FEDERAL COURT OF AUSTRALIA

BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited [2015] FCA 1077

THE COURT ORDERS THAT:

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    There are presently before the Court four Interlocutory Applications seeking discovery.

2    These Interlocutory Applications are:

    an application filed on 17 September 2015 by the Respondent in the proceeding, Arup Pty Limited (“Arup”), seeking discovery against the Applicants, including BrisConnections Finance Pty Limited (“BrisConnections”);

    an application filed on 18 September 2015 by Arup as the Cross-Claimant seeking discovery against the First Cross-Respondent, Macquarie Bank Limited (“Macquarie”); the Second Cross-Respondent, Thiess Pty Ltd (“Thiess”); and the Third Cross-Respondent, John Holland Pty Ltd (“John Holland”);

    an application filed on 14 September 2015 by Macquarie, seeking discovery against Arup; and

    an application filed on 14 September 2015 by Thiess and John Holland, seeking discovery against Arup.

The last two of these Interlocutory Applications are expressed in the same terms and conveniently can be dealt with together.

The claims and cross-claims

3    On 27 May 2014 BrisConnections (and a number of other Applicants) commenced a proceeding against Arup. A Further Amended Statement of Claim was filed on 4 June 2015. One of the amendments effected was to join an additional Applicant, AirportLinkM7 Pty Limited. On 23 June 2015 Arup filed a Notice of Cross-Claim against Macquarie, Thiess and John Holland.

4    The dispute has its origins in February 2007 when expressions of interest were invited for the finance, design, construction, operation and maintenance of a mainly underground toll road to connect the North-South Bypass Tunnel, Inner-City Bypass and local road network at Bowen Hills, to the northern arterials and the East-West Arterial, in and around Brisbane, Queensland. The Cross-Respondents had formed a consortium (the “Sponsor Group”) for the purpose of submitting, or considering the submission, of a bid in relation to this project. The Cross-Respondents earlier in February 2007 engaged Arup to provide (inter alia) traffic model development and traffic forecast reporting services.

5    The First to Seventh Applicants were incorporated in November 2007. The Eighth Applicant was incorporated in March 2011.

6    In December 2007 Arup issued the “Arup Patronage Forecast”. That forecast, it is said, contained a number of representations. Two of the Applicants submitted a bid. Thereafter Arup prepared a “Conforming Bid Forecast Memo” and “Investor Reports”, which also contained a number of representations. A revised bid was submitted.

7    In May 2008 the First to Seventh Applicants were awarded a concession from the State of Queensland to design, construct, operate, maintain and finance the project. In June 2008 Arup issued a “Revised Arup Patronage Forecast” and in March 2012 issued a “POS Report”. These documents are also said to contain a number of representations.

8    In simplified form, the allegations advanced by the Applicants against Arup are that:

    a series of representations were made by Arup each of which is alleged to have been misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the “Trade Practices Act”); and/or

    Arup owed a duty to exercise reasonable care in making the representations and that it breached such a duty.

The Applicants allege that they suffered loss or damage.

9    The Cross-Claim filed by Arup against Macquarie, Thiess and John Holland is within a far more confined compass than those allegations sought to be canvassed in the proceeding brought by the Applicants as against Arup.

10    The Cross-Claim concerns only the legal framework within which Arup might become liable to the Applicants. As summarised in the written submissions filed on behalf of Macquarie, the Cross-Claim involves three causes of action, namely:

    an allegation that the Sponsor Group was contractually obliged by a “Patronage Forecasting Contract” for the “Airport Link Project” (the “Engagement Agreement”) to ensure that Arup’s liability to the Applicants was contractually limited;

    an allegation that there is an implied contractual indemnity in the Engagement Agreement in Arup’s favour; and

    an allegation that the Sponsor Group engaged in misleading or deceptive conduct by either representing to Arup that they would take steps to ensure that Arup’s liability to the Applicants was limited or by not informing Arup that the Applicants did not consider that Arup’s liability was so limited.

The Federal Court Rules

11    The making of orders for discovery is now regulated by Div 20.2 of the Federal Court Rules 2011 (Cth) (the “Federal Court Rules”).

12    Within Div 20.2, r 20.11 provides as follows:

Discovery must be for the just resolution of the proceeding

A party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible.

This rule “reflects the overarching purpose referred to in s 37M(1) of the Federal Court of Australia Act 1976 (Cth)”: Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) [2011] FCA 1396 at [21]; (2011) 212 IR 313 at 318 per Collier J. Although discovery facilitates proof of facts and can avoid ambush or surprise, it can also be “extremely expensive” and the discretion to order discovery is thus to be exercised in a way that best promotes the overarching purpose of the civil practice and procedure provisions set forth in s 37M: Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No 4) [2012] FCA 143 at [14] per Katzmann J. The Court controls the discovery process in part to ensure that the parties “are not crippled with the cost and delay of that process”: Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063 at [7] per McKerracher J. A party seeking discovery bears the onus of satisfying the Court that the documents sought are necessary: Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 436 per Lindgren J; Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (No 4) [2013] FCA 1044 at [33] per Mansfield J; Construction, Forestry, Mining & Energy Union v Rio Tinto Coal Australia Pty Ltd [2014] FCA 462 at [92] per Flick J; Rinehart v Rinehart (No 2) [2015] FCA 339 at [36] per Gleeson J.

