INPEX Operations Australia Pty Ltd v AkzoNobel NV [2024] FCA 1221 | Case summary

INPEX Operations Australia Pty Ltd v AkzoNobel NV [2024] FCA 1221 | Case summary | Zoe

[19]

Background 2 This action, referred to as the INPEX action, is being heard concurrently with WAD 448 of 2017, referred to as the JKC action. In accordance with an ongoing convention in the proceedings, I will refer to the parties as INPEX, JKC and ANIP. ANIP is the respondent in both actions. 3 Each of INPEX and JKC pursue ANIP in relation to the supply and use of a protective coating product known as Intertherm 228 (I228) on piping and equipment used in the Ichthys LNG Gas Field Onshore Project at Bladin Point, Darwin. The I228 has degraded. The cost of rectification is said to be in the billions of dollars. Which party should bear that cost is in issue. 4 It is not necessary to set out any further details in these reasons, as there are a number of interlocutory judgments in the respective proceedings that already do so. Some will be referred to below. 5 In terms of the trial architecture, the questions of liability and quantum are to be determined by a liability trial (which proceeded over the course of some 11 weeks from 17 June 2024), a reference of specified quantum issues to a referee which is to proceed in November 2024, and a hearing to consider the adoption of the referee's report scheduled for May 2025. Judgment on liability and quantum will not be delivered until sometime after the adoption hearing. 6 Although the liability trial is largely complete, at the date of the hearing of this application there remain some discrete matters to be addressed on a small number of allocated hearing days in October 2024 and November 2024, including potential further oral closing submissions and evidence from a further witness. Further written closing submissions remain to be filed. The parties continued to request and produce documents during the trial. Issues with discovery were raised during the course of the trial. Relevantly, a number of affidavits were filed on behalf of ANIP during the trial that purported to respond to some of those issues. The intention to cross-examine the deponents was anticipated during the trial. Senior counsel for INPEX made its position expressly clear during oral closing submissions and there were discussions at that time about programming this hearing and the filing of respective submissions. This context is important. This is not a standard pre-trial self-contained interlocutory application, where time may permit various options to be explored ahead of trial. It is brought during the closing stages of a long and complex liability trial and in relation to continuing disclosure obligations.

[23]

Attribution 14 Another key issue is attribution. Some of the threshold jurisdictional issues relating to the operation of s 18 of the Australian Consumer Law (ACL) in the circumstances of this case ultimately fell away during the trail. However, even if it is found that representations were made (which ANIP denies), INPEX must establish which of the respondents made the representations, whether expressly or impliedly, or is liable because the representations are attributable to them. The attribution case requires an understanding of the roles and responsibilities of a large number of people. ANIP has a global structure. The first respondent, AkzoNobel NV (headquartered in the Netherlands) is the parent company. It has a Board of Management and a Supervisory Board. By way of overview, at the relevant time it divided the operations of the AkzoNobel Group of companies across three divisions, described as business units, with sub-business units and a global team referred to as key account managers. 15 In particular, the liability of the first respondent (AkzoNobel NV) and the second respondent (IPL) for the making of the representations is in issue in both the INPEX and JKC actions. The interconnection between various entities and teams and the roles and responsibilities of members of the business units and teams within the AkzoNobel Group is highly relevant to the attribution case. ANIP has not called any witnesses in relation to such matters. Nor has it called any of the persons who wrote or received key communications. In those circumstances it is unsurprising that INPEX and JKC have vigorously pursued discovery that relates to the attribution case. 16 A particular aspect of the attribution case is the involvement of three ANIP senior personnel, being Mr Leif Darner, Mr Conrad Keijzer and Mr Rob Molenaar. Both Messrs Darner and Keijzer were very senior within the AkzoNobel group, sitting on AkzoNobel NV's Board of Management or Executive Committee (ExCo) at various times. ANIP has admitted that Mr Darner was employed by 'an entity within the AkzoNobel Group'. It has not otherwise identified his employer. Mr Keijzer was employed by AkzoNobel NV. Mr Molenaar was the managing director of the Marine and Protective Coating Business Unit at a relevant period and reported to Mr Darner and Mr Keijzer. The absence of, or very minimal, discovered communications by or involving these personnel, or production of information about the terms and conditions of their employment, their duties, responsibility and authority, has been a long-running contentious issue. It was the subject of a 29 November 2023 discovery application and three subsequent hearings. Orders were made on 17 May 2024 requiring discovery in that regard. I was informed that no documents responding to this category in relation to Mr Darner have been produced to date. 17 That same application and orders required certain discovery of ANIP approvals or records of decision making in relation to the Project, documents recording strategic or operational plans which relate or refer to the Project and any approval of those plans, and minutes of meetings, board papers, briefing papers or presentations of the AkzoNobel Board of Management/ExCo, Performance Coatings Business Area Board and the Operational Review Meetings (ORMs) that refer to the Project or any other projects in Australia.

[25]

Gaps in document production 19 This litigation involves events over a period of about a decade, but in particular between 2011 and 2017. In proceedings of this scale, some problems with document identification and retention are bound to arise. Some mistakes are inevitable. Mr Gleeson KC for INPEX stated on a number of occasions that this application is aimed at fair disclosure, not punishment or embarrassment. That position must be acknowledged and endorsed. It must also be recalled that one of the aims of the discovery regime implemented by the parties was efficiency in so-called mega litigation. The manner in which categories were drafted, agreed or determined took account of the need for efficiency, and it is fair to say that all parties compromised to some degree in relation to search terms, filters and other discovery tools. 20 However, in the lead up to and during trial, it became apparent that documents which fell within the identified categories or orders and should have been revealed by way of the discovery process had not been produced by ANIP. I accept that INPEX also produced some additional documents during trial. I accept that INPEX was unable to locate certain documents. However, this application does not concern INPEX's discovery. 21 As to ANIP's discovery, it is not possible within any sensible timeframe to rehearse the history or content of the numerous communications between Corrs Chambers Westgarth (representing INPEX) and Clayton Utz (representing ANIP) constituting requests by Corrs to undertake further searches or produce documents, refusals by Clayton Utz to do so (in full or in part), or agreement by Clayton Utz to do so whilst denying any such obligation. Needless to say, there were differences of opinions expressed as between Corrs and Clayton Utz on many matters. 22 I approach this application on the basis that the overarching aim is to ensure fairness to the parties in the conduct of this trial, having regard generally to the interests of justice. 23 With that in mind, I turn to the contentions of INPEX. In addition to it submissions, INPEX relied on an affidavit of Mr Callum Strike. Mr Strike is a partner of Corrs and together with two other partners has carriage of the matter for INPEX. 24 The application was prompted by the production of 2,972 documents by ANIP during the 11-week period of the liability trial (and the days immediately before and after it) and the contents of the relevant affidavits filed by ANIP. Many of the late discovered documents respond to categories in the INPEX Combined Redfern Schedule and discovery orders, and, according to INPEX, are highly relevant. INPEX relies on apparent issues in the discovery process implemented by ANIP that it says are disclosed by the late discovery. INPEX also referred to the late production of a number of specific documents by way of example. The late production of these documents was referred to by Mr Gleeson on a number of occasions during the course of the liability hearing, as and when documents were produced. The application also relies on what are said to be inadequate or ambiguous explanations as to why repositories of certain documents apparently no longer exist - for example, the email boxes of a large number of ANIP employees and senior management.

