEY & ORS | Defendants |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 January 2012 | |
DATE OF RULING: | 30 January 2012 | |
CASE MAY BE CITED AS: | Wheelahan & Anor v City of Casey & Ors | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 10 | |
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PRACTICE AND PROCEDURE – Settlement of plaintiffs’ claims by first defendant – Cross-claim by first defendant claiming settlement sum from co-defendants – Whether first defendant required to plead or particularise reasonableness of settlement – Discovery concerning settlement.
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APPEARANCES: | Counsel | Solicitors |
| For the first Defendant (City of Casey) | Mr J G Santamaria QC and Mr G Ahern | Maddocks |
| For the third Defendant (SITA Australia Pty Ltd) | Ms M Quigley SC and Mr P Liondas and Mr M McLay | Baker & McKenzie |
| For the fourth Defendant (LMS Generation Pty Ltd) | Mr P Cawthorn SC and Mr B Carr | Thomsons Lawyers |
| For the eighth Defendant (Stuart Hercules) | Ms L Alampi | Monahan & Rowell |
HIS HONOUR:
The applications, which are before me in this matter, raise two issues in respect of the claim by the first defendant, City of Casey (“Casey”), against its co-defendants, SITA Australia Pty Ltd (“SITA”), LMS Generation Pty Ltd (“LMS”) and Stuart Hercules (“Hercules”). The first issue concerns whether Casey must plead, or provide particulars, to the effect that the settlement of the claim against it by the plaintiffs was reasonable. The second issue, raised by LMS, concerns the manner in which Casey has discovered documents, which might be relevant to the settlement of the plaintiffs’ claim by Casey.
For the purposes of determining those issues, it is only necessary for me to summarise, in short form, the background to the proceeding. The plaintiffs were the owners of land within a housing estate situated in Cranbourne, known as the Brookland Greens Estate. The estate abuts the western boundary of what was previously known as the Stevensons Road Landfill, which accepted putrescible waste from municipalities, including the City of Casey, between 1996 and June 2005. In November 2008, the plaintiffs commenced the current proceeding, as a group action brought under Part 4A of the Supreme Court Act 1986, by residents, and former residents, of the estate, who had been affected by the migration of landfill gas from the Stevensons Road Landfill. The claim, by the plaintiffs against Casey, was based on alleged breaches of duties of care owed by Casey to the plaintiffs, and on nuisance. Casey subsequently joined a number of other parties as third parties to the proceeding, including SITA, LMS, Hercules and the Environment Protection Authority (“EPA”). In due course, each of those third parties were made defendants to the proceeding.
On 24 March 2011, a deed of settlement was entered into between the plaintiffs and group members, Casey and the EPA. Pursuant to the settlement deed, Casey and the EPA agreed to pay to the plaintiffs and the group members the sum of $23,500,000 in full and final settlement of their claims. Of that sum, Casey agreed to pay $13,500,000, and the EPA agreed to pay $10,000.000. The settlement was approved by Emerton J of this Court on 23 May 2011.[1]
[1]Wheelahan & Anor v City of Casey & Ors [2011] VSC 215.
Claims by Casey against SITA and LMS
In its further amended statement of claim (on the third party notice) directed to SITA, Casey asserts claims against SITA on the basis that SITA was the manager of the landfill from June 2003 until about October 2006 pursuant to an agreement between SITA, Casey and the City of Frankston. In essence, Casey claims that SITA failed to act with reasonable care in discharging its responsibilities in relation to works at the landfill, including the landfill gas extraction systems and the monitoring of landfill gas levels. In its cross-claim against SITA, Casey claims contribution from SITA pursuant to s 23B of the Wrongs Act. It also makes a claim directly in damages against SITA, both in contract and in tort.
In its further amended statement of claim against LMS, Casey claims that LMS undertook gas extraction works at the landfill and gave advice relating to those works in the period from 2003 to 2007, which failed to prevent the migration of landfill gas from the landfill to the estate. In its cross-claim against LMS, Casey claims contribution pursuant to s 23B of the Wrongs Act. It also makes direct claims against LMS for damages, both in contract and in tort.