13    Rule 20.14 provides as follows for what is described as “standard discovery”:

Standard discovery

(1)    If the Court orders a party to give standard discovery, the party must give discovery of documents:

(a)    that are directly relevant to the issues raised by the pleadings or in the affidavits; and

(b)    of which, after a reasonable search, the party is aware; and

(c)    that are, or have been, in the party’s control.

(2)    For paragraph (1) (a), the documents must meet at least one of the following criteria:

(a)    the documents are those on which the party intends to rely;

(b)    the documents adversely affect the party’s own case;

(c)    the documents support another party’s case;

(d)    the documents adversely affect another party’s case.

(3)    For paragraph (1) (b), in making a reasonable search, a party may take into account the following:

(a)    the nature and complexity of the proceeding;

(b)    the number of documents involved;

(c)    the ease and cost of retrieving a document;

(d)    the significance of any document likely to be found;

(e)    any other relevant matter.

(4)    In this rule, a reference to an affidavit is a reference to:

(a)    an affidavit accompanying an originating application; and

(b)    an affidavit in response to the affidavit accompanying the originating application.

In Construction, Forestry, Mining & Energy Union v Rio Tinto Coal Australia Pty Ltd [2014] FCA 462 at [95] it was said that the phrase used in r 20.14(1)(a), “directly relevant”, assumes importance. That phrase, it was there said, emphasises the considerable shift in attitude and the confined nature of the discovery which is now “standard” from that which was previously ordered, namely the discovery of documents that would lead to a train of inquiry. “Non-standard and more extensive” discovery is addressed in r 20.15.

14    The constraints imposed by r 20.14 upon a party required to produce documents on “standard” discovery were also emphasised by Rares J in City of Swan v McGraw-Hill Companies Inc [2014] FCA 1271, (2014) 226 FCR 462. There in question was the extent of the obligation imposed upon a party pursuant to r 20.14 to produce documents that supported or adversely affected one of their co-applicant’s cases but had no bearing upon their own case. In dealing with an argument that there should be discovery of “all relevant material in Swan’s possession bearing on the cases brought by its co-applicants”, Rares J concluded:

[21]    I reject that argument. In my opinion, the proper construction of r 20.14 is to require discovery of documents directly relevant to the issues only between the discovering party and the party or parties in the litigation, but not to those issues between the party seeking discovery and other parties in the litigation, with which the seeking party is in dispute. A party’s obligation to give discovery concerns the resolution of the controversy in which he, she or it is engaged in the litigation and does not extend to other issues that are not between the discovering party and any of the other parties in the litigation. To require a discovering party to give discovery of documents that are directly relevant to issues raised by the pleadings but that do not involve him, her or it, would impose a burden that, in my opinion, would be not conformable with the requirement of r 20.11. That is because such an extended obligation would not facilitate the just resolution of the proceeding so far as it concerned the discovering party and its opponent or opponents as quickly, inexpensively and efficiently as possible.

[22]    An obligation of the kind suggested by Standard & Poor’s would require the discovering party to analyse and understand issues between other parties to the proceedings that are of no concern to the discovering party. Not only would that not be efficient, but it could be much more expensive for the discovering party to have to consider a wide range of material. In much litigation in today’s society, huge amounts of documentation are produced and received electronically. If a party had to discover all such documentation in its control that related to issues not between the discovering party and his, her or its opponent(s) but between other parties regardless of its relevance to the issues in the discrete controversy involving the discovering party, that would be capable of occasioning delay, inconvenience and expense. Moreover, such an obligation would require the discovering party to make assessments of issues in the proceedings that had nothing to do with it and to form judgments about documents on pain of committing contempt if it failed to discover documents that were relevant to disputes that were not its concern. That would be unnecessarily burdensome.

[23]    Similar issues have arisen in relation to the administration of interrogatories, which were, historically, an aspect of bills of discovery in Chancery …

[24]    … That obligation is becoming more and more burdensome because of the greater retention of electronic versions of documents, notwithstanding the truncated obligation in respect of relevance intended to be imposed on a discovering party for which r 20.14 was, at least partly, introduced. The consequence of accepting Standard & Poor’s argument, in effect, would be to enlist Swan in assisting Standard & Poor’s in obtaining documents that may be relevant, not to the case between Swan and Standard & Poor’s, but between Standard & Poor’s and the other two applicants, where those matters do not involve the common issues of fact or law between the parties to these proceedings for which Swan must necessarily give discovery of all relevant documents. It would require Swan to give discovery of disparate documents not relevant to the case or issues between it and Standard & Poor’s.

[25]    Where a person through no fault of his or her own gets mixed up in the tortious acts of others so as to facilitate the other’s wrongdoing, that person may, although incurring no liability, come under a duty to assist the person who has been wronged by giving full information and disclosing the identity of the wrongdoers …

[26]    However, that position is a far cry from imposing a compulsory obligation, under the Rules, to require a person to search documents in his, her or its control for the purpose of dealing with issues only in controversy between other parties in the litigation and that will not bear on the resolution of the issues in respect of which he, she or it seeks to have resolved as a party to the proceedings.

…

[28]    In modern litigation, the court is often confronted with multi-party issues in which one set of issues between particular parties has no real bearing on, or relationship with, issues between other parties in the same proceedings. The cost and burden imposed on the effective non-combatants, if they were obliged to go through their documents, the pleadings and other material identifying issues to determine whether a document or documents that the non-combatants might have could or would fall within their discovery obligations not relating to the controversy involving them, but controversies of others, would be contrary to the efficient, inexpensive and just determination of the proceedings.

