Wright v Lemon [No 3]
[2025] WASC 41
•12 FEBRUARY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WRIGHT -v- DAVID JOHN NEALE LEMON as executor of the estate of MICHAEL JOHN MAYNARD WRIGHT [No 3] [2025] WASC 41
CORAM: WHITBY J
HEARD: 31 JANUARY 2025
DELIVERED : 12 FEBRUARY 2025
FILE NO/S: CIV 1319 of 2017
BETWEEN: JULIAN DAVID MAYNARD WRIGHT
Plaintiff
AND
DAVID JOHN NEALE LEMON as executor of the estate of MICHAEL JOHN MAYNARD WRIGHT
First Defendant
ANGELA MARY MAYNARD WRIGHT BENNETT
Second Defendant
LEONIE BALDOCK
Third Defendant
ALEXANDRA BURT
Fourth Defendant
VOC GROUP LTD
Fifth Defendant
AMB HOLDINGS PTY LTD
Sixth Defendant
WRIGHT PROSPECTING PTY LTD
Seventh Defendant
TERALANI PTY LTD
Eighth Defendant
LAREMONT PTY LTD
Ninth Defendant
Catchwords:
Civil procedure - Discovery - Application for discovery pursuant to O 26A r 3 of the Rules of the Supreme Court 1971 (WA) to identify a potential party - Whether application can only be made against a 'non-party' - Proposed action for costs order against third-party litigation funder - Whether proposed action is a 'cause of action' - Relevance of confidentiality of funding arrangements - Discretionary considerations
Legislation:
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Supreme Court Rules 1970 (NSW)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr T G Camp |
| First Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Second Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Third Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Fourth Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Fifth Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Sixth Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Seventh Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Eighth Defendant | : | Ms L A Coleman and Ms A Pieniazek |
| Ninth Defendant | : | Ms L A Coleman and Ms A Pieniazek |
Solicitors:
| Plaintiff | : | Butcher Paull & Calder |
| First Defendant | : | Clayton Utz |
| Second Defendant | : | Clayton Utz |
| Third Defendant | : | Clayton Utz |
| Fourth Defendant | : | Clayton Utz |
| Fifth Defendant | : | Clayton Utz |
| Sixth Defendant | : | Clayton Utz |
| Seventh Defendant | : | Clayton Utz |
| Eighth Defendant | : | Clayton Utz |
| Ninth Defendant | : | Clayton Utz |
Cases referred to in decision:
Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Cooke v Gill (1873) LR 8 CP 107
Court House Capital Pty Ltd v RP Data Pty Ltd [2023] FCAFC 192
Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234
Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105
Hancock Family Memorial Foundation Ltd v Fieldhouse [No 2] [2008] WASC 147
Hardingham v RP Data Pty Ltd [2023] FCA 480
Hirschberg (ATF LPH Developments Keegan Street Trust) v Jameson Moore Pty Ltd [2018] WASC 348
Hooper v Kirella Pty Ltd (1999) 96 FCR 1
Idoport Pty Ltd v National Australia Bank Ltd [2004] NSWSC 695
Reynolds v Higgins [2024] WASC 260
Wright v Lemon (No 2) [2021] WASC 159
Wright v Lemon (No 2) [2021] WASC 159 (S)
Wright v Lemon [2024] WASCA 19
WHITBY J:
Background and context
Ernest Archibald Maynard Wright, known as Peter, carried on a mineral exploration business through Wright Prospecting Pty Ltd (WPPL). He died in September 1985, leaving his shares in WPPL equally to his three children, Michael John Maynard Wright, Angela Mary Maynard Wright Bennett and Julian David Maynard Wright. Given several individuals share the same last name, I will refer to them by their first names with no disrespect intended.
In 1987, Julian, the plaintiff in these proceedings, sold his one third shareholding in WPPL to his brother, Michael and sister, Angela, the first and second defendants in these proceedings respectively.