In its further amended statement of claim against Hercules, Casey claims that Hercules provided consultancy services for operational management, and post closure management, of the landfill. In its cross-claim, Casey claims contribution against Hercules pursuant to s 23B of the Wrongs Act, and it also makes direct claims against Hercules for damages both in contract and in tort.
The present applications by SITA, LMS and Hercules relate only to the direct claims for damages made by Casey against them. In the statements of claim against each of SITA, LMS and Hercules, Casey has pleaded the deed of settlement with the plaintiffs and the group members, and the approval of the settlement by Emerton J. The first issue, with which I am concerned, arises from the manner in which Casey has pleaded its claim against SITA, LMS and Hercules for damages comprising the settlement sum of $13,500,000, which it has agreed to pay to the plaintiffs.
Relevant pleading against SITA
In its third party statement of claim against SITA, Casey summarised the claim made against it by the plaintiffs. It pleaded the execution of the deed of settlement in paragraph 25B and s 25C of the statement of claim. In paragraph 25E, it pleaded the approval of the settlement by Emerton J on 23 May 2011. In paragraph 26A, it pleaded that, on the grounds set out in the succeeding paragraphs, Casey had suffered loss and damage caused by SITA’s breach of contract and breach of common law duty of care owed to Casey. In paragraphs 33 and 34 respectively, Casey pleaded the breach by SITA of its obligations under the management agreement, and the breach by SITA of its duty of care to Casey. Paragraph 35(a) pleaded the loss and damage, which is relevant to this application, as follows:
“By reason of the breach by SITA of its obligations under the management agreement and/or the breach by SITA of the duty to Casey, Casey has suffered, and may suffer, loss and damage as follows:
(a)$13,500,000, being the amount it has paid the plaintiffs and group members (including costs).”
The relevant parts of the third party statement of claim by Casey against LMS may be summarised as follows. In paragraph 17, Casey summarised, at length, the claims made against it by the plaintiffs. Paragraph 18B pleaded the deed of settlement, and paragraph 18E pleaded the approval of the settlement by Emerton J on 23 May 2011. In paragraph 20, Casey pleaded that, by reason of the matters set out in the succeeding paragraphs, it had suffered loss and damage caused by LMS’s breach of contract in common law duties of care owed to Casey. It then pleaded breaches by Casey of two agreements, and four duties of care to Casey. In paragraph 68(g), Casey pleaded that, by reason of those breaches of duties and breaches of agreement, Casey had suffered, or may suffer loss and damage including the $13,500,000 which it paid to the plaintiffs and the group members.
The claim pleaded by Casey against Hercules is in like form. Casey pleaded, against Hercules, the claims made against Casey by the plaintiffs, and the settlement of those claims. In paragraph 24, it pleaded an agreement between Hercules and itself for the provision of consultancy services for the operational management and post closure management of the landfill. In subsequent paragraphs, it pleaded the terms of that agreement, and duties owed by Hercules, both to the plaintiffs and to Casey, arising out of it undertaking the provision of those services. In paragraph 34, it pleaded that the work undertaken by Hercules was ineffective in preventing the subsurface migration of landfill gas to the Brookland Estate. It pleaded that Hercules had breached its agreement with Casey, and had breached the duty of care which it owed to Casey. In paragraph 46(a), it pleaded that, by reason of Hercules’s breach of its duty to Casey and the breaches by it of its agreement with Casey, Casey had suffered loss, consisting of the amount of $13,500,000, which it was required to pay to the plaintiffs and the group members under the settlement agreement.
The application for particulars
The first application, with which I am concerned, is the application by SITA for further particulars of paragraph 35(a) of the third party statement of claim, by LMS for further particulars of paragraph 68(g) of the third party statement of claim against it, and by Hercules for further particulars of paragraph 46(a) of the third party statement of claim against it.
