In these proceedings, relevantly, the plaintiff, CIMIC Group Limited (CIMIC), claims indemnity from a number of insurers including the first defendant, AIG Australia Limited (AIG), who provided CIMIC with primary and excess D&O insurance cover for the 2011-12 policy year, in respect of costs and settlement amounts it paid in connection with claims against and investigations involving a number of its directors and officers, including Mr David Savage and Mr Russell Waugh. The claims and costs arose from allegations that CIMIC and related companies had engaged in corrupt practices including the payment of bribes to government officials in Iraq. The insurers defend that claim on various grounds, including on the basis of misrepresentation and non-disclosure. Criminal charges have been brought against Mr Savage and Mr Waugh arising out of the same events.
At a hearing on 2 December 2021, I dealt with applications to set aside two subpoenas. One subpoena was issued on 7 June 2021 by CIMIC to the Australian Securities and Investments Commission (ASIC) and sought production of the transcript of Mr Savage's examination conducted by ASIC on 11 February and 14 March 2015 (the ASIC Subpoena). By a notice of motion dated 8 July 2021 (the Savage Motion), Mr Savage sought to set aside that subpoena.
The second subpoena (the AFP Subpoena) was issued on 18 June 2021 by AIG to the Australian Federal Police (AFP) and sought production of a broad range of documents. The Savage Motion also sought orders setting aside a number of paragraphs of that subpoena. In addition, by a notice of motion filed by CIMIC on 30 July 2021 (the CIMIC Motion), CIMIC sought to set aside the whole subpoena.
On 16 July 2021, before the CIMIC Motion was filed, AIG agreed to narrow the scope of the AFP Subpoena. AIG agreed to narrow the scope of the subpoena further on 11 November 2021, with the result that at the hearing AIG only pressed three paragraphs of the subpoena. Those paragraphs called for the production of briefs of evidence served by the AFP on Mr Savage and on Mr Waugh. A third, recast paragraph sought production of documents relating to one or more suspicious payments.
I concluded that the ASIC transcript and, indeed, any other statement of evidence obtained from Mr Savage or Mr Waugh, should be produced, but on the basis that irrelevant material should be redacted and that a confidentiality regime should be put in place. Apart from production of that material, I set aside the paragraphs of the AFP Subpoena that remained in dispute.
The only question that remains is the costs of the two motions.
CIMIC seeks its costs of both motions. Mr Savage submits that each party should bear its own costs in respect of the motions or, in respect of parties to the substantive proceedings, that costs be costs in the cause. AIG submits that each party's costs of the CIMIC Motion should be costs in the cause and that each party should bear his or its own costs of the Savage Motion. ASIC seeks an order that ASIC's costs of and incidental to its compliance with the ASIC Subpoena are to be costs payable by CIMIC. Mr Savage also seeks an order that each party bear its own costs in complying with the ASIC Subpoena or, in respect of parties to the substantive proceedings, that costs be costs in the cause.
[2]
The ASIC Subpoena
Two questions arise in relation to the ASIC Subpoena. The first is whether Mr Savage should pay CIMIC's costs of and incidental to his application to set aside the subpoena. The second is what orders should be made in relation to the costs of compliance with the subpoena.
So far as the first issue is concerned, Mr Savage was unsuccessful in setting aside the ASIC Subpoena. There appears to be no reason why, in accordance with UCPR r 42.1, costs should not follow the event. It is true that I ordered production of the transcript on the basis that irrelevant material could be redacted and on the basis that a confidentiality regime would need to be put in place. However, they were not issues between the parties. CIMIC had offered to agree to a confidentiality regime proposed by ASIC shortly after the subpoena was issued. Mr Savage resisted production altogether on the basis that production would interfere with the criminal proceedings against him. I rejected that submission. Accordingly, in my opinion, it is appropriate that Mr Savage pay CIMIC's costs of the application to set aside the ASIC Subpoena.
Mr Savage submits that the task of separating out the costs of the two motions in relation to the two subpoenas will be difficult and time-consuming and that that provides a strong reason for ordering that each party bear its own costs of both motions. There are two answers to that point. First, in my opinion, the difficulties are exaggerated. Although the two motions were heard together and case-managed together, much of the preparatory work is likely to be relevant to only one of the subpoenas. Moreover, the task of separating out costs is one that often has to be undertaken. There is nothing particularly special about the costs in this case in that regard. Second, although the expense and difficulty of determining costs may be relevant to what order should be made, it cannot be decisive. In the present case, CIMIC was successful in resisting Mr Savage's application. The documents it sought were relevant to the issues in the case and were easily identified. ASIC did not object to their production. CIMIC acted reasonably in seeking to accommodate Mr Savage's concerns in relation to production of the documents. It should not be deprived of its costs in those circumstances.
As to the question of the costs of compliance with the ASIC Subpoena, CIMIC accepts that it must pay ASIC's costs of compliance. In its submissions, ASIC purports to describe the various categories of cost covered by such an order. As CIMIC points out in its submissions, some of those costs appear to be costs incurred by ASIC in connection with the Savage Motion rather than costs of compliance with the subpoena. The precise costs ASIC is entitled to recover is best left to assessment. However, I accept that ASIC should only be entitled to the costs of compliance with the subpoena, and not to any costs it incurred in connection with the Savage Motion.
Mr Savage also seeks an order in relation to the costs of compliance. It is not entirely clear what those costs might be, since the subpoena was served on ASIC, not on him. Moreover, he proposes an order the effect of which is that he would bear his own costs of compliance, whatever they are. Accordingly, no order needs to be made in relation to those costs.
[3]
The AIG Subpoena
It appears to be common ground between AIG and Mr Savage that no order for costs should be made as between them in relation to Mr Savage's application to set aside certain paragraphs of the AIG Subpoena. The only question is whether CIMIC should recover the costs of its motion to set aside that subpoena.
AIG submits that each party should bear its own costs of the CIMIC Motion on the basis that each party enjoyed some degree of success.
I do not accept that submission. During the course of the hearing, I concluded that one narrow class of documents should be produced - namely, any statements or transcripts of evidence of Mr Savage or Mr Waugh to the extent that they were relevant to AIG's non-disclosure defence. That class was never specifically sought by AIG and arose out of discussion relating to the production of the ASIC transcript in response to the ASIC Subpoena. Much of the time and work involved in connection with the AIG Subpoena clearly arose from the fact that it was drafted far too broadly. Accordingly, in my opinion, AIG should pay those costs.
[4]
Orders
The orders of the Court, therefore, are:
1. David Savage pay the plaintiff's costs of and incidental to Mr Savage's notice of motion filed on 8 July 2021 insofar as it sought to set aside the subpoena to produce addressed to the Australian Securities and Investments Commission issued on 7 June 2021;
2. The first defendant pay the plaintiff's costs of and incidental to the plaintiff's notice of motion filed on 30 July 2021 seeking to set aside the subpoena to produce addressed to the Australian Federal Police and issued on 18 June 2021;
3. The plaintiff to pay ASIC's costs of and incidental to its compliance with the subpoena served by the plaintiff on it and dated 7 July 2021.
[5]
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Decision last updated: 11 February 2022