In 2001, Julian's children, Natalie and Timothy, commenced proceedings against Michael and Angela in relation to the sale of their father's shares in WPPL (Natalie and Timothy Proceedings). Michael and Angela filed a cross‑claim against Julian as a third party. In April 2008, Michael, Angela, Julian, Natalie and Timothy resolved the Natalie and Timothy Proceedings by a Deed of Settlement (Deed). Julian was a party to the Deed and the Deed contained a covenant not to sue.
On 24 February 2024, Julian commenced these proceedings claiming that he sold his WPPL shares to Michael and Angela in circumstances where:
(1)the assets in Peter's estate had not been fully and accurately disclosed to him;
(2)matters material to WPPL's mining interests and royalties had not been fully and accurately disclosed to him; and
(3)he did not receive full and fair value for the interests which he relinquished.
Julian sought orders setting aside the agreement to sell his WPPL shares and to be reinstated as a one third shareholder in WPPL and as a residuary beneficiary of Peter's estate. In the alternative, Julian sought equitable compensation and damages.
Michael and Angela denied that Julian was entitled to any relief. They also contended that Julian released the claims he was making in these proceedings pursuant to the Deed. Michael and Angela also filed a counterclaim alleging that Julian breached the covenant not to sue contained in the Deed by commencing these proceedings and seek damages for breach of the Deed.[1]
[1] Defence and Counterclaim dated 16 January 2020 (Defence) [24] ‑ [26].
Judgment in these proceedings (other than in respect of the defendants' counterclaim) was delivered in favour of the defendants on 2 July 2021 in Wright v Lemon (No 2).[2] Le Miere J found that Julian's claims against Michael and Angela were barred by the Deed and that Julian breached the Deed by instituting these proceedings.[3] Le Miere J made orders as to costs in favour of the defendants on 8 February 2022 in Wright v Lemon (No 2)[4] (Costs Orders). Julian appealed. His appeal was dismissed by the Court of Appeal on 1 March 2024 in Wright v Lemon.[5] Julian's application for special leave to appeal to the High Court was refused on 8 August 2024.
[2] Wright v Lemon (No 2) [2021] WASC 159.
[3] Wright v Lemon (No 2) [2021] WASC 159 [16].
[4] Wright v Lemon (No 2) [2021] WASC 159 (S).
[5] Wright v Lemon [2024] WASCA 19.
Julian's avenues of appeal have been exhausted. The defendants now seek to recover their costs of these proceedings in accordance with the Cost Orders. As a part of that process, the defendants are considering seeking a third‑party costs order against Julian's litigation funder. That consideration is what gives rise to this application by the defendants.
Application for discovery of documents
By chamber summons dated 31 October 2024, the defendants seek orders requiring the plaintiff to give discovery of all documents that disclose the identity of his litigation funder.
The defendants seek the following orders:
1.Pursuant to Order 26A, rule 3(4) of the Rules of the Supreme Court 1971 (WA) (RSC), the plaintiff:
(a)give discovery of all documents that are or have been in the plaintiff's possession relating to the description of any party to any arrangement for the funding of the plaintiff in these proceedings (Potential Party); and
(b)personally attend the Court to be examined in relation to the description of the Potential Party.
2.Alternatively pursuant to Order 26, rule 7(3) of the RSC, the plaintiff give discovery of all documents which evidence any arrangement for the funding of the plaintiff in these proceedings, including any associated communications.
3.Alternatively, pursuant to Order 26, rule 6(1) of the RSC, the plaintiff file an affidavit stating whether any document evidencing any arrangement for the funding of the plaintiff in these proceedings is, or has at any time been, in the plaintiff's possession, custody or power, and if not then in his possession, custody or power, when he parted with it and what has become of it.
4.The plaintiff pay the defendants' costs of this chamber summons.
The application is supported by the affidavit of Gareth John Jenkins sworn 31 October 2024 (Jenkins Affidavit).
Julian, by his affidavit sworn on 20 November 2024 (Julian Affidavit), and by written submissions filed 20 November 2024, opposed the defendants' application.
