G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd

Supreme Court of NSW|2024-06-18|Before: Stevenson J

Solicitors: HFW Australia (Plaintiffs/Cross-Defendants/Respondents) Corrs Chambers Westgarth (Defendants/Cross-Claimants/Applicants) File Number(s): 2019/71358

EX TEMPORE JUDGMENT (REVISED)

The background to this matter is set out in my numerous interlocutory judgments, including that of 17 May 2022. [1]
This is the Court's 14th and my 12th interlocutory judgment in these proceedings.
I will use the same abbreviations here as I have adopted in earlier judgments.
The matter is now fixed for hearing for two months commencing on 19 August 2024.
By notice of motion filed on 8 April 2024, MACH seeks orders that the solicitor for the plaintiffs and cross-defendants ("CDJV"), Mr Kenneth Hickman, and the general counsel for the fourth cross-defendant, DRA Global Ltd, Ms Victoria Hawkins, attend on a date to be fixed to be cross-examined on their affidavits of discovery of 4 October 2023 and 27 September 2023 respectively.
There is no dispute as to the relevant principles. They have been summarised in a comprehensive and very helpful fashion by Mr Ball, who appears for MACH.
The general rule is that an affidavit verifying discovery is conclusive on the question of whether there has been proper discovery and that cross-examination of the deponent will not be allowed except in three circumstances: 1. if it can be shown (from the pleadings, the verifying affidavit, or some other source) that there are reasonable grounds for being fairly certain that there are other relevant documents which have not been discovered; [2] 2. if it can be shown that the discovering party has misconceived its obligation of discovery, in which case it is not necessary to infer the existence of other relevant documents; [3] and 3. if the Court in its discretion considers it otherwise necessary for such cross-examination to occur - though such discretion should be exercised with the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW) in mind, including the goal of avoiding the process of discovery becoming unduly onerous. As to this point, it should be noted that cross-examination provides a tool for finally disposing issues without the drawn-out and seemingly endless process of solicitor correspondence. [4]

Mr Crowe's work laptop and handwritten notes

Mr Michael Crowe was the managing director of the first cross-defendant from 2009 to 2019 and was the senior vice president of the fourth cross-defendant from 2019 to mid-2022.
Mr Crowe had what the parties have described as a "work computer".
In relation to that computer Mr Hickman has given this evidence: "5. On around 29 January 2024, I called Mr Crowe. Mr Crowe informed me that he had returned a work PC, that he had used in China, to DRA's Brisbane office in around mid-2023, after his departure from DRA. 6. After notifying Ms Hawkins of this conversation, Ms Hawkins informed me on 31 January 2024 that: (a) Between 29 and 31 January 2024, she had made enquiries within DRA regarding Mr Crowe's work PC; (b) When the work PC was returned to DRA's IT department it was mistakenly not identified as being subject to DRA's litigation hold procedure and was re-formatted to be re-deployed to another employee; (c) The hard drive of the laptop was searched by DRA's IT department, but no documents were located on the hard drive that had been previously stored on the device by Mr Crowe; (d) It is not known whether there were documents on the hard drive of the laptop before it was reformatted. The process of reformatting deletes the hard drive; (e) Documents saved to a OneDrive folder via the device remained accessible to DRA's IT department, who were able to log into Mr Crowe's OneDrive account by virtue of their administrative rights. Those documents were provided to HFW for review."
Mr Ball submitted, in relation to the matters there set out, that "the admitted existence and destruction of Mr Crowe's work computer are serious matters warranting cross-examination according to the first [category] described" at [7(1)] above. Mr Ball submitted that there is still no explanation provided as to "how Mr Crowe's laptop came to be destroyed beyond citing some 'mistake'".
I think this overstates matters somewhat. I do not see that the matters to which Mr Hickman deposed shows that Mr Crowe's computer was "destroyed".
However, as Mr Ball has submitted, "something" has gone "wrong". But it has been explained.
What Mr Hickman's evidence did reveal was the existence of a "OneDrive folder" through which CDJV's IT department could evidently access Mr Crowe's "OneDrive account" and access the handwritten notes to which Mr Hickman referred.
Further, on 22 February 2024, CDJV's solicitor stated in regard to these matters: "a. despite reformatting of its local drives, 'documents saved onto a OneDrive folder via the device remain accessible'; b. the OneDrive folder contained an electronic copy of Mr Crowe's handwritten notebooks, being 'the same notebooks from which [CDJV] ha[d] already given discovery'; c. 'for completeness, [CDJV had] re-reviewed the notebooks' and 'identified 33 further discoverable documents on the OneDrive folder, inclusive of the additional notebook entries'."
Mr Ball submitted the fact that Mr Crowe's overwritten records could be accessed via the OneDrive system bespoke the possibility that there are other discoverable documents that might be available and accessible in CDJV's OneDrive system.
As Mr Ball submitted: "The connection between the two matters is not entirely clear; that is, why the discovery of a cloud-based server would prompt the review of physical documents and the reconsideration of prior disclosure resulting in the identification of further documents which ought to have been discovered previously."
It was on this subject, as the argument developed, that Mr Ball submitted that cross-examination of Mr Hickman and Ms Hawkins should be permitted.
I propose to give CDJV a choice. Either Mr Hickman and/or Ms Hawkins can make an affidavit setting out the extent to which CDJV could have, and has sought to, access its OneDrive folder in order to comply with its discovery obligations; or I will permit cross-examination on this topic.
Any such affidavits should be served and provided by email to my Associate by 5pm on 20 June 2024.

