Supreme Court New South Wales Medium Neutral Citation: Coope Litigation Management Pty Limited v Octavier Limited [2017] NSWSC 1339 Hearing dates: 27/09/2017 Date of orders: 27 September 2017 Decision date: 27 September 2017 Jurisdiction: Equity - Commercial List Before: McDougall J Decision: Notice of motion for further discovery dismissed with costs. Catchwords: PRACTICE AND PROCEDURE – application for further discovery – no question of principle. Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Category: Procedural and other rulings Parties: Coope Litigation Management Pty Ltd (Plaintiff) Octavier Limited (in liquidation) (First Defendant) Octavier Administration Pty Ltd (in liquidation) (Second Defendant) Representation: Counsel: D Barnett (Plaintiff) A Rao (Defendant) Solicitors: Corrs Chambers Westgarth (Plaintiff) Johnson Winter Slattery (Defendants) File Number(s): 2017/78812 Judgment (ex tempore – revised 27 september 2017) 1. HIS HONOUR: The substantive dispute between the plaintiff and the defendants relates to a mediation funding agreement (MFA) under which, upon conditions that need not be spelled out in detail, the plaintiff agreed to provide funding to enable the defendants to mediate a dispute with third parties. Under that agreement, if the mediation led to a fruitful outcome, the plaintiff was entitled to have the costs it outlaid repaid to it and to receive a premium. 2. The MFA also provided that in certain circumstances, the plaintiff might become obliged to provide litigation funding under a litigation funding agreement (LFA). If that happened, and if the litigation produced a fruitful outcome, the plaintiff would be entitled again to have the costs that it outlaid repaid and to receive a premium. The premium it would receive under the LFA was double that which would be received under the MFA. The difference between the two is a very substantial sum of money. 3. The plaintiff claims that the dispute between the defendant and the third parties did not settle at mediation, within the meaning of the MFA, and that therefore the LFA came into existence. The dispute now having settled, the plaintiff claims it is entitled to be repaid the costs outlaid and to be paid the higher (LFA) premium. The defendants deny those allegations. 4. In addition, the defendants say the plaintiff's own actions, in breach of the MFA, caused or contributed to the delay in finalisation of the settlement, and thus if (contrary to the defendants' principal position) the LFA did come into effect, it was the plaintiff's breach of its obligations under the MFA which caused or contributed to that happening. In those circumstances, the defendants say, they have suffered loss, being the increased premium that, by hypothesis, they would be required to pay to the plaintiff. 5. The defendants say, further, that by reason of the matters that have been "pleaded" in their Commercial List Response relating to breach of contract, the plaintiff engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law or s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth). The particulars given of that relate to earlier-pleaded alleged conflicts of interest and alleged failure to co-operate, and to the plaintiff's alleged delay in allowing the settlement to proceed. They also refer, in a way that is totally unidentified, to the list of factors identified in s 22 or s 12CC respectively of the two legislative sources of unconscionability. 6. The defendants' specific complaints are that the plaintiff refused to be a party to any settlement agreement, and refused to have its identity disclosed to the third parties who were the defendants in the principal action, and that this was one of the contributing factors that led to the delay in finalisation of the settlement. That is said to have given rise to a conflict of interest in breach of the plaintiff's contractual and statutory obligations. It is said also to have led to the delay that, on the plaintiff's case, caused the LFA to come into effect. 7. I am concerned today with the defendants' application for further discovery. Discovery has been ordered and has been given. The categories were proposed by the plaintiff and agreed by the defendants, although the defendants purported to reserve "the right to seek further discovery...in the event that they consider the discovery provided to be inadequate." 8. The agreed categories of discovery related to the plaintiff's conflict policy and its management of that policy in its dealings with the defendants; to the plaintiff's desire to keep its identity confidential for the purposes of the mediation; and to the plaintiff's desire to delay settlement of the principal action so that the LFA would come into effect. 9. The defendants do not say the discovery given by the plaintiff in response to the agreed categories was defective. They say, rather, that the discovery has indicated the likely existence of further documents that may be relevant, and they seek discovery of those further documents. 10. I start by observing that the estimated cost of providing the further discovery sought has been said to range from $5,000 to $10,000. That cost is absolutely minimal compared with the amount at stake in the litigation. It has not been suggested it would be in any way burdensome or oppressive, in financial terms, for the plaintiff to provide the further discovery. Nor has it been suggested that to do so would imperil the hearing, which is fixed to commence in November this year. The only grounds of opposition advanced are that the documents sought have not been shown to be relevant in any way, and are confidential. The plaintiff says it is entitled to maintain its interest in the confidentiality of those documents. 11. The defendants say the discovery that has been given has revealed that the plaintiff itself was funded by third parties, who may be sufficiently referred to as Vannin and Bramden. The discovery that has been provided already reveals, not surprisingly in light of the fact of financial backing, that the plaintiff was in constant communication with Vannin and Bramden over the progress of the mediation and the halting steps towards finalisation of the in-principle settlement that was reached in, I think, May 2016. 