JKC Australia LNG Pty Ltd v AkzoNobel NV

Relevant events prior to Notice being issued 24 I will deal with the background relevant to delay and relevance in tandem. This particular request for production issue developed over time. 25 The fact that the Arbitration took place was no secret between ANIP, JKC or INPEX. It appears there has also been some limited overlap of counsel and solicitors involved in the Arbitration and involved in these proceedings. 26 More to the point, and as I have said, the Award has been discovered. 27 As the parties know, there has been a long history of discovery processes in both actions before me, including the resolution of numerous disputes by consent and by Court rulings, made both by responses to Redfern schedules and memoranda, and by formal reasons. 28 Access to documents in the Arbitration was addressed as early as April 2021 in a discovery contest. 29 ANIP sought the following documents at the time: In relation to any dispute including arbitration or other proceedings between JKC Entities and third parties (including but not limited to INPEX and any module fabricators): a) Any correspondence between the parties to the dispute that relates to a matter in issue in this Proceeding b) any documents filed, served, exchanged or produced by a party to that arbitration or other proceeding that relates to a matter in issue in this Proceeding; and c) any documents evidencing or comprising any decision or award of the arbitrator, judge or presiding member. 30 My ruling at the time, published to the parties, was as follows: [42] The applicant submits that initial category 35 covers this request and that the respondents [ANIP] had previously indicated they were content with discovery of any award or judgment that resolved any other dispute. Sub-para (c) would be covered by initial category 35. It is also limited to a decision of a judge, arbitrator or presiding member. However, sub-paras (a) and (b) contain no such constraints. In principle it can be accepted that such documents might be directly relevant, because: (a) they may evidence the applicant's right to receive payments from third parties through other proceedings that reduce or eliminates its claim or the scope of indemnity against the respondents; or (b) they may be documents regarding an obligation on the applicant's part to pay another party which increases or forms part of its claim against the respondents for which it seeks indemnity. [43] Further, it can generally be accepted that there may be some overlap with any dispute between INPEX and the applicant relating to coatings: so much was indicated in the context of JKC Australia LNG Pty Ltd v AkzoNobel NV [2019] FCA 1032. [44] However, the respondents now seek documents in relation to 'any dispute including arbitration or other proceedings', including 'any correspondence' between the parties to the dispute that relates to a matter in dispute in these proceedings. They assert that documents between the parties to those arbitrations, disputes or proceedings are relevant, including because the applicant 'may have made admissions or taken inconsistent positions'. Compliance with such a request has the potential to be an enormous and oppressive task, depending upon the number of proceedings and arbitrations. Potentially many minor disputes may have been resolved informally and on a without prejudice basis. The potential weight of any admissions made for the purpose of settling narrow or small disputes may be questionable. [45] The applicant has not in this matter put in issue its proceedings against other parties, but relies on its claims against the respondents. Whether the content of such documents might assist the respondents appears to be speculative, including to the extent as to which such documents might contain admissions which affect the applicant's claim, and the weight that might be given any such admission in all the circumstances. [46] In short, as presently drafted the category is rejected on the grounds of disproportionality and oppression. However, in fairness to both parties, it has not been possible to properly consider this category solely on the papers and with only limited evidence and limited written submissions. If the respondents pursue discovery of this nature, the parties are encouraged to confer to summarise the nature of any other relevant resolved or pending claims and the extent to which there is any relevant overlap. These suggestions are not intended to be exhaustive. Liberty to seek further or better discovery is reserved. 