Federal Court of Australia

Veolia Water Australia Pty Ltd v Centennial Springvale Pty Limited [2023] FCA 443

ORDERS

THE COURT ORDERS THAT:

1.    The prospective respondents give discovery to the prospective applicant of the Data for the Period where:

(a)    Data means any raw data, analysed data, analytical data and processed data of samples and/or tests of Mine Water and Bore Holes;

(b)    Mine Water means water including ground water treated or untreated from Springvale Mine and/or Angus Place Mine;

(c)    Bore Holes means all bore holes that store and/or hold Mine Water; and

(d)    Period means from 1 October 2014 to 12 November 2017.

2.    Such discovery be provided by 31 May 2023.

3.    The parties confer on the question of costs of the provision of discovery and of the application and notify the Associate to Goodman J, by 19 May 2023, of any agreed position.

4.    If the parties are unable to reach an agreed position concerning costs, then:

(a)    the parties file and serve any evidence and submissions concerning costs (limited to 3 pages) by 26 May 2023;

(b)    the parties file and serve any evidence and submissions concerning costs in reply (limited to 3 pages) by 2 June 2023; and

(c)    the question of costs is to be determined on the papers and without an oral hearing.

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

REASONS FOR JUDGMENT

GOODMAN J

INTRODUCTION

1    The prospective applicant, Veolia Water Australia Pty Ltd (VWA) owns and operates a purpose built water treatment facility. At that facility, VWA treats water from the Springvale and Angus Place mines owned by the prospective respondents (collectively, the Customer).

2    VWA seeks an order pursuant to rule 7.23 of the Federal Court Rules 2011 (Cth) that the Customer provide preliminary discovery of documents that VWA claims are needed in order for it to decide whether to commence a proceeding against the Customer. Stated briefly, the contemplated proceeding involves a claim that the Customer engaged in misleading and deceptive conduct or negligent misrepresentation by providing to VWA inaccurate information as to the parameters of the water that was to be treated (such as acidity/alkalinity, turbidity, electrical conductivity and the levels of presence of particular elements). The documents sought go to levels of such parameters including key parameters such as silica and alkalinity.

BACKGROUND

3    The background is mostly uncontentious and the following summary of the salient features of that background is taken from the affidavits of Richard Kirkman (VWA’s managing director and chief executive officer) sworn 18 March 2022 and 15 June 2022; and Mr David Randall (a projects manager employed by the Customer in relation to the Springvale and Angus Place mines at relevant times) sworn 18 May 2022.

4    The Customer owns the mines. Operations at the mines (active mining at the Springvale mine and care and maintenance at the Angus Place mine) produce excess water (for example, in the process of cooling mining equipment and in the suppression of dust) and it is necessary to remove water from the mines to allow such operations to continue. The process of removing excess water is referred to as dewatering. Before the water extracted from the mines is returned to the environment, it is treated to remove certain elements.

5    Prior to the commencement of the operation of the treatment facility built by VWA in 2019, the process by which the water was extracted from the mines and treated was as follows:

(1)    as part of the dewatering activities at the mines, a series of pumps moved subterranean water to bore holes on the surface. More particularly, the Springvale mine was dewatered via the pumping of water at bore holes known as bores 6 and 8 and at Fan Shaft 3 (also known as bore 3); and the Angus Place mine was dewatered via the pumping of water via a borehole known as bore 940;

(2)    the water from bore 940 on some occasions was subject to treatment with ferric chloride to reduce levels of arsenic;

(3)    samples were taken at sampling points at each of bores 3, 6, 8 and 940 at various times;

(4)    water from each of bores 3, 6 and 8 was combined at a boost station with the consequence that the water which left the first boost station was a mixture of water from bores 3, 6 and 8;

(5)    that combination of water was combined with water from bore 940 at a second boost station, with the consequence that the water which left the second boost station was a mixture of water from bores 3, 6, 8 and 940;

(6)    the water that was a combination of water from bores 3, 6, 8 and 940 (combined water) was sent through a pipeline to a settling pond;

(7)    during its journey along that pipeline, the combined water was sampled;

(8)    near the end of its journey along that pipeline, the combined water was treated, including treatment with flocculants and coagulants;

(9)    the treated combined water was kept in the settling pond; and

(10)    the treated combined water was then discharged into the environment at a licensed discharge point known as LDP009, adjacent to the Wallerawang Power Station Ash Dam.