15    The Rule sought to be invoked by Arup in the present proceeding is r 20.15 which provides as follows:

Non-standard and more extensive discovery

(1)    A party seeking an order for discovery (other than standard discovery) must identify the following:

(a)    any criteria mentioned in rules 20.14 (1) and (2) that should not apply;

(b)    any other criteria that should apply;

(c)    whether the party seeks the use of categories of documents in the list of documents;

(d)    whether discovery should be given in an electronic format;

(e)    whether discovery should be given in accordance with a discovery plan.

(2)    An application by a party under subrule (1) must be accompanied by the following:

(a)    if categories of documents are sought — a list of the proposed categories; and

(b)    if discovery is sought by an electronic format — the proposed format; and

(c)    if a discovery plan is sought to be used — a draft of the discovery plan.

(3)    An application by a party seeking more extensive discovery than is required under rule 20.14 must be accompanied by an affidavit stating why the order should be made.

(4)    For this Division:

category of documents includes documents, or a bundle of documents, of the same or a similar type of character.

An application under r 20.15 cannot be considered in isolation from r 20.11: Mathews v State of Queensland [2014] FCA 424 at [14] per Rangiah J. See also: Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063 at [9] per McKerracher J. Rule 20.15(1)(a) means, generally speaking, that a party may press a case as to why some documents that are not directly relevant should be discovered, perhaps on a “train of inquiry” test: Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 5) [2013] FCA 663 at [34] per Barker J.

16    No reliance is sought to be placed by Arup upon r 20.21, which provides as follows:

Order for particular discovery

(1)    If a party (the first party) claims that a document or category of documents may be or may have been in another party’s control (the second party), the first party may apply to the Court for an order that the second party file an affidavit stating:

(a)    whether the document or any document of that category is or has been in the second party’s control; and

(b)    if the document or category of documents has been but is no longer in the second party’s control — when it was last in the second party’s control and what became of it.

(2)    The first party seeking an order under subrule (1) must identify the document or category of documents as precisely as possible.

A party may seek “particular discovery” after either “standard” or “non-standard” discovery: Dennis v Chambers Investment Planners Pty Ltd [2012] FCA 63 at [39], (2012) 201 FCR 321 at 329 per Barker J; Meaden v Bell Potter Securities Ltd (No 5) [2014] FCA 978 at [12] per Edmonds J.

Arup v BrisConnections et ors

17    In the Interlocutory Application filed on 17 September 2015 Arup seeks an order for “non-standard discovery in accordance with rule 20.15 of the Federal Court Rules 2011”. Such discovery was sought as against BrisConnections.

18    An order for discovery had previously been made in November 2014.

19    Notwithstanding the fact that the previous order for discovery had been made after a detailed exchange of correspondence between the solicitors for BrisConnections and the solicitors for Arup, Arup now seeks a further order for “non-standard” discovery.

20    Schedule A to the Interlocutory Application identifies 23 proposed further categories of documents. BrisConections has agreed to 22 of these further categories – but it objects to one category, being category [22]. That category identifies the documents sought to be discovered as follows:

22.    All documents brought into existence or provided to the Applicants (or any one or more of them) between 26 July 2008 and 30 October 2012 inclusive recording, evidencing or relating to:

(a)    anticipated traffic patronage or revenues of, or associated with, Airport Link;

(b)    any consideration or analysis by the Applicants (or any one or more of them) of Arup’s Final Traffic Report or Revised Final Traffic Report, or any part or aspect thereof;

(c)    the key assumptions made by the Applicants in formulating the bid and in building the Base Case Financial Model, as referred to in section 9.6 of the PDS; or

(d)    the advice obtained by the Applicants from experts in various fields, as referred to in section 9.6 of the PDS.

Of relevance to the resolution of the question as to whether these documents should be discovered are categories [14] and [15] of Schedule A of the order for discovery previously made in November 2014. Those two categories, in turn, provide as follows:

14    All documents brought into existence or provided to the Applicants (or any one or more of them) between 4 June 2008 and July 2012 30 October 2012 inclusive comprising:

(a)    minutes of meetings of directors of the Applicants;

(b)    board papers, reports or other documents provided to the directors of the Applicants for the purpose of or in connection with any such meetings;

(c)    documents recording or evidencing the deliberations of the directors at any such meetings (other than minutes);

(d)    reports prepared by any board committee or management committee established by any of the Applicants;

(e)    minutes and other documents recording or evidencing any meetings of the members of the Applicants; and

(f)    papers, reports or other documents tabled at any meetings referred to in (e) above,

provided, in each case, the documents relate to project traffic patronage or revenues of, or associated with, Airport Link.

15    All documents brought into existence or provided to the Applicants (or any one or more of them) between 4 June 2008 and July 2012 30 October 2012 inclusive comprising:

(a)    documents recording or evidencing any peer review or written report provided by any person or entity to any one or more of the Applicants and/or to any one or more of the Sponsor Group regarding or relating to projected traffic patronage of, or associated with, Airport Link;

(b)    documents constituting, recording or evidencing any modelling or other work forming the basis of, or prepared in connection with, the peer review or written report referred to in (a) above; and

(c)    documents recording or evidencing the scope and terms of engagement of each of the persons or entities referred to in (a) above.

