Evans v Davantage Group Pty Ltd

(a) The insurers' applications to intervene 18 Before getting into the detail of the applicant's arguments, let me say something further on the insurance position. 19 AAI Limited (the primary insurer) was the professional indemnity insurer of Davantage during the relevant period. The primary insurer sought leave to intervene in the hearing of the applicant's interlocutory application. 20 Insurance Australia Limited, Dual Australia Pty Ltd and Berkley Insurance Co. (trading as Berkley Insurance Australia) were the first excess layer insurers of MMS (the excess insurers) during the relevant period. The excess insurers also sought leave to intervene with respect to the hearing of the applicant's application. The excess insurers have also denied indemnity. 21 In considering an application to intervene, regard must be had to whether the intervener's contribution would be useful and different from the contribution of the parties to the proceeding and whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as they wished. But a non-party whose interests would be directly affected by a decision is usually entitled to intervene to protect the interest likely to be affected. 22 In the present case, the primary insurer's interest and the excess insurers' interest, including their legal interest in the confidentiality of the policies and associated communications, will be substantially and directly affected if the applicant's application is granted. Further, it is possible that the disclosure sought may lead to an attempt being made by the applicant to either join the insurers to the present proceeding or to bring new proceedings against them. Further, the submissions of the insurers on the present application were different to the submissions of Davantage. It was therefore appropriate that the insurers be permitted to intervene to make submissions with respect to the applicant's application. 23 Let me make two further points concerning the insurers and the insurance documents before dealing with the applicant's detailed arguments. 24 First, although the insurance documents include policies and communications relating to the policies which are confidential to the insurers, contractual confidentiality claims cannot defeat any orders that I might make, although such confidentiality is a relevant matter for me to consider in the exercise of my discretion. 25 Second, both the primary and excess layer policies were taken out by MMS. As I have not seen them I have made the assumption that the cover, whatever it is, provided by those policies covers Davantage and that Davantage if necessary could enforce such policies through, inter-alia, MMS as trustee holding on trust the benefit of any cover for its subsidiaries or more directly through s 48 of the Insurance Contracts Act 1984 (Cth).

(b) The applicant's arguments 26 Let me now set out the applicant's arguments. 27 First, the applicant contends that the recent decision of BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall (2019) 94 ALJR 51 does not deny any power to order production of the insurance documents under s 33ZF(1). 28 The applicant says that the plurality confirmed that the power conferred by s 33ZF(1) is not limited to the actual determination of the substantive issues in dispute in the proceeding, "but extends to encompass all procedures necessary to bring the matter to a fair hearing on a just basis" (at [45] citing the words of Tamberlin J). So, any interlocutory orders "apt to move the proceeding towards a just conclusion between the parties are within the scope of the section" (at [54]). 29 The applicant says that questions of recoverability are not extraneous to the proceeding or beyond the compass of s 33ZF(1). Indeed, he says that recoverability is at the heart of the class action procedure established by Part IVA. In this respect, to ameliorate or remove the practical impediments of litigating an individual claim that is small and not worth the expense of suing, the class action procedure enables a representative applicant to bring a proceeding to secure practical access to that litigant's legal rights in association with many others. The applicant undertakes that task and in doing so assumes a duty to represent the claims of the absent group members. And the rights of the absent class are inevitably and forever affected by how the applicant chooses to run or compromise his claims. Part IVA expressly recognises this, and provides a protection to the group members in respect of it. Pursuant to s 33V(1), no representative proceeding can be settled without the Court's approval. And in that respect, in determining whether the applicant should be permitted to conclude a group proceeding by settling, the Court should take into account matters such as "the nature and the likely cost and duration of the proceedings if approval or leave were not given", "the amount offered and the likelihood of success in the proceeding", and "whether the discontinuance, compromise, settlement or acceptance of money is in the interests of group members" (Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988) at [222]). Jurisprudence concerned with settlement approval procedures under s 33V echoes such considerations. 30 So, Pt IVA imposes a responsibility upon the applicant to weigh the prospect of recovering a substantial judgment against the risk of litigation. Here, so the applicant points out, Davantage has net assets of less than $1 million, which is a relatively paltry sum compared to the quantum of claims against it in this proceeding. But the applicant says that there is the prospect that Davantage has the right to insurance cover for a substantially greater sum. So, in order to quantify that prospect, the applicant says that he must review the insurance documents. The applicant says that it is self-evident that without such review, no assessment of the merits of any settlement proposal or the commercial risks of proceeding to trial can be undertaken. Indeed, he says that it is difficult to see how I could discharge my own functions concerning any settlement approval under s 33V(1) without such an assessment. I will return to this matter later. 