Mr Crowe's previous mobile phone

Mr Crowe evidently had two mobile phones issued to him by CDJV. One was a Huawei phone issued in September 2019. There was also a "previous phone".
In relation to the Huawei phone, Mr Hickman deposed in his affidavit of discovery of 4 October 2023: "17. In April 2023, I contacted Mr Crowe by telephone to enquire about any mobile phones in his possession which may contain messages relevant to these proceedings. Mr Crowe informed me that: (a) in about September 2019, he relocated from Brisbane to Dalian in the People's Republic of China as part of his employment with DRA Global; (b) around that time, he purchased a Huawei mobile phone in China which was paid for by the DRA group, and he still had that phone in his possession; (c) when he setup the Huawei phone, he used his existing mobile phone profile. Because of this the phone contained a backup of messages dating back to at least early 2018, (d) he reset his existing device when he replaced it with the Huawei phone; (e) the Huawei phone was the only phone within his possession that contained messages from 2017 or 2018; (f) he was willing to provide the Huawei phone to the Cross-Defendants for discovery. 18. On 3 May 2023, I received a call from Mr Crowe. He informed me that he had delivered the Huawei phone to Sky Discovery - an e-discovery firm used by the Cross-Defendants to assist with managing their discovery in these proceedings. 19. I instructed Sky Discovery to take an image (i.e a digital copy) of all messaging data that was accessible on the Huawei phone, and to upload that data onto the Cross-Defendants' e-discovery database, Relativity. I am informed by Mr Tom Pritchards, Head of Consulting for Sky Discovery, that Sky Discovery arranged for an image to be exported which included all instant messages and chat records available on the phone, and that all of these records were uploaded onto Relativity. 20. The messaging data was available in Relativity from about 5 May 2023. My team and I at HFW undertook a review of the messages for the purpose of discovery. The substance of that review was as follows - (a) I reviewed a list of all contacts (i.e. senders or recipients of messages) within the messaging data obtained from Mr Crowe's phone, and identified 34 who are potentially relevant to the issues in dispute in these proceedings. Those contacts are listed in Annexure A to this affidavit; (b) a date-range search was conducted over all data available from the phone involving those 34 contacts, and the results of that search were reviewed; (c) the date ranges used were: (i) 1 December 2016 to 21 March 2017; and (ii) 1 December 2017 to 6 August 2018; (d) messages identified as responsive to the Cross-Claimants' discovery categories were tagged for disclosure and were produced to the Cross-Claimants on 24 May 2023. 21. In June 2023, my team and I at HFW undertook a further review of the messages in an attempt to resolve queries raised by the Cross-Claimants as to the adequacy of the discovery of those documents. This review was undertaken in the same way as I describe above and resulted in the identification and disclosure of 12 further messages to the Cross-Claimants. 22. In September 2023, I was informed by Ms Hawkins that she had arranged for the DRA IT team to undertake further searches to locate any forms of instant messages sent or received by Mr Crowe, either by a mobile phone or by computer, but no further instant messages could be identified."
As to the "previous phone", Mr Hickman deposed in his 2 May 2024 affidavit: "11. In my 4 October 2023 affidavit, at paragraph 17, I stated information provided to me by Mr Crowe about mobile phones in his possession. 12. Mr Crowe identified the existence of two mobile phones. A phone that Mr Crowe had used up until about September 2019, and a Huawei phone that Mr Crowe obtained in China in about September 2019 to replace the previous phone. 13. As at 4 October 2023, based on the information provided to me by Mr Crowe, only the Huawei phone had been searched for discoverable documents. 14. In February 2024, I obtained the previous phone, arranged for it to be searched, and identified that it contained 15 discoverable messages. Those messages were produced to the Cross-Claimants on 22 February 2024.