The underlining represents the variations to the categories of documents now sought to be discovered compared to that previously ordered in November 2014. The underlining of the entire category [22] thus indicates that this category is entirely new and not previously the subject of any order made in November 2014.

21    The underlined variations now sought in respect to categories [14] and [15] are agreed to by the Applicants. These variations are such that:

    the period of time for which documents are to be discovered is extended from July 2012 through to October 2012.

Moreover, discovery would now also extend to:

    the Eighth Applicant.

22    BrisConnections opposes an order seeking the discovery of those documents identified in category [22] on three broad bases, namely:

    the absence of any adequate explanation from Arup as to why it now seeks to depart from the agreement previously reached as to the extent of that discovery which was previously considered to be appropriate;

    oppression; and

    the lack of any apparent forensic utility in the further order.

Each of these three bases for resisting the orders sought by Arup against BrisConnections and the remaining Applicants, it is concluded, should prevail.

The need for a satisfactory explanation

23    Senior Counsel on behalf of the Applicants places at the forefront of their opposition to the “non-standard discovery” now sought by Arup the absence of any satisfactory explanation as to why such discovery should now be ordered given the discovery that has previously been ordered.

24    An explanation, the Applicants submit, is called for: AON Risk Services Australia Limited v Australian National University [2009] HCA 27, (2009) 239 CLR 175. In the context of an application for leave to amend a statement of claim made on the third day of a four-week hearing and where the relevant rule of Court (r 21) called for “the just resolution of the real issues” and “the timely disposal of the proceedings”, Gummow, Hayne, Crennan, Kiefel and Bell JJ observed:

[103]    … Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.

25    The need for some explanation to be provided by Arup as to why the discovery now sought should be ordered may be accepted. The discovery previously ordered was the subject of detailed competing correspondence between the solicitors for the Applicants and the solicitors for Arup. It may also be accepted that in commercial litigation such as the present, there is a need for some finality in the orders and directions made throughout the preparation of such a case for hearing. It may equally be accepted, however, that the preparation of a case for hearing may disclose a need to explore factual issues which were not fully appreciated at the outset.

26    Where the dividing line is to be drawn, obviously enough, depends upon the facts and circumstances of each individual case.

27    In the present case it is not considered that any adequate explanation has been provided by Arup. Reliance upon the fact that a further amendment to the Statement of Claim was made in June 2015 to add an Eighth Applicant, it may be noted, fails to provide a satisfactory explanation. The Eighth Applicant, for example, was incorporated in March 2011 and yet category [22] seeks discovery of documents going back to July 2008.

28    Nor is any adequate explanation to be discerned by reference to a limited number of documents produced during the hearing of the present Interlocutory Application exposing the provision of “Updates” in October 2010 to the Board of BrisConnections. Those documents expose what was referred to during submissions as the input of “management” to the deliberations of the Board. Questions relating to the materials relied upon by the Applicants when decisions were made, and questions as to the reliance placed by the Applicants upon one or other of the representations made by Arup, had obviously been the subject of detailed consideration in the exchange of correspondence between the solicitors for the Applicants and the solicitors for Arup preceding the prior order for discovery. Not surprisingly, the question of the reliance by the Applicants upon one or other of the representations said to have been made by Arup was an issue explored in that correspondence and – subject to any further order that may be made – resolved by agreement as to the categories of discovery then ordered. Included within that agreement was agreement on the discovery of documents now described in categories [14] and [15] of Arup’s current Interlocutory Application – subject to the period of time then being confined to the period from June 2008 through to July 2012. The Applicants now consent to that period being extended through to October 2012. Categories [14] and [15], it may be noted, are not confined to documents considered by the Board of BrisConnections and encompass (for example) “reports prepared by any … management committee established by any of the Applicants”. Such further documents as are now relied upon by Senior Counsel for Arup, with respect, do not expose any inadequacy in the scope of the discovery previously ordered. No adequate explanation, with respect, has been advanced on behalf of Arup as to what category [22] would add to the discovery embraced within categories [14] and [15] as now agreed by the Applicants. Those categories would embrace all Applicants, including the Eighth Applicant and now extend through to October 2012.

29    There remains, however, a more compelling discretionary reason why the “non-standard” discovery now sought should not be ordered.

Oppression

30    The primary reason, albeit not the only reason, for refusing to order the further discovery now sought by Arup is that the orders sought are oppressive. This conclusion is reached for two reasons.

31    First, questions as to the costs of compliance with orders for discovery assume some relevance.

32    Compliance with the existing orders for discovery has involved the Applicants in reviewing more than 460,000 documents and a team of up to 40 lawyers and paralegals conducting a manual review of approximately 230,000 documents at a total cost exceeding more than $1.5 million. Some 7,200 documents have been discovered, including approximately 3,000 documents in response to the original categories [14] and [15]. The orders now sought by Arup would expose the Applicants to a review of more than 225,000 documents of which more than 100,000 documents have already been reviewed but which would be required to be reviewed once again. Compliance with such a task, it has been estimated, would take approximately 14 to 15 weeks and involve the Applicants in an expense of $1.35 million. A more recent estimate provided during the hearing of the Interlocutory Application was that approximately 105,000 documents would need to be reviewed of which approximately 42,000 have already been reviewed and that the costs would be approximately $630,000. The task it is now estimated would take approximately 3,500 hours. Whichever calculation is considered, the time and costs involved are considerable.