31 Now the applicant had to accept that a respondent's insurance policy is not usually discoverable under the Court's processes of discovery unless it is relevant to an issue on the pleadings. But the applicant says that this does not mean that production of an insurance policy is beyond the "gap-filling" compass of s 33ZF(1). He says that in the present context, s 33ZF(1) fulfils its gap-filling role by empowering the Court to compel the production of documents held by Davantage to support the operation of s 33V(1), and in particular the duty imposed pursuant to s 33V(1) on the applicant, his legal advisers, and the Court to ensure that any settlement is fair and reasonable and in the interests of group members. 32 Now the plurality in BMW v Brewster considered that s 33ZF(1) could not sustain an order "the purpose of which is to ensure that the proceeding is able to go forward" by giving a litigation funder a "sufficient financial inducement to support the proceeding" (at [49] and [50]). But contrastingly, so the applicant says, by the present application the applicant seeks an order the purpose of which is to permit him to discharge his statutory duty to properly represent the interests of the group members in a proceeding already on foot, including in respect of any settlement of the proceeding. So, the interests of any litigation funder in the present case are not to the point. 33 Further, the applicant says that the present proceeding has been prosecuted against a substantial business with an apparently healthy financial position and a large listed parent entity. And it has been defended by a prominent commercial law firm. And in this context, he says that until now no indications of impecuniosity were apparent. Therefore the present circumstances comprise an unforeseen difficulty in the context of a representative proceeding for which it is necessary and appropriate to make an order to ensure that justice is done. 34 Further, the applicant says that despite achieving a preliminary victory for the class on the separate question that I have answered, he must now decide whether to press ahead to trial or compromise the rights of the class without obtaining any meaningful compensation for their losses. The applicant says that to make that decision without independently reviewing the insurance documents would constitute a failure of justice for group members in the proceeding. 35 For all the above reasons, so the applicant says, BMW v Brewster supports his position. 36 Second, the applicant relies upon the decision of Gleeson J in Simpson v Thorn Australia Pty Ltd trading as Radio Rentals (No 4) [2019] FCA 1229. Simpson (No 4) held that s 33ZF(1) empowers the Court to compel production of documents relevant to the ability to recover judgment from a respondent, even if such documents are not relevant to an issue arising on the pleadings, provided that the Court thinks that such an order is appropriate or necessary to ensure that justice is done in the proceeding. The applicant says that the relevant facts which informed the Court's reasoning in Simpson (No 4) align with the relevant facts in the present case, namely: (a) if a judgment of substance is obtained, the respondent will be unable to meet it; (b) the applicant will be assisted by access to the insurance documents for the purposes of advancing any discussions at mediation; (c) the prospects of a settlement will be reduced if the applicant's legal representatives are required to assess any settlement offer without information about the applicant's insurance position; and (d) any settlement would require Court approval, based in part upon evidence that the applicant's legal representatives were satisfied the settlement was fair and reasonable and in the interests of group members as a whole, having regard to inter alia the recoverability of any judgment. 37 Contrastingly, the applicant says that the decision in Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2019] QSC 250 is distinguishable. In that case, the respondent had substantial assets, any mediation was still some time away, and it was likely that there would be further developments in the case, including with respect to quantum, which might diminish the significance of the respondent's insurance position. So in that case there was no demonstrable need for disclosure of the insurance documents. 38 Third, the applicant says that it is not premature at this stage for him to be concerned as to how he will satisfy the Court under s 33V(1) on the reasonableness of any settlement offer accepted at a further mediation. Further, the applicant's solicitor has deposed to his opinion that no settlement can be reached without further information about Davantage's insurance position. Accordingly, the applicant says that there can be no doubt as to the significance of Davantage's insurance position or as to the need for the invocation of s 33ZF(1) to ameliorate what he describes as the untenable informational deficit afflicting the applicant. 39 Fourth, the applicant says that unlike in Mallonland, in the present case there is a dispute between Davantage and the insurers as to the existence of responding cover. Now the insurers have changed their position a number of times. But on any view, the applicant says that there is a clear foundation for the applicant to investigate the basis for and validity of any declinature. And he says that the prospect that the declinature may be invalid is no mere speculation. 40 Now the insurers contend that Davantage is capable of taking any action necessary to enforce its own insurance arrangements. And at the moment Davantage does not agree with the insurers' position. But the applicant says that it has not been suggested that Davantage will join the insurers to the group proceeding, and the applicant says that it would be wrong to assume that Davantage is motivated to contest the declinature. He says that there is no incentive for Davantage in doing so. The applicant says that the declinature, coupled with Davantage's asset deficiency, provide Davantage with a tactical advantage that it can use to seek a "bargain basement" settlement. Further and in this context, the applicant says that it is noteworthy that Davantage has not provided any response to the excess insurers' declinature. 