PERPETUAL TRUSTEES COMPANY LTD -v- BURNISTON [2012] WASC 26 (27 January 2012)

4 The application for discovery was initially brought under O 26 r 6(1) of the Rules of the Supreme Court 1971 (WA). It was brought following several directions hearings at which I had explained to the parties the manner in which they might resolve their differences on the discovery issues. Some progress was made. Some conferral is continuing. Some of the orders sought by the Burnistons have been abandoned (including when it became apparent that the documents they sought do not exist). But, unfortunately, the parties still cannot resolve the discovery issues in relation to numerous documents and categories of document.

5 The volume of affidavit evidence and submissions in relation to this application was considerable. The application is in the context of a claim for less than $400,000. But the issues involved are of some importance to the proceedings and I consider it appropriate to deal with each of the categories of document, and documents, sought. In light of these reasons it is to be expected that the parties will confer to resolve the remaining issues.

6 The Burnistons refined and amended their application in a Minute filed shortly before the hearing. A consequence of the refinement was that an issue arose as to the power of this court to make the discovery orders sought in the absence of the Burnistons satisfying a precondition of O 26 r 6(1), namely the existence of a supporting affidavit (O 26 r 6(3)). In instances in which the Minute seeks orders which fall within the scope of the summons, and supporting affidavit, then there is power to make orders under O 26 r 6.

7 In instances in which the Minute seeks orders beyond those in the summons and supporting affidavit, then there is power to make orders under O 26 r 7(3) which empowers this court to make various discovery orders 'at any time of its own motion in any proceedings'. That discretionary power is subject to O 1 r 4B which is concerned with the broad overriding objectives of case flow management.

8 Many of the documents about which discovery orders were sought by the Burnistons were part of a fishing, or hunting, expedition. But some of the documents sought are directly relevant to issues in the proceedings, and are referred to, or incorporated by reference, in documents which go to the heart of the case. Discovery orders should be made in relation to the latter documents.

9 The Burnistons filed two affidavits in this application both from Ms Joanne Brinkley, a lawyer employed by the Legal Aid Commission of Western Australia. The first was an affidavit of 356 pages, including annexures, sworn on 25 October 2011. References to the Brinkley affidavit in these reasons are to that affidavit. The second was a shorter affidavit of 28 pages, sworn on 10 January 2012, mainly deposing to the conferral process.

10 Perpetual filed two affidavits. The first was and affidavit of Ms Hilary Saunders, an employee of Collins Securities Pty Ltd (Collins Securities), sworn on 24 November 2011. The second was an affidavit of Mr Allan Willoughby, the General Manager of Collins Securities sworn on 5 December 2011. Objections were made to the admissibility of various paragraphs in Mr Willoughby's affidavit. I ruled on those objections during the hearing.

The application and the power to make the orders sought

11 This application was originally brought as a summons for further discovery orders by reference to O 26 r 6(1) of the Rules of the Supreme Court.

12 I have set out O 26 r 6 below. In broad summary, O 26 r 6 is concerned with orders requiring Perpetual to explain whether any document or class of document is, or was, in Perpetual's possession, custody or power; if not, then when Perpetual parted with it and what has become of it.

1. Order for information as to particular documents

(1) Subject to Rule 7 the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document specified or described is, or has at any time been, in his possession custody or power, and if not then in his possession custody or power when he parted with it and what has become of it.

(2) An order may be made against a party under this Rule notwithstanding that he may already have made or been required to make a list of documents or affidavit under Rule 1 or Rule 7.

(3) An application under this Rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this Rule has, or at some time had, in his possession, custody or power the document or class of document specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.

13 Discovery of nine categories of document were sought in a schedule to the summons for further discovery; these were narrowed to the seven categories (2, 3, 4, 5, 6, 8, 9) below. It is necessary to set out the schedule below. I have deleted the categories of document which were no longer in issue in the application.

(a) 'bank' means the plaintiff, Collins Securities Limited, HVB (Australia) Pty Ltd.

(b) 'period' means the period from 1 January 2008 To 4 November 2009.