6    On or about 6 May 2016, GHD Pty Ltd, on behalf of the Customer, released a Call For Expressions of Interest for the design and construction of a water treatment facility, to treat water from the mines. The Call For Expressions of Interest included as part of its “Preliminary Risk Allocation” an “Inflow Risk” described as:

The Promoter will be required to treat all inflow volumes received at the inlet point for the entire Concession Period with financial compensation and/or relief from performance obligations being available to the Promoter in limited circumstances expressly provided for in the BOOT Contract.

7    The Promoter in that context was the party taking on the obligation to design and construct the water treatment facility, which ultimately was VWA. The Concession Period was envisaged to be 15 years.

8    Mr Kirkman’s evidence is that in order to design a water treatment facility it is (and at relevant times was) necessary to understand parameters of the water that is to be treated; and that such design (including the treatment processes and facility size) is driven by the type, magnitude range and statistical distributions of those parameters.

9    On 28 July 2016, Mr Tom Roche, Project Manager for VWA made a request for information (RFI-P-003) to GHD in the following form:

Veolia would like to better understand the nature and duration of the elevated raw water TSS events, please provide the following if possible:

Can GHD please provide:

•    Historical SCADA data detailing

o    Bore pump status (running/off)

o    Individual groundwater flows

o    Combined groundwater flows

o    Individual groundwater turbidity

o    Combined groundwater turbidity

Data at 5 minute intervals for the period 2013 – 2016.

Copies of operational logs detailing raw water quality conditions and operational observations.

Drawing showing location of raw water sampling points and water quality instrumentation.

10    On the same day, Mr Roche sent a further request for information (RFI-P-004) to GHD in the following form:

Veolia would like to better understand the magnitude and characterisation of the raw water organics, this is a critical design parameter for the water treatment process:

Can GHD please provide:

•    Raw water grab sample results (please include details describing sampling approach and location)

o    Dissolved Organic Carbon

o    Total Organic Carbon

o    UV254 absorbance or UV transmissivity (please specify whether this is filtered)

o    Any additional raw water NOM fractionation results

o    Colour

•    Online data (where available)

o    UV254

•    Data at 5 minute intervals for the period 2013-2016.

•    Jar testing campaigns

o    Methodology and Results

11    On or about 30 July 2016, the Customer provided a request for proposals (RFP) to potential tenderers, including VWA. The RFP included the following under “Project Scope”:

The Customer wishes to select a specialist water services company (Project Co) that will finance, design, construct, test and commission, operate and maintain water transfer and treatment systems and brine management systems. This arrangement will be documented under a water treatment services contract to be entered into between the Customer and the successful Proponent in the form contained in Volumes 3 and 4 of this RFP (Water Treatment Services Contract or WTSA).

…

The successful Proponent will agree to perform the Works and Services under the WTSA including:

•    the financing, design, construction, testing and commissioning of a water transfer system to transfer Mine Water from the Springvale and Angus Place Mines to MPPS (Water Transfer System);

•    the financing, design, construction, testing and commissioning of a water treatment system adjacent to MPPS to enable the beneficial reuse of Treated Water by MPPS for cooling purposes, and release of surplus Treated Water to the environment (Water Treatment System);

•    the financing, design, construction, testing and commissioning of a new brine crystallisation system at MPPS to enable the efficient disposal of brine extracted from the Mine Water and the existing power station cooling water system to the salt slurry ponds adjacent to the MPPS (Brine Crystalliser);

•    installation of augmentation works to the existing brine concentrators at MPPS;

•    the operation and maintenance of the Water Transfer System, the Water Treatment System and the Brine Crystalliser; and

•    the provision of water transfer and treatment services.

12    The RFP also included an overview of the proposed contractual structure, including relevantly as part of the proposed Water Treatment Services Contract:

2.1    Mine Water Quality Envelope

(a)    The Customer does not warrant the quality of Mine Water.

(b)    Subject to section 2.1(c), the Water Treatment Facility must accept and treat Mine Water of any quality, including Out-of-Envelope Mine Water.

(c)    If the Mine Water is Materially Out-of-Envelope Mine Water, Project Co may direct the Customer to reduce the delivery of Mine Water to the Reduced Flow Condition in accordance with clause 20 of the General Conditions of Contract.

(d)    The Mine Water Quality Envelope is described in Table 1.