33    Whether the refusal of an order requiring such a task to be undertaken in respect to the new category [22] is approached from the perspective of simply the oppression it would occasion the Applicants, or from the perspective of the lack of any adequate explanation from Arup as to why such additional costs should be required, the result is the same.

34    Second, reservation is also expressed with respect to the manner in which category [22] is drafted, such reservation springing from the draftsman’s use of such terms or phrases as:

    “relating to”; and

    “associated with”.

35    In an appropriate case, it frequently occurs that the Court itself during the course of a hearing canvasses with the parties suggested revisions to the manner in which categories of documents are sought to be described. Frequently, such suggestions are embraced by the parties and consensus emerges. Such a course is not to be discouraged as a means of resolving what is otherwise an impasse between the parties as to that which one party seeks to have discovered and that which an opposing party is prepared to proffer by way of compromise. Indeed, to do otherwise would be to fail to comply with the overarching purpose of civil procedure set forth in s 37M of the Federal Court of Australia Act 1976 (Cth) (the “Federal Court Act”), to proceed in a manner which is as quick, inexpensive and efficient as possible. The parties themselves, it is to be recalled, have a duty imposed upon them pursuant to s 37N to act, including attempting to negotiate a settlement of a dispute, in a manner consistent with that overarching purpose.

36    In the present proceeding, there was an exchange between the parties over suggested revisions and the use of “search terms” that could be employed by the Applicants in seeking to reduce the ambit of what would otherwise be oppressive discovery down to manageable limits.

37    At the end of the day, however, the responsibility for drafting appropriate categories of documents remains with the party seeking discovery.

38    The justification for seeking discovery in terms as wide as that expressed in category [22], and the oppression which compliance with such an order would require, have not met with any satisfactory response from Arup – either by way of narrowing the terms of the order sought or by negotiating consensus as to “key words” which could be employed in a discovery process to narrow the scope of an otherwise oppressive task.

The lack of forensic utility

39    A further reason for refusing to order discovery according to the terms of category [22] is the failure on the part of Arup adequately to explain the utility in ordering that discovery.

40    What further or different forensic utility would be achieved by ordering the category [22] documents, as opposed to the utility in ordering discovery in terms of categories [14] and [15] remained, with respect, opaque.

41    There was a disturbing lack of explanation on the part of Arup as to what further purpose would be served by ordering the discovery in category [22] which would be achieved beyond that served by the discovery to-date. Without confining a party to seeking an order for “particular discovery” pursuant to r 20.21 of the Federal Court Rules, and whilst recognising that in an appropriate case a party who has already obtained an order for discovery may be entitled to a further order for “non-standard” discovery pursuant to r 20.15 of those Rules, it would normally be expected that such a party would provide to the Court some analysis of the documents already produced on discovery and what different forensic purpose is now sought to be achieved. Even if it were the same forensic purpose which is still being pursued, it would normally be expected that the party would be able to explain how such further discovery would facilitate the pursuit of that purpose. All such explanations were missing in the present proceeding.

42    Similar to the conclusion reached in Construction, Forestry, Mining & Energy Union v Rio Tinto Coal Australia Pty Ltd [2014] FCA 462 at [115], the application now pursued by Arup for further discovery as against the Applicants “largely puts to one side the benefit of the discovery that has already taken place” and “places too little weight upon the benefits of the existing discovery and gives too little credence to the need for any party to conduct civil litigation ‘as quickly, inexpensively and efficiently as possible’”.

Arup v The Cross-Respondents

43    In the Interlocutory Application filed by Arup on 18 September 2015, Arup again seeks an order for “non-standard discovery” as against the Cross-Respondents.

44    There has been no order previously made for discovery against any of the Cross-Respondents.

45    The Interlocutory Application seeks discovery of documents by reference to 23 categories. The Cross-Respondents do not oppose an order for discovery in respect to 5 of those categories – namely categories [4], [5], [12], [19] and [20]. The Cross-Respondents, however, do oppose any order being made for the discovery of the remaining categories.

46    Counsel for the First Cross-Respondent, Macquarie, had the primary carriage of the opposition advanced by the Cross-Respondents.

47    In summary form it is concluded that:

    the Court has power to order discovery against Macquarie, Thiess and John Holland, of documents going to the factual issues to be resolved in the case between the Applicants and Arup;

and that:

    as a matter of discretion, it may well make an order for the discovery of documents in terms which appropriately identify particular categories of documents – especially bearing in mind the close corporate relationship between Macquarie, Thiess, John Holland, and the Applicants; and

    when making such an order, a term should not necessarily be imposed that Arup should pay the reasonable costs of compliance;

but that:

    as a matter of discretion, such discovery as is sought by Arup as against Macquarie, Thiess and John Holland should be refused because no attempt has been made by Arup to review such documents as have already been produced by the Applicants and potentially to limit such discovery as may otherwise be appropriate against Macquarie, Thiess and John Holland to such documents as may be in the possession of those Cross-Respondents but not already produced on discovery by the Applicants. The very real prospect that the order for discovery now sought by Arup against those Cross-Respondents may well result in the duplication of documents already produced on discovery is such that no conclusion could be reached that the discovery sought would “facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible” as required by r 20.11;

and that, in any event:

    the manner in which the categories of documents which Arup seeks to be discovered have been drafted is such that compliance with the categories as drafted would itself occasion oppression.