It is common ground, on this application, that, in order to be entitled to recover the settlement amount of $13,500,000, which Casey has agreed to pay to the plaintiffs and the group members, Casey will need to prove, inter alia, that the settlement was reasonable. It was submitted on behalf of SITA, LMS and Hercules that, accordingly, Casey must provide particulars specifying in what manner Casey will allege that the settlement sum was reasonable. In particular, it was submitted that the proof, of the reasonableness of the settlement, is a necessary link in the proof by Casey of its claim that the breach of contract, and/or breach of duty, alleged against SITA, LMS and Hercules, caused the loss claimed by Casey, namely, the settlement sum which it has agreed to pay to the plaintiffs and to the group members.
Ms M Quigley SC, who appeared with Mr P Liondas and Mr M McLay for SITA, submitted that the reasonableness of the settlement sum has been placed in issue by SITA in its defence. She drew attention to the fact that, in the letter by its solicitors, Casey had indicated that it would not be seeking to prove the reasonableness of the settlement by relying on the legal advice given to Casey at the time of the settlement. Thus, she submitted that it is unclear how Casey will seek to establish that the settlement sum was reasonable. Ms Quigley submitted that, in the absence of appropriate particulars of the reasonableness of the settlement, SITA would be unable to properly prepare an answer to the claim made by Casey for recovery of the settlement sum. She further submitted that, in the absence of such particularisation, the issue relating to the reasonableness of the settlement sum would not be properly defined, both for the purposes of other interlocutory issues, and for the purpose of determining the relevance of evidence to be adduced at trial.
The submissions made by Ms Quigley were supported by Mr P Cawthorn SC, who appeared with Mr B Carr for LMS. Mr Cawthorn drew my attention to the fact that, in other pleadings by it in the proceeding, Casey has pleaded a number of substantive matters, on the basis of which it has asserted that it was not liable to the plaintiffs, and the group members, for the claims made by it. Thus, in the defence, which it pleaded to the claims made by the plaintiffs, it set out, in substantial detail, the steps which it took, from 1991 to the present day, in carrying out the approval, development, operation, management and monitoring of the landfill. It pleaded that, as a result, at all relevant times it had taken measures which were reasonable and practical to prevent the migration of landfill gas from the landfill.
Mr Cawthorn also pointed to other pleadings, in which Casey has raised the same matters. In particular, it has pleaded the same matters by way of defence to a counterclaim made against it by Peet & Co Casey Land Syndicate Ltd, which was the developer of the Brookland Estate. In addition, LMS, and other parties, have responded to the cross-claims made against them by Casey, by pleading contributory negligence on behalf of Casey. By reply, Casey has pleaded the same steps and measures which it took, and which it enumerated in the defence to the plaintiffs’ claim. By its reply, Casey has pleaded that, by those steps, it took all reasonable and practicable actions to prevent damage to the plaintiffs and the group members.
Accordingly, Mr Cawthorn submitted that, based on the material currently before the Court, Casey will need to either explain, or disprove, the matters which it has pleaded, which would, on their face, constitute, at least in part, an answer to the claims made by the plaintiffs and the group members. The fact that Casey has, in some detail, in a number of pleadings, set out its defence to the claims originally asserted by the plaintiffs and the group members, raises a real question as to how Casey proposes to establish that the settlement, by it of the claims made by the plaintiff, was reasonable.
Ms L Alampi, who appeared for Hercules, supported the submissions made by both Ms Quigley and by Mr Cawthorn.
In response, Mr J Santamaria QC, who appeared with Mr G Ahern on behalf of Casey, submitted that Casey had adequately pleaded, and particularised, its claim for damages against SITA, LMS and Hercules. He submitted that Casey is not required to plead, or particularise, the reasonableness of the settlement, which it made with the plaintiffs and the group members. He submitted that, rather, that issue was a matter for evidence, and not for particulars. He pointed out that, pursuant to directions given by Osborn J on 13 December 2011, Casey was required to file and serve its lay witness statements on or before 22 February next. He submitted that those statements will make it clear to SITA, LMS and Hercules how Casey intends to establish the reasonableness of the settlement.