13    “Mine Water” was defined in the proposed Water Treatment Services Contract as meaning:

… the mine water discharged from either the Springvale Mine or the Angus Place Mine (or both) and delivered (or, where the context requires, to be delivered) to a Mine Water Receipt Point.

14    The Mine Water Quality Envelope, as described in Table 1, was a list of various parameters, together with minimum and maximum measurements for each parameter.

15    The RFP also included blank tables for Out of Envelope Mine Water (OOE) parameters and Materially Out of Envelope Mine Water parameters (MOOE), in respect of which the tenderers were to nominate the values of the parameters that would define what was OOE and MOOE.

16    The RFP did not contain any raw data that captured the parameters within the mine water that was being treated at that time. As noted above, VWA made two requests for such information on 28 July 2016. On 3 August 2018, Mr Roche of VWA sent a further request (RFI-P-007) to GHD, under cover of an email:

Please see RFI attached.

This is critical information without which we cannot progress the WTP design. We had thought that the necessary information would be in the RFP docs so would appreciate your assistance to try to get it from CECO/EA as soon as possible.

Our process engineering team is happy to have a telecon to discuss whenever it suits.

17    The attached RFI was in the following form:

Following detailed review of the 29th July 2016 issue of “Attachment 1 to Water Treatment Services Contract: Scope of Works and Services” document (RFP Vol 4, Annexure 3), Veolia notes that key ‘mine water’ quality information has not been provided. This information is essential to enable Veolia (and other proponents) to progress the design in a reasonable manner and to ensure the design of the WTP adequately meets the performance requirements of the Project. Without this information, Veolia is unable to commence the 14 week tender period.

The key raw water quality data (or envelope) is necessary to progress the design of the WTP. Can GHD provide 95%ile and 50%ile for the following species as a matter of urgency:

1.    Total alkalinity

2.    Carbonate

3.    Bicarbonate

4.    Total hardness

5.    Sodium

6.    Calcium

7.    Magnesium

8.    Potassium

9.    Sulphate

10.    Chloride

11.    Nitrate

12.    Boron

Furthermore, the following species have treated water quality limits identified in the treated water performance standards (Table 4 of RFP Vol.4, Annexure 3). To enable the design of the WTP to be completed effectively it is necessary for the ‘mine water’ concentrations of these species to be understood. Without this information typical reductions that may be achieved by the WTP processes can be conveyed but whether the magnitude of this reduction is sufficient to meet the limiting values stated in Table 4 will ultimately be dependent on the incoming mine water concentration:

•    Cadmium

•    Copper

•    Cobalt

•    Nickel

•    Lead

•    Mercury

•    Chromium

•    Selenium

18    On 4 August 2018, Mr Chris Godfrey, the Chief Financial Officer of VWA, wrote to GHD in the following terms:

Veolia thanks GHD for the Request for Proposal (RFP) documents received over the weekend. The good news is our team is well advanced with Engineering, Procurement, Construction and Operations planning and we look forward to supporting GHD and its customers throughout the RFP process.

Having reviewed this set of documents and recognising the overall tight timeframe we are all working towards, Veolia wanted to provide some high level feedback on the documents provided so in order to support an efficient bid process.

…

Technical

Veolia notes that the RFP information regarding Water Quality Inputs is limited and will not allow Veolia to progress the process design adequately. Without further levels of additional information, Veolia would need to take conservative design assumptions which would not be beneficial to either party.

Accordingly, can GHD please provide the following information as a matter of urgency:

Notes of criticality:

1.    WTP Design cannot be started without this information. Veolia is unable to commence the 14 week tender period until this information is provided, i.e. required within 1 day.

2.    This information is required as a matter of high priority in order to allow detailed design to progress, i.e. required within 3 days.

3.    This is information is required to allow optimisation to be complete, i.e. required within 5 days.

Veolia trusts the above will assist with timely initiation of the RFP process. Please do not hesitate to contact me should any item require discussion.