(c) 'sub originator agreement['] means the agreement with that title dated 18 June 2008 disclosed as the plaintiff's document number 13.

1. Agency documents dated or operative in the period.

(a) The agreements appointing Perpetual Trustees Limited and Collins Securities Limited as agents of HVB Australia Pty Ltd including correspondence relating to those appointments.

1. The sub originator agreement and related correspondence in the period.

(a) Not in issue.

(b) Communications subsequent to the sub originator agreement both with Mortgage Miracles and internal to Collins Securities and the plaintiff relating to Mortgage Miracles.

(c) Not in issue.

1. The approval procedure and policy documents operative or dated in the period.

(a) The approval policy or process for each of Collins Securities Limited, Perpetual Limited and HVB (Australia] Pty Ltd.

Relevance: Paragraphs 9 (h), 12, 16 (a) and (b) of the plaintiffs defence to the counterclaim plead an approval process for the loan exists and was followed.

1. The following documents identified in the plaintiffs discovered document number 6:

(a) Origination procedures and guideline policies for approval and funding of offered loans and funding of loans.

(b) Servicing procedures including any express directions issued pursuant to those procedures.

(c) Training manuals and information provided to Mortgage Miracles and Ms Thompson to receive the certification that she was successfully trained by Collins Securities.

(d) Verification certificates, due diligence reports, service reports, series notices and origination notices which relate or refer to the loans introduced by Mortgage Miracles and Ms Thompson.

Relevance: These documents are required to be prepared or required to be observed by clause 9 of the sub originator agreement.

1. Rules imposed by the sub originator agreement dated or operative in the period.

(a) The rules that the plaintiff imposed on Mortgage Miracles and referred to in clause 3 of the sub originator agreement

1. Not in issue.
2. Insurance requirements documents dated or operative in the period.

(a) The documents that identify the insurance requirement imposed on Mortgage Miracles.

(a) All the demands that the plaintiff has made to any of its sub originators including Mortgage Miracles and any of their insurers.

14 Shortly prior to the hearing, the categories of document, and the particular documents sought, were substantially refined in a minute filed by the Burnistons on 11 January 2012 of proposed further discovery (the Minute).

15 Counsel for the Burnistons explained that he sought to rely upon the documents contained in the Minute to 'articulate' the remaining issues (ts 33 34).

16 Perpetual pointed to a difficulty with this proposed course. In some respects the Minute went beyond the documents sought in the schedule to the summons and supporting affidavit. For instance, category 6 documents sought in the summons, as described above, were the rules imposed by Perpetual upon Mortgage Miracles Pty Ltd (Mortgage Miracles), as referred to in cl 3 of the SubOriginator Agreement (Brinkley, page 149). But what was sought in the Minute were '[r]ules applied to [all] originators and sub originators of Trilogy Assets Securities Trust Series No 1 dated or operative in the Period'. There were other respects in which the Minute was broader.

17 The difficulty is that to the extent that the discovery orders sought in the Minute went beyond those in the summons, those orders were not supported by the Brinkley affidavit. The Brinkley affidavit only deposed to matters raised in the summons. A supporting affidavit is required by O 26 r 6(3) to state the belief of the deponent that Perpetual has, or at some time had, in its possession, custody or power the further documents of which discovery was sought, and that those documents relate to a matter in question in the case.

18 In the absence of an affidavit as described above, there is no power, and hence no discretion under O 26 r 6(1), for this court to make the discovery orders sought to the extent that those orders go beyond the summons and supporting affidavit: CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 [22] (Le Miere J).

19 However, as Le Miere J recognised in CVW Group Holdings, '[t]hat is not the end of the matter' [23]. One other source of power relied upon by the Burnistons for an order for further and better discovery is the inherent power of the court.

20 In Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 [4], Murphy JA explained that the discovery practice developed by the Court of Chancery empowered the court to make an order for further and better discovery where the discovery given was insufficient.

21 This power of the Court of Chancery was preserved in Western Australia by s 16(1)(d) of the Supreme Court Act 1935 (WA).

