Cobankara v Australia and New Zealand Banking Group Ltd

MORTIMER J: 1 Huseyin Cobankara and Serife Cobankara, the prospective applicants in this preliminary discovery application commenced under r 7.23 of the Federal Court Rules 2011 (Cth), were (and it appears, remain) customers of the prospective respondent, the Australia and New Zealand Banking Group Limited (ANZ). They were both recorded as cardholders on an ANZ Frequent Flyer Platinum Card, and used that credit card account for a number of personal and medical expenses. 2 Mr Cobankara had a previous business relationship with an individual called Jeffrey Borg. Through their respective corporations, they engaged in business activities together. Their respective corporations were both shareholders in another corporation, called Maple Properties Pty Ltd. Both Mr Borg and Mr Cobankara had been directors of this corporation, until Mr Cobankara ceased to be a director in June 2011. 3 Mr Cobankara and Mr Borg appear to have had a significant falling out in 2012, which culminated in litigation commenced in August 2013. Prior to the litigation, Mrs Cobankara was granted an intervention order in December 2012 against Mr Borg and his wife. In the second half of 2013, when matters were clearly acrimonious between the prospective applicants and Mr Borg and his wife, Mr Cobankara came to believe that Mr Borg may have had access to some personal financial information of his and his wife's. 4 By mid-2014, after the ANZ had contacted him, Mr Cobankara realised that the statements for the ANZ credit card were not being sent to him and his wife, but rather to an address associated with Mr Borg. This was of concern to Mr Cobankara and he pursued the issue with ANZ. In his affidavit filed with the application for preliminary discovery he deposed: On or about 9 October 2014, ANZ Bank advised our then solicitor that on 7 October 2013 a request was made to change the address details from Borg Corporation Customer Lending Group. ANZ refused to comment on the reason why the change of address was requested, claiming that this was a matter for the person who had made the request. ANZ Bank advised that the request was then acted upon by ANZ and the account name and the addresses for the entities in the Borg Corporation Customer Lending Group were changed. I had been told in an earlier discussion with Judy Goodwin of the ANZ Bank that my account had been linked to the Borg Corporation Accounts when I first became a director of Maple Properties, which was in 2008. We believe that Borg Corporate has had online access to our accounts, although ANZ have refused to confirm this. 5 Mr Cobankara then deposed to communications over a period of approximately 18 months, during which his solicitors attempted to secure explanations from ANZ and relevant documents, without success. 6 He had a particular concern, which was expressed this way by him: The ANZ Frequent Flyer Platinum Credit Card records showed the places my wife shopped on a regular basis, and information relating to private medical treatment and procedures my wife and I had undertaken. This is all information that is confidential to us, and that we would not want Mr Borg, his wife, or others knowing, especially given the intervention order my wife had obtained. 7 He deposed to being informed that: …my wife and I may have a rights to bring action against the ANZ bank for breach of our privacy, breach of the Privacy Act, for misuse of our confidential information, for breach of contract, and breaches of the Consumer Law… 8 He deposed that, without access to any information held by ANZ, he and his wife were not in a position to assess whether there had been any breaches of their privacy (or associated contraventions of the law), and ANZ continued to refuse to give them the requisite information. 9 The prospective applicants made an application under r 7.23 on 14 October 2016. They sought several categories of documents relating to the conduct of ANZ, with respect to the bank accounts held by him and his wife, including the linking of those accounts to any accounts held by Mr Borg or his companies, communications about such linking, and any documents tending to reveal access by or on behalf of Mr Borg and his companies to the credit card statements. 10 After the first case management hearing, the matter was referred to mediation. It was also listed for hearing if the mediation failed. The prospective respondent made no submission that the matter should not be listed for trial. 11 After the mediation, ANZ filed an affidavit of Scott Graydon Clarke, the Dispute Resolution Manager for the prospective respondent. In that affidavit, Mr Clarke deposes to what the ANZ can produce in relation to each of the categories sought, and attaches those documents produced to his affidavit. He also deposes to what had happened to result in the prospective applicants' credit card account statements being sent to Mr Borg and his companies, and how the accounts had been "linked" by ANZ. Essentially, an ANZ employee internally "linked" the Cobankara and Borg accounts, based on information that employee had accessed and then, when a request came through to update the Borg account addresses, this employee mistakenly updated the Cobankara account to that address as well. ANZ was unable to explain why copies of the prospective applicants' credit card statements were addressed and sent to "Borg Corp PPTY Services CLG" between September 2013 and July 2014. 12 ANZ was able to depose, through Mr Clarke, that accordingly, Borg Corporation Property Services Pty Ltd (Borg Corporate) has never been granted access to the Cobankara account by ANZ, whether as a result of the linking of the Cobankara account to the Borg Corporate customer lending group or otherwise. 13 This affidavit, together with the production of documents addressing the categories sought in the application, resolved the application under r 7.23. However the parties were unable cooperatively to resolve the question of who should pay the costs of the application. 14 Mr and Mrs Cobankara sought costs on an indemnity basis. They invoked the approach set out by McHugh J in Re The Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 624-625 and submitted the Court should assess the reasonableness of the parties' respective conduct and costs should be awarded on the basis of that assessment. The approach discussed by McHugh J in Lai Qin is premised upon a settlement of the substantive dispute between the parties to a proceeding. 15 ANZ submitted pre-trial discovery applications were governed by distinct principles and the approach in Lai Qin was not appropriate. Relying on Cappuccio v Australia and New Zealand Banking Group Ltd [1999] FCA 1188, and SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 271, ANZ submitted that orders in the following form should be made: (a) if the Prospective Applicants commence the foreshadowed substantive proceeding against the Prospective Respondent within 4 months of the date of these orders, the costs of the application be at the discretion of the Judge with carriage of the substantive proceeding; and (b) if the Prospective Applicants do not commence the foreshadowed substantive proceeding against the Prospective Respondent within 4 months of the date of these orders, the Prospective Applicants pay the Prospective Respondent's costs and expenses of the application pursuant to Rule 7.29(b) of the Federal Court Rules 2011 (the Rules), to be taxed in default of agreement. 16 Given the way the parties agreed to resolve this interlocutory application, no substantive orders have been made. Rather, as I have noted, the evidence discloses the prospective respondent has produced documents to the prospective applicants which support the explanation of the course of events given by Mr Clarke in his affidavit.