19    On 10 August 2016, GHD on behalf of the Customer provided to VWA a document titled “ProjectRFI Response 01”. The Response attached Microsoft Excel worksheets titled “Raw Water before treatment” and “LDP009WaterQuality”. The Response set out, as “Questions 1 to 3”, the parts of RFI-P-003, RFI-P-004 and RFI-P-007 extracted at [9], [10] and [16] above. The Response then continued:

Answer 1, 2 and 3:

The files “Raw Water before treatment” & “LDP009WaterQuality” contain a comprehensive list of mine water quality data from samples collected between Oct 2014 to Dec 2015 (except for total suspended solids and turbidity data where the data spans from Jun 2012 to Dec 2015). The sampling point was in the combined mine water discharge pipeline (i.e, after all dewatering bores from the mine have been combined) and was at the inlet to the existing LDP009 treatment pond (before treatment). A relatively steep section of this mine water discharge pipeline operates as “open channel” with a large air vent and suspected super-critical flow.

The mine water quality data contains the requested parameters. It is the Proponent’s responsibility to assess the quality and suitability of this data for its own use.

20    The worksheet titled “Raw water before treatment” is a spreadsheet which:

(1)    contains 174 rows of data;

(2)    contains various columns including:

(a)    “Sample Point” (column A). For each row, the “Sample Point” is identified as “Before Treatment”;

(b)    “Sample Date” (column B). The dates range from 10 October 2014 to 29 December 2015;

(c)    “(Sampled By) Sampled By (text)” (column H) which appears to record, for each row, the names of the persons who took the samples; and

(d)    numerous columns which have as their headings various parameters.

21    The worksheet titled “LDP009WaterQuality” is a spreadsheet which:

(1)    contains 122 rows of data;

(2)    contains the following columns:

(a)    “Date” (column A). The dates range from 18 June 2012 to 16 October 2014;

(b)    “Source” (column B). The source is predominantly “LDP009”, however the first three rows record no source and two of the subsequent rows record “LDP010” as the source;

(c)    “Turbidity” (columns C and D). Column C is titled “Turbidity – Inlet” and column D is titled “Turbidity – Outlet”;

(d)    “TSS” (columns E and F). Column E it titled “TSS – Inlet” and column F is titled “TSS – Outlet”;

(e)    “Turbidity Average – Inlet” (column H); and

(f)    “TSS Average – Inlet” (column I).

22    I will refer to the Response and the two worksheets as the RFI Data.

23    Mr Kirkman’s evidence is that the RFI Data: contained data only for Springvale mine and not for Angus Place mine; did not include all parameters requested in RFI-P-007 (for example, temperature was not included despite it being a parameter in the Envelope); consisted of irregular results in that there was not a result for every parameter on all days that samples were taken; was not taken daily or at regular intervals; did not include data for each day or week during the period from October 2014 to December 2015; included narrow ranges for the parameters tested and a limited number of samples; and did not indicate the provenance of the samples, testing methodologies or the error margins and sampling limits.

24    On or about 12 April 2017, VWA submitted its final response to the RFP. Mr Kirkman’s evidence is that it did so having taken into account the RFI Data. VWA’s final response to the RFP included returnable schedules A and D which amongst other things nominated proposed parameters for OOE and MOOE water quality.

25    On 13 November 2017, MP Water Pty Ltd – a special purpose vehicle incorporated for the limited purposes of constructing, operating and financing the project – entered into a water treatment services contract (WTSC) with the Customer. MP Water agreed to design, engineer, construct and commission the water treatment facility. On the same day, MP Water engaged VWA, as the successful tenderer, to undertake many of MP Water’s obligations under the WTSC via a contract under which VWA was to design and construct the facility (D&C Contract); and a services provider agreement (SPA) under which VWA was to operate the facility.

26    Mr Kirkman’s evidence is that VWA entered into these contracts in reliance upon the RFI Data.

27    Since about mid-2019, VWA has operated its water treatment facility.

28    The flow of the water to VWA’s facility follows the same path as described above at [5(1) to (5)], in that it is combined water following the second boost station. However, (1) the treatment of water in bore 940 (see [5(2)] above) did not continue past the point of commencement of VWA’s facility, such that the combined water provided to VWA has included water from bore 940 that has not been treated; and (2) the combined water no longer travels to the settling pond (see [5(6)] above) and instead travels from the second boost station to VWA’s facility.