41 Further, the applicant says that he should not have to accept the insurers' declinature at face value, settle the case for virtually nothing on the assumption that the insurers are correct, and leave it to the Court to assess the position on settlement provided only with submissions from Davantage and possibly its insurers, with no assistance from the applicant on this question. 42 Fifth, the applicant says that any settlement would need to be reached before any s 33V(1) approval application. But he says that this requires him to form a view as to the insurance cover. The applicant says that it would be irresponsible for him to settle the claims of just under 27,500 group members in any further mediation for a negligible amount in circumstances where: (a) he succeeded in the separate trial of the preliminary question, and accordingly has good prospects at least on that part of the applicant's claims; (b) the quantum of all claims is in the order of $47.6 million plus interest; and (c) Davantage has said the declinature is contested by it, and so it must be assumed that the declinature is reasonably contestable. 43 Further, the applicant says that the insurers' proposed approach of placing the burden upon the Court to evaluate the insurance position after any settlement is reached is illogical, unworkable, and contrary to principle. He says that it is for him and his advisers to quantify the risks of recovery and negotiate the best settlement they can or else to proceed to judgment. Further, and making the assumption that the Court, though armed only with partisan submissions from the insurers at the settlement approval hearing, formed the view that the declinature was doubtful and the settlement was too low, the applicant poses the following questions. How are the parties then to proceed? What are the parameters for any future settlement discussions? How should the applicant and his advisers thereafter weigh the costs and risks of proceeding to trial against the prospects of recovery? 44 Sixth, apart from Simpson (No 4), the applicant points to examples of orders made in other cases where s 33ZF(1) has been used to justify making orders for the production of a respondent's insurance documents. But I would say now that those examples are not useful for two reasons. First, they were consent or non-opposed orders. Second, they predated BMW v Brewster.

(c) Analysis 45 Let me begin my analysis with the following points. 46 First, the insurance documents are not relevant to the determination of any fact in issue in the group proceeding. It is trite to observe that insurance policies are not normally discoverable where they are not relevant to the determination of a fact in issue, save for under specific exceptions dealing with an insolvency scenario (see the type of scenario dealt with in Rodolfo Lopez v Star World Enterprises Pty Ltd [1997] FCA 454). 47 Second, an applicant has no right to examine a respondent ahead of a trial in an endeavour to elicit information about the respondent's means with a view to deciding whether it is worth his while to go on with the case or some part of it, save for specific exceptions such as insolvency. 48 Now the applicant seeks to justify a departure from this conventional position by invoking the protective role of the Court in a group proceeding with respect to group members, by the breadth of power under s 33ZF(1) and by my case management powers (ss 37M and 37P). I accept that there is power, but it is not one sourced to ss 33ZF(1), 37M or 37P. Rather, power is available under s 23. But in any event I would not exercise any such power in favour of the applicant. Let me elaborate.

Section 33ZF(1) 49 Let me first say something about s 33ZF(1). 50 The plurality in BMW v Brewster emphasised that whilst the power provided by s 33ZF(1) is wide, it is essentially a supplementary or gap-filling power. And as a supplementary source of power for Part IVA, it is not to be supposed that s 33ZF(1) was intended to meet the exigencies of litigation not adverted to at all by the provisions of Part IVA. So, s 33ZF(1) may not be "relied upon as a source of power to do work beyond that done by the specific provisions which the text and structure of the legislation show it was intended to supplement" (at [70]). Section 33ZF(1) "cannot be given a more expansive construction and a wider scope of operation than the other provisions of the scheme" (at [70]). And to do so "would be to use …s 33ZF … as a vehicle to rewrite the scheme of the legislation" (at [70]). Rather, s 33ZF(1) has the effect of "support[ing] any interlocutory procedural order necessary to ensure that the pleaded issues are resolved justly between the parties" (at [21]). 51 Let me say something further about Nettle J's analysis so that I can then synthesise the common themes of the majority. 52 It is useful to recall that the issue before the Court concerned the exercise of power under s 33ZF(1) to make a common fund order at an early stage of the proceedings. The issue did not concern any settlement approval under s 33V(1) or the exercise of any express power under s 33V(2), the latter of which provides: If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 53 Understandably then, Nettle J carefully expressed himself by reference to s 33ZF(1) and referred to "a common fund order ("CFO") of the kind in issue in these matters" (at [122]) and "the kind of CFOs sought in these matters" (at [125]). His context and kind was an early common fund order which he held was not empowered by s 33ZF(1) and was outside the legislative purpose; such a purpose "did not extend to addressing uncertainties on the part of litigation funders as to the financial viability of funding such proceedings" (at [126]). Contrastingly, s 33V(1) speaks to the other end of the time spectrum where the action is for all practical purposes over and no such in futuro "uncertainties" or "financial viability of funding" questions are in play. 54 So, he was clearly contrasting "the broad generality of s 33ZF(1)" with "the detail and specificity of other provisions such as… s 33V…" (at [124]). But he accepted that s 33ZF(1) could be used as a supplementary power to do what was necessary or incidental to achieving the objectives of, inter-alia, s 33V itself. 