[26]

The 2,972 additional documents 25 Mr Strike deposes to the dates on which the 2,972 documents were disclosed. By way of example, on 14 June 2024, 54 documents were provided. On 25 June 2024, 69 documents were provided. On 9 August 2024, 2,325 documents were provided. On 16 August 2024, 181 documents were provided. These were not new documents - they dated mainly from the years 2013 to 2017. It must be observed that the trial was ongoing at the time of production. Counsel on all sides were occupied at the time with examination and cross-examination of lay and expert witnesses. 26 I also acknowledge that Clayton Utz contends that some of those documents were provided in response to requests from Corrs despite the fact Clayton Utz considered them to be irrelevant. 27 However, Mr Strike prepared a schedule which selected some 51 documents from those produced and summarised parts of those documents that indicated their relevance. As the documents are exhibits in the proceedings, I have had the benefit of reviewing them. All appear on their face to fall within discovery categories. 28 I will refer to some of the 51 documents identified by Mr Strike in order to illustrate the point. Category 18 of the INPEX Combined Redfern Schedule is as follows: All documents recording any adverse performance issues (including issues such as accelerated oxidation, chalking, loss of coating and degradation, where degradation means cracking, micro cracking, pitting, corrosion and corrosion under insulation, coating erosion, rust crazing, extent of cure and thermal shock or degradation at service temperatures from 120°C) or complaints with the performance of I228 as a coating on pipework and equipment on other projects which used I228 in similar applications or environmental conditions to the Ichthys Onshore Project, in the period 2002 to the present. 29 The following table (adopted and edited from Mr Strike's affidavit) sets out a sample of nine documents produced during the course of the trial that objectively fall within this category: Document Date Exhibit No Description of document Date document produced 14 May 2013 Exhibit 9417 Email chain involving Kenneth Jonsson and other ANIP employees discussing chalking of 1228 on a different project and noting a 'general "feeling "...that any epoxy probably needs to be top coated to prevent massive chalking'. 9 August 2024 27 May 2013 Exhibit 11458 Email chain involving Omar Gunnarsson, Kenneth Jonsson, David Claydon and other ANIP employees with subject line, 'Smelters in Iceland - huge problem with exterior exhaust ducts'. 9 August 2024 The email from Gunnarsson to Jonsson notes 'the grey colour had completely chalked away' and 'In some places we see corrosion has started'. 11 December 2023 Exhibit 9419 Discussion of letter to [third party] from 'IP Chemist' that 'says UV is detrimental to 228'. An email from Barry Tungland notes 'I wrote the letter. If 228 is left outside exposed for that length of time, bad things happen'. 9 August 2024 15 July 2015 Exhibit 9565 Document titled 'AkzoNobel Insurance Management General and Product Liability Insurance claims form' addressing an issue encountered on another project which notes 'Extreme Chalking of Intertherm 228 Top Coat' in a description of the reason for the claim. 16 August 2024 21 December 2015 Exhibit 9439 Email from Matthew Lee (Risk & Liability Management, ANIP) to Brian Mitchelson regarding the [third party] LNG claim. Lee notes 'I have been asked to write to the loss adjustor to emphasize the accelerated chalking is a normal occurrence in these exposed areas and therefore we should have specified a top coat to protect the costing system'. 16 August 2024 2 February 2017 Exhibit 9437 Letter from JG Kim (IPK R&D Centre) to [third party customer] 13 August 2024 with the subject 'Intertherm 228 - [project name] Substructure project', dealing with the 1228 curing time in low temperatures. 10 March 2017 Exhibit 9438 Email chain involving Nigel Atkinson (ANIP) and Keizo Fujino (Meisei) discussing among other things the 'mode of failure at the Darwin site' and noting that an 'independent conclusion from JKC is entirely consistent with the technical conclusion of AkzoNobel in the case of [third party] i.e. exposure to UV and rain washes the coating from the pipework.' 16 August 2024 Undated Exhibit 9434 Extract of complaints/claims regarding 1228 and I228HS from the GCC database. 13 August 2024 Undated Exhibit 9433 Extract of complaints and claims register regarding 1228 2 August 2024

[28]

The Ward letter - Exhibit 9474 34 A specific document provided late is the so-called Ward letter. This was produced during the second day of INPEX's closing submissions and at that time Mr Gleeson submitted that the document should have been discovered. The letter is dated 1 March 2017 and was sent by Darren Ward, 'Technology Leader 1-Segment Support', of IPL to a customer who had inquired about I228 drying times. 35 The Ward letter quoted a reference to a statement in the I228 PDS and said, amongst other things: The statement above does not reflect the time required to attain sufficient cure to provide corrosion protection experienced at ambient conditions during the erection/storage/handling period where there is no exposure to high temperatures. We would refer to the hard dry times as being the minimum time at a specific temperature to indicate when the coating has achieved sufficient cure to be exposed to ambient conditions including rain/moisture/condensation. 36 Effectively, on its face the letter questioned the accuracy or meaning of the PDS. The letter is undoubtedly relevant to the matters in issue, particularly as a result of the January 2024 amendment that raised the issue of the PDS/cure to which I have referred. The Ward letter was produced after Corrs identified that it was an attachment to an email exchange, and specifically asked for its production. In particular, it was attached to an email dated 2 March 2017 (2 March email). It was also an attachment to a second email exchange which expressly referred to testing, along with a third-party customer presentation expressly concerning the testing of I228. 37 INPEX submitted that the document was responsive to category 18 of the INPEX Combined Redfern Schedule but that in any event it should have been discovered because it was an attachment to the various emails, having regard to a production Protocol in place between the parties in the matter. Furthermore, according to INPEX, as the Ward letter was attached to an email that clearly related to testing of I228, it also should have been produced in response to category 16 (which includes documents recording the testing of I228 including requirements regarding cure). 38 Relevantly, the Protocol provides that: Entire document group including host and attachments will be produced unless a document is subject to privilege or confidential claims, in which case a placeholder may be used in the place of the document.