29    Mr Kirkman’s evidence is that:

(1)    the Envelope, OOE and MOOE were and remain critical to the structure of the D&C Contract and the SPA;

(2)    since VWA entered into the D&C Contract and SPA, the quality of the mine water, as recorded by the data collected and sampled by Veolia from August 2017 to May 2021 (VWA Data), has had a materially different profile of parameters compared to the quality of mine water indicated by the RFI Data. In particular, the VWA Data demonstrates that certain key parameter profiles, such as silica and alkalinity, have been significantly higher and more frequently occurring than identified by the RFI Data to the point where the parameters are often outside of the Envelope and are significantly and frequently OOE or MOOE. Scatterplot graphs prepared by VWA, which contain a comparison of the RFI Data and the VWA Data, illustrate these differences;

(3)    as a result of the differences in the parameter profiles of the mine water, VWA has: incurred costs under the D&C Contract in order to treat mine water which is often outside the Envelope with parameters significantly and frequently above their OOE and MOOE limits; had its operational costs significantly increased due to additional measures and in particular for chemical consumptions required to treat the elevated parameter profiles; and lost the opportunity to negotiate more favourable terms for the treatment of the mine water and related matters;

(4)    there exist various documents prepared by GHD on behalf of the Customer, or by the Customer directly, that demonstrate that water was collected from Springvale mine on dates additional to those specified in the RFI Data, as a consequence of which Mr Kirkman believes that there may be further data held by the Customer which was not included in the RFI Data, notwithstanding the statement in the Response that the RFI Data was “comprehensive” (see [19] above);

(5)    as a result of (1) the vast difference between the RFI Data and the VWA Data and (2) the mine water data referred to in the various documents referred to in the previous subparagraph, Mr Kirkman believes that:

(a)    the further data held by the customer may contain different parameters to those contained in the RFI Data and specifically, higher levels of the parameters which were listed in the Envelope, in which case he has reason to believe that the RFI Data did not accurately indicate the extent of the profile of parameters in the mine water;

(b)    VWA may have tendered for and entered into the D&C Contract and the SPA on the basis of summarised information concerning the quality of the mine water that was not a representative depiction of the actual parameters of the mine water;

(6)    he believes that if the “Data” for the “Period” (as these terms are defined in VWA’s application and which are set out at [46] below) were to reveal that the mine water was materially different in terms of the profile of the parameters to the RFI Data, then VWA may have the right to obtain relief against the Customer for, amongst other things the amounts identified in (3) above;

(7)    he is the primary decision-maker on behalf of VWA as to whether to commence a proceeding but at this stage he does not have “sufficient information to be satisfied beyond mere possibility into the realm of existence or probable existence of any viable claim for misleading or deceptive conduct, negligent misrepresentation or other claims”; and

(8)    he believes that the documents containing the “Data” for the “Period”, when compared against the RFI Data, would assist in determining whether VWA has a right to relief on the basis of data not provided to it (if any) and whether to commence a proceeding against the Customer. He also refers to correspondence passing between the solicitors for the parties and states that notwithstanding such correspondence he still does not have sufficient information to decide whether VWA has a viable claim sufficient to warrant the commencement of a proceeding.

Consideration

Legal framework

30    Rule 7.23 provides:

7.23      Discovery from prospective respondent

(1)      A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)      reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)      after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)      reasonably believes that:

(i)      the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)      inspection of the documents by the prospective applicant would assist in making the decision.

(2)      If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

31    Rule 7.23(2) provides the Court with a discretion to order a prospective respondent (defined in r 7.21 as “a person, not presently a party to a proceeding in the Court, against whom a prospective applicant reasonably believes the prospective applicant may have a right to obtain relief”) to give discovery to a prospective applicant (defined in r 7.21 as “a person who reasonably believes that there may be a right for the person to obtain relief against another person who is not presently a party to a proceeding in the Court”) of documents of the kind mentioned in r 7.23(1)(c)(i) (being “documents directly relevant to the question whether the prospective applicant has a right to obtain the relief”).

32    That discretion is enlivened upon the court being satisfied about each of the matters mentioned in r 7.23(1), namely that: (a) the prospective applicant reasonably believes that it may have the right to obtain relief in the Court from a known prospective respondent; (b) the prospective applicant has made reasonable enquiries but does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and (c) the prospective applicant reasonably believes that (i) the prospective respondent has or had (or is likely to have or to have had) in its control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; (ii) inspection of the documents by the prospective applicant would assist in making the decision whether to start a proceeding in the Court to obtain the relief.

33    The applicable principles are well-settled and were not in dispute on this application. The parties agreed that those principles were conveniently summarised by Anastassiou J in Seven Network v Cricket Australia [2021] FCA 1031 at [67] to [72].