55 It would seem that Nettle J considered that his analysis was consistent with the plurality's views on the matters that I have just described (see his references at [122] and [128]). So, I will make that working assumption. And if you take the plurality's view together with Nettle J's view, then you can distil the following themes from the combination. 56 First, s 33ZF(1) is a power only to be exercised in the context of how an action should proceed in order to do justice. 57 Second, s 33ZF(1) can be used "to support any interlocutory procedural order necessary to ensure that the pleaded issues are resolved justly between the parties" (at [21]) or "to bring the matter to a fair hearing on a just basis" (at [45] citing the words of Tamberlin J). But s 33ZF(1) "is essentially supplementary" or "gap-filling" notwithstanding that it is broad (at [46], [60], [69] and [70]). So, and importantly, it was in the context of those observations that it was said that s 33ZF(1) could be used to "ensure that the proceeding is brought fairly and effectively to a just outcome" (at [47], [50], [51] and [54]). The concept of "just outcome" was not to be decontextualised and read up to be looked at from the perspective only of the applicant and group members. 58 There is nothing expressed in such observations to suggest that s 33ZF(1) could be used to override the conventional position that insurance documents are not discoverable. And it is not a sufficient justification for ordering production of the insurance documents that they may be of some assistance to group members. The criterion "justice is done" in s 33ZF(1) involves a consideration of the position of all parties. 59 Further, it is unremarkable that an applicant, even in a group proceeding, would not have the advantage of access to a respondent's insurance position prior to incurring expense at trial or for the purpose of assessing the value and desirability of a potential settlement. Generally speaking, this is not an unforeseen difficulty, although I do accept that there has been an unexpected change in Davantage's balance sheet strength. 60 In summary, and given the guidance now provided on the scope of s 33ZF(1), that provision in the present context is not a helpful source of power to the applicant. But what about the specific authorities on the question of the production of insurance documents?

Simpson (No 4) and other cases 61 The applicant has relied upon Simpson (No 4). 62 Simpson (No 4) involved a group proceeding the essence of which involved claims going to the falsity of representations made to the applicant and group members that they could rent specific goods, try those goods, and then buy those same goods for $1 at the end of the rental contract. 63 The applicant in that case sought to join Mr Marshall for his alleged involvement in making the representations, and AIG because it had refused indemnity to Thorn Australia Pty Ltd and Mr Marshall. The applicant's proposed claim against AIG was pursuant to ss 4 and 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the 2017 NSW Act). Apparently, Mr Marshall had foreshadowed his intention, if joined, to file a cross-claim against AIG for indemnity. It was in that context that Gleeson J ordered the joinder of Mr Marshall and AIG. 64 The applicant sought discovery from AIG, and orders were made for discovery of various categories of documents relevant to that claim. The applicant subsequently made an application for the production of Thorn Australia Pty Ltd's and Mr Marshall's insurance policies and associated documents pursuant to s 33ZF(1), relevantly for the purposes of mediation and prospective settlement approval. AIG resisted, but did not dispute the existence or legitimacy of those purposes. Gleeson J held that production of the documents was appropriate to ensure that justice was done in the proceeding in the following circumstances. First, there was a real possibility that if judgment were obtained Thorn Australia Pty Ltd and Mr Marshall would not be able to meet it. The claim was for $100 million. Second, AIG had denied liability to indemnify Thorn Australia Pty Ltd and Mr Marshall. Third, the applicant would be at a significant disadvantage in the mediation without the documents, and might be unable to demonstrate that a proposed settlement was fair and reasonable and in the interests of the group members as a whole. Fourth, it was accepted that the documents would confer a tactical advantage on the applicant to the detriment of AIG. 65 So it is said in the present case before me that there is a real possibility that if judgment were obtained, Davantage would not be able to meet it. Further, it is said that the applicant would be assisted at mediation if he had information about Davantage's insurance position. Further, it is said that any settlement requires Court approval, and the satisfaction of the applicant's legal representatives that the settlement is fair and reasonable and in the interests of group members as a whole. And such matters will be informed by Davantage's insurance position. 66 But in my view Simpson (No 4) does not sufficiently assist the applicant. 