22 There is a further source of power for an order for further and better discovery in relation to documents in the Minute which went beyond those described in the summons (supported by the Brinkley affidavit). This further source of power was properly conceded by counsel for Perpetual in reply (ts 118).

23 The further source of power is O 26 r 7(3). This subrule 'gives the court the widest powers, having regard to the principles of positive case flow management, to determine the stage at which and the extent to which discovery shall be ordered': North Kalgurli Mines Pty Ltd v GRD Minproc Ltd [2002] WASC 275 [26] (Hasluck J).

24 Order 26 r 7(3) empowers the court 'at any time of its own motion in any proceedings' and, having regard to the overarching principles of case flow management, to make the orders described in the order set out below.

(1) An application for an order under this Rule may be made at any time by -

(a) a party whose request under Rule 1 for discovery has not been satisfied; or

(b) a party who has been requested under Rule 1 to give discovery, whether or not the party has complied with the request.

(2) An affidavit in support of the application is not necessary.

(3) On an application, or at any time of its own motion in any proceedings, the Court, having regard to Order 1 Rule 4B, may -

(a) order any or all of the parties to give discovery at that stage or at some specified future stage of the action;

(b) as to the documents to be discovered by any party -

(i) order that discovery be given of only those specified documents or specified classes of document;

(ii) order that discovery be given of only those documents that are directly relevant to any specified matter in question or to all matters in question;

(iii) order that discovery be given of all documents relating to any specified matter in question or to all matters in question;

(c) make orders as to which parties are to be given discovery by any specified party;

(d) order that any or all of the parties not give discovery at that stage of the action, or at all;

(e) order any or all parties to make, file and serve an affidavit verifying the party's list of documents discovered.

(4) For the purposes of this Rule if a party is ordered to give discovery, the party shall, subject to the order, make and serve, a list of the documents that are or have been in the party's possession, custody or power.

25 It was not suggested by Perpetual that after a general discovery order has been made, as has already occurred in this case, the court's power in O 26 r 7(3) would be exhausted. I am content to proceed on the assumption that it is not. Nor do I consider that the power to make orders for further discovery under O 26 r 7(3) would render O 26 r 6 nugatory. Order 26 r 6 is expressed to be 'subject to Rule 7' and it provides for a broader range of orders, notably orders requiring Perpetual to provide an affidavit deposing to matters including when it parted with documents sought which were in its possession, custody or power, and what has become of them.

26 The onus is upon the party seeking further discovery orders to satisfy the court that the orders should be made.

27 Perpetual's written submission (par 36) was that a discovery order under O 26 r 6(1), or in the inherent jurisdiction of the court, could only be made if, at least, the court has 'reasonable grounds for being fairly certain' that there are other relevant documents which ought to have been disclosed: Beecham Group Ltd v Bristol Myers Co [1979] VicRp 27; [1979] VR 273, 276, 279 (Menhennitt J); Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3] (Newnes M); British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709, 714 (Viscount Haldane LC). This legal approach was not challenged by the Burnistons and the hearing proceeded on the basis that this is the appropriate standard.

28 There appears to be no authority which has applied this test to O 26 r 7(3). This may be because few applications are brought on the basis of O 26 r 7(3). But the 'widest powers' of discovery in O 26 r 7(3) ought to be subject to the same legal test. This is particularly because of the very close relationship between the provisions. Until O 26 r 7 was introduced in October 1996, a similar, although narrower, power to make those orders had been contained in the old version of O 26 r 6: see Government Gazette, WA, 28 October 1996, pages 5674 5677.

29 Whichever of the three sources of power is relied upon, there are therefore three requirements to satisfy:

(1) the court has reasonable grounds for being fairly certain that the documents sought (or class of documents sought) are in existence;

30 The reference in (2) to relevant documents is, of course, a reference to documents which may either (a) advance a party's case or damage his or her opponent's case or (b) lead to a train of inquiry that would either advance a party's case or damage his or her opponent's case: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63 (Brett LJ); Mulley & Marney v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345 (Menzies J).