12. The submissions put for the defendants outline a number of material facts in dispute. Those material facts include whether the mediation concluded on one or other of two specific dates, or was deemed to conclude on another specific date, or whether it continued up until a fourth specific date. Those are questions of fact to be answered by reference to what happened at the mediation. I have no idea whatsoever as to how those findings of fact could be informed by whatever may have been passing between the plaintiff, Vannin and Bramden. Ms Rao of counsel, who appeared for the defendants, suggested it was possible that the communications included admissions that the mediation had concluded. If I may say so, that appears to be no more than speculation. And if it were the fact, it is more than a little difficult to see how the document would not have been discoverable pursuant to the existing categories. 13. Further material facts in dispute are said to be the terms of the MFA in relation to conflicts and co-operation, and the content of those terms; terms as to what was meant by complete or satisfactory settlement and the content of those terms; and whether in fact the action (between the defendants and the third parties) did settle completely or satisfactorily before a specific date. There are said also to be consequential material facts in dispute as to whether the LFA became binding and, if so, when. 14. Again, as it seems to me, a decision on all those material facts would depend upon findings as to what happened in the mediation and the application of the MFA, properly construed, in the circumstances found. As to the existence and scope or content of terms, they again would depend upon the proper construction of the MFA, on the usual basis on which commercial contracts are construed. It is difficult (to put it at its highest) to see how any communications between the plaintiff, Vannin and Bramden could bear upon those matters. 15. There are undoubtedly material facts in dispute as to whether there existed conflicts (relating to the plaintiff's desire for anonymity and the plaintiff's interest in having the LFA come into existence), and as to whether the plaintiff managed any such conflicts in a way that breached whatever its obligations may have been. Again, as I see it, it is unlikely in the extreme that resolution of those factual disputes would be assisted in any way by consideration of what may have passed in communications between the plaintiff, Vannin and Bramden. Again, I suppose, it is possible there might be admissions in the documents, but speculation as to possibilities does not seem to me to be a sufficient basis for ordering further discovery. 16. Before I turn to the only possible basis on which, it seems to me, the further discovery could be justified, I should mention two more of the suggested factual disputes. One is whether the existence of either or both of the conflicts had some influence on the way the plaintiff managed its approach to the principal dispute. The other is whether its conduct caused or contributed to the LFA's coming into effect (if that happened). At the risk of repetition, those matters again seem to me to depend upon what actually happened in the circumstances, and not to be matters as to which communications between the plaintiff, Vannin and Bramden might have any bearing. 17. That leaves the question of unconscionability. It is, of course, correct to say that "statutory unconscionability" (referring to the statutory sources earlier mentioned) is something to be assessed in all the circumstances. However, that assessment must be undertaken within the framework of the pleaded and particularised case. I have outlined the nature of that pleaded and particularised case already. It does not seem to me that such pressure as Vannin and Bramden may have put on the plaintiff to delay the effectuation of the settlement falls within the scope of that case, at least in a way that would take the scope of discovery outside the existing categories. 18. It is correct to say, as Ms Rao emphasised, that one of those categories related to the plaintiff's desire or interest in delaying settlement of the action and in the LFA's coming into effect. As she submitted, again correctly, that would not catch the interest of Vannin and Bramden in those matters. However, if Vannin and Bramden conveyed to the plaintiff their desire to have settlement delayed so the LFA could come into effect, and the plaintiff thereby became desirous of or interested in those things happening, then the category would have been engaged. To put it another way, whatever theoretical interest Vannin or Bramden may have had in those matters, and may have communicated to the plaintiff, would not really count unless they actuated a corresponding desire or interest in the plaintiff. 19. It may be accepted, at the theoretical level, that documents falling within that category could contain some material that might assist in putting together a case of unconscionability. However, more than theoretical possibility is required. And I add that what the defendants seek is not limited discovery of documents relating to those matters, but general discovery of all communications between the plaintiff, Vannin and Bramden over a defined period of time. 20. In the circumstances, I do not think the application for further discovery can be supported. I reach that conclusion with some regret, because it is undoubtedly the case that the costs of litigation of that dispute will exceed, by a comfortable margin, the outer limits of the estimated cost of giving the further discovery. However, as Mr Barnett of counsel, for the plaintiff, submitted, the plaintiff does have an interest in maintaining the confidentiality of its documents, and that confidentiality ought not be disturbed unless the circumstances require it. 21. For those reasons I order that the notice of motion filed on 6 September 2017 be dismissed with costs. I direct the exhibits tendered on that notice of motion be handed out. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 October 2017