67 First, in Simpson (No 4), AIG had already been joined to the proceeding with the applicant having been given leave to bring a proceeding against the insurer directly pursuant to s 5 of the 2017 NSW Act, and it had been conceded by AIG that there was an arguable case against it for indemnity. But none of these features apply in the present case. 68 Indeed, these differences were held to be significant by Mullins J in Mallonland, correctly in my view. The plaintiffs in Mallonland also sought discovery of insurance documents under an equivalent provision to s 33ZF(1), relying on Simpson (No 4). In Mallonland, as in the case before me, the plaintiffs sought access to the defendant's insurance information on the basis that prospects of settlement would be reduced if the plaintiff's lawyers were required to advise on the reasonableness of a settlement offer without conclusive information about the insurance position, and in order to submit to the court that any settlement reached at mediation was reasonable and ought to be sanctioned. The plaintiffs in Mallonland also foreshadowed action against the defendant's insurer. Mullins J was not persuaded that it was either appropriate or necessary to ensure that justice was done in the proceeding at that stage to accede to the disclosure application in respect of the defendant's insurance policy and related documents. Mullins J also observed that it was premature for the plaintiffs to be concerned about how they would satisfy the court of the reasonableness of any settlement offer accepted at a mediation. I must say that I prefer the approach of Mullins J. 69 Second, Simpson (No 4) was decided prior to the High Court handing down BMW v Brewster. In Simpson (No 4), Gleeson J quoted extensively from the Full Federal Court's now superseded description of the breadth of s 33ZF(1) and was satisfied that s 33ZF(1) did empower her to order the disclosure of the insurance documents in question. But in my view, s 33ZF(1) cannot be so used. 70 Third, Gleeson J sought to distinguish Kirby v Centro Properties Limited [2009] FCA 695, in which Ryan J held that he did not have power to compel the production of documents concerning the respondent's insurance. Her Honour distinguished that case on the basis that Ryan J did not consider whether s 33ZF(1) conferred that power. But as I say, the Full Court's broad interpretation of s 33ZF(1), which was relied upon by Gleeson J, did not find favour in the High Court. In any event, I am confident that the able junior counsel for Mr Kirby, then Mr Lee instructed by Mr Murphy, the experienced Queen's Counsel for Centro and Ryan J were all quite familiar with and considered s 33ZF(1) in the context of that insurance application. 71 In Kirby v Centro Properties, Ryan J refused to order the production of insurance policies in circumstances where the proceedings before him had been referred to mediation and it was submitted that production of the policies was required to permit the applicant to evaluate or to agree to any proposal which might be made at the mediation for the purposes of s 33V or 33ZF(1). Like the present applicant, Mr Kirby contended that Centro would not be able to meet any realistic judgment sum if he succeeded. But Ryan J rejected the submission that a lack of knowledge by the applicant and his advisers of the existence and extent of insurance cover held by the respondent would preclude the applicant's advisers from forming an opinion on the reasonableness of any proposed outcome of negotiations in a mediation. He also rejected the submission that a mediation occurring in the absence of that knowledge would be hollow or inconsistent with the principles which the Court had developed for the mediation or case management of class actions. 72 Ryan J recognised that the underlying justification for the Court's traditional reluctance to compel disclosure of a party's insurance cover is that such policies will not normally be relevant to the proof of any cause of action pleaded against that party. Ryan J acknowledged that such documents may still assume significance in mediation, but found that this is a matter of commercial judgment or strategy and "is not something on which the Court can intrude by exercising its coercive powers if the limits of those powers are properly understood" (at [23]). 73 Further, Ryan J recognised the significance of the effect of an order for production of the respondent's insurance policy. The disclosure would give the applicant a benefit, in that his advisers would then know the sum available for satisfaction of a judgment. But the respondent would suffer a corresponding detriment. Ryan J accepted that the provision of insurance documents would give rise to asymmetric bargaining positions, which would prejudice the respondent. He said at [24]: Were the Court to make orders in the terms which the applicant seeks in relation to the policies of insurance, the effect would be that one party to the mediation would know from the outset the likely maximum extent of the financial capacity of the respondent giving discovery to contribute to any settlement. The prejudice to such a respondent immediately becomes obvious and reinforces the contention of Mr Beach QC for the respondents in VID 326 of 2008 made in oral submissions that there can be no cognate advantage (such as an indication of the group members' desperation to settle) conferred on the respondent. Accordingly, as Mr Beach argued, the respective bargaining positions of the parties would become "asymmetric". 74 Now such an asymmetry would also arise in the present case. For example, in the litigation funding agreement disclosure notice that the applicant filed on 6 September 2018, key commercial terms including funder obligations, funding premium control, settlement, security for costs and termination were redacted. I note that the funder's position is that it will not disclose the full terms of its funding agreement with the applicant. It no doubt takes that position because it considers that such disclosure would disadvantage the applicant and group members in settlement negotiations, and would correspondingly advantage Davantage. 75 Ryan J concluded that "… it is not within the power or discretion of the Court to compel disclosure to the applicant of the presumptive insurance policies" (at [28]). Now I would say here that I disagree with his Honour in terms of the existence of power. At the least, s 23 provides the necessary power. But I do agree with his Honour in terms of the exercise of power.