Mr Santamaria pointed out that the issue, of the reasonableness of the settlement, relates to the proof by Casey that the breaches of duty and contract pleaded by it against SITA, LMS and Hercules were causally connected with the settlement monies agreed to be paid by Casey to the plaintiffs and the group members. In its statements of claim against its co-defendants, Casey had pleaded that it was reasonably foreseeable that, if SITA, LMS or Hercules failed to take reasonable care in the performance of their obligations under the agreements pleaded, Casey might suffer economic loss as a result of the environmental impact of the Stevensons Road landfill, including any amount which Casey would be required to pay to the plaintiffs and group members in any proceedings brought by them against Casey. The claim, made by Casey against each of those three co-defendants, is for the amounts which Casey has been required to pay to the plaintiffs and the group members. Thus, he submitted, Casey had adequately pleaded, in terms of contract, that the claims made by the plaintiffs and group members were within the reasonable contemplation of Casey and its co-defendants, at the time of the relevant contracts between them, and that, similarly, in terms of its claims in tort, the liability of Casey to the plaintiffs and group members was reasonably foreseeable damage. Mr Santamaria submitted that those pleadings were sufficient for the purposes of setting out the case to be made by Casey on the issue of causation.
As I stated, it is common ground between the parties that, in order to recover the settlement amount of $13,500,000, which Casey has agreed to pay to the plaintiffs and the group members, Casey will need to prove, at trial, that the settlement sum was reasonable. It is also common ground that those proofs are necessary in order to establish the relevant causal link between the breaches of duty and breaches of agreement pleaded by Casey, and the damages, consisting of the settlement sum, claimed by Casey against the co-defendants. For the purposes of this ruling, and based on the authorities which have been drawn to my attention, I am prepared to accept that Casey will, of necessity, be required to prove the reasonableness of the settlement, in order to be entitled to recover the settlement sum, which it has agreed to pay to the plaintiffs and the group members.
The principal case, referred to by the parties in respect of this issue, is the decision of the High Court in Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd[2]. In that case, the defendant insurance broker arranged an industrial special risks policy on behalf of its client, the plaintiff. However, the defendant negligently failed to fully disclose to the insurer the claims history of the insured, of which the defendant was aware. After the plaintiff’s premises were damaged by fire, the insurer refused to pay the full amount, which would have been payable under the policy, if not for the non-disclosure. The plaintiff commenced proceedings against both the insurer and the defendant broker. In the course of the proceedings, the plaintiff settled its claim against the insurer, on the basis that the insurer pay to it the sum of $900,000. If the insurer had been fully liable under the policy, the insurer would have been required to pay $1,720,000 to the plaintiff. Accordingly the plaintiff claimed the balance (plus interest) against the defendant. The plaintiff’s claim for that amount succeeded at trial. The appeal by the defendant to the Full Court of Western Australia was dismissed. The High Court, by a majority, dismissed the appeal of the defendant.
[2](1997) 192 CLR 603.
In separate judgments, Brennan CJ, McHugh J and Hayne J each held that the correct measure of the damages, recoverable by the plaintiff from the defendant, was to be determined by reference to the settlement sum between the insurer and the plaintiff, provided that the plaintiff had proven, on the balance of probabilities, that the settlement sum was reasonable. Their Honours each held that the plaintiff had discharged that onus of proof.