31 The issue was raised again in a discovery dispute the subject of INPEX Operations Australia Pty Ltd v AkzoNobel NV [2023] FCA 382 at [65]-[66], [69] about a cognate (albeit slightly broader) request for discovery made in 2023 in respect of the Arbitration and other materials. At the time I determined: [65] It appears from their submissions that the respondents consider the requested documents from other proceedings are relevant because they might contain admissions as to the applicants' knowledge, as to JKC's status as a concurrent wrongdoer, or as to other aspects of this proceeding. I note that the request falls generally within the section of the Redfern schedule that refers to 'alleged loss'. [66] The respondents did not refer to any authorities on the use that might be made of any such materials, such as authorities that address the limits on the use that might be made of evidence or findings in other proceedings; the limited weight that any admissions might have when purportedly deployed in separate proceedings; or the weight that might be given to documents such as witness statements or affidavits that have not been read or challenged. … [69] At present, the respondents have not satisfied me that the discovery they seek, presumably on a rolling basis, of any future documents will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. Those documents may be the subject of confidentiality or other undertakings limiting their use and disclosure. Filing on the Court file does not necessarily give documents a particular evidentiary status. The proffered pleadings relating to ongoing and future matters should reveal more specifically the allegations made in them as to the failure and subsequent rectification of I228 and may open up for legitimate consideration the question of whether additional documents relating to those ongoing proceedings should be discovered in this proceeding. The potential remains to consider that question further in due course by a renewed application and with closer consideration of any forensic relevance that identified documents may have. But I am not satisfied that discovery should be ordered at this time, other than in the terms proffered by the applicants. 32 As is apparent from those respective rulings, the question of discovery remained open to be pursued further by ANIP if it wished to do so on a more refined or developed basis. 33 Access to the Arbitration documents was again raised in February 2024 by the solicitors for ANIP by way of correspondence to the solicitors for JKC. In that correspondence they did not specify particular documents, other than to seek discovery of 'all witness statements and expert reports filed or served' in the Arbitration. JKC's solicitors sought specific information about the relevant pleaded or factual issues that formed the basis of the request. ANIP's solicitors replied by reference to paragraphs pleaded in the defence and other discovery categories. I do not consider reference to the other discovery categories was particularly helpful in circumstances where there had been express rulings relating to the Arbitration evidence, but in any event ANIP's solicitors did point in their correspondence to parts of the pleaded case that reveal the potential relevance of the documents requested. 34 It is important in this context to note a development in the pleadings in late 2023 and early 2024. 35 As is apparent from JKC Australia LNG Pty Ltd v AkzoNobel NV (No 5) [2023] FCA 1248 (transfer application), there are separate proceedings in the Supreme Court of WA, to which neither JKC nor ANIP are parties, that address from an insurance perspective claims by INPEX relevantly relating to the insulation of the pipework and equipment for the Ichthys Onshore Project. I made orders refusing the transfer application on 10 October 2023. 36 Without addressing the matters relevant to the transfer application again, I note that ANIP's pleadings in the actions in this Court were amended after the reasons in the transfer application were published. It is apparent that a draft was circulated in late 2023, although the amended pleadings were not formally filed until early 2024. 37 Importantly, the issue of insulation was expressly raised by way of amendment to a contributory negligence claim brought by ANIP against JKC in the JKC proceeding in which it pleads that certain alleged conduct by JKC comprised breaches of warranties in favour of INPEX: [73(e1)] further, say that by designing coating and insulation systems applicable to the Ichthys Onshore Project involving the use of I228 and involving the use of either a flexible elastomeric foam insulation system (FEF System) or a mineral wool insulation system (Mineral Wool System) (where the FEF System and the Mineral Wool System were not capable or suitable to properly insulate against water ingress or exposure to the environmental conditions), by arranging for the construction, delivery and installation on site of modules involving pipework and equipment coated with I228 and insulated with either the FEF System or the Mineral Wool System, and by performing (including by failing to perform properly) Works for the Ichthys Onshore Project which included provision of such coated and insulated pipework and equipment, JKC: … 38 It is apparent from the extracted paragraph that design and performance of works are put in issue by ANIP. A similar pleading is contained in ANIP's proportionate liability pleading in the INPEX proceeding that refers to the conduct of, relevantly, JKC.