The application was heard by special appointment on 31 January 2024. At the hearing, counsel for Julian informed the court that Julian neither consented to nor opposed the defendants' application insofar as the defendants sought orders pursuant to O 26A r 3 of the Rules of the Supreme Court 1971 (WA) (RSC).
Order 26A r 3 of the RSC
Applicable legal principles
O 26A r 3 of the RSC provides that if a person appears to have a cause of action against a potential party, the court may order another person (defined as the 'non‑party') to give discovery to identify a potential party if the following four conditions are satisfied:[6]
(1)the applicant wants to take proceedings against the potential party in the course of the action to which the applicant is a party;
(2)the applicant has made reasonable enquiries to identify the potential party;
(3)the applicant has not been able to ascertain a description of the potential party sufficient for the purpose of taking proceedings against the potential party; and
(4)there are reasonable grounds for believing that the non‑party had, has, or is likely to have had or to have, possession of information, documents or any object that may assist in ascertaining the description of the potential party.
[6] Hirschberg (ATF LPH Developments Keegan Street Trust) v Jameson Moore Pty Ltd [2018] WASC 348 [23].
Before considering whether those conditions are satisfied, the court must be satisfied that the applicant appears to have a cause of action against the potential party.[7]
[7] O 26A r 3(1) RSC.
Although the applicant for discovery is not required to establish a prima facie case against the potential party, the court will not make an order for discovery if the prospective action is merely speculative.[8]
[8] Hancock Family Memorial Foundation Ltd v Fieldhouse [No 2] [2008] WASC 147 [19].
Even if the court is satisfied that the applicant appears to have a cause of action and the four conditions have been met, the order for discovery to identify a potential party remains a discretionary one. In exercising its discretion to order discovery against a non‑party, the court will have regard to the applicant's prospects of success against the potential party.[9] The court must also consider whether the order for discovery is necessary in the interests of justice, that is, whether the order is necessary to provide the applicant with an effective remedy in respect of the actionable wrong of which the applicant complains.[10]
[9] Hooper v Kirella Pty Ltd (1999) 96 FCR 1, 11.
[10] Hooper v Kirella (11).
However, there is an initial issue that arises for determination - that is whether an order for discovery pursuant to O 26A r 3 of the RSC can only be made against a 'non‑party'.
Analysis
Must the application for an order for discovery be made against a 'non‑party'?
Order 26A r 3(2) of the RSC refers to an application against 'another person (the non‑party)'. However, by this application, the defendants seek an order for discovery against Julian - a party to these proceedings. The question therefore arises as to whether O 26A r 3 of the RSC empowers the court to make an order against a party to the proceedings, as opposed to a non‑party.
Order 26A r 3(1)(b) of the RSC refers to an applicant seeking to 'take proceedings against the potential party in the course of an action to which the person is a party'. The reference to 'non‑party' in O 26A r 3(2) and (4) of the RSC is a term that is used to define 'another person', meaning a person other than the 'potential party'. In my view, it is not a term that is limited only to a 'non‑party' in the strict sense of the word, that being a person who is not a party to the proceedings.
None of the authorities to which I was referred consider an application for an order that a party to the proceedings provide discovery identifying a potential party.
Although the case of Reynolds v Higgins[11] may, at first blush, appear to be a situation in which an order was made against a party to proceedings pursuant to O 26A r 3 of the RSC, it is not the case.
[11] Reynolds v Higgins [2024] WASC 260.
Senator Reynolds commenced separate proceedings by originating summons seeking pre‑action discovery against Ms Higgins for discovery of a trust deed or documents that identified the trustee of a trust in circumstances where Senator Reynolds wished to commence fresh proceedings against the trustee to set aside the trust. Although Senator Reynolds and Ms Higgins were parties in a defamation action, Senator Reynolds' application pursuant to O 26A r 3 of the RSC was not made in that defamation action. The application was a separate proceeding and was based upon a desire to commence fresh proceedings against the trustee. In that sense, Ms Higgins was properly characterised as a 'non‑party' to the application.