34    The parties differ principally as to whether VWA has established that it reasonably believes that it may have the right to obtain relief in the Court from the Customer; and as to whether the documents in respect of which VWA seeks discovery are all “directly relevant” to the question whether VWA has a right to obtain such relief.

Pre-conditions to the exercise of the discretion

35    I turn now to consider the pre-conditions to the enlivenment of the discretion.

(1) Does VWA have a reasonable belief that it may have the right to obtain relief in the Court from the Customer?

36    The first pre-condition is that the VWA must have a reasonable belief that it has the right to obtain relief in this Court from the Customer.

37    As noted above, VWA relies upon the evidence of its managing director and chief executive officer, Mr Kirkman, to establish the requisite reasonable belief. The salient features of Mr Kirkman’s evidence include:

(1)    he is the primary decision-maker with respect to any decision to commence a proceeding against the Customer;

(2)    his views as to the centrality of the parameters of water that is to be treated to the operation of any treatment plant and to the decisions involved in the establishment and ongoing operations of such a plant;

(3)    VWA’s requests in 2016 for information concerning those parameters;

(4)    the provision of the Response, including the RFI Data;

(5)    his evidence that VWA entered into the D&C Contract and the SPA in reliance upon the RFI Data;

(6)    his evidence that the parameter profile of the water subsequently received by VWA from the Customer has differed significantly from the parameter profile disclosed by the RFI Data;

(7)    his evidence that he is aware of documents which suggest the existence of other data collected during that period covered by the RFI Data and which does not appear in that data; and

(8)    his evidence that he believes that VWA may have an action against the Customer for “misleading or deceptive conduct, negligent misrepresentation or other claims” and that this might entitle VWA to recover the losses described at [29(3)] above.

38    I am satisfied on the basis of this evidence that VWA reasonably believes that it may have a right to obtain relief in the form of compensation for misleading and deceptive conduct or negligent misrepresentation. In particular, Mr Kirkman’s evidence establishes that there may be a basis for the Court to conclude that the Customer engaged in misleading or deceptive conduct or negligent misrepresentation with respect to the provision of the RFI Data in circumstances where the water that the Customer has subsequently provided to VWA for treatment scores materially worse against the parameters than the water the subject of the RFI Data.

39    The Customer: (1) acknowledges Mr Kirkman’s evidence that he believes that VWA may have an action against the Customer for “misleading or deceptive conduct, negligent misrepresentation or other claims”; (2) submits that VWA’s written submissions did not state the cause of action beyond a statement that “Veolia may wish to bring a claim based on the Customer data having been misleading and causing Veolia to suffer loss and damage, inter alia, by having to enhance the Facility to deal with the poorer quality water”; and (3) submits that the “vagueness” with which Mr Kirkman’s evidence and VWA’s written submissions address the nature of the potential claim which Mr Kirkman thinks VWA may have is “fundamentally inconsistent with Veolia’s onus of establishing the reasonableness” of Mr Kirkman’s belief that VWA may have a right to obtain relief from the Court.

40    Subject to one immaterial matter, I do not accept this submission. The immaterial matter is the reference in Mr Kirkman’s evidence to “other claims”. This expression, at least on its own, is vague and on its own might be difficult to reconcile with the proposition that Mr Kirkman holds an objectively reasonable belief that VWA may have a right to relief. However, it is unnecessary to consider this point further in circumstances where, for the reasons already discussed at [37] and [38] above, there is a reasonable basis for a belief that VWA may have a right to obtain relief on the basis that the Customer engaged in misleading or deceptive conduct or negligent misrepresentation with respect to the provision of the RFI Data.

41    The Customer also submitted that VWA has not established that Mr Kirkman’s belief that VWA may have a right to obtain relief is an objectively reasonable belief in circumstances where he has not, in his affidavit, given consideration to the elements of each of the contemplated causes of action. I do not accept this submission. It is clear from Mr Kirkman’s evidence that he has addressed at least the provision of the RFI Data (conduct); VWA’s entry into the D&C Contract and the SPA in reliance upon the RFI Data (causation); the disparity between the parameters of the RFI Data and the parameters of the subsequently supplied water (misleading or deceptive nature of the conduct); and the losses he says have been suffered by VWA as a consequence.

(2) Does VWA, having made reasonable inquiries, not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief?