Summary of JKC's position 39 JKC contends that ANIP has not filed evidence that appears to support the pleaded claims as to (in particular) insulation and so it infers that the Notice has been issued in order to impermissibly fish for documents. That allegation is contested by ANIP which contends the apparent relevance of the documents arises squarely on the pleadings and having regard to the I228 issues already disclosed by the proceedings. JKC also contends that the Notice should be set aside on the basis that in all the circumstances, including the previous discovery applications, confidentiality issues and delay, compliance would be oppressive.

Delay 40 Turning specifically to the question of delay, the above history indicates that ANIP has sought documents relating to the arbitration for a number of years. Because of the way it framed its requests at the time, discovery had not been ordered. However, the circumstances have changed. 41 In short, having regard to the current circumstances, I am not considering production of the Arbitration documents in this application on the same basis as the previous discovery applications. There are four relevant developments: (a) first, the pleadings have been amended; (b) second, by submissions in this application ANIP has clarified by specific reference to particular paragraphs of the Award and to the pleaded issues the basis upon which it is said the remaining documents requested 'could possibly throw light on the issues in the main case' (to which I will return); (c) third, the documents have been expressly identified by reference to witnesses and narrowed from those included in the original Notice; and (d) fourth, it is apparent that INPEX intends to call at least some of those witnesses to give evidence in these proceedings. 42 Having regard to the known dispute as to relevance and service of the Notice at a time when ANIP must have known JKC's lawyers were occupied in trial preparation and proceedings, delay is a matter relevant to costs. However, I do not think in all of the circumstances that it directs a finding that the Notice should be set aside or otherwise not complied with.

Relevance 43 As to relevance, it is to be recalled that in accordance with the principles, it is necessary that the material sought has an apparent relevance to the issues in the principal proceedings or could possibly throw light on the issues in the main case. 44 In this context I turn to the actual documents sought. 45 ANIP relies on extracts from the Award which indicate who gave evidence before the Tribunal. 46 ANIP says that JKC JV served statements from 13 lay witnesses, of whom four were cross examined, six were not cross examined and three were ultimately not called. 47 Of those witnesses, Mr Scott, Mr Stevens and Mr Natarajan are being called by JKC or INPEX in this proceeding. A fourth, Mr McClymont will be called in relation to a reference, which is the subject of formal orders and programming. ANIP says that the Award disclosed that those witnesses gave evidence relating to defective application of I228 and insulation. 48 On that basis I accept that the evidence those witnesses gave before the Tribunal is apparently relevant to the issues in this case, and meets the threshold for production. The witnesses may well be cross examined on the same topics upon which they have given evidence before the Tribunal. 49 As to the remaining JKC JV witnesses, the respondents say they are entitled to use against JKC any admissions contained in those statements, both in relation to defects in application of I228 and insulation. I take into account that it appears that not all of the witness statements were read. 50 ANIP submits that there is also a clear forensic purpose in the respondents obtaining the expert reports of two experts who gave evidence before the Tribunal, Dr Winnik and Mr Flessner, and the transcript of their cross examination. ANIP submits that what they said, including based upon their own direct observations and assumptions or instructions given to them, may add to the relevant evidence about defective insulation design and workmanship issues. 51 In my view, in light of the potential commonality of issues indicated by the pleaded case and the matters referred to in the Award, ANIP has also met the relevance threshold in relation to these other documents referred to in the Notice (as refined by ANIP in accordance with the minute of proposed orders) - that is, the remaining documents are apparently relevant and could possibly throw light on the matters in issue. 52 I am not satisfied that ANIP is merely fishing for documents, as that phrase is to be properly understood in this context: Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at [25]. The matters set out in the Award provide context and support for relevance, when read with the pleading. 53 However, there are a number of matters that are acknowledged. 54 The evidence referred to in the Award was gathered at least five years ago. Additional evidence, including evidence from different experts, has subsequently been prepared for the purpose of and served in this proceeding, and will no doubt be tested by cross examination. 55 The weight and relevance of some of the earlier evidence before the Tribunal may well be very limited having regard to events and work undertaken by the parties since that time. This is pertinent to a particular submission made by JKC as to the doubtful relevance of earlier decisions made by INPEX about the nature of ongoing rectification works. I accept that decisions and approaches to rectification may well have changed over time. I accept that evidence that may now appear to meet the relevance threshold for the purpose of the Notice to produce may later fail to be of particular relevance as matters play out during the trial. This remains to be seen. 56 Admissibility of documents is not resolved by this application. There may well be questions that arise as to admissibility should ANIP seek to rely on any of the documents in these proceedings. This too remains to be seen. 57 Weight will inevitably remain a real question. Counsel for ANIP submitted that the documents, if they contain admissions against interest, might be tendered, presumably as exceptions to the hearsay rule. That may well be so but, again, the weight that might properly be accorded to such evidence, where untested by cross examination in this proceeding, may be questionable.