Discovery confined to issues relevant to the Cross-Claim

48    Placed at the forefront of the opposition of the Cross-Respondents to the discovery sought against them by Arup is the extent to which an order for discovery will or may be made as against a party to a cross-claim where the discovery sought is not confined to those documents of relevance to the resolution of the cross claim.

49    Arup seeks discovery of documents held by Macquarie, Thiess and John Holland which potentially go the resolution of the factual issues which separate the Applicants and Arup – not to the issues to be resolved in Arup’s Cross-Claim.

50    It was not understood that Macquarie, Thiess or John Holland ultimately contended that the Court lacked power to make an order for the discovery of documents going beyond those of relevance to the resolution of the Cross-Claim. Their position was that – as a matter of discretion – the Court ought to exercise extreme caution before ordering such discovery.

51    The need for caution may be accepted: cf. Manatee Towing Co and Coastal Tug & Barge Inc v Oceanbulk Maritime SA and Laura Maritime Inc [1999] 1 Ll Rep 876 at 881. Rix J there recognised as follows the circumstances in which such discovery may be ordered:

Of course, the circumstances in which one party may be justified in calling for discovery of documents from another party where no material issue directly arises between them may be rare. That, however, seems to me to raise a question of discretion, not of jurisdiction. It still remains the case that any applicant has to satisfy the Court that the production for disposing fairly of the cause or matter or for savings costs (r. 13(1)).

Since the matter may be controlled as a matter of discretion, I do not see what virtue there is in curtailing the jurisdiction, which in any event appears to me to exist on the wording of the rules.

In exercising the discretion, Rix J went on to observe:

… in any event the documents now requested are tightly defined, and in my judgment should present no particular difficulty for the plaintiffs to gather together. The Court is capable of ensuring that this line of investigation does not get out of hand, to the prejudice of the parties or the trial.

The need for caution when imposing upon a party greater burdens than are necessary for the resolution of the claims made by or against that party may be accepted. A further example of that need for caution was expressed as follows by Hodges J of the Supreme Court of Victoria in Fuller v Wood [1913] VLR 92 at 94 to 95 when considering whether to make an order for interrogatories:

The first objection raised by the defendant … is that he cannot be called on to answer the interrogatories because the time has not yet arrived, inasmuch as the order is that he is to answer the interrogatories within ten days after the delivery of the defence, and no defence has been delivered yet …

The second objection taken by the defendant … is that, inasmuch as he has put in no defence, and admits liability, there is no question in dispute between him and the plaintiff, and consequently he cannot be called upon to answer the questions … In my opinion, it, would be extremely undesirable to allow a plaintiff to interrogate every person who is upon the record, even if he has put in no defence, on matters which may be relevant to actions against other defendants. It would cause a defendant who did not pretend to have any defence to go to the expense of instructing solicitor and counsel to draw up answers to the interrogatories simply to serve the plaintiff's convenience. I do not, think the Court, in the exercise of its discretion, if it has a discretion, should make an order to compel interrogatories to be answered for such a purpose …

Notwithstanding the considerable shift in case management on the part of the Court that has taken place since these observations were made, including in particular the requirements now imposed by ss 37M and 37N of the Federal Court Act, the manner in which particular discretionary powers are now exercised by this Court may well pay heed to the reasons behind the previously expressed judicial caution. The “overarching purpose of the civil practice and procedure provisions” set forth in ss 37M and 37N are not to be pursued in disregard of the accumulated judicial experience which pre-dates those reforms.

52    But it cannot be accepted, nor was it submitted on behalf of any of the parties, that “non-standard discovery” cannot be ordered as against a party to a cross-claim requiring the discovery of documents relevant to issues raised in the principal proceeding and not the cross-claim. The power conferred by r 20.15 of the Federal Court Rules does not contain any such constraint. And no such limitation should be implied. The only express constraints upon the manner in which the discretionary power conferred by r 20.15 is to be exercised are those contained within r 20.11 and r 20.15 itself. The width of the power conferred by r 20.15, it is respectfully concluded, is supported not only by:

    the absence of any express constraint confining the ambit of the power to documents of relevance to the issues to be resolved between the parties to a cross-claim;

but also by:

    the fact that the power conferred by r 20.15 extends to requiring “a party” to give discovery and the fact that “a party” is defined in the Dictionary to the Rules as meaning “a party to a proceeding”, that definition including a cross-respondent;

    the fact that r 20.15(1)(a) expressly contemplates that the power to order “non-standard” discovery is a power to order discovery going beyond what was previously embraced by the “train of inquiry” test and a power conferred in otherwise unconfined terms; and

    the fact that the power to order “non-standard” discovery remains within the discretion of the Court and subject to the control of the Court.

The need for caution before making such an order, however, remains. As the facts of the present case themselves demonstrate, the need for caution arises, if for no other reason, because of the orders already made for discovery as against the Applicants in November 2014.