The relevant authorities 17 I accept the prospective respondent's submission that the approach in Lai Qin is not appropriate because there are authorities suggesting a distinct approach to costs in pre-trial discovery applications. Indeed, there are a great many such authorities. The "contingent" approach for which the prospective respondent contends is but one of the approaches revealed by the authorities. The authorities, state and federal, suggest there is no uniform view on what that distinct approach should be. In ObjectiVision Pty Limited v Visionsearch Pty Limited (No 3) [2015] FCA 304 (Objectivision), Perry J said (at [13]): It has been doubted that there is as yet a "conventional approach" as to the manner in which the discretion as to costs and expenses is to be exercised in preliminary discovery applications: Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 (Apache) at 146-147 [90]-[91] (Flick J (in dissent but on issues not presently relevant)); J & A Vaughan Super Pty Ltd v Becton Property Group Ltd [2013] FCA 340 (Vaughan Super) at [16] (Kenny J). Any order for costs must necessarily be dictated by the facts and circumstances of the proceeding: Apache at 146 [89]; Vaughan Super at [16]. The decided cases are therefore illustrative only of the manner in which the discretion has been exercised in the circumstances of the particular case and provide guidance in that sense. (Emphasis in original.) 18 I respectfully agree with her Honour. 19 In the ObjectiVision case, and with her Honour's customary thoroughness, Perry J reviewed the relevant authorities. Having canvassed a number of authorities where doubts were expressed about the kind of "contingent" costs orders proposed in Cappuccio and SmithKline Beecham plc v Alphapharm Pty Ltd, her Honour said (at [21]-[23]): [21] Similar doubts as to the desirability of making contingent costs orders were expressed by McDougall J in Steffen v ANZ Banking Group [2009] NSWSC 883 (Steffen) at [31] with respect to the principles applicable to an application for preliminary discovery under the Uniform Civil Procedure Rules 2005 (NSW). McDougall J considered that generally it is better to deal with costs on an application for preliminary discovery by making an order with immediate rather than contingent operation (at [33]). However, his Honour took a different view as to where the burden of costs should lie on a contested application for preliminary discovery, considering at [32] that: "where an application for preliminary discovery is contested in an adversarial fashion, then the ordinary consequences of that decision should follow unless some good reason is shown why they should not." (following Simpson J in Airways Corp of New Zealand v The Present Partners of Pricewaterhouse Coopers Legal [2002] NSWSC 521 (Airways Corp of NZ)). [22] Besanko J in Proctor v Kalivis (No 3) [2010] FCA 1194 (Proctor) adopted a similar approach to that in Steffen, stating at [17] that: First, the jurisdiction to make an order for preliminary discovery is an extraordinary jurisdiction. There is a sense in which a respondent is entitled to remain passive until the applicant makes out a case for preliminary discovery: Glencore International AG v Selwyn Miners Limited (2005) 223 ALR 238 at 241 [15] per Lindgren J. Secondly, if the respondent does not take an adversarial approach to the application for preliminary discovery and in fact provides discovery then it may be appropriate to make the type of order sought by the respondents in this case [namely, a contingent costs order]. Thirdly, if the respondent does take an adversarial approach then it may be appropriate to order that it pay the costs caused by that adversarial approach: Re Steffen; Western Bulk Carriers (Australia) Pty Ltd v Cosco Bulk Carrier Co Ltd [2002] FCA 1520. [23] I consider that there is considerable force in the approach adopted in Proctor and Steffen in contested cases such as the present. I also consider that the exceptional nature of the jurisdiction remains a matter to be taken into account in determining costs and may lead to a closer scrutiny than might otherwise be the case of the extent to which a successful prospective applicant should receive its costs: cf Hughes at 48,136 (Toohey J). (Emphasis in original.) 20 Again, I respectfully agree with her Honour and cannot improve on her Honour's analysis. Some additional scrutiny should be applied to whether, even if a prospective respondent has been "adversarial", the usual orders as to costs following the event should be made, because of the extraordinary jurisdiction involved. 21 In Guest v Guest (No 2) [2016] VSC 76 at [19] (Guest), Mukhtar AsJ said: It comes to this. On the current variable state of authority, it cannot be said that when an application for pre-action discovery is granted, then the usual rule is that costs of the application follow the event. So much depends on the case. The application is discrete, and depending on the circumstances, an applicant can and I would think ought be liable to pay a respondent's costs of a successful application if there was a genuine dispute and the respondent did not act unreasonably in refusing to give discovery otherwise than by being ordered to do so by a court. 22 As Perry J noted in ObjectiVision at [39], there is a distinction between costs incurred on application for preliminary discovery and the costs of complying with an order for preliminary discovery. The same distinction was drawn by Mukhtar AsJ in Guest. I consider each aspect separately.

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