The Harman obligation 58 Another important matter raised by JKC was whether the fact that the witness statements were served and the transcripts produced in confidential arbitration proceedings limit their production. 59 In the context of delivering reasons during the course of an ongoing trial, time does not permit a detailed discussion of the cases in this area. However, the Court of Appeal decision in Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [No 2] [2023] WASCA 108 comprehensively and usefully addresses such issues: see [76], [98]-[106] ('The Harman obligation in arbitral proceedings'). 60 In short, neither party contended that any Harman obligation arising out of the Arbitration presented an obstacle to compliance with the Notice. The issue in any event would not seem to arise in relation to production of JKC's own evidence. 61 Senior counsel for ANIP also referred to provisions in the International Arbitration Act 1974 (Cth) which expressly permit a party to an arbitral proceeding to disclose information if disclosure is authorised by another relevant law: s 23D(9). ANIP says this would include disclosure in compliance with a notice to produce issued under r 30.28 of the Federal Court Rules. Whilst strictly speaking, JKC is not a party to the Arbitration, I take into account that, according to counsel, JKC is able to access the relevant documents on behalf of the JKC JV (and Mr Marsh's affidavit, to which I will turn shortly, supports this). However, I also consider, consistent with the tenor of the provision as a whole, and having regard to JKC's position more generally, that STP&I should be informed of the pending disclosure. In saying this I do not suggest that it has any right to be heard. It would need to persuade me of that if it sought to be heard.

Prejudice 62 Mr Marsh of Solomon Brothers provided an affidavit on behalf of JKC. JKC does not point to any real prejudice, save for addressing confidentiality issues on short notice and the requirement, under the pressure of trial conditions, to ensure that further documents are located and reviewed. Mr Marsh confirmed that he has made inquiries and been informed that JKC has been able to download a bundle of Arbitration documents (about 40,000 documents) from the online review bundle, but indicated that if JKC is required to locate and produce from that bundle the witness statements and expert reports sought with the exhibits to them, the task would take a week or two, provided that JKC is entitled to rely on the metadata that accompanied the documents when they were downloaded. Mr Marsh said that if JKC has to carry out quality control to ensure that the metadata from the online review bundle is correct, this will take considerably longer. Mr Marsh also said that the documents will require new production numbers if they are to be used in these proceedings. 63 I accept that, at present, production of the witness statements and transcripts with reliance on the metadata as referred to by Mr Marsh is sufficient compliance. If the parties wish to revisit this issue before me once the documents are secured and produced, then they may do so. It is hoped that will not be necessary. I do not consider the renumbering issue is one that is significant. 64 Relevantly, it is not suggested that the trial timetable will be unduly delayed if compliance is ordered.

Conclusion 65 For those reasons I will refuse JKC's application and will make orders that in substance reflect ANIP's proposed orders in its minute. However, I ask the parties to re-visit the timing of production, the relaying of notice to STP&I and any interim confidentiality arrangements that might be sought. I will hear further from the parties in relation to those matters as appropriate. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.