Each of the majority in the High Court analysed the question in terms of the causation and remoteness of damages. Thus, their Honours reasoned as follows: It was in the reasonable contemplation of the plaintiff and the defendant that, if the defendant failed to exercise reasonable care and skill in arranging insurance on behalf of the plaintiff, the insurer might refuse to indemnify the plaintiff in the event of loss sustained by the plaintiff; in those circumstances, it was also in the reasonable contemplation of the parties that the plaintiff might need to resort to litigation against the insurer in order to assert its claim under the policy; further, it was in the reasonable contemplation of the parties that, in such a case, the contentions made by the insurer, in response to the plaintiff’s claim, might be such as to make it reasonable for the insurer to settle the litigation. It was not in the reasonable contemplation of the parties that the plaintiff would settle the case on terms, which were unreasonable. Thus, their Honours held that, in order to prove its loss by reference to the settlement sum negotiated with the insurer, the plaintiff must prove that the settlement sum was reasonable.[3]
[3]Above, pages 607-8 [3]-[6] (Brennan CJ); page 612-613 [22]-[27] (McHugh J), page 650-651 [119]-[123] (Hayne J).
The question in Unity Insurance Brokers concerned how a plaintiff might establish its claim against a defendant, where the plaintiff had, by settlement, recovered part of that claim from a third party. However, the principles stated, by the High Court in relation to that issue, have been adopted and followed in a number of cases where a party (“the claimant”) had settled a claim against it by another party (“the third party”), and had then sought to recover the amount of that settlement from the defendant. In each of those cases, it was held that, in order to recover the settlement sum, the claimant must prove that the settlement amount paid, or agreed to be paid, by it to the third party, was reasonable. In each case, it was recognised that the proof of the reasonableness of the settlement formed part of the proof by the plaintiff that the breach of contract, or breach of duty, by the defendant, was relevantly causally connected with the settlement amount paid, or agreed to be paid, by the claimant to the third party.[4]
[4]See, for example, BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72; Yokogawa Australia Pty Ltd & Ors v Alstom Power Ltd (2009) 262 ALR 738, 745 to 747 (Duggan J); BHP Billiton (Olympic Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH [2011] VSC 659, [227] (Habersberger J).
Based on those authorities, it has been accepted that Casey will only succeed in its claim, against the co-defendants, for the settlement sum, if it is able to prove that that settlement sum was reasonable. In the absence of such proof, Casey will fail to prove that the settlement sum was causally linked to the breach of contract and breach of duties pleaded by it against the co-defendants. Thus, the proof by Casey of the reasonableness of the settlement sum is an essential step in its proof of the claims pleaded by it against the co-defendants.
Mr Santamaria contended that, nevertheless, Casey is not required to plead, or particularise, the reasonableness of the settlement sum. He submitted that, since the reasonableness of the settlement sum is not an element of any of the causes of action pleaded by Casey against the co-defendants, Casey is not required to plead or particularise that aspect of its claim.
In support of that proposition, Mr Santamaria relied on the recent decision of Habersberger J in BHP Billiton (Olympic Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH[5]. In that case, Protec Pacific Pty Ltd (“Protec”) had settled a claim against it by WMC (Olympic Dam Corporation) Pty Ltd. It then sought to claim that settlement sum from Steuler Industriewerke GmbH (Steuler). Habersberger J referred to the decision of the majority in Unity Finance Brokers. His Honour observed that, while reasonableness “informed” the assessment of damages for breach, it is not, of itself, a separate criterion, which a plaintiff must prove to demonstrate compensable loss.[6] His Honour thus stated:
“The principle that emerges from the majority judgment in Unity Insurance Brokers is that a plaintiff needs to establish that a loss, as represented by a settlement sum, was caused by the defendant’s breach which was not too remote. There is no additional requirement of ‘reasonableness’. However, the inquiry into causation and remoteness questions may be informed by the ‘reasonableness’ of a settlement sum.[7]”
[5][2011] VSC 659.
[6]Para [226].
[7]Para [227].
Nevertheless, his Honour concluded that Protec had failed to lead any evidence to establish the reasonableness of the settlement sum, which it had achieved with WMC. His Honour regarded that omission by Protec as “fatal” to its claim for recovery of the settlement sum. As Protec had failed to prove that the settlement sum was reasonable, it had not made out its claim that its obligation to pay the settlement sum was caused by the breaches alleged by Protec against Steuler, and accordingly its claim against Steuler failed.[8]
[8]Above, [233]-[234].