Order 26A r 3(1)(b) of the RSC makes it unnecessary for the 'cause of action' to be commenced by fresh proceedings. An applicant for a discovery order may take proceedings in the 'course of an action' to which the defendants are parties. That is what the defendants wish to do - to take proceedings against a third party in the course of this action.
To limit the application of O 26A r 3 of the RSC to permit the court only to make a discovery order against a person who is not a party to the proceedings would, in my view, not be consistent with the purpose of O 26A r 3 of the RSC. I am of the view that the purpose of O 26A r 3 of the RSC, given that 'non-party' is a term used to define a person other than the potential party, and that the proceedings against the potential party may be commenced in the course of an action to which the applicant is a party, is to give a person the ability to obtain an order for discovery to identify a potential party. The fact that Julian is a party to these proceedings is not, in my view, a fact which precludes the court from making an order pursuant to O 26A r 3 of the RSC.
Is there a 'cause of action' against the prospective party?
The defendants identify the relevant 'cause of action' as an application to obtain a third‑party costs order against any persons who funded Julian in the proceedings.
The first issue in determining whether the defendants have a cause of action is whether the court has the power to make a costs order against a third‑party litigation funder.
It is well‑established that the court's power under s 37 of the Supreme Court Act 1935 (WA) and O 66 r 1 of the RSC extends to making costs orders against non‑parties.[12] The circumstances in which a costs order may be made against a litigation funder were considered in Hardingham v RP Data Pty Ltd.[13] Thawley J said:
… Plainly enough, the power to order costs against a third party would only be exercised in circumstances where a non-party has a connection to the litigation which is sufficient to warrant exercise of the power.
One example of where a connection is typically insufficient is where family members provide financial support to an applicant in litigation in which the supporting family member has no commercial interest in the outcome; such assistance is founded in family or social ties and directed at facilitating access to justice for the purpose of vindicating rights. (citations omitted)
[12] See Seaman P, Civil Procedure Western Australia (1990) [66.1.4] and the cases cited therein.
[13] Hardingham v RP Data Pty Ltd [2023] FCA 480 [19] ‑ [20] (Hardingham).
After observing that it has been said in previous cases that an order for costs against a non‑party would only be made in exceptional circumstances, his Honour went on to say:[14]
… This is not intended as more than an observation that the costs consequences usually fall on the parties to the litigation or that such an order is outside of the ordinary run of cases where parties pursue or defend claims for their own benefit, and at their own expense. … It is, accordingly, not particularly helpful to state that a third party costs order is rare and exceptional when there is a sufficient connection between the litigation and a third party and the circumstances are such that the making of a costs order is fair in all the circumstances. The making of a third party costs order is normal. Certainly, it is not exceptional to order costs against the litigation funder who facilitates litigation for their own commercial gain. Indeed, this has become increasingly common …
There are many cases which recognise the fairness in ordering a party who funds litigation for their own commercial benefit to pay, if they fail, the successful party's costs. This is so whether or not the funder has given an indemnity for the costs ordered against an unsuccessful applicant. (citations omitted)
[14] Hardingham [21] ‑ [22].
The first instance judgment in Hardingham was upheld by the Full Court on appeal in Court House Capital Pty Ltd v RP Data Pty Ltd.[15] In dismissing the appeal against the costs order, the Full Court recorded that the primary judge had made no error in the distillation of the principles which inform the court's discretion to make an order for costs against a non‑party.[16]
[15] Court House Capital Pty Ltd v RP Data Pty Ltd [2023] FCAFC 192.
[16] Court House Capital Pty Ltd v RP Data Pty Ltd [13].
In answer to the first issue, the court has power to make such a costs order against a litigation funder.
The second issue that arises is whether an application for a costs order against a third party constitutes a 'cause of action' in the course of these proceedings. A 'cause of action' exists when all the facts have occurred which the claimant must prove in order to succeed.[17]
[17] Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415 [31] applying Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234, 245;Cooke v Gill (1873) LR 8 CP 107.