31 The assessment of whether the documents sought by the Burnistons are relevant proceeds by reference to the pleadings, but regard must also be had to the conduct and admissions of the parties and the nature of the action: Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [5] (Newnes M).

32 The reference in (3) to documents, or classes of document, which ought to have been disclosed requires reasonable grounds to believe that those documents are in the possession, custody or power of the party against whom discovery is sought. In O 26 r 6 it is sufficient to show that there are reasonable grounds to believe that those documents were once in the possession, custody or power of the other party.

33 Of the three sources of power, the inherent power contains additional limitations. Those are explained in the survey of the authorities by Murphy JA in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [3] [8]. In particular, an affidavit of discovery, such as that provided by Perpetual, is conclusive as to the sufficiency of discovery of the documents in its possession, custody or power unless (i) an insufficiency appears from the pleadings; (ii) an insufficiency appears from the affidavit itself; (iii) an insufficiency appears from the documents themselves which are referred to in the affidavit or subsequently disclosed by the party as relevant; (iv) an insufficiency appears as a result of an admission by Perpetual; (v) an insufficiency appears because Perpetual had excluded documents by a misapprehension of its own case.

34 Any order for further and better discovery, under any of the three heads of power I have discussed, is discretionary. The discretion is exercised with regard to the overriding objectives of case management and the just resolution and determination of litigation: O 1 r 4B Rules of the Supreme Court; see also Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.

35 One matter relevant to the exercise of discretion is whether the production of discovered documents would be unnecessary or oppressive: Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60 [7] (Buss JA). Perpetual placed some reliance on what it said was the oppressive nature of some of the Burnistons' requests.

36 In determining whether discovery is oppressive, relevant factors include the value of the discovery to the party seeking it and the burden imposed on the party giving it. Further, the court should restrict the volume of documents and the labour and expense involved to that which is needed for fairly disposing of the issues in the proceeding: Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62 [27] (Parker J); see, also, Re McGorm; Ex parte Cooperative Building Society of South Australia (1989) 20 FCR 387, 390 (von Doussa J); BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553; Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd [No 4] [2009] WASC 17 [13] (Le Miere J).

37 In written submissions, reliance was also placed by Perpetual upon the confidentiality of some of the documents sought. But confidentiality of documents will not ordinarily prevent discovery. This is particularly the case if the confidential portions are not relevant and if they can be redacted. But confidentiality is a factor to be considered and weighed against other concerns in making discovery orders, including the relevance and importance of documents to the matters in issue: Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028, 1065 (Lord Wilberforce); Minetec Pty Ltd v Frost [2011] WASC 145 [22] (Corboy J); Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34, 37 38 (Hayne JA).

38 In very broad and summary outline, the pleadings in this action include the following matters.

39 The action brought by Perpetual against the Burnistons concerns a contract of loan by which Perpetual said it agreed to advance to the Burnistons the sum of $344,911.14.

40 Perpetual says that the contract of loan was comprised of a loan agreement entered into on 23 July 2008 and a first registered mortgage over a property owned by the Burnistons.

41 In its statement of claim Perpetual says that the Burnistons defaulted under the contract of loan (referring to cl 19, cl 20.1 and cl 20.3 of the Memorandum of Provisions incorporated in the mortgage).

42 Perpetual says that the Burnistons failed to make payments set out in the loan agreement of 23 July 2008, that a notice of default was issued to the Burnistons on 24 September 2009 by Perpetual, and that the Burnistons have failed to remedy the default. Perpetual thus seeks payment of the sum of $364,978.28 plus interest at the rate specified in the loan agreement and possession of the property and costs.

43 The Burnistons have a defence and counterclaim to the action.

44 The Burnistons say that the contract of loan was partly in writing and partly oral and that it included a further term that the agent of Perpetual would pay all amounts periodically payable to Perpetual from part of the proceeds of the sale of the Burnistons' previous home in Thornlie which proceeds were provided by the Burnistons to the person said to be the agent of Perpetual (Ms Thompson).

45 The Burnistons say that they paid the proceeds from the sale of their previous home in Thornlie to Ms Thompson, who they say was the agent of Perpetual. They say that the proceeds were paid to Ms Thompson to use to meet the obligations of the Burnistons to Perpetual from time to time. The Burnistons deny they are in default.