53    This approach to the construction of r 20.15 is consistent with the approach adopted in respect to the former Rules of this Court relating to discovery: Murex Diagnostics Australia Pty Ltd v Chiron Corporation (1994) 55 FCR 194. In question in that case was the revocation of a patent issued to the first respondent. An order for discovery was sought against the second respondent. But that respondent opposed the making of any order for discovery on the basis that it had filed a submitting appearance, “so that there are no matters in issue in the proceeding between it and the applicant”. In resolving that application as at the date of that decision, Burchett J rejected the argument referring to both the power conferred by the former Rules of this Court to order discovery against “any other party” and the “width of the court’s discretion in relation to discovery”: (1995) 55 FCR at 199. In declining to then order discovery, his Honour was of the view that the “obligation of discovery would be burdensome” and that there was no “commensurate benefit” to the applicant. The proceeding again came before the Court when a cross-claim had been filed in which it was claimed that the cross-respondents had a common design of pursuing a course of action involving the infringement of the patent. Burchett J then ordered discovery against both cross-respondents notwithstanding the absence of the second cross-respondent raising a matter relied upon by the first cross-respondent. His Honour was not prepared to allow the corporate structure of the cross-respondents to dictate the documents that would be available to the Court.

54    Notwithstanding the change in language between the former Rules and the language now employed in r 20.15, the Murex decision supports a construction of the Rules which confers a broad discretionary power and a power which permits discovery to be ordered against a cross-respondent on issues not going to the cross-claim but arising out of the claims dividing the Applicants and Arup.

55    Moreover, any analogy is to be rejected which seeks to categorise the Cross-Respondents as third parties required to produce documents on subpoena and an entitlement to recover reasonable costs of compliance. Rule 24.22 of the Federal Court Rules provides, of course, for an order to be made requiring a party to pay the “amount of any reasonable loss or expense incurred in complying” with a subpoena. And such analogy is rejected either because:

    a cross-respondent is a party to a proceeding and r 20.15 is not to be construed as confining discovery as against a cross-respondent to documents only of relevance to the resolution of the cross-claim; and/or

    on the facts of the present case it cannot properly be concluded that the relationship between the Applicants and the Cross-Respondents is such that the Cross-Respondents can be said to have no interest in the manner in which the claims as against the Applicants are resolved.

To so observe says nothing, of course, as to whether it is appropriate to impose terms upon any discovery that may be ordered, including, as a matter of discretion, an order as to costs.

56    In reaching these conclusions it is recognised that there is some tension between these conclusions and the conclusions of Rares J in City of Swan which is not completely addressed by the fact that the presently relevant rule is r 20.15 and not r 20.14 as considered by his Honour. To some extent the tension is resolved by reference to the extent of the obligations imposed by an order to provide “standard discovery” and the constraints imposed upon those obligations by r 20.14(1) and (2) as opposed to the obligations to provide discovery of such “categories of documents” as have been the subject of scrutiny by this Court pursuant to r 20.15. A tension nevertheless remains.

57    To the extent that the decision in City of Swan may stand as some authority regarding the ambit within which the power conferred by r 20.15 is expressed, it is respectfully concluded that the constraints upon the exercise of power conferred by r 20.15 should properly be found in an exercise of judicial discretion and not founded upon constraints absent from the language in which the power conferred by r 20.15 is expressed.

Oppression

58    Between the submissions advanced on behalf of Macquarie and those advanced on behalf of Thiess and John Holland, there were two principal ways in which the Cross-Respondents sought to contend that to order the discovery sought by Arup would be oppressive, namely:

    given the close corporate relationship between the Applicants and the Cross-Respondents, and given the fact that the Applicants had already complied with an order for discovery, to order discovery against the Cross-Respondents would have the very real potential to order the discovery of documents that had already been produced; and

    the manner in which the categories of documents were drafted was itself indicative of oppression.

Both arguments are accepted.

59    As to the former argument, no attempt had been made by Arup to review the documents produced on discovery by the Applicants with a view to determining the prospect that such documents as had been produced by the Applicants expose either:

    the likelihood that further documents may be in the possession of the Applicants such that an order for “particular discovery” could or should be sought against the Applicants pursuant to r 20.21; or

    the prospect that there are still categories of documents that may remain in the possession of the Cross-Respondents alone and not within the possession of the Applicants.

To make an order against the Cross-Respondents in the terms sought by Arup, it is respectfully concluded, would not “facilitate the just resolution of the proceedings as quickly, inexpensively and efficiently as possible”. The order sought by Arup would fail each element of that trinity of requirements.

60    The discovery now sought by Arup as against the Cross-Respondents has the very real potential to duplicate the discovery already provided by the Applicants. A Schedule prepared by Macquarie attempted to identify this “overlap” of documents. It is sufficient for present purposes to conclude that there is in fact, and perhaps not surprisingly, a considerable overlap.

61    As for the latter argument, and without seeking to confine attention to specific categories, Counsel for Macquarie made reference to the following categories in aid of the submissions sought to be advanced, namely:

Financial Models

1.    Any draft or final version of the financial and revenue models produced by Macquarie or one or more of its related bodies corporate, and used by the Applicants (or one or more of them) to assess the viability of, finance and bid for the Airport Link toll road concession (the Financial Models).

2.    Documents created between 1 June 2006 and 28 February 2013 constituting, recording or evidencing:

(a)    any assumptions used in the Financial Models; and/or

(b)    the source of any assumptions used in the Financial Models.

3.    Documents created between 1 June 2006 and 28 February 2013 constituting, recording or evidencing the assessment, testing or cross-checking of:

(a)    the Financial Models;

(b)    the reliability of any assumptions used in the Financial Models; or

(c)    the outputs of the Financial Models.