[32]

INPEX's application - the deponents 46 Against that backdrop, INPEX seeks leave to cross-examine three deponents of affidavits, being Mr Timothy Donisi, Dr Sarah McCague and Ms Lancaster. 47 Mr Donisi is a partner of Clayton Utz. Mr Donisi together with three of his colleagues is responsible for the day-to-day conduct of the litigation. Mr Donisi provided affidavits dated 16 January 2024, 27 March 2024 and 28 August 2024. This third affidavit (Donisi 3) was filed on 29 August 2024, day 36 of the trial. He filed a further affidavit (Donisi 4) for the purpose of this application. 48 Dr McCague is the 'Risk and Liability Manager, Marine, Protective and Yacht Coatings' of IPL. Dr McCague swore affidavits dated 15 January 2024 (McCague 1) and 18 April 2024 (McCague 2). 49 Ms Lancaster is employed by Imperial Chemical Industries Limited. Ms Lancaster states that she currently holds the position of Director Litigation of the AkzoNobel NV group of companies and that this is a global role. She states that she has held this position since 1 January 2023. Ms Lancaster also states that she currently holds the position of Global Legal Business Partner Marine, Protective & Yacht Coatings, and has held this position since 1 April 2019. Ms Lancaster provided affidavits dated 12 June 2024 (Lancaster 1) and 16 August 2024 (Lancaster 2). 50 None of the affidavits sworn by the deponents are of the nature of the familiar standard discovery affidavits that attach and verify lists of documents said to have been in the possession, custody or control of a party. Rather, they are affidavits that respond to bespoke requests for further documents or seek to provide explanations as to an absence of documents or late production. I will address particular issues that the affidavits are said to raise further below, but this distinction is important. It reveals the need to approach with caution the application of a long line of authorities that suggest that cross-examination on discovery affidavits is not ordinarily permitted. It is important to have regard to broader statements of principle in relation to cross-examination of the deponents of affidavits on interlocutory applications.

[33]