The meaning of the term 'cause of action' was considered in similar circumstances as the present in Idoport Pty Ltd v National Australia Bank Ltd.[18] In that case, the court had made costs orders against the plaintiff in favour of the defendants. On the evidence before the court, the plaintiff was not able to pay any substantial sum that was awarded by way of costs. The defendants sought information from the plaintiff's solicitors in relation to funding of the proceedings. The plaintiff declined to provide that information. The defendants then applied for equitable discovery to obtain information to determine whether to seek to recover their costs of the proceedings from all or any of the third parties who funded the plaintiff's prosecution of the proceedings. The defendants' application was made pursuant to the court's general jurisdiction to order discovery to enable the proper protection and administration of the court's process and pursuant to the Supreme Court Rules 1970 (NSW) pt 1 r 14 which gives any person the right to commence proceedings for discovery.
[18] Idoport Pty Ltd v National Australia Bank Ltd [2004] NSWSC 695 (Idoport).
One of the grounds upon which the plaintiff resisted an order for equitable discovery was that any third‑party costs application was not a 'cause of action' and therefore, not within the ambit of equitable discovery.
In Idoport, the defendants, unlike the defendants in this case, had amassed a considerable amount of information concerning the plaintiff's funding arrangements and they knew the identity of the third‑party funders. The defendants were seeking equitable discovery to ascertain matters within the knowledge of the plaintiff including information relevant to the purpose for the funding (which was in the form of the funder's purchase of shares in the plaintiff) and the use the plaintiff intended to make of those funds.
Einstein J found that an application for a third‑party costs order amounted to a 'cause of action' for the purposes of equitable discovery. In so finding, Einstein J said:[19]
The arguable case which to my mind has been made good by the applicants is that equitable discovery is available in this State and is available in the context of a prospective third party costs application. Such an application does sufficiently comprise 'proceedings' or 'a cause of action' or 'wrongdoing' so as to engage the processes of discovery, whether in relation to name discovery or information discovery.
[19] Idoport [126].
Although Einstein J was ultimately concerned with whether equitable discovery should be ordered, his Honour's finding that a third‑party costs application was a 'cause of action' is equally applicable to the defendants' prospective application for a costs order against a third‑party funder in these proceedings. There is no practical difference between the prospective application for third‑party costs orders in Idoport and the defendants' prospective application for third‑party costs orders in these proceedings.
I am therefore satisfied that a prospective application by the defendants against a third‑party litigation funder is a 'cause of action' for the purposes of O 26A r 3 of the RSC.
The third issue that arises in determining whether the defendants have a cause of action against a third‑party funder is whether the proceedings concluded when the Costs Orders were made.
In the written submissions filed on behalf of Julian, the submission was made that the proceedings were fully concluded on 8 February 2022 (the date of the Costs Orders) and that no discovery order could be made as the order would not be 'in the course of an action.' Counsel for Julian did not press this submission at the hearing of the application, accepting, correctly in my view, that costs may be dealt with 'at any stage of the proceedings or after the conclusion of the proceedings'.[20] The fact that the Costs Orders were made does not preclude the court from amending the Costs Orders or making new orders against a third party.[21]
[20] O 66 r 10 RSC.
[21] Supreme Court Act 1935 (WA), s 37; O 66 r 10 RSC.
The defendants' prospective cause of action against any third‑party litigation funders for a costs order was not extinguished on the date of the Costs Orders. The defendants still have the right to seek a costs order against a third‑party funder.
Having determined that the defendants may have a cause of action against any third‑party funder, the final issue to consider is the defendants' prospects of succeeding in obtaining a costs order against a third‑party funder. As I have outlined, a prima facie case need not be shown, but the cause of action must be more than merely speculative.
It is not unusual for a court to make a costs order against a third‑party litigation funder where the third party is funding litigation for its own commercial gain.[22] That is based on the principle that the court should not allow a third party who is funding a litigation purely for a commercial benefit to avoid the costs consequences if that litigation fails.[23]
[22] Hardingham [21].
[23] Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105 [51].