Mr Ball submitted that the fact that "steps were only taken with respect to the [previous] mobile phone (and messages later discovered from it) after it was physically returned to CDJV by Mr Crowe" bespoke a misunderstanding by CDJV of its discovery obligations.
MACH's concern is as to whether there are other employees or former employees of CDJV to whom telephones were issued for work use, but who have not been asked to make their telephones available in order that they be searched for discoverable material.
Mr Hickman has given evidence as to the steps taken to locate mobile phones used by personnel such as Mr Crowe: "16. In about November 2022: (a) I asked Ms Hawkins to arrange for the Cross-Defendants to undertake a search to identify whether they held any mobile phones used by personnel of G&S, including Mr Crowe, in 2017 or 2018; (b) I was informed by Ms Hawkins that (i) members of DRA Global's IT team, which has responsibility for managing all mobile phones held by DRA and G&S personnel, had undertaken a search to locate any G&S mobile phones held by the DRA group of companies (including G&S), and (ii) the only G&S mobile phones located by DRA Global's IT team were damaged phones with no recoverable data that had been returned from personnel working at remote client sites."
In relation to that matter, on 22 February 2024, CDJV's solicitors advised MACH's solicitors: "a. reasonable searches and enquiries (set out in [20]-[25] of the Hawkins affidavit and [16]-[22] of the Hickman affidavit) had been undertaken to locate mobile phone devices used by Mr Crowe within the Cross-Defendants' possession, custody or power, including: i. a search of CDJV's mobile phone procurement records, which did not identify any mobile phone devices provided to Mr Crowe by the business other than the Huawei phone; and ii. enquiries made with Mr Crowe, in which HFW 'were informed that the Huawei phone was the only phone that contained messages from the period relevant to the proceedings'; b. the prior phone 'was not within CDJV's possession, custody or control, for the purposes of discovery' and CDJV in 'voluntarily tak[ing] possession] of the prior phone had gone 'above and beyond [its] discovery obligations, in the interest of avoiding further disputation on these issues'; and c. CDJV had reviewed the prior phone and identified 15 further discoverable text messages."
This appears to suggest that CDJV considered that, for the purpose of discovery, it was only obliged to interrogate the telephones of its employees if its employees had voluntarily given CDJV access to its telephones. In that regard, as Mr Ball submitted: "A mobile phone issued by an employer to an employee is within the 'possession' of the employer … because the employer (in the ordinary course [of business]) can demand the return of the phone during the employment and a fortiori once the employment [has ceased]." (Emphasis in original.)
Mr Ball submitted: "Cross-examination of this misunderstanding and extent of its effect on discovery from Mr Crowe's and other possible repositories of documents is justified because MACH and the Court otherwise cannot know whether CDJV has complied with its obligations beyond narrowly searching for documents within its physical possession."
I see force in that submission.
Once again, I propose to give CDJV a choice. Mr Hickman and/or Ms Hawkins can make an affidavit, to be served and provided by email to my Associate by 5pm on 20 June 2024, setting out what CDJV's position is in relation to these matters. Otherwise I will permit cross-examination on this topic.