Thus, the fact, that the reasonableness of the settlement sum is not a separate element of the causes of action pleaded by Casey, does not detract from the fundamental proposition that that matter is an essential part of the proof, on the issues of causation and remoteness, by Casey of its claim against the co-defendants. In that way, the reasonableness of the settlement sum is a material fact which must be proven by Casey, in order that it succeed in its cross-claims against the co-defendants. As such, it follows that, strictly speaking, that matter ought to have been pleaded by Casey, pursuant to rule 13.02 of the Rules of the Supreme Court. However, each of the applicants before me – SITA, LMS and Hercules – have accepted that it would be sufficient that Casey provide particulars of reasonableness, in respect of the pleading by Casey that the breach of contract and breach of duties alleged against the co-defendants caused the loss consisting of the settlement sum.
The pleading of material facts, and provision of adequate particulars, fulfils a number of important purposes in litigation.[9] First and foremost, it properly informs the party, against whom the pleading is made, of the claim, which is to be made against that party, and of the claim it must meet. The role of pleadings, and particulars, cannot be adequately substituted by the provision of witness statements. It is the pleadings, and the particulars, which define the issues raised by the claimant. It is the issues, as defined by the claimant, and by the respondents in their relevant defences, which form the framework for the provision of discovery, and, ultimately, for the adducing of evidence relevant to those issues. A fortiori, it is not the role of witness statements to define the issues between the parties. That is the role of particulars and pleadings, which provide the parameters within which evidence is to be adduced. It is, indeed, circular to suggest that witness statements (the evidence) themselves are to define the evidence which is to be adduced.
[9]Dare v Pulham (1982) 149 CLR 658, 664.
In the present case, the provision of particulars relating to the issue of reasonableness is, I consider, important. The parties, against whom Casey is asserting its cross-claims, are entitled to know, and have properly defined for them, how Casey proposes to put its claim for recovery of the settlement sum. The definition of that aspect of Casey’s claim is critical to issues of discovery, which were also ventilated before me. As I shall elaborate later, the issues of discovery, raised on behalf of LMS, demonstrate that, potentially, a large number of documents may be discoverable by Casey, depending on the manner in which it intends to make its case on the issue of the reasonableness of the settlement which it effected with the plaintiffs and the group members. Further, questions as to whether Casey has, or will, impliedly waive privilege in relation to a number of categories of documents, can only be determined after Casey has properly and definitively specified how it intends to make its case that the settlement was reasonable.
In complex litigation such as this, pleadings and particulars assume a most important role. Ultimately, this case will be decided on the pleadings and the particulars (subject, of course, to any subsequent amendment of them). It is the issues raised by the pleadings and particulars, which the trial judge will be required to address. Those issues, as so defined, will determine questions of the admissibility of evidence. Ultimately it will be those issues which are determined by the trial judge in his or her judgment. It is most important that the pleadings and particulars properly define the manner, in which Casey intends to make its case on the issue of reasonableness. The need for such particularisation is, in my view, magnified by the matters raised by Mr Cawthorn in his address, and which I have already set out. Based on the current state of pleadings filed by Casey, both in response to the plaintiffs’ claims, and also in the cross-claims between itself and co-defendants, it is by no means clear how Casey intends to make its claim on the issue of reasonableness. This is particularly so given the contents of the letter written by Casey’s solicitors to the solicitors for LMS, in which it was said that, “as things stand”, Casey does not intend to rely on the proof of legal advice to establish the reasonableness of the settlement.