Julian admits that he received funding for his legal costs, but says that the funder did not have direct or indirect control or influence over the conduct of the proceedings.[24] As an aside, this is the reason why Julian says he did not notify the court and the defendants of the identity of the funder pursuant to O 9A of the RSC. That does not however mean that the funder did not stand to gain commercially from the litigation if Julian was successful and Julian does not submit that it would not. I am satisfied that the defendants' cause of action against a third‑party funder is much more than merely speculative - in my view, the defendants have strong prospects of successfully obtaining a costs order against a third‑party funder in these circumstances.
[24] Julian Affidavit [3], [8] and [9].
Having decided that the defendants have a cause of action with strong prospects of success against a prospective party, I turn to consider whether the four conditions of O 26A r 3 of the RSC are satisfied.
Have the conditions been satisfied?
Condition (1) - do the defendants want to take proceedings against a third‑party funder in the course of these proceedings? Yes - the defendants wish to consider an application for further costs orders against any persons who funded Julian in these proceedings.[25]
[25] Jenkins Affidavit [36].
Condition (2) - have the defendants made reasonable enquiries to identify the potential party? The defendants, through their solicitors, made enquiries on 30 March 2017, 22 February 2018 and 11 October 2024 as to whether the plaintiff was funded in the proceedings and, if so, requested discovery of the funding agreement.[26] It was reasonable for the defendants to expect that Julian's solicitors would inform the defendants of any third party funding arrangements. The defendants received responses to the effect that Julian was not funded in the proceedings, or, in some cases, no response at all.[27] In all of those circumstances, the defendants have made reasonable enquiries to identify any third‑party funders of Julian.
[26] Jenkins Affidavit [6] (GJJ‑1); [8] (GJJ‑3); [25] (GJJ‑6).
[27] Jenkins Affidavit [7] (GJJ‑2); [9] (GJJ‑4).
Condition (3) - have the defendants not been able to ascertain a description of the potential party sufficient for the purpose of taking proceedings against the potential party? The defendants have either been told by the solicitors for Julian that he was not funded in the proceedings,[28] or have not received responses to their enquiries.[29] None of the defendants, or their solicitors, have been able to ascertain a description of the potential party at all, let alone sufficient for the purpose of taking proceedings against the potential party.[30]
[28] Jenkins Affidavit GJJ‑2; GJJ‑4.
[29] Jenkins Affidavit [26] and [32].
[30] Jenkins Affidavit [35].
Condition (4) - are there reasonable grounds for believing that Julian had, has, or is likely to have had or to have, possession of information, documents or any object that may assist in ascertaining the description of the potential party? Julian's evidence is that, in 2019, due to the increasing costs of the litigation, he sought funding for his legal costs. Julian obtained funding in 2020 to cover his trial costs. Julian says that the arrangements are confidential and that he is not able to disclose them.[31] The only reasonable inference that can be drawn from his evidence is that Julian does know the identity of the third‑party funder and is, or was, in possession, of information and documents that detail those funding arrangements.
[31] Julian Affidavit [2] ‑ [4].
All four conditions having been satisfied, the final hurdle for the defendants to overcome is that the orders for discovery which they seek are in the interests of justice.
Is an order for discovery in the interests of justice?
I do not need to determine whether a costs order will be made against a third‑party funder of Julian for the purposes of this application. I only need to determine whether an order for discovery should be made to allow the defendants to identify the third‑party funder of Julian's costs.
If an order for discovery is not made, the defendants would be left to seek costs solely from Julian. The result would be that a litigation funder, who has potentially facilitated litigation for its own commercial gain, is protected from the risk of doing so. That would not be in the interests of justice.
Confidentiality of the identity of the third‑party funder
The last matter that is raised by Julian in opposition to the defendants' application for discovery is confidentiality. By his affidavit and outline of written submissions, Julian's position was that he could not release any documents in relation to his funding arrangements due to confidentiality.[32] At the hearing of the application, counsel for Julian indicated that Julian's position now was that he could not discover documents which identified the third‑party funder without an order of the court.