42    The second pre-condition is that VWA, has made reasonable inquiries, but lacks sufficient information to decide whether to start a proceeding in the Court to obtain the relief. I am satisfied that VWA has made reasonable inquiries to obtain the information of which it now seeks discovery. The Customer did not suggest otherwise. I am also satisfied, on the basis of Mr Kirkman’s evidence, that VWA does not have sufficient information to decide whether to commence the proposed proceeding. Again, the Customer did not suggest otherwise.

(3) Does VWA reasonably believe that: (a) the Customer has or is likely to have or has had or is likely to have had in its control documents directly relevant to the question whether VWA has a right to obtain the relief; and (b) inspection of the documents by VWA would assist in making the decision

43    The third pre-condition is that VWA holds a reasonable belief as to two matters. The first is that the Customer has or had (or is likely to have or to have had) in its control documents directly relevant to the question whether VWA has a right to obtain the relief. In this regard, “control” is defined in Schedule 1 to the Rules as meaning “possession, custody or power”. The second matter is that inspection of those documents by VWA would assist in making the decision whether to start a proceeding in the Court to obtain the relief. There is a connection between these two matters as directly relevant documents are likely to assist in making the decision whereas documents which are not directly relevant are less likely to be of assistance. This in turn feeds into the reasonableness of the belief.

44    The question whether VWA has a right to obtain the relief has at its heart whether the Customer engaged in misleading and deceptive conduct or made a negligent representation when it provided the RFI Data to VWA. This in turn requires consideration of whether the RFI Data accurately represented the profile of parameters in the combined water as it existed prior to treatment. The accuracy of the RFI Data may be tested by reference to other documents which contain data recording the parameters in the water as it existed prior to treatment.

45    The evidence of Mr Kirkman suggests that the Customer is likely to have such documents and the Customer has not contended to the contrary or adduced any evidence to the effect that the RFI Data was the only such information. The parties are at odds as to which of those documents can be said to be “directly relevant” to the accuracy of the RFI Data.

46    The documents which VWA contends are directly relevant to the accuracy of the RFI Data are those sought in its application. VWA seeks an order that the Customer give discovery of the “Data” for the “Period”, where:

Data means any raw data, analysed data, analytical data and processed data of samples and/or tests of Mine Water and Bore Holes;

Mine Water means water including ground water treated or untreated from Springvale Mine and/or Angus Place Mine;

Bore Holes means all bore holes that store and/or hold Mine Water; and

Period means from 1 October 2014 to 12 November 2017.

47    The Customer has indicated that it is prepared to give discovery of the “Data” for the “Period”, where:

Data means any raw data, analysed data, analytical data and processed data of samples and/or tests of Mine Water;

Mine Water means combined ground water treated or untreated from Springvale Mine and the Angus Place Colliery as sampled at the Pre-Settling Pond Sample Point as described in the correspondence from Herbert Smith Freehills to Norton Rose Fulbright Australia dated 12 May 2022; and

Period means 1 October 2014 to 10 August 2016.

48    Thus, the Customer’s position is that documents within its formulation are directly relevant and documents which fall outside its position are not.

49    The principal area of disputation between the parties concerns the definition of “Mine Water”. The Customer contends that the only relevant mine water is that which was sampled at the “Pre-Settling Pond Sample Point as described in the correspondence from Herbert Smith Freehills to Norton Rose Fulbright Australia dated 12 May 2022”. That description is of a sampling point in the pipeline and prior to treatment of the combined water. In support of this contention, the Customer submits that the Court should infer that the RFI Data was sampled at the “Pre-Settling Pond Sample Point”. Such an inference should be drawn, the Customer contends, from the following:

(1)    the evidence of Mr Randall that the RFI Data was obtained from samples taken prior to the combined water being treated;

(2)    a diagram referred to by Mr Randall in his evidence which shows that there was a sampling point prior to the entry of the water into the settling pond;

(3)    the text of the Response, which included:

The files “Raw Water before treatment” & “LDP009WaterQuality” contain a comprehensive list of mine water quality data from samples collected between Oct 2014 to Dec 2015 ... The sampling point was in the combined mine water discharge pipeline (i.e, after all dewatering bores from the mine have been combined) and was at the inlet to the existing LDP009 treatment pond (before treatment).