Contemporary case management theory 76 The applicant also strongly relied upon the Court's general powers to make orders under ss 37M and 37P to facilitate the overarching purpose. But none of this is a cure all, let alone an appropriate source of power in the present case. 77 In Beneficial Finance Corporation Limited v Price Waterhouse (1996) 68 SASR 19, the Full Court of the Supreme Court of South Australia rightly rejected the notion that case management principles of themselves could justify an order for production of an insurance policy that was not otherwise discoverable in accordance with the Rules of Court. 78 As Perry J said (at 34): Neither, with respect, am I able to agree that case flow management rules, in particular r 2, have anything to do with the scope of discovery. In particular, I am unable to accept that the case flow management rules are a warrant for overturning the construction which over the years has been placed on longstanding procedures such as the rules as to discovery, in favour of an amorphous application of them said to be justified in the interests of securing an expeditious disposal of the proceedings. The flexible application of the rules of court so as to keep pace with the changes in the manner in which and the pace at which litigation is conducted has always been part of the exercise of the pretrial jurisdiction of the court. But if that process is taken too far, there is a risk of destabilising the pretrial process with a consequent interference with the very purpose said to underscore the case flow management procedures, namely, the prompt and orderly disposal of litigation. 79 And as Lander J said (at 58): I cannot agree that the system of case flow management entitles or disentitles a party to a substantive right that the party did not or did enjoy prior to the introduction of the system except to disentitle parties from conducting their litigation otherwise than efficiently and expeditiously. More particularly case flow management, in my opinion, cannot be used for the purpose of making discoverable a document which would otherwise not be discoverable nor can it be used for the purpose of justifying the joinder of a party otherwise not susceptible to an order for joinder. Case flow management ought to be understood as no more than the court assuming the obligation of ensuring that litigation proceeds in accordance with the objectives stated in r 2.02. 80 Of course, Perry J and Lander J were not discussing ss 37M and 37P of the Act. But in substance what they said still has considerable force more than two decades later. Indeed, in Commonwealth Bank of Australia v ACN 076 848 112 Pty Limited [2015] NSWSC 666, Ball J referred to Beneficial Finance Corporation and noted that there was no reason to think that a different approach should apply with respect to the case management provisions of the Civil Procedure Act 2005 (NSW).

Potential proceedings against insurers 81 The applicant says that he needs the insurance documents in order to determine whether he should bring separate proceedings against the insurers. In this context he says that the trial of the claims for illusory consideration is likely to be short and efficient, as compared to the trial of the more fact-specific and context-driven inquiry of the claims for unconscionable conduct. So, if the insurers are wrong and can be shown to be wrong in separate proceedings so that it is established that the illusory consideration claims are covered by the insurance, those claims could be pursued to judgment more efficiently than a trial on all issues. 82 But in my view the provision of the policies ought not affect whether the applicant brings an application seeking orders to ensure that the unconscionable conduct claims are not heard at the next trial stage. In any event, Davantage has pleaded defences to the illusory consideration claims, and there is the prospect of appeal. Further bifurcation in any event may not be efficient. 83 Generally, the applicant says that in order properly to discharge his obligations to represent the claims of group members in the proceeding, the applicant must consider whether any application should be made against the insurers in order to resolve questions whether the policies respond. But the applicant's submission that it could bring such an application against the insurers for this purpose is problematic. 84 Sections 4 and 5 of the 2017 NSW Act apply only to claims brought in a New South Wales court. Now although s 79 of the Judiciary Act 1903 (Cth) could be utilised in some cases, the problem here is that this Court is exercising federal jurisdiction in Victoria. As such there is a doubt as to whether the 2017 NSW Act could be picked up in this group proceeding. But in any event let me make the following points. 85 MMS is the policy holder and the ultimate holding company of Davantage. MMS has a real interest in the insurers indemnifying Davantage in respect of the applicant's claims. But whilst MMS contests the insurers' position, the insurance position is presently a matter for it and Davantage. The applicant is a stranger to the policies. 86 Further, Davantage does not accept the various insurers' denials of indemnity and continues to engage in discussions with the insurers. Further, it is represented by Herbert Smith Freehills who are quite capable of advising Davantage as to its rights and prospects of challenging the denial of indemnity by the insurers. 87 In my view, it would seem that Davantage remains motivated to take any reasonable steps necessary to challenge the denial of indemnity, if it has a proper basis to so challenge the insurers' position. So, it is likely that the question of the availability of insurance will be ventilated between the parties to the contracts of insurance. 