Authorities 51 The starting point is the Evidence Act 1995 (Cth) and the question of cross-examination of deponents of affidavits generally. 52 There are a number of earlier decisions that refer to a discretion to permit cross-examination of a deponent, with such discretion to be exercised sparingly: for example, Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321 at [18]; and the cases collected by Stewart J in Selvaratnam v St George - A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 at [43]. Nevertheless, there are examples where cross-examination on an affidavit in an interlocutory matter has been permitted. These include Talacko v Talacko (No 2) [2009] VSC 444; (2009) 25 VR 613 at [15]-[16] (Habersberger J); Dale v Clayton Utz (a firm) [2012] VSC 577 at [77] (Hollingworth J); and, more recently, Re Summit Hotel Bondi Beach Pty Ltd [2023] NSWSC 295 at [44]-[45] (Robb J). 53 However, more recent decisions in this Court have emphasised the provisions of the Evidence Act, and questioned whether the issue is properly one of granting leave or whether the prima facie position is that a party is entitled to cross-examine the deponent of an affidavit. 54 In Lantrak Holdings Pty Ltd v Yammine [2023] FCAFC 156, Lee J commented on the primary judge's refusal to grant leave to cross-examine the deponent of an affidavit, observing as follows: [27] Given the decision of the primary judge, it is unnecessary to consider the correctness of his Honour's refusal of 'leave' to cross-examine Mr Yammine on the matters canvassed in his affidavit: PJ (at [83]). In adopting that course, his Honour applied a line of authority developed in some States prior to the introduction of the Evidence Act 1995 (Cth) (EA) and its cognates and summarised by Nicholson J in Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 (at 272) as follows: 'there is clearly a discretion in the Court to permit cross-examination on affidavits or otherwise. In interlocutory matters ... such a discretion is normally exercised somewhat sparingly' (citation omitted). That statement has apparently been approved in this Court on numerous occasions: see Selvaratnam v St George - A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 (at [43]-[45] per Stewart J). [28] Although the point does not arise for decision (and notwithstanding it is understandable the primary judge approached the issue the way he did given the state of the authorities), the apparent difficulty with this approach is that the EA applies to interlocutory proceedings (s 4(1)(b)), s 27 provides that '[a] party may question any witness, except as provided by this Act' and s 29(1) provides that '[a] party may question a witness in any way the party thinks fit, except as provided by [ch 2 of the EA] or as directed by the court'. Although the Court has an express (s 11) and implied power to control the conduct of a proceeding (except so far as the EA provides otherwise expressly or by necessary intendment), given the terms of ch 2, it seems to me the question of whether cross-examination should occur on an interlocutory application is more properly framed as whether a direction should be made that it does not occur. When properly framed, it can be seen the mandatory considerations in s 192(2) of the EA apply to considering whether a direction ought to be made and it is difficult to understand how this can be reconciled with the notion that a form of 'leave' needs to be sought and that such 'leave' is normally granted 'somewhat sparingly'. Although as a practical matter the result may be the same (in that a direction there be no interlocutory cross-examination would no doubt often be appropriate), and with respect to those who have expressed a different view, it is not evident to me that the pre-EA approach is the right starting point or frame of analysis. 55 The position of starting with the application of s 27 of the Evidence Act was adopted by Feutrill J in Sivwright v St Ives Group Pty Ltd (No 3) [2024] FCA 833 at [18]. His Honour observed that regardless, there may be many kinds of hearings where cross-examination of the deponent of an affidavit will not be relevant or in the interests of justice, and the Court may make a direction that has the effect of preventing such cross-examination. 56 Neither Lantrak nor Sivwright were relevantly concerned with discovery. 57 As to the particular context of discovery, the usual principles applied in respect of cross-examination on an affidavit of discovery are fairly well established: see in particular Procter v Kalivis [2009] FCA 1518 at [35]-[41] (Besanko J). They were summarised by Perram J in Voxson Pty Ltd v Telstra Corporation Limited (No 10) [2018] FCA 376 as follows: [17] Sometimes discovery is found to be deficient. For a long time it was accepted that the affidavit verifying the discovery was both conclusive and unable to be cross-examined upon. However, that is no longer the case. Besanko J reviewed the authorities in Proctor v Kalivis [2009] FCA 1518; (2009) 263 ALR 461 at 468-469 [35]-[41] and it is clear from his Honour's treatment that the modern position is: (a) the affidavit of discovery is not conclusive; (b) the usual remedy for deficient discovery, where it is demonstrated, is the ordering of a further affidavit of discovery; but (c) in limited circumstances, cross-examination of the verifying deponent may be ordered. [18] It may be that 'limited circumstances' will be shown when there is a basis for believing that the approach of the party giving discovery has, in some way, been illegitimate (Olympic Airways SA v Spiros Alysandratus & Consolidated Travel (Vic) Pty Ltd (unreported, VSC, Harper J, 26 May 1997)) or, perhaps, where the only way the deficiencies can be exposed is by cross-examination (IO Group Inc v Prestige Club Australasia Pty Ltd [2008] FCA 1147 at [50] per Flick J). 58 In Olympic Airways SA v Spiros Alysandratos & Consolidated Travel (Vic) Pty Ltd (unreported, Supreme Court of Victoria, Harper J, 26 May 1997) cross-examination on an affidavit of discovery was allowed. His Honour stated that there are good policy reasons, in general, for not allowing cross-examination on affidavits of discovery. However, Harper J observed that the circumstances of the case before his Honour were: unusual in that here there is cogent evidence to suggest the existence of documents which one would expect, if they do or did exist, were generated by one or other of the defendants. The evidence that the documents either never existed or, if they do or did exist were never in the possession of the defendants, is (it seems to me) much less cogent. If the documents do exist but are not discovered then (given their relevance to this proceeding) an injustice might be done to the plaintiff. The only procedure available to ensure that injustice is not done, and to ensure that the processes of the Court are not abused, is cross-examination. 59 In IO Group Inc v Prestige Club Australasia Pty Ltd [2008] FCA 1147 (Flick J) the deponent of a discovery affidavit consented to cross-examination. However, reflecting on that course, his Honour said at [50]: Notwithstanding the circumstances in which the orders were made … the unusual course of permitting cross-examination was again raised with Counsel for the Applicants and, more relevantly, Counsel for Mr Kiriakidis. Reference was made to the observations of Menzies J in Mulley v Manifold (1959) 103 CLR 341. Counsel for Mr Kiriakidis requested, and was granted, a short adjournment to obtain further instructions in light of reference being made to the unusual course being pursued. The cross-examination thereafter continued without any submissions being advanced on his behalf. As events unfolded, it was probably the only effective means whereby the Applicants could have exposed what they believed were inadequacies in the existing discovery as provided particularly by the Fourth Respondent. As a result of the cross-examination, the Applicants were proved right. An order requiring a further affidavit to be filed in respect to particular documents, without knowledge of the manifest deficiencies in the existing discovery, may well have proved as ineffective as the discovery previously provided. 60 In Guy Carpenter & Company Pty Ltd v Grove (No 2) [2011] FCA 1190, Jagot J refused an application to cross-examine deponents of discovery affidavits in relation to their compliance with orders for preliminary discovery, saying at [5]: In Procter v Kalivis at [29]-[40], Besanko J summarised the principles applicable to challenges to affidavits of discovery. Besanko J concluded that the relevant test, including for preliminary discovery, is whether there exist 'reasonable grounds for being fairly certain that there are other relevant documents' (at [33]). If there are no such grounds, the affidavit of discovery is conclusive. His Honour also noted (at [35]) that, if such reasonable grounds exist, the usual order is to require further discovery verified by affidavit. To permit cross-examination has been described as 'unusual' (citing Olympic Airways SA v Spiros Alysandratos & Consolidated Travel (Vic) Pty Ltd (Unreported, Supreme Court of Victoria, Harper J, 26 May 1997)), being a power available in limited circumstances and only as necessary 'in order to do justice between the parties or to prevent an abuse of the Court's processes' (citing Moore J in Finance Sector Union of Australia v Commonwealth Bank of Australia Limited [2000] FCA 1389 at [16]). 61 In Watson v Kriticos (Further Discovery and Adjournment) [2023] FCA 793, Perram J revisited the issue, concluding (at [18]) that r 20.21 of the Federal Court Rules (order for particular discovery) should be understood as a statement of the principles in Procter. In other words, in limited circumstances, cross-examination of the verifying deponent may be ordered. His Honour also concluded that the standard to be applied in an application for particular discovery is whether there are reasonable grounds for being fairly certain that there are other relevant documents (at [22]). 62 The importance of discovery should not be understated and must be borne in mind in considering applications that relate to it. There may be significant consequences if discovery is inadequate. The decision in Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 (Besanko, Markovic and Banks-Smith JJ) provides a useful example of the potential consequences of inadequate discovery, noting the discussion at [190]-[205]. The Court at [192] cited Mango Boulevard Pty Ltd v Spencer [2008] QCA 274, in which Muir JA (with whom Mackenzie AJA and Douglas J agreed), in considering the primary judge's findings about the deficiencies in discovery, said at [13]: A party's failure to comply with its obligations under the Uniform Civil Procedure Rules, including those relating to disclosure, may constitute an abuse of process even if the failure directly affects only some of the pleaded issues. An object of the rules is to ensure that all the pleaded issues between the parties to a proceeding are tried fairly. That is also the parties' entitlement. A party cannot be permitted to gain a forensic advantage by wilfully, recklessly or negligently failing to give proper disclosure on an issue of substance. Here, the failure to disclose went to an issue central to the Mango's case and also to one of the defences pleaded by Spencer, Perovich and the appellant. 63 Therefore, even if one assumes that in all of the circumstances of this litigation, the same approach should be taken as applies in relation to cross-examination of the deponent of a standard discovery verification affidavit or on an application for particular discovery, it is apparent from the authorities that it is open to the Court to permit the deponents of affidavits to be cross-examined in special circumstances. These include where there are reasonable grounds for being fairly certain that there are other relevant documents, where there is concern about the legitimacy of the discovery process, or where the only process by which the deficiencies can be exposed or to ensure that injustice is not done is by cross-examination. 64 However, as this is not an application of the nature of general discovery or particular discovery, and some of the authorities on discovery affidavits pre-date or do not address the Evidence Act, I consider it is open to take a broader approach to the need for or the nature of any 'special circumstances'. In particular, many of the authorities refer to the statutory regime that predated the current Part 20 of the Federal Court Rules (Discovery and inspection of documents), and the formal introduction of discovery by categories. 65 I prefer the view that in the context of this application, pursuant to s 27 of the Evidence Act INPEX does not require leave to cross-examine deponents of the affidavits. In the end, this was not in issue between the parties, as acknowledged at [67] below. However, whether or not cross-examination should proceed will be determined having regard to the guiding principles as to cross-examination on interlocutory applications discussed above. That the proposed cross-examination relates to document discovery is a relevant matter to take into account. 66 Regardless, this application does not turn on such procedural distinctions. There are special circumstances that would justify a grant of leave (if it were required) and that would persuade me to permit cross-examination in any event, for reasons I set out below.