46 The Burnistons also bring a counterclaim against Perpetual. The counterclaim is brought on the basis of statutory claims for unconscionable conduct, representations which were misleading or deceptive or likely to mislead or deceive, breach of a duty of care, and for declarations and rectification of the loan agreement.

47 At the heart of the Burnistons' defence and counterclaims are the communications and dealings that the Burnistons say that they had with Ms Thompson.

48 The Burnistons plead that Ms Thompson was the representative of Mortgage Miracles Pty Ltd (Mortgage Miracles). They say that false representations were made by Mortgage Miracles, through its representative Ms Thompson, which included:

(i) That Ms Thompson said to the Burnistons that they could obtain finance for a home more suited to their age and needs (counterclaim par 23).

(ii) That the Burnistons could meet the cost of a new home by means including the money that Ms Thompson would make for them (counterclaim par 27(a)).

(iii) That Ms Thompson would make the Burnistons sufficient money to meet their payment obligations arising from finance for their new home and that she would pay any obligations arising from finance for the new home (counterclaim par 27(b)).

49 The Burnistons then plead that Mortgage Miracles (by Ms Thompson) made an application for a home loan on behalf of the Burnistons without informing the Burnistons of the information in the home loan application (counterclaim par 31). They say that Ms Thompson knew this information to be false including:

(i) the Burnistons' purpose for the loan was to make an investment;

(ii) the Burnistons were selfemployed property managers;

(iii) the Burnistons were resident or intended to reside at Ms Thompson's residence;

(iv) the Burnistons held superannuation assets in the United Kingdom valued at $150,000 (counterclaim par 32).

50 The conduct by Ms Thompson and the representations of Ms Thompson, as the representative of Mortgage Miracles, form the core of the defence and counterclaim by the Burnistons. They allege as follows:

(i) the communications with Ms Thompson form part of the terms of the agreement for finance (defence pars 3 5);

(ii) the terms that arise from those communications were breached or, in substance, they excuse the failure to meet the demands (defence pars 10 13);

(iii) that Mortgage Miracles/Ms Thompson was the agent of Perpetual and had actual or ostensible authority from Perpetual (counterclaim pars 19 21);

(iv) the communications from Mortgage Miracles/Ms Thompson were misleading or deceptive or likely to mislead or deceive (counterclaim par 39) and unconscionable in contravention of the Trade Practices Act 1974 (Cth) and the Australian Securities & Investments Commission Act 2001 (Cth) (counterclaim par 37);

(v) that Perpetual owed the Burnistons a duty of care and breached that duty (counterclaim par 41 42).

51 Perpetual denies all of these claims. In its reply it says, amongst other things, that the Burnistons inability to meet their obligations under the loan agreement and mortgage was caused by Ms Thompson's failure to perform obligations under a private agreement between her and the Burnistons for the investment of the Burnistons' funds, which agreement was entered by Ms Thompson on her own account (reply par 2c; defence to counterclaim par 24).

52 Perpetual's defence to the Burnistons' counterclaim also provides elucidation of the nature of the relationship which it says existed between the Burnistons and Perpetual.

53 At pars 9 12 of the defence to counterclaim, in broad summary Perpetual says that:

(i) Mortgage Miracles acted at all material times as the agent for the Burnistons; Mortgage Miracles was not the agent for Perpetual.

(ii) Mortgage Miracles was accredited by Collins Securities by a suboriginator agreement.

(iii) Collins Securities gave Mortgage Miracles authority to market Perpetual's products to the public and to submit finance applications to Collins Securities for approval at the discretion of Collins Securities under the terms of a suboriginator agreement.

(iv) The Burnistons' loan application was forwarded by Mortgage Miracles for a 'no doc loan' to Collins Securities.

(v) The loan application and approval process was conducted by Collins Securities.

Perpetual also denies that it owed any duty of care to the Burnistons, and denies that any duty of care was breached.