88 Further, to the extent that the applicant seeks access to the insurance documents in order to determine whether to commence proceedings against the insurers, this application is not the appropriate means by which to do so. There is a specific mechanism for seeking production of documents for the purpose of determining whether to commence proceedings against a third party. That mechanism is preliminary discovery which has not been invoked by the applicant. 89 Let me make two other observations. 90 First, there are considerable difficulties with the applicant as a stranger to the policies bringing such proceedings for declaratory relief outside an insolvency scenario. These difficulties were well ventilated by each of Ormiston JA and J.D. Phillips JA in C.E. Heath Casualty and General Insurance Ltd v Pyramid Building Society (in liquidation) [1997] 2 VR 256 at 258, 260 to 263, 267, 270 to 273, and 280 to 289 in rejecting arguments that I had put as counsel for Pyramid suggesting that such proceedings could be feasible. For present purposes all that I need do is flag such difficulties. Now I accept that a difference in the present matter is that the insurers have denied liability, aligning the present context more with J.N. Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432 than with C.E. Heath. Nevertheless this does not remove other substantial difficulties, which for completeness are also not removed by CGU Insurance Ltd v Blakeley (2016) 259 CLR 339. 91 Second, even if the 2017 NSW Act could apply, how would it work? The grant of leave under s 5 concerns proceedings against the insurer under s 4. 92 But s 4 is in the following terms: Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance. 93 Section 4 does not speak about hypothetical declaratory proceedings before it has been determined that the insured person "has an insured liability" to the claimant. And indeed, s 4(1) is speaking about proceedings by the claimant to "recover the amount of the insured liability from the insurer". It is not talking about hypothetical declaratory proceedings by the applicant against Davantage's insurers before it has been established that Davantage has a liability to the applicant. Perhaps the trial of an action against the insurer could take place at the same time as the trial of the group proceeding. But it is difficult to see how it could realistically do so before then. 94 But let it be assumed that proceedings could be brought first against the insurers. There would then be unsatisfactory time difficulties that would impinge on the disposition of the group proceeding. When precisely would such separate proceedings be brought? Where would they be brought? Further, both Davantage and MMS would need to be parties. Moreover, when would they be heard and disposed of? And how much disruption would be caused to the disposition of the group proceedings in the meantime? In my view, what is contemplated by the applicant could cause significant disruption and delay. Moreover, none of this would be significantly ameliorated if the applicant was to attempt to bring some form of application against the insurers in the present group proceeding if this was possible.

Mediation 95 As I have already indicated, the fact that the insurance documents might assist the applicant in a mediation does not justify their discovery. As Perry J said in Beneficial Finance Corporation (at 35): Mediation is an entirely different procedure from the trial of an action at law. While mediation may be mandated, nonetheless it is essentially a consensual procedure. It would be contrary to the proper disposal of pretrial procedures relating to proceedings in the civil jurisdiction of the court (as opposed to mediation) to confuse those procedures by taking steps which might be thought desirable if there was to be a mediation. … It was contended that disclosure of the extent of the indemnity available to the defendants might have an effect upon decisions taken by the plaintiff as to what issues it will pursue at the trial, with a potential saving in cost if the issues were for that reason reduced. I do not see that as a matter which would justify joinder or discovery in aid of discovery. Ordinarily, matters of that kind might well emerge at the pretrial conference stage. But unless a party sued volunteers the information, there is no right in a plaintiff to examine a defendant ahead of the trial in an endeavour to elicit information about the defendant's means, with a view to deciding whether it is worth his or her while to go on with the case, or some part of it. 96 And as Lander J said (at 58): Next his Honour relied upon alternative dispute resolution, because it was submitted to his Honour, the respondents may well give consideration to limiting the scope of their claim and thus the issues to be tried. So also his Honour said that the possibility of mediation was a fact relevant to the making of this order. Again I cannot agree with the learned judge. Because a court may require parties to submit to mediation is not, in my opinion, in any way relevant to determine whether or not a party ought to make discovery of a document which records its commercial relationship with a party, not then a party to the proceedings, and in circumstances where the document is not relevant to any matter currently in the proceedings. The matters of alternative dispute resolution or mediation are not good reasons to override a party's right to keep its commercial documents or any of its documents confidential, nor are they a reason to allow one party to intermeddle in the affairs of another party and its insurers. 97 In Commonwealth Bank of Australia v ACN 076 848 112 Pty Limited, Ball J (at [23]) elaborated upon similar themes. 98 And as I have said, in circumstances where production or disclosure of the relevant insurance details will confer a tactical advantage on the applicant, and a corresponding disadvantage upon the respondent, thereby creating an asymmetry in the parties' positions at mediation, facilitating such a course would not usually be appropriate to ensure that justice is done in the proceeding. The interests of the applicant and group members do not trump those of the respondent to that extent.