The test of the reasonableness of the settlement is objective.[10] The reasonableness of the settlement is determined by reference to the circumstances existing at the time of the settlement.[11] Thus, I consider that the respondents, to the cross-claims by Casey, are entitled to particulars of the facts and circumstances, by reason of which Casey will allege that the settlement, which it entered into with the plaintiffs and the group members, was, in the relevant circumstances, reasonable. I am therefore prepared to make an order requiring Casey to provide particulars of the allegation, in paragraph 35(a) of the amended statement of claim against SITA, in paragraph 68(g) of the amended statement of claim against LMS, and in paragraph 48(a) of the amended statement of claim against Hercules, as follows:
(a)That Casey provide particulars of each fact, matter, circumstance and thing on which it relies to allege that the loss and damage, constituted by the settlement sum, was suffered by reason of the alleged breaches of its obligations by SITA, LMS and Hercules (respectively).
(b)That Casey provide particulars of each fact, matter, circumstance and thing on which it intends to rely in support of the allegation that the settlement sum was reasonable.
[10]Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (above), 608 [6] (Brennan CJ), 653 [129] (Hayne J); Yokogawa Australia Pty Ltd & Ors v Alstom Power Ltd (2009) 262 ALR 738, 752 [57] (Duggan J), 767 [127] (Kourakis J); BHP Billiton (Olympic Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH [2011] VSC 659, [229] (Habersberger J).
[11]Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (above), 609 [7] (Brennan CJ), 653 [130] (Hayne J).
Discovery
Mr Cawthorn, on behalf of LMS, also addressed two matters relating to the discovery of documents, in the context of the issue relating to the requirement that Casey prove the reasonableness of the settlement which it concluded with the plaintiffs and the group members. First, Mr Cawthorn submitted that Casey had not properly identified the documents, in Part 2 of Schedule 1 of Casey’s listed documents, in respect of which it claimed privilege. Secondly, Mr Cawthorn made submissions concerning the waiver of privilege by Casey in respect of advices and other documents relating to the settlement.
The second submission was made in some detail in the written outline filed on behalf of LMS. In response, Mr Santamaria and Mr Ahern made detailed written submissions countering the propositions relied on by LMS. The written submissions filed by LMS, on this aspect, were described as being “necessarily tentative”. In oral submissions, Mr Cawthorn accepted that the submissions relating to the question of waiver were probably premature. He expressly disavowed any argument, on behalf of LMS, that, by its present pleading of its claim for damages consisting of the settlement sum, Casey had waived privilege in relation to legal advices, and other documents, available to Casey at the time of the settlement. Thus, in oral submission, Mr Cawthorn did not press for a decision relating to that aspect of discovery. I agree with that concession by Mr Cawthorn. Clearly, it is premature to consider issues relating to the waiver of privilege, until Casey has, at least by way of further particulars, properly identified how it intends to put its case on the issue of the reasonableness of the settlement. Indeed, it would, I consider, be preferable to defer consideration of the issue, until after the provision of both particulars and lay witness statements by Casey.
Mr Cawthorn, in oral submission, focused on the first matter, namely, the specification of documents, in respect of which privilege was claimed, in Casey’s list of documents. Mr Cawthorn’s submissions relating to that matter were supported by Ms Alampi on behalf of Hercules. On the other hand, Ms Quigley’s position was that it was probably premature to consider that matter, until the provision of particulars and witness statements relating to the issue of reasonableness. Thus, she reserved the position of SITA in respect of this issue.
In paragraph 17 of its written outline, LMS identified six categories of documents which, it was submitted, should be specifically identified in Schedule 1 Part 2 of Casey’s list of documents, namely:
“(a)Documents constituting or recording legal advice between December 2010 and 25 March 2011 (both times inclusive) (‘the relevant times’) relating to settlement with the plaintiffs including as to the merits of the defences raised by Casey and as to whether any offers made by the plaintiffs to resolve the proceeding would be accepted;
(b)Lay witness statements or notes of interviews with lay witnesses regarding defences of the plaintiffs’ claims, in existence or available to Casey at the relevant times or drafts of such documents;
(c)Expert witness statements or notes of interviews with expert witnesses regarding defences of the plaintiffs’ claims, in existence or available to Casey at the relevant times or drafts of such documents;
(d)Notes and analyses of the strengths or weaknesses of the plaintiffs’ case in existence at the relevant time;
(e)Instructions from and analyses of Casey regarding the decision to settle including papers for Council and Council minutes and directions;
(f)Documents concerning or recording the course of negotiations, the reasoning which led to the settlement and the matters that were taken into account in deciding to settle.”