The issues in the case relevant to this application

54 There are two essential issues arising from the pleadings which are relevant to this application.

55 The first issue arises from the relationship, if any, between Mortgage Miracles (by its alleged principal, Ms Thompson) and Perpetual.

56 As to this issue, the essence of the Burnistons' case now appears to be that the relationship between Perpetual and Mortgage Miracles is effectively one of sub-agency. In other words their case starts with the premise that Collins Securities was the agent of Perpetual and Mortgage Miracles was the agent of Collins Securities (ts 43 44).

57 At this early stage of proceedings, the full detail of the legal basis for the Burnistons' claim of liability based upon agency has not been clearly developed.

58 It has been iterated and reiterated in the High Court (borrowing from Lord Herschell in Kennedy v De Trafford [1897] AC 180, 188) that '[n]o word is more commonly and constantly abused than the word "agent"': eg Jones v Bouffier [1911] HCA 7; (1911) 12 CLR 579, 587 (Griffith CJ); Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Cooperative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41, 50 (Dixon J); Scott v Davis [2000] HCA 52; (2000) 204 CLR 333, 408 [227] (Gummow J), 435 [299] (Hayne J).

59 Borrowing from Lord Wilberforce, Gleeson CJ observed in Scott v Davis that 'to describe a person as the agent of another [can be] to express a conclusion that vicarious liability exists, rather than to state a reason for such a conclusion' [4] (see also (345) [33] (McHugh J), (411) [235] (Gummow J), (435) [299] (Hayne J)).

60 On other occasions, the use of concepts of agency is to invoke the legal consequences which follow from the attribution of the acts of another (rather than the liability of another) to a principal: International Harvester Company of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Company [1958] HCA 16; (1958) 100 CLR 644, 652 (Dixon CJ, McTiernan, Williams, Fullagar & Taylor JJ).

61 The gist of the Burnistons' pleadings is concerned with the responsibility of Perpetual, via 'agency', for the alleged conduct by Mortgage Miracles. I use the term 'responsibility' in a neutral sense because it is not apparent whether the legal basis for the alleged liability of Perpetual is put on the basis of an attribution to it of the acts of Mortgage Miracles (via Collins Securities), or an attribution to it of the liability of Mortgage Miracles, or either. No submissions were advanced on this point.

62 But however the Burnistons' legal case concerning 'agency' is ultimately formulated, I accept that their case will require examination of the relationship and the conduct of each party, as well as the scope of the authority of each of Mortgage Miracles and Collins Securities: express, implied, and ostensible.

63 Senior counsel for Perpetual submitted that documents which were produced, or were required to be produced, by Collins Securities subsequent to a loan approval by Collins Securities were irrelevant to the scope of the relationship of agency between Collins and Perpetual or between Collins and Mortgage Miracles.

64 So, for instance, it was submitted that an Origination Notice from Collins Securities which directed Perpetual to fund a loan was not relevant. It was said that although this notice was part of the dealings between Collins Securities and Perpetual it need not be discovered because it is a document which comes into existence after the approval process by Collins Securities (ts 90; and see Willoughby pars 46, 48).

65 I do not accept this submission. The construction of express, implied, and particularly ostensible authority cannot be filleted into (on the one hand) the authority in a document or documents (on the other hand) and conditions on that authority to act prior to the grant of a loan, and the authority given, in the same document or documents, in relation to events subsequent to the approval of a loan (ts 92).

66 Nor is it correct to submit, as Perpetual did in written submissions at par 35.4, that authority can be filleted into that authority which, on the one hand, relates to the approval process for a loan, and that authority which, on the other hand, relates to other matters concerning the loan to the Burnistons.

67 The whole of the authority conferred upon the relevant party must be considered. This is particularly the case in relation to ostensible authority, and it is especially the case where the authority relates to a loan such as that which was made to the Burnistons.

68 In written submissions for Perpetual, it was also asserted that documents relating to the relationship of agency were irrelevant because Perpetual did not raise any 'objection to the contention that [Collins Securities] was at all material times the agent of [Perpetual]' (par 35.1). It may be that the relationship of agency is accepted. Other clauses of the Originator Agreement such as cl 11 (Brinkley, page 68) may also be relevant to this issue.