[34]

The nature of the application and ANIP's position 67 Mr Gleeson and Mr Walker SC (who represented ANIP on this application but has not appeared as counsel on the substantive trial) agreed that despite INPEX having drafted this application on the basis that it requires leave to cross-examine, such leave may not be necessary. Mr Walker accepted that, leaving aside the old-established position with true affidavits of discovery, if affidavits are deployed by one party against another on a fact in issue for final trial or for an interlocutory issue which remains for determination, then the court would start with the proposition that there would be a right to cross-examine. Mr Walker agreed with Mr Gleeson's proposition that in busy courts, the approach in practice is generally governed by whether cross-examination is likely to assist the court. 68 Mr Walker accepted that I have the power to permit cross-examination on affidavits as part of governing proceedings in the particular circumstances of this case, the question being whether or not I should exercise that power. 69 Mr Walker made a number of submissions in opposition to the exercise of that power. It was submitted (in effect) that: (a) the nature of this application is undefined and it is really an application with respect to a motion that has not yet been brought (a reference to the matters set out at [95] below); (b) there was no interlocutory application on foot to which the affidavits respond (save for Donisi 4, which was filed for the purpose of this application) so as to give rise to any ordinary entitlement of cross-examination; (c) rather, the affidavits have been deployed 'for the purpose of fully determined previous motions' which are 'forensically exhausted'; (d) therefore it would appear that INPEX seeks to proceed on the basis that answers given on cross-examination are evidence at trial, despite the affidavits themselves not constituting evidence at trial; (e) it is for ANIP to decide which affidavits it reads at trial, and a party cannot be compelled to give evidence at trial; (f) it is for the responsible party to assert whether there is an explanation for the absence of documents - that is a matter for that party and it bears the consequences in terms of inferences that might be drawn and the fact that the court might make findings of fact by reference to things being unexplained; (g) once one factors in all the times upon which documents have been produced by ANIP without any concession that they were discoverable, there is no useful purpose to be served by cross-examination; (h) the deponents of the affidavits have answered the questions that have arisen already and INPEX has not pointed to anything further they can usefully add. 70 In considering ANIP's submissions, there are two important matters that influence my view: first, the fact that ANIP chose to provide affidavits as to some of the discovery issues prior to and during the course of the trial; and second, although the parties continued to contest and agree aspects of discovery during the trial, their conduct related to the interlocutory discovery regime.

[36]

Evidence relates to interlocutory discovery processes 75 Further, I consider it is artificial to proceed on the basis that there was some freestanding interlocutory process for discovery that at some point was concluded, leaving the parties to proceed with their trial preparation. A simple model such as this might represent the manner in which smaller disputes or disputes pre-electronic records might have proceeded. That is not this case. The Redfern schedule process, rolling requests for discovery, applications for further discovery and further contested requests for production continued over the course of many years. Indeed, such contested requests and responses have continued in parallel to the running of the trial. The parties did not bring a separate interlocutory application every time there was a discovery issue, but rather continued to respond and react and seek Court assistance from time to time. All parties have been on notice of their ongoing obligations of discovery. Therefore, I do not approach this task on the basis that the deponents' affidavits were filed in response to interlocutory applications that were forensically exhausted. Nor was it suggested that the deponents were trial witnesses (by either INPEX or ANIP). Rather, the deponents have provided evidence in relation to discovery. Having provided it, they may be cross-examined. Any cross-examination would be undertaken in the context of discovery being an interlocutory process, rather than a trial, and would be controlled. 76 It does not follow that the deponents' evidence will be irrelevant when it comes to questions of inferences that might be drawn from discovery processes. How such evidence is deployed remains to be seen, as Mr Gleeson has foreshadowed. But that is not the central point of this application. The central point of this application, to adopt what was said in Mango Boulevard, is to ensure that all the pleaded issues between the parties are tried fairly. And to adopt what was said in Olympic Airways, an injustice might be done if documents of relevance to the proceeding do exist but are not discovered. The Court will be assisted in guarding against the risk of such injustice by permitting cross-examination. A party cannot be permitted to gain a forensic advantage by failing to give proper disclosure, nor by giving ambiguous, incomplete or artificially-confined explanations for any such failure or the absence or destruction of documents without the capacity for the explanations to be tested. Cross-examination is the manner by which such explanations might be tested.