…

Decision to submit Airport Link bid and execute agreements

10.    Documents brought into existence between 1 June 2006 and 4 August 2008 constituting reports or other documents provided to or created by the Sponsor Group and/or First to Seventh Applicants for the purpose of or in connection with the decision to:

(a)    submit the initial bid for the Airport Link toll road concession in December 2007;

(b)    submit the revised bid for the Airport Link toll road concession in May 2008; and/or

(c)    execute the agreements referred to in paragraph 67 of the FASOC.

…

13.    Documents brought into existence between 10 December 2007 and 31 December 2008 inclusive recording, evidencing or referring to the basis or terms on which the Roadshow available to potential or actual debt or equity investors in the Airport Link toll road.

…

Product Disclosure Statement

21.    Documents brought into existence between 1 January 2008 and 30 June 2008 in relation to the verification of and/or consent to any and all third party statements to be included in the Product Disclosure Statement of the First to Seventh Applicants, not limited to those statements ultimately included in the Product Disclosure Statement of the First to Seventh Applicants.

And again without being exhaustive, particular objection is taken on behalf of Macquarie – and not without considerable justification – to orders for discovery being made which require the production of:

    “drafts” of models; and

    “the source of any assumptions”

and the production of documents by reference to such phrases as:

    “evidencing or referring”; and

    the provision of reports “to potential or actual debt or equity investors”.

Perhaps less concern would be expressed with respect to such terms being employed had there not already been discovery by the Applicants of documents which “overlap” those now sought against the Cross-Respondents.

62    These considerations for refusing the order for discovery sought by Arup against the Cross-Respondents are only reinforced when reference is made to the costs that will be incurred by those Cross-Respondents in complying with any order that may be made. On behalf of Macquarie, the time taken to ensure compliance and the costs involved are not insignificant – even bearing in mind the potential for any loss or damages that may be awarded to the Applicants, if ultimately successful, to be far greater in quantum. On behalf of Macquarie, it is estimated that there are approximately 76,648 documents that fall within categories [4], [5], [12], [19] and [20] and a further 136,527 documents that fall within what are referred to as the “contested categories”. The review of these documents, it is estimated, will take many weeks. A secondary review of those documents falling with the “contested categories”, it is estimated will take approximately 10 weeks.

63    A final note of caution should be expressed. Notwithstanding the submission advanced on behalf of the Cross-Respondents as to the lack of relevance of some of those categories of documents now sought by Arup, no concluded view is expressed as to whether an order for the discovery of an appropriately drafted category would be made. Thus, for example, although Macquarie asserted that categories [1] to [3] were of no relevance to the issues to be resolved, even in respect to the issues dividing the Applicants and Arup, any such submission may ultimately not prevail. It may well be the case that the Applicants’ asserted reliance upon the representations made to them by Arup could be tested by reference to the financial and revenue models – including potentially “draft” models – that were provided by Macquarie.

Macquarie et ors v Arup

64    The Interlocutory Application filed by Macquarie which seeks discovery as against Arup is in identical terms to the Interlocutory Application filed by Thiess and John Holland.

65    The fate of both Interlocutory Applications can, accordingly, be resolved together.

66    As filed, the Interlocutory Applications seek the discovery of six categories of documents.

67    There has been agreement between the relevant parties as to revised terms upon which discovery is to be granted in respect to categories [1] to [5].

68    It is category [6] which continues to divide the parties. And even that dispute is within a limited compass. Category [6] is drafted as follows:

6.    All documents created in the period from 1 November 2004 to 27 May 2014 recording, evidencing or referring to advice sought or obtained by (or on behalf of) Arup, in relation to:

i.    the operation of clauses 6.1, 6.3 and 17.9 of the Engagement Agreement or NSBT Contract respectively; or

ii.    the procurement on behalf of Arup of the benefit of a limitation of liability in relation to claims by the Parties as defined in Schedule 2 of the Engagement Agreement and / or NSBT Contract.

69    The dispute centres upon whether the discovery should be granted in respect to such documents up until 27 May 2014, as sought by Macquarie, Thiess and John Holland, or whether discovery should be confined to that period up to 12 March 2012 as submitted on behalf of Arup.

70    The March 2012 date is the latest date upon which Arup issued a report to the Applicants and performed services under the Engagement Agreement. The May 2014 date is the date upon which the proceeding was commenced.

71    It is concluded that discovery should be ordered in respect to this category for the period up to 28 February 2013.

72    In correspondence from the solicitors for Arup to the solicitors for Macquarie, and when addressing the extent of discovery to be provided by the Cross-Respondents, the solicitors for Arup accepted “that there may be documents created post-March 2012 which refer to events during that earlier time period”. In that context it was agreed that discovery would be provided for the period up to 28 February 2013.

73    The extent of discovery that may be “necessary” to ensure the just resolution of a dispute may be informed by the approach taken by the parties. Indeed, in advance of the Court commencing the hearing of a proceeding, in many circumstances it is the parties that may best be placed to form a view as to the appropriate ambit of orders to be made.

CONCLUSIONS

74    The Interlocutory Applications filed by Arup seeking discovery against BrisConnections and the other Applicants, and discovery against the Cross-Respondents, have met with a considerable lack of success.

75    To a considerable extent, however, the parties have reached agreement as to the extent of such discovery as is appropriate.

76    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

Associate:    

Dated:    9 October 2015