Mr Cawthorn submitted that each of the above documents were, potentially, relevant to the issue of whether the settlement was reasonable. He pointed out that, in Schedule 1 Part 2 of its list of documents, Casey has enumerated the documents, in respect of which privilege had been claimed, in the common, in globo, form, namely:
“6All original and copies of correspondence or documents recording or evidencing communication between Casey and/or its agents and its solicitors and/or it agents for the dominant purpose of obtaining and giving legal advice or for the purpose of these proceedings.
7.All statements, notes, drafts, reports and other documents prepared by or for Casey and Casey’s legal advisers for the dominant purpose of obtaining and giving legal advice or for the purpose of these proceedings.”
Mr Cawthorn submitted that the description of the documents, in respect of which privilege was claimed, did not conform with the requirements of Rule 29.04 of Chapter 1 of the Supreme Court Rules, that documents in an affidavit of documents be appropriately enumerated and described.[12]
[12]Halliday v ACN 003075394 Pty Ltd (Full Court of the Supreme Court of Victoria, unreported, 11 April 1994), page 3 (Ormiston J).
In response, Mr Santamaria submitted that, prima facie, the first five categories of documents, identified by Mr Cawthorn, were covered by legal professional privilege, and that the sixth category of documents was, prima facie, covered by “without prejudice” privilege. He submitted that no purpose would be served by requiring Casey, at this stage, to enumerate those documents, unless and until issues of waiver of privilege arose. He submitted, therefore, that the issue of whether any, or all, of the categories of documents, identified by Mr Cawthorn, should be enumerated by Casey in its list of documents, should be deferred until the provision by Casey of its witness statements and of any particulars of the reasonableness of settlement, should I order provision of the same.
In my view, Mr Santamaria was correct in submitting that, at this stage, it is premature to require Casey to enumerate further the documents in respect of which privilege is claimed. Strictly speaking, the two paragraphs of its list of documents, which I have quoted above, do not comply with the rules. However, in a complex and difficult case such as this, it is important that the interlocutory processes be directed to the issues which are at large between the parties. The question, as to whether any of the six categories of documents, referred to by Mr Cawthorn, will be relevant, and, if so, whether they are either privileged, or whether privilege in relation to them has been waived, will be better addressed, after Casey has provided the further particulars of the reasonableness of the settlement, and provided its lay witness statements. I therefore agree with Mr Santamaria and Ms Quigley that, at this stage, it is appropriate that the question of the adequacy of Casey’s list of documents, and the question of the waiver of any privilege claimed by Casey, be deferred until the provision of particulars which I have ordered, and until Casey has served and filed its lay witness statements in accordance with the order of Osborn J of 13 December 2011.
Summary of conclusions
For the reasons which I have set out above, I have reached the following conclusions:
(1)That Casey should be required to provide particulars of the facts and circumstances by reason of which Casey will allege that the settlement, which it entered into with the plaintiffs and the group members, was reasonable.
(2)It is premature to consider the two matters, relating to the discovery of documents, raised on behalf of LMS.
Accordingly, I shall make orders requiring Casey to provide particulars of the allegation, in paragraph 35(a) of the further amended statement of claim against SITA, in paragraph 68(g) of the further amended statement of claim against LMS, and in paragraph 48(a) of the further amended statement of claim against Hercules, as follows:
(a)That Casey provide particulars of each act, fact, matter, circumstance and thing on which it relies to allege that the loss and damage, constituted by the settlement sum, was suffered by reason of the alleged breaches of its obligations by SITA, LMS and Hercules (respectively).
(b)That Casey provide particulars of each act, fact, matter, circumstance and thing on which it intends to rely in support of the allegation that the settlement sum was reasonable.
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