[37]

Mr Donisi 77 INPEX seeks to cross-examine Mr Donisi on his affidavits in relation to questions they expose about the manner in which Clayton Utz, together with Deloitte, searched for, organised and reviewed certain documents, particularly in the context of discovery by categories and search terms. The questions arise primarily by reference to the examples of the Ward Letter and the PCLR report, but relate more generally to the late discovery referred to at [25]-[33] above. 78 Mr Donisi provides some evidence in his affidavits about the circumstances of the late production of the Ward letter. The Relativity database to which he refers is a database maintained and used by Clayton Utz for the purpose of this proceeding. Mr Donisi states in Donisi 3 that after Corrs, on 17 August 2024, requested a copy of the attachments to the 2 March email, he caused searches to be undertaken and ascertained that Clayton Utz did not have a copy of it with its attachments in Relativity. Clayton Utz then obtained a copy of the 2 March email and its attachments, including the Ward letter, from Deloitte, and provided it to Corrs on 20 August 2024 under cover of a letter that said the Ward letter was not captured by any of the ordered discovery categories. 79 Mr Donisi states in Donisi 3 that he has ascertained that there are 20 copies of the Ward letter stored in Relativity. He states that: It appears from the information on Relativity that these copies of the document were provided by the Respondents and uploaded to Relativity from around 6 April 2018 onwards. The document histories for those copies of the 1 March Ward Letter on Relativity record that the first time any copy of the 1 March Ward Letter was formally reviewed for relevance was on 18 February 2019 and the last time any copy of the 1 March Ward Letter was formally reviewed for relevance (prior to August 2024) was on 9 June 2021. At no time was a copy of the 1 March Ward Letter identified as responsive to any discovery category. That is why none of them had been previously produced. 80 Mr Donisi also deposed in Donisi 4 to the fact that since Donisi 3 he had ascertained that a standalone copy of the 2 March email with its attachments was in Relativity from on or about 2 July 2022. It had not been formally reviewed or tagged for the purpose of discovery prior to 24 August 2024. 81 Mr Donisi states in Donisi 3 that the relevance of the Ward letter is now apparent to him, but that the only reason it was not discovered was that it was not considered responsive to the discovery categories. 82 ANIP continues to assert that although the Ward letter is relevant, it is not discoverable as it does not relate to an adverse performance issue or testing of I228 (categories 16 or 18). This position is maintained despite the January 2024 amendment. 83 Mr Donisi also refers to the failure to discover the PCLR report until it was called for. Mr Donisi properly accepts that the report should have been discovered as being responsive to category 16 of the INPEX Combined Redfern Schedule and has apologised to the Court, INPEX and JKC for that omission (an apology I take to be given on behalf of his firm). 84 Mr Donisi explains that the report was provided to two lawyers (one of whom is identified by Mr Donisi) at Clayton Utz in August 2022. It was reviewed by a solicitor in relation to expert evidence, but was not identified at the time as falling within discovery categories and was not uploaded to Relativity. It was apparently not considered relevant because it did not mention the word 'Willawong'. The report does, however, refer to search terms such as 'Ichthys' and 'Intertherm 228'. It is also called a laboratory report and references issues such as blistering and rust. It is not clear whether the report was provided to ANIP's technical expert, Professor George, but it is not referred to in his report. Professor George expressed some concern during his evidence as to whether he had received all relevant material. It is not appropriate to determine or say anything further about that at this point. However, objectively, the fact that the report was not identified by solicitors involved in the matter as discoverable, having regard to its content, is concerning. The omission raises questions as to the basis upon which solicitors proceeded to review documents (having regard to key search terms, issues etc), and the extent to which those processes might indicate further discoverable documents may have been disregarded. 85 There are other matters raised by Mr Donisi's affidavit. For example, explanations are provided in relation to the non-discovery of some but not all of the documents referred to at [29], [32] or [33] above. Some explanations do not elucidate why a document was not produced earlier. For example, according to Mr Donisi, Exhibit 9439 was reviewed by Clayton Utz on 15 August 2024 and produced to Corrs on 16 August 2024, but had been on Relativity for about four years. It includes the word 'chalking', a key search term for certain categories. Why it was not captured is not relevantly explained. Exhibit 9438 similarly contains key search terms but was reviewed by Clayton Utz in 2019 and not discovered, with no further explanation. There are no explanations provided in relation to the late discovery of Exhibits 9437, 9420, 9425 or 9422 (each referred to at [29] or [32] above). 86 There is also some evidence in Donisi 4 to the effect that attachments to emails were coded within Relativity in a manner that may have excluded them from a 'family' (by reference to Exhibit 9431, an email of 6 March 2017). Further, reply emails may not have included attachments. According to Mr Gleeson, such issues might explain why attachments such as the Ward letter were missed on some occasions. He submitted, however, that such an approach is inconsistent with the Protocol, which does not speak of 'families' and requires attachments to be provided with emails. Whether this is a real or larger issue, beyond the Ward letter, is not immediately apparent. 87 Some of the issues raised by the Donisi affidavits upon which Mr Gleeson has indicated he seeks to ask questions include: (a) How have categories 16 and 18 been interpreted by ANIP and does that differ in any material way from the manner in which INPEX has understood the scope of those categories? (b) Having regard to the Ward letter, are there other documents relevant to the foundation of the January 2024 amendment that have not been produced because of the manner in which ANIP has interpreted the categories? What is the likelihood of that being the case? (c) What was the nature of the searches conducted by Mr Donisi that failed to identify the 2 March email or the Ward letter and what does that suggest about the prospect or locations of other additional discoverable documents that have similarly not been identified to date? (d) What were the layers of review that were undertaken in the case of missed documents such as those referred to at [27]-[33] and the PCLR report and how might that information inform the parties and the Court about the prospect and magnitude of other errors? 88 I note these by way of example. Mr Donisi is not a trial witness. Cross-examination relating to an interlocutory process (such as discovery) is more strictly controlled than during a trial and, where permitted, tends to be limited to the issues of the application: Marsden v Amalgamated Television Services Pty Ltd [2000] NSWSC 66 (Levine J). Permitting cross-examination would not provide an opportunity for free-range cross-examination on any matter in issue. Mr Gleeson acknowledged this to be the position.