50    I am not prepared to draw such an inference on the evidence before me on this application for the following reasons. First, in the “Raw water before treatment” worksheet, no particular sampling point is mentioned and in column A titled “Sample Point” the only entry is “Before Treatment”. Secondly, the headings in the “LDP009WaterQuality” worksheet refer to the turbidity and TSS parameters as measured at both an “inlet” and an “outlet”. This, together with the generally lower numbers recorded at the “outlet” when compared to the “inlet” suggests that the data is not limited to any one sampling point. Further, the “Source” (column B) (see [21(2)(b)] above) does not assist in narrowing down the sampling point to the one point suggested by the Customer. Thirdly, the precise point at which the samples were taken is a matter in respect of which it was open to Mr Randall to give direct evidence and he has not done so. His evidence refers to the taking of samples and to particular sampling points but does not make any direct statement to the effect that the RFI Data was derived from samples taken at a particular point. Indeed, Mr Randall makes no reference to the RFI Data. Fourthly, no explanation has been provided for the absence of such direct evidence from Mr Randall (or the persons named in column H of the “Raw water before treatment” spreadsheet – see [20(2)(c)] above). Finally, in the correspondence exchanged prior to the filing of the present application, the solicitors for VWA expressly and directly asked the solicitors for the Customer to identify the points at which the samples were obtained from which the data in the “Raw water before treatment” and “LDP009WaterQuality” worksheets was extracted, and these questions remain unanswered.

51    In any event, even if the RFI Data had been drawn from a particular sample point, I see no reason to conclude that the data from that sample point would be the only data that could be considered directly relevant. There is no evidence that there was only one sample point for the combined water. Data derived from samples of the combined water taken at other points and times would appear to be directly relevant to whether the RFI Data was representative of the water that was to be treated.

52    A second area of disputation is whether data from the “Bore Holes” is directly relevant. As noted above: (1) samples were taken at various times of water at each of bores 3, 6, 8 and 940 prior to any mixing of that water with water from the other bores; (2) the water from bore 940 had on some occasions been subject to some treatment with ferric chloride to reduce levels of arsenic; (3) the water that was sampled to obtain the RFI Data was the combined water from those bores and included some water that had been treated; (4) the treatment of bore 940 did not continue past the time of the commencement of VWA’s facility, such that the combined water provided to VWA has included water from bore 940 that has not been treated.

53    Thus, to compare the parameters of the combined water in the RFI Data (which may have been treated with ferric chloride) with the parameters of combined water actually provided to VWA for treatment (which was not so treated) it is necessary to understand the parameters of the water from bore 940 and its relationship to the parameters of the water from the other bores. It follows, in my view, that the data from the individual bores is directly relevant.

54    The final area of disputation between the parties concerns the definition of “Period”. The starting date of 1 October 2014 is common ground. VWA seeks an end date of 12 November 2017 (being the day before entry into the D&C Contract and the SPA) and the Customer contends that an end date of 10 August 2016 (being the date of the provision of the RFI Data) is appropriate. In my view, an end date of 12 November 2017 is appropriate for the following reasons. First, the case for relief may be framed as a case based upon a representation by the Customer that the RFI Data was representative of the combined water to be treated which representation continued until the D&C Contract and the SPA were entered into. Secondly, to the extent that the case for relief is founded upon the proposition that the RFI Data was unrepresentative of the combined water to be treated, that proposition may be tested by reference to data obtained both before and after the date of the provision of RFI Data.

55    Thus, I am satisfied that documents recording data taken from the individual bores and from the combined water pipe (but not limited to any particular sampling point) up to 12 November 2017 are directly relevant and that inspection of those documents by VWA would assist in making the decision whether to start the contemplated proceeding; and that VWA holds a reasonable belief as to these matters.

Exercise of the discretion

56    For the reasons set out above, I am satisfied that the discretion is enlivened and that it should be exercised by making orders in the form sought by VWA. I note that (1) where the pre-conditions to the enlivenment of the discretion have been met, there is normally little scope for exercising the discretion so as to refuse relief in circumstances where the remedy is beneficial and should not be refused save for good cause: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435 at 445 [45] (Heerey, Gyles and Middleton JJ); (2) it was not suggested that there was any reason beyond the issues discussed above concerning satisfaction of the pre-conditions as to why the discretion, if enlivened, ought not to be exercised favourably to VWA. For example, there was no suggestion that compliance with the orders sought would be onerous.

Conclusion

57    There should be an order in the terms of the order sought by VWA. The parties should be afforded an opportunity to make any submissions concerning the costs of the provision of the discovery and of this application. I will make orders accordingly.

Associate:

Dated:    10 May 2023