[32] Plaintiff’s Outline of Submissions dated 20 November 2024 [2], [25]; Julian Affidavit [7].
At the hearing, the defendants provided a minute of a proposed confidentiality order, with which Julian agreed, in the event the court was persuaded to make discovery orders. This meant the issue of confidentiality fell away.
However, I wish to make it clear that confidentiality is ordinarily not a sufficient reason to decline to order discovery. The implied undertaking that the documents be used only for the purpose of the proceedings provides sufficient protection to the party who is giving discovery and inspection of the documents.[33] I would have ordered discovery on the defendants' application even if that confidentiality order was not acceded to by the defendants. That position is reinforced by two things - firstly, that Julian does no more than make a bare assertion of confidentiality and secondly, that the defendants are not in a position to use the documents for another purpose, for example to compete with the third‑party funder as a trade rival.
Disposition
[33] Civic Video Pty Ltd v Paterson [2013] WASCA 107 [26].
The defendants, having established that they have a cause of action against a third‑party litigation funder with strong prospects of success and having satisfied the conditions of O 26A r 3 of the RSC, are entitled to an order for discovery against Julian which requires him to:
(1)give discovery of all documents that are or have been in his possession relating to the description of any party to any arrangement for the funding of his costs in these proceedings (Potential Party); and
(2)personally attend the court to be examined in relation to the description of the Potential Party.
Order 26 r 6 and r 7 of the RSC
Although it is not necessary to determine the application on the alternative bases put forward by the defendants, I would have ordered discovery pursuant to O 26 r 6 and r 7 of the RSC, in any event. That is for the following reasons.
In these proceedings, the defendants allege that Julian breached the Deed by instituting these proceedings against them. Le Miere J made findings to that effect at first instance which were unaffected by the appeal to the Court of Appeal. By the counterclaim, the defendants allege that the loss and damage they will suffer as a result of Julian's breach of the Deed is the difference between their recoverable legal costs in these proceedings and the costs they will actually incur in the defence of Julian's claims against them.[34] The defendants' counterclaim remains to be determined.
[34] Defence and Counterclaim [26].
The documents sought by the defendants on this application are relevant to the counterclaim because the potential for recovery of costs from a funder may bear on the quantum of loss suffered by the defendants which can, on the counterclaim, be recovered from Julian as damages. I do not accept the submission made by counsel for Julian that it is purely hypothetical whether the defendants will be able to recover all of their actual costs from Julian. These proceedings have been long and complex and the costs incurred by all parties are clearly significant. This, coupled with the very fact that Julian sought funding to prosecute the proceedings, makes the prospect of the defendants not recovering all of their actual costs from Julian more than hypothetical.
Given their relevance to the defendants' counterclaim, documents identifying the third‑party funder and documents which are relevant to those funding arrangements ought to have been disclosed. Julian's obligation to discover all relevant documents is a continuous one.
Conclusion
I grant the defendants' application pursuant to O 26A r 3 of the RSC and make orders in terms of order 1 of the application. I also make the confidentiality order to which the parties consented in the event that the application was granted, that being:
Until further order, the documents produced under Order 1 are to remain confidential and are not to be disclosed or published to anyone other than: the parties to the proceedings; counsel, solicitors and/or in house legal representatives for the parties and their administrative staff, to the extent reasonably necessary in order for them to perform work in connection with the proceedings; the court, and their staff.
I am of the view that the appropriate order for costs of this application is that Julian pay the defendants' costs of the application. Julian opposed the application by his affidavit and outline of submissions. It was only at a later stage, either at, or close to, the hearing, that Julian indicated he neither opposed nor consented to the orders sought by the defendants. I have also found that the confidentiality order, while agreed to by the defendants, was not, in my view, a necessary precondition to the granting of the application. However, I will provide the parties with an opportunity to confer and if orders cannot be agreed, to make submissions in relation to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CS
Associate to the Hon Justice Whitby
12 FEBRUARY 2025
13
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