[38]

Consideration 89 Collecting all of these matters and having regard to the centrality of attribution and the PDS/cure to the outcome of this high stakes proceeding, questions properly arise from Mr Donisi's affidavits which persuade me that there are reasonable grounds for being fairly certain that there are other relevant documents. The respective responses to the Ward letter are telling. It is apparent that Corrs and Clayton Utz (or their respective clients) have taken a different approach to the interpretation or scope of certain discovery categories. 90 This reveals that ANIP apparently does not consider that it has any overarching obligation to disclose documents that it accepts are relevant following the January 2024 amendment unless such documents fall within its interpretation of the previously determined categories. It also exposes a significant issue that exists more generally with discovery by categories. In this context Mr Walker referred to the 'lamented abolition of Peruvian Guano' and I am sure he is not alone in that view. Categories can be counterproductive, and as this experience indicates, important documents relevant to facts in issue may be shielded from production through ambiguous or uncertain drafting or a lack of knowledge as to the type of documents that may exist and should be requested. No doubt standard discovery may also serve to obscure relevant documents in an avalanche of data. It is unsurprising that in a dispute of this scope the parties considered that the most efficient method by which to proceed was by categories. However, that approach brings with it the need to revise, refine and reconsider, particularly as issues evolve or pleadings are amended. 91 Further, it is inevitable that in these reasons I would refer to the recognised obligations of parties and their lawyers having regard to s 37M and s 37N of the Federal Court Act of Australia Act 1976 (Cth). Such obligations also inform the approach to discovery. 92 If this application were not being considered virtually at the end of the liability trial, in light of Donisi 3 and Donisi 4 I might have directed the parties to reconsider the categories in line with the final pleaded positions and to also reconsider if there were additional search terms that should be applied across different repositories of documents. I might have made detailed orders about further and better discovery and the provision of further specific affidavits. However, I am concerned, having regard to the numerous lengthy exchanges of correspondence in evidence on such matters between the parties' solicitors both prior to and during the trial, that such a course would now have very little prospect of efficiently resolving the questions raised by ANIP's discovery. 93 The resolution of these matters is now urgent. At this point, it seems to me that confined and controlled cross-examination is the only efficient and effective means whereby INPEX might expose whether there are inadequacies in the existing discovery processes that may have denied them access to highly relevant documents and may potentially cause prejudice to it in this litigation. 94 In deciding to allow the application, I have taken into account a number of other matters relevant to the exercise of discretion. They include the following. 95 The question of the purpose of the proposed cross-examination should not be considered removed from its potential consequences. INPEX submitted that depending on what emerges from cross-examination, there may be a number of courses open to it. It may seek orders for particular further and better discovery; that certain paragraphs of ANIP's defence be struck out (Clifton (Liquidator) v Kerry J Investment); that ANIP has made certain admissions (Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361); or that certain adverse inferences should be drawn against ANIP (Kuhl v Zurich). Therefore, I have taken into account that there may be further steps that follow, whether they be by way of application or supplementary closing submissions. I must take into account the impact of this upon the completion of the liability trial. It is my anticipation that any further steps that INPEX seeks to pursue will be raised and addressed by it in an efficient and expedited manner. With some steps related to the liability trial still to be completed (see [6] above), there is a small window in which confined matters might be addressed. Whilst not ideal, I must weigh this inconvenience against both the potential unfairness to INPEX if it is denied access to relevant documents or information, and the interests of justice in maintaining as far as is practicable the integrity of discovery processes in court proceedings. 96 The application is not centred on alleged errors of fact but on processes that are undertaken to afford fairness to parties. 97 At a practical level there is one day in October 2024 available when cross-examination could be accommodated and INPEX has indicated that insofar as deponents are overseas, it has no difficulty with remote attendance. This additional hearing will not unduly delay the completion of the liability trial. 98 ANIP has been aware since at least late August 2024 of the prospect of this application and, based on the date of some of the relevant production and affidavits, INPEX has not delayed in bringing it (nor did Mr Walker assert INPEX had relevantly delayed). 99 Finally, I have also had careful regard to the submissions made on behalf of ANIP opposing the application. I have addressed some of those matters already. I accept that there is uncertainty about what might result from this application to cross-examine, and how INPEX might seek to deploy any evidence given. I would not categorise this as 'preliminary discovery about an application for further discovery', as Mr Walker suggested at one point. It is an order for cross-examination in relation to affidavits that have already been filed and which, in all the circumstances, INPEX is entitled to test. The uncertainty as to what might happen next should not deny INPEX the right to cross-examine. Uncertainty apparently did not stand in the way of cross-examination of deponents in the cases referred to at [52] above. It may often be the case that what might follow from cross-examination on affidavits that form part of an interlocutory process will not be apparent until the evidence is given. INPEX will have to satisfy the Court in relation to any further application or submissions it seeks to make and ANIP will be heard in that regard. Needless to say, there is a time imperative. The liability trial must be brought to a formal close as soon as possible. 100 I will now move briefly to the positions of both Dr McCague and Ms Lancaster.

[39]