Court approval of settlement 99 In my view, the applicant's lack of access to the insurance documents at this time will not preclude the Court from being able to approve a settlement. 100 The Court's class actions practice note provides flexibility as to the means by which the Court may be satisfied that the settlement is fair and reasonable. The Court is not limited to receiving evidence only from the applicant in that regard. 101 Now I accept that the applicant has made a reasonable point in saying that on a s 33V approval application, insurance questions may need to be looked at. Assume that to be so. There are a number of points that can be made. 102 First, I can design procedures to flush out the insurance question at that stage if necessary. I could require confidential material to be produced by Davantage or the insurers at that point. In circumstances where Davantage's insurers have denied indemnity to Davantage, it would, for example, be possible for a confidential affidavit to be filed with the Court justifying why denial of indemnity was reasonable in all the circumstances, to otherwise supplement the information available to the Court as to the financial position of Davantage. I could even appoint an amicus. Indeed, I could even refer the matter to a special referee or independent expert to look at the matter and to provide an opinion to the Court. There are many possibilities. Such procedures could firm up or verify any foundational assumptions that the applicant had made in agreeing to a settlement in principle, subject to s 33V approval. 103 Second, if any foundational assumptions were not firmed up, s 33V approval would not be given and the matter would be given back to the applicant to decide the course he wanted to take. As part of this, at that stage some disclosure to the applicant might be ordered by me of the insurance position. More generally, the applicant could seek further directions from me as to how he should proceed. 104 Third, the applicant asserts that without the insurance documents he cannot even reach an in principle settlement at any mediation. Let me say a number of things as to this. 105 In a sense, any applicant in any litigation whether a class action or not might assert this. The fact is that settlements occur on imperfect information. 106 Further, the applicant can settle "in principle" on a foundational assumption or a representation made by the respondent. If that is made transparent before me I will seek to verify it in any s 33V process if the applicant cannot. Indeed, the respondent would also have an interest in verifying it. And if it was not verified, then other steps can be taken.

(d) Conclusion 107 Let me make the following final observations. 108 First, I have carefully considered the Court's protective role under Pt IVA. But the boundaries thereof are not unlimited and do not go so far as to justify giving the applicant, under the collective action of a group proceeding, the right to obtain a respondent's insurance documents in a context such as the present that the applicant and group members would not normally have in individual proceedings. 109 Second, I do accept that there has been a changed circumstance in Davantage's balance sheet strength since the time of issue that no doubt impacts upon the judgment call to be made by the applicant and his advisers as to whether to pursue the proceeding further and in what form, or whether to settle the proceeding and if so on what terms. And I well appreciate the applicant's desire to inform himself further on such matters by seeking to obtain the insurance documents. Nevertheless this is not a compelling enough reason to grant his application. 110 Third and finally, one can reasonably speculate about what would follow if I was to accede to the application. Now it is to be recalled that the primary insurer has denied cover save as to a limited aspect, and the excess insurers have denied cover generally. Therefore, it may be queried how much utility there will be in reviewing the insurance documents in that context, as distinct from a scenario where an insurer has accepted that its policy covers a respondent's liability to the applicant in relation to the nature of the claims but the respondent and insurers want to keep confidential the dollar figure of the available cover. But I do not have to speculate further. I do not propose to accede to the applicant's claims. 111 In summary, I accept that I have the power to make the orders sought under s 23. But I do not accept that ss 33ZF(1), 37M and 37P provide an available source of power. 112 In any event, for the various reasons given I would not exercise any power in favour of the applicant to order production of the insurance documents. I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.