69 But, for the legal issues arising from the pleadings, the mere invocation of 'agency' or 'subagency' only begins the legal enquiry. The question of agency may itself involve legal issues concerning the scope of any relationship of agency, ie the nature of the powers and authority conferred upon Collins Securities (either expressly, impliedly, or ostensibly), as well as whether those powers were delegated by a subagency, or the manner in which conduct by a subagent could give rise to liability for the agent or principal.

70 The second issue raised by the Burnistons which is relevant to this application is the extent to which Perpetual breached any duty of care which it might have owed to the Burnistons by 'failing to warn the [Burnistons] of the risk of loss through the approval of [their] application for the home loan' in circumstances in which it is said that Perpetual exposed 'the [Burnistons] to serious risk of fraud which was reasonably foreseeable at the time [Perpetual] approved the application for a home loan' (counterclaim pars 41 42).

71 I turn then to the categories of document in relation to which discovery orders are sought under O 26 r 6(1), alternatively in the inherent jurisdiction of the court or under O 26 r 7(3).

72 I have set out below the documents sought, as described in the Minute provided by the Burnistons. As I have said above, in some respects the Minute was broader than the summons; in those respects the Burnistons' application was put on the basis of the inherent power of the court, or O 26 r 7(3). As I have indicated above, O 26 r 7(3) supplies the relevant power, although the range of orders is different from O 26 r 6. In my discussion, I indicate in each category of document the source of power for the orders which can be made. It is not necessary for these proceedings to be further delayed by another application and affidavit.

73 The relevant categories of document sought in the Minute are as follows (with categories removed which were conceded prior to or during argument, or where conferral is not exhausted):

1. The Period ... is confined to 1 January 2008 to the date of the writ being 4 November 2009.
2. Agency creation documents and correspondence dated or operative in the Period in particular:
   1. Master Trust Deed, trust deed or agreement creating trust 'Trilogy Assets Securities Trust Series 1' [Brinkley at p 50].
   2. Appointment of Trust Manager and agreement identifying its role and obligations [Brinkley at p 50, 112, 203].
3. [Conferral in relation to category 3 should continue. Suggested search terms should be exchanged in relation to electronic searches and conferral should occur on those terms. Some documents have also been offered by Perpetual in this category subject to redaction].
4. Approval of loan process, correspondence and audit documents dated or operative in the Period in particular:
   1. Sale Origination and Service Agreement:
      1. Guidelines [Brinkley at 51, 62].
      2. Origination Notice [Brinkley at 52, 57].
      3. Origination Procedures [Brinkley at 58].
      4. Series Notice [Brinkley at 51, 53, 57, 58].
      5. Servicing Procedures [Brinkley at 66].
      6. Eligibility Criteria [Brinkley at 58].
      7. Verification certificate [Brinkley at 61].
   2. The Manual [Brinkley at 172]:
      1. Serviceability Guide Worksheet [Brinkley at 209].
      2. ii. Delegated Lending Authority [Brinkley at 187].
      3. Guidelines for self employed and PAYG applicants [Brinkley at 213].
      4. Guidelines for self employed who have an ABN [Brinkley at 213]
5. Sale Origination and Service Agreement documents and related correspondence dated or operative in the Period in particular:
   1. [Conferral continuing].
   2. As above in 3 (a) the:
      1. Origination Procedures [Brinkley at 58].
      2. Guidelines [Brinkley at 51, 62]
      3. Eligibility Criteria [Brinkley at 58].
      4. Servicing Procedures [Brinkley at 66].
      5. Verification certificate [Brinkley at 61]
      6. Due diligence reports, service reports, series notices and origination notices.
6. Rules applied to originators and sub originators of Trilogy Assets Securities Trust Series No 1 dated or operative in the Period [Brinkley at 142, 149].
7. [Conferral continuing]
8. Insurance requirements and related documents dated or operative in the Period [Brinkley at 158] applied to originators and sub originators - disclose searches of available electronic copies.
9. Demands applied to originators and sub originators