Dr McCague 101 In McCague 1, Dr McCague addressed document production highly relevant to the attribution issue. Dr McCague made an error in McCague 1. McCague 2 was provided in order to notify the Court (and INPEX and JKC) of the error. The error was said to be inadvertent. Whilst I have acceded to INPEX's request to cross-examine Dr McCague, it is not because of the error itself, which has been properly admitted. The error, does, however, disclose an apparently broader issue as to the manner in which Dr McCague identified or relied on other persons to identify the potential repositories where documents might be stored, and searched for. 102 The principal concern relates to the identification of potential repositories of documents falling within categories referred to at [17] above (more particularly categories 5, 6(a), 7, 9 and 10 of the relevant discovery categories) and the manner in which they have been identified or searched. INPEX submitted that: To date no documents relating to internal approvals or decision making in relation to the supply contracts for Ichthys have been produced despite ANIP's internal processes and procedures requiring multiple levels of review and authorisation. One set of draft ExCo minutes for a meeting held on 22 August 2013 was produced on 9 August 2024. Save for that one document, no ExCo minutes have been produced. ORM minutes have not been produced. ExCo board packs have not been produced. Some ORM slide packs were belatedly produced. While some emails between Keijzer and Molenaar that may constitute 'reports' were belatedly produced, no reports by Molenaar to Darner as BAR [business area responsible] have been produced. 103 In short, in McCague 1, Dr McCague set out that she relied upon certain persons to identify repositories of documents and undertake searches in relation to certain categories. For example, as to request 14(a) and (b) of the first discovery application (which related to searches in the names of Mr Darner and Mr Keijzer) Dr McCague said that she had been informed by Ms Yvonne Kaptein of the Corporate Secretariat team that Ms Kaptein had used the Corporate Secretariat Team Archive to conduct searches for (relevantly) references to Mr Darner and Mr Keijzer. Dr McCague deposed that she 'conferred with' (relevantly) Ms Kaptein who 'would be expected to be aware of repositories' of potentially responsive documents and was informed by her that 'there are no other readily identifiable document repositories that are likely to contain such documents'. Dr McCague apparently relied upon the information provided to her by Ms Kaptein in forming her more general conclusion that 'the Respondents have conducted reasonable searches'. 104 In the period between the filing of McCague 1 and McCague 2, Corrs queried this outcome in relation to (relevantly) searches relating to Mr Darner and Mr Keijzer. ANIP relied upon Dr McCague's evidence on a number of occasions in support of its view that no further searches of particular repositories were required. 105 In McCague 2, Dr McCague said that in fact Ms Kaptein had not informed her of the matters referred to in McCague 1 regarding searches for documents relating to Mr Darner and Mr Keijzer in the Corporate Secretariat Team Archive and that Ms Kaptein had not undertaken searches of that repository for their names or those of other identified employees. Dr McCague observed that the Corporate Secretariat Team had conducted multiple other searches of that archive and that she 'had received information from Ms Kaptein about the role of Mr Keijzer and Mr Darner'. 106 Further, by letter dated 29 April 2024 Clayton Utz indicated that following discovery of the error, ANIP arranged for further searches to be undertaken, including searches of HR records stored in the Netherlands, and including searches of the OneDrive maintained by the Chief HR Officer of AkzoNobel NV and other network drives, and that two documents were uncovered as part of that process (affidavit of Emma Forbes filed 29 April 2024). 107 This example indicates that there is a reasonable basis upon which INPEX might seek to question how Dr McCague satisfied herself that all relevant repositories of documents that might respond to the relevant categories were identified by those persons who assisted her with that task. 108 I should add that in McCague 1, Dr McCague appears to have gone to considerable trouble to corral and disclose relevant information about ANIP's attempts to comply with the relevant discovery orders. Objectively, McCague 1 is neither a short nor superficial affidavit. There are many categories where ANIP has not disputed that discovery should be made. Dr McCague has also disclosed certain limitations with the ability to search for terms within documents that have been disclosed. However, the fact that hearsay evidence is permitted on such interlocutory processes does not deny INPEX the right to question a basis of belief where genuine questions as to that basis seem to arise. Again, if time and the stage of proceedings otherwise permitted, there might be other ways of dealing with this issue. For example, it is likely I would have acceded to a request for, at minimum, further targeted affidavit material from Dr McCague or those persons identified in her affidavit. However, in the current circumstances, I consider this is one of those special cases where cross-examination of Dr McCague should be permitted, but any cross-examination will be closely controlled, as referred to above at [88].

[40]

Ms Lancaster 109 At [43] above I referred to the fact that an order was made that ANIP explain by affidavit the dates and circumstances of the apparent deletion of the relevant email mailboxes. 110 It is objectively apparent that Mr Keijzer, Mr Darner and Mr Molenaar are key individuals for the attribution case. 111 With respect, Ms Lancaster's evidence is of a general nature and does not descend into any great detail, having regard to the significance of the apparent loss or deletion of a body of communications involving senior people. INPEX could have chosen to make submissions based on that generality and the weight I might give such evidence. It has chosen, however, to pursue cross-examination. 112 Ms Lancaster deposes to the end date of 2015 being relevant, because key named persons ceased employment with the various entities in the AkzoNobel group prior to that time. Ms Lancaster states that she was informed by Mr Adolfo Gutierrez, the Domain Lead Cybersecurity Risk and Compliance Manager within the AkzoNobel group, that the group currently uses Microsoft Office 365 and Deloitte has access to the platform. Ms Lancaster states that she was informed by Mr Wajahat Syed, who leads the IT team responsible for managing the Office 365 platform across the AkzoNobel group, that he and his team have been unable to find email content for the relevant employees on Office 365. 113 In summary, Ms Lancaster deposes to the effect that the 'most likely reason' the mailboxes were not found or deleted is because they were not migrated to Office 365. Alternatively, Ms Lancaster said that Mr Gutierrez had informed her that there was a possibility that the mailboxes were 'lost' before the Office 365 migration because at the relevant time email inbox sizes 'were very limited' and 'employees needed to regularly manually delete or archive their own mailboxes'. Ms Lancaster states that she believes based on her own experience and on information from Mr Gutierrez that the AkzoNobel group migrated to Office 365 'between around 2016 and 2018'. Mr Gutierrez told her that in order to manage costs the key focus of the migration was to transfer active user mailboxes. To manage costs the team exercised a discretion as to what data was transferred, including prioritising active users. 114 For context, it must be recalled that the JKC action commenced in 2017. ANIP was involved in investigations as to the degradation of I228 on the Project from at least 2016. 115 Ms Lancaster did not have any involvement in these proceedings prior to February 2023 and attested to no personal knowledge of the circumstances of the deletion of the mailboxes. Whilst the court order allowed for an explanation for the deletion of mailboxes to be given on the basis of information and belief, it is implicit in any such direction that there will be a sound basis for such knowledge and belief. In my view, the general nature of the information apparently given to Ms Lancaster by Mr Gutierrez called for further interrogation by Ms Lancaster or by others within ANIP as to the timing and circumstances of the deletion, including whether back-ups were arranged prior to the migration to Office 365. Whether or not there was any further interrogation of such issues is a legitimate matter for cross-examination. 116 I observe that Ms Lancaster does not address the non-availability of Ms Muller's email mailbox in her evidence. This is not surprising as this email mailbox was not covered by the court order pursuant to which her affidavit was filed. I note this because although INPEX has raised the issue relating to Ms Muller, it is not clear whether INPEX assumes it might therefore cross-examine Ms Lancaster about it. This can be addressed should it arise in due course. Otherwise, I also observe that no submissions were made in relation to Lancaster 2 (which addressed separate discovery) and I proceed on the basis that the issues upon which INPEX seek to cross-examine Ms Lancaster are those that arise from Lancaster 1.

INPEX Operations Australia Pty Ltd v AkzoNobel NV

At a glance

Court

Decision date

Before

Source

Judgment (41 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (22)