Andrew Naude's laptop

Mr Naude was a director and CEO of various other cross-defendants from February 2016 to October 2022. He had an HP laptop.
In that regard, Mr Hickman said in his affidavit of discovery of 4 October 2023: "62. In about May 2023, I was informed by Ms Hawkins that the Cross-Defendants had located within their South African offices: (a) a laptop which appeared to have been used by Mr Naude for work purposes; (b) Ms Hawkins would arrange for the laptop to be delivered to HFW's Perth office for the purpose of discovery. It arrived at HFW's offices in May 2023 or June 2023. 63. Mr Paul Evans, a Partner of HFW who has carriage of this matter with me, arranged for a file list to be produced after it arrived at HFW's Perth office, showing all files on the laptop. Mr Evans and I both reviewed the file list but did not identify any documents relevant to these proceedings. 64. Also in about May 2023, I was informed by Ms Hawkins that: (a) the Cross-Defendants had located a further laptop used by Mr Naude; (b) it appeared to be a personal laptop, as it was not owned by the Cross-Defendants and was not a brand that had been issued to employees of DRA Global at the relevant time (it is a HP laptop, whereas DRA laptops at the time were Dell laptops); (c) the Cross-Defendants have not taken steps to examine the laptop to assess whether it contains discoverable documents, as the laptop is understood to be personal and private property to Mr Naude which the Cross-Defendants do not have consent to access."
Evidently, proceedings are on foot in the Federal Court of Australia between one of the cross-defendants, DRA Global Ltd, and Mr Naude.
In relation to those proceedings, Mr Hickman has deposed in his 2 May 2024 affidavit: "15. In my 4 October 2023 affidavit, at paragraph 64, I stated information provided to me by Ms Hawkins about a laptop held by DRA that was believed to be the personal and private property of Mr Naude. I stated, in my affidavit, that the Cross-Defendants had not searched that laptop. 16. There are currently proceedings on foot in the Federal Court of Australia (WAD231/2023) between DRA Global Limited and others (as Applicants) and Mr Naude and others (as Respondents). 17. A dispute arose between DRA Global and Mr Naude in respect of the laptop. Mr Naude brought an application for delivery up of the laptop. DRA Global brought an application for an order that they be permitted to forensically image the laptop. 18. On 23 April 2024, DRA Global's application was dismissed and Mr Naude's application was allowed. DRA Global was ordered to deliver the laptop to Mr Naude. DRA Global delivered the laptop to Mr Naude's solicitors on 23 April 2024. 19. On 24 April 2024, the Cross-Defendants informed the Cross-Claimants of the order, and that the laptop had been delivered to Mr Naude's solicitors."
Thus it appears that Mr Naude's laptop did come into the possession of CDJV, but that CDJV has now been directed to return the laptop to Mr Naude.
There is thus no longer any question of CDJV's obligation to interrogate Mr Naude's laptop.
However, the wider question that arises is whether this is an isolated incident or whether there have been other occasions on which CDJV has not sought to obtain access to ostensibly private laptops or other devices used by its personnel during the relevant period in order to ascertain whether there is, within those devices, discoverable material.
Mr Ball submitted it was necessary in the circumstances that there be cross-examination on this subject, because: "Without cross-examination on this topic, neither the Court nor MACH can presently be satisfied that CDJV has searched for documents in its possession, custody, or power untainted by a misguided [5] concern for the privacy of its employees and former employees."
Again, I propose to give CDJV the opportunity to have Mr Hickman and/or Ms Hawkins make an affidavit setting out CDJV's position in this regard, absent which I will permit cross-examination on this topic.
Again, the affidavit should be served and provided to my Associate by 5pm on 20 June 2024.

Keywords

On 6 September 2023 I ordered CDJV to explain by affidavit "the substance of all searches (including details of the document repositories and data sources searched) … that have been undertaken" by CDJV.
Mr Hickman made an affidavit setting out those matters and has said that he undertook keyword searches across multiple categories of documents. He identified in relation to one category of documents the keywords he used.
MACH's contention is that CDJV has not complied with my order because it has not identified the actual keywords used in relation to each category of documents discovered.
However, the answer to this is that my order did not require that this be done.
I do not see that what Mr Hickson has done bespeaks any misconception by CDJV as to its discovery obligations. After all, as CDJV has pointed out in its written submissions, MACH has not sought an order that CDJV provide the keywords used.

The "file list" issue

During oral submissions this morning, on 18 June 2024, Mr Ball raised for the first time an issue in relation to a "file list" referred to by Mr Hickman in his 4 October 2023 affidavit.
It is too late in the day for that issue to be raised and I do not propose to deal with it.

The affidavits

I will stand this matter over before me to 2pm on 21 June 2024.
In the event that CDJV has caused Mr Hickman and/or Ms Hawkins to make affidavits of the kind I have described, I will then decide whether to permit any cross-examination on those affidavits.
If CDJV has not served any such affidavits, I will then make orders that Mr Hickman and Ms Hawkins be made available for cross-examination on the topics I have outlined.

Endnotes

G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 6) [2022] NSWSC 628.
Dai v Zhu [2013] NSWCA 412 at [124]-[125] (Sackville AJA, Barrett and Leeming JJA agreeing) citing Procter v Kalivis [2009] FCA 1518; 263 ALR 461 at [33] (Besanko J); Con Ange v Fairfax Media Publications Pty Ltd [2010] NSWSC 1200 at [39] (Garling J) citing Preston v Star City Pty Limited [2007] NSWSC 293 at [21] (Hoeben J).
Dai v Zhu at [124]-[125] citing Procter v Kalivis [2009] FCA 1518; (2006) 263 ALR 461 at [33] (Besanko J); Con Ange v Fairfax Media Publications Pty Ltd at [39] citing Proctor & Gamble Australia Pty Ltd v Medical Research Pty Ltd [2001] NSWSC 183 at [64] (Hunter J).
Dai v Zhu at [124]-[125].
Mr Ball's language. 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: 19 June 2024

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