FEDERAL COURT OF AUSTRALIA Carna Group Pty Ltd v The Griffin Coal Mining Company (No 4) [2020] FCA 761 File number: WAD 354 of 2018 Judge: MCKERRACHER J Date of judgment: 3 June 2020 Catchwords: PRACTICE AND PROCEDURE – timetabling – preparation for trial – sequence of pre-trial steps – lay witness evidence – expert witness evidence – documentary evidence – whether documentary evidence should be exchanged before witness statements – whether expert evidence should precede lay evidence – whether it is appropriate to depart from the ordinary course Cases cited: Carna Group Pty Ltd v The Griffin Coal Mining Company (No 3) [2020] FCA 576 Date of hearing: 6 May 2020 and determined on the papers Date of last submissions: 26 May 2020 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 15 Counsel for the Applicant: Ms R Young Solicitor for the Applicant: Clayton Utz Counsel for the First Respondent: Ms K McNally Solicitor for the First Respondent: McNally & Co Counsel for the Second Respondent: Mr A Mizen Solicitor for the Second Respondent: Mizen + Mizen Counsel for the Third Respondent: Mr S Penrose Solicitor for the Third Respondent: Tottle Partners ORDERS WAD 354 of 2018 BETWEEN: CARNA GROUP PTY LTD ACN 063 629 630 (IN LIQUIDATION) Applicant AND: THE GRIFFIN COAL MINING COMPANY PTY LTD ACN 008 667 285 First Respondent RAJ KUMAR ROY Second Respondent JAMES RIORDAN Third Respondent AND BETWEEN: THE GRIFFIN COAL MINING COMPANY PTY LTD ACN 008 667 285 Cross-claimant AND: CARNA GROUP PTY LTD ACN 063 629 630 (IN LIQUIDATION) First Cross-Respondent HARRY CARNA Second Cross-Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 3 june 2020 THE COURT ORDERS THAT: Expert Evidence 1. The time for: (a) the applicant's compliance with order 3 of the orders made on 20 December 2019 (December 2019 Orders) be extended to 31 August 2020; (b) the respondents' compliance with order 4 of the December 2019 Orders be extended to 31 October 2020; and (c) the applicant's compliance with order 5 of the December 2019 Orders be extended to 30 November 2020. Witness Statements 2. The time for all parties' compliance with: (a) order 1 of the December 2019 Orders be extended to 31 July 2020; and (b) order 2 of the December 2019 Orders be extended to 31 August 2020. Documents to be Tendered at Trial 3. By 31 October 2020, each party must file and serve an index listing all documents (including with their document identification numbers) that they propose to tender at trial. 4. In compliance with their obligations under order 3, the respondents may instead file a consolidated index, listing all documents the respondents collectively propose to tender. 5. Each document proposed by a party for inclusion within the tender bundle shall, in the absence of a specific objection by another party, be taken to be: (a) authentic; (b) prepared by its apparent author; and (c) in the case of a communication, sent by the person who appears to have sent it, and received by the person(s) appearing to have received it on or about the date it bears. 6. By 20 November 2020: (a) the respondents must, collectively and in writing, advise the applicant: (i) which listed documents in the applicant's index may be tendered by consent; (ii) why the respondents do not consent to the tendering of any documents, with a short statement of grounds for each document they object to; and (iii) whether the matters referred to in order 5 are disputed by the respondents for any of the documents listed in the applicant's index (with any such documents to be specifically identified); and (b) the applicant must, in writing, advise the respondents on each of the matters identified in order 6(a) above, in respect of the respondents' indexes (or index, if the respondents file a consolidated index in compliance with order 4). 7. By 30 November 2020, the applicant is to file and serve an index listing all documents (including with their document identification numbers) that the parties have agreed to tender within the joint tender bundle at trial. The parties are to confer prior to 30 November 2020 in order to finalise the index. 8. By 11 December 2020, the applicant will: (a) file a book of documents with the Court, containing: (i) the index filed in accordance with order 7; and (ii) legible copies of all documents that the parties have agreed to tender within the joint tender bundle at trial; and (b) serve the book of documents on each of the respondents. 9. By 18 December 2020, each party (or if order 4 applies, the applicant and the respondents collectively) is to file an indexed book of documents with the Court, containing any documents that that party (or parties) proposes to tender, but which the opposing parties (or party) do not consent to being tendered within the joint tender bundle at trial. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MCKERRACHER J: 1 Following delivery of judgment on 30 April 2020 in the first and third respondents' strike out applications (Carna Group Pty Ltd v The Griffin Coal Mining Company (No 3) [2020] FCA 576), the parties have agreed on some matters that are necessary in order to progress the matter to trial. These reasons assume familiarity with the content and abbreviations used in Carna No 3. There is an issue as to the sequence of certain pre-trial steps on which the parties are divided. The trial is currently listed for 17 days in March 2021, commencing on 9 March 2021. 2 The conventional approach to litigation usually contemplates closure of pleadings and provision of discovery based on the issues in the pleadings. If there is provision for exchange of witness statements and/or affidavits there would be such exchanges and an exchange of expert evidence, (if any). In this matter, discovery has already been given of over 30,000 documents. Pleadings, as at the time of giving that discovery, had not closed, but my impression is that the parties are not in the dark as to the issues in the case. 3 The respondents may be unclear, and they say they are, as to how it is possible for the applicant, Carna, being in liquidation, to prove its case, particularly the element of reliance. Carna, without admitting anything, accepts that it does not have access to particular lay witnesses during the course of its liquidation and points to the fact that the factual part of a case may be entirely on the documents, depending on the content of the documents. From documents only for example, it says that it is possible for reliance to be inferred. 4 At a recent case management hearing the parties put forward their respective positions as follows. 5 The parties all agree that there should be a process by which trial indices are exchanged. The issue between the parties is the sequence of those steps. Carna's position is that the documentary evidence should come first and, at the same time, Carna will provide its expert evidence. Then following that, lay witness evidence should be exchanged. In contrast, the respondents say that the first step should be lay witness evidence, then expert evidence, followed by the documentary steps. 6 Carna says there are two reasons why its sequence is preferable. The first is that there is great utility in this particular case in having the parties first identify all of the relevant documents. The representations were made on documents as, Carna says, is clear from its statement of claim. By having the exchange of trial bundle indices first, this crystalizes the issues upon which lay evidence should be led. If agreement can be reached in respect of documents, doing so may narrow the issues that need to follow for lay evidence. The second reason Carna advances this sequence is that expert evidence is of importance. But the expert evidence does not, Carna says, rely upon lay witness evidence. So there is value in having that expert evidence exchanged earlier as under Carna's minute than as proposed by the respondents. There is no reason, Carna says, why it cannot be sequenced ahead of the lay witness evidence. 7 The respondents, quite properly, rely upon the fact that Carna will have to prove its case. Griffin complains that Carna's proposal means that the parties would need to review over 30,000 documents to guess what might become relevant. If the filing of evidence precedes the preparation of the trial bundle, the documents that are relevant will be narrowed down based on the witness statements that are exchanged. For the same reason, the respondents say that the lay evidence should be exchanged first, even if Carna is limited as to the lay evidence on which it can presently rely. Griffin points out that Carna has not indicated who they intend to call, which they should be expected to do at this stage. If Carna does not have the lay evidence it needs to prove its case, both on reliance and causation, Griffin says that should be made known early in the sequence as it will directly impact how the respondents choose to defend the case. Knowing Carna's lay evidence first, Griffin says, may save the respondents from incurring 'hundreds of thousands of dollars' preparing for a case which may not succeed. 8 Mr Mizen for the second respondent, Mr Roy, submits that the pleadings do not in fact disclose much documentary evidence in relation to the liability issues, such that it would be necessary for lay witnesses to be called on liability. Mr Mizen adopts the submission of Ms McNally for Griffin to the effect that it would be much better to produce documents after and during the time that witness statements were being produced. He also points to the fact that pleadings would not close until late June 2020. Mr Penrose for the third respondent, Mr James Riordan, makes the point that the 'elephant in the room' is whether or not Carna will be able to call lay evidence as to reliance. If it cannot, there would be no cogent evidence as to reliance and no case. That would affect, he submitted, the parties' approach to settlement and other matters. Although the lay evidence will be extensive to prepare, especially on the respondents' side, it would be exceeded by an order of magnitude by the costs of preparation of the expert evidence. This, he argues, is a powerful pragmatic reason to adopt the conventional order. To take one example, if no lay evidence was put on by Carna as to reliance, the respondents, or some of them, might take the view that they will not call any expert evidence. He supports the submission from Mr Mizen that the process of preparing the witness statements should reveal which documents ought to be in the trial bundle, not the other way around. Inevitably, if there was an attempt to make a trial bundle now, or an index for it, it would be supplemented once people have done their witness statements. Importantly, there is no particular rush about the trial bundle, providing it is done in a reasonably orderly period before trial. There is no advantage in doing it any earlier than that. 9 The respondents say from the bar table that there is nothing in the documents which will assist the position in relation to reliance. Mr Penrose submits that if Carna wants to disturb the conventional order of operations on the basis that it can prove its case by documents when it does not necessarily have access to lay witness, then it would be up to Carna to persuade the Court as to that course and not vice versa. 10 Carna reiterates that without making any concessions as to any shortage of access to lay witnesses, reliance could always be proven by inferences to be drawn from documents. 11 Carna subsequently abandoned this approach and advanced a more conventional regime with the trial bundle tendered last, but which still contemplated filing of expert evidence before lay evidence. Carna's underlying rationale was presumably essentially the same, namely that with perhaps some limit to lay witness access, it would be relying on the documents to prove the underlying facts on which its expert evidence would rely. 12 The respondents oppose this course and their arguments are conveniently collected in Mr Penrose's submissions where he says lay evidence ought be filed first in this matter, for the following reasons: (a) that order of things is the usual course and the applicants have not proffered any reason for the usual course to be departed from. It is the usual course because, in most cases, it makes the best sense for lay evidence to precede expert evidence, and this is one of those cases; (b) the lay evidence is likely to be far less expensive than the expert evidence; (c) thus far, there is no evidence from the likely lay witnesses on the applicant's side; (d) even the assumptions (for expert evidence) proposed by the applicant depend upon lay evidence (see Annexure FJS-27 to the affidavit of Ms Fiona Jane Schmedje sworn on 5 December 2019); (e) if, to take an example, no such lay evidence is adduced by the applicant, or the evidence is assessed to be patently weak, the respondents might, for example, choose not to adduce expert evidence; (f) to take another example the lay evidence might, hypothetically, be prima facie strong as to reliance on, say, the alleged cash support representation and weak or non-existent as to reliance on the alleged financial standing warranty. That scenario would provoke quite a different focus for the expert evidence than, for example, if the position in relation to reliance evidence was reversed; and (g) the gap between the lay and expert evidence ought be at least a month, preferably two, to enable the assessments alluded to in (e) and (f) to be properly made and acted upon. CONSIDERATION 13 It is central to flexible modern case management that the least costly, least time consuming approach be adopted to meet the particular needs of the particular case so long as the interests of justice remain the paramount objective. Carna has not admitted any difficulties in obtaining the underlying lay evidence, but even if it does have difficulties, I am unpersuaded that departure from the ordinary course is appropriate. I accept that expert evidence would play an important part in Carna proving its case. But expert evidence will be of no assistance unless reliance and causation are established first. It is also difficult to see how expert evidence would assist in this regard. It may be, contrary to the respondents' submissions, that inferences can be drawn from documents. While that is a possibility, Carna has not indicated with any precision on which documents it would rely upon if it were to take that course. I do not suggest that it should disclose in chapter and verse its forensic case at this point, but if it seeks some departure from a conventional, and I think more economic, process it would need to explain which specific documents go to proving the liability element of its case. 14 If it does not wish to disclose which documents it relies on for that purpose at this stage or on which lay evidence, I consider the conventional order of trial preparation is most consistent with the objectives referred to in the first sentence of [13] above. Orders will be made in accordance with the second respondent's minute sent to the Court on 22 May 2020. CONCLUSION 15 The orders will be: Expert Evidence (1) The time for: (a) the applicant's compliance with order 3 of the orders made on 20 December 2019 (December 2019 Orders) be extended to 31 August 2020; (b) the respondents' compliance with order 4 of the December 2019 Orders be extended to 31 October 2020; and (c) the applicant's compliance with order 5 of the December 2019 Orders be extended to 30 November 2020. Witness Statements (2) The time for all parties' compliance with: (a) order 1 of the December 2019 Orders be extended to 31 July 2020; and (b) order 2 of the December 2019 Orders be extended to 31 August 2020. Documents to be Tendered at Trial (3) By 31 October 2020, each party must file and serve an index listing all documents (including with their document identification numbers) that they propose to tender at trial. (4) In compliance with their obligations under order 3, the respondents may instead file a consolidated index, listing all documents the respondents collectively propose to tender. (5) Each document proposed by a party for inclusion within the tender bundle shall, in the absence of a specific objection by another party, be taken to be: (a) authentic; (b) prepared by its apparent author; and (c) in the case of a communication, sent by the person who appears to have sent it, and received by the person(s) appearing to have received it on or about the date it bears. (6) By 20 November 2020: (a) the respondents must, collectively and in writing, advise the applicant: (i) which listed documents in the applicant's index may be tendered by consent; (ii) why the respondents do not consent to the tendering of any documents, with a short statement of grounds for each document they object to; and (iii) whether the matters referred to in order 5 are disputed by the respondents for any of the documents listed in the applicant's index (with any such documents to be specifically identified); and (b) the applicant must, in writing, advise the respondents on each of the matters identified in order 6(a) above, in respect of the respondents' indexes (or index, if the respondents file a consolidated index in compliance with order 4). (7) By 30 November 2020, the applicant is to file and serve an index listing all documents (including with their document identification numbers) that the parties have agreed to tender within the joint tender bundle at trial. The parties are to confer prior to 30 November 2020 in order to finalise the index. (8) By 11 December 2020, the applicant will: (a) file a book of documents with the Court, containing: (i) the index filed in accordance with order 7; and (ii) legible copies of all documents that the parties have agreed to tender within the joint tender bundle at trial; and (b) serve the book of documents on each of the respondents. (9) By 18 December 2020, each party (or if order 4 applies, the applicant and the respondents collectively) is to file an indexed book of documents with the Court, containing any documents that that party (or parties) proposes to tender, but which the opposing parties (or party) do not consent to being tendered within the joint tender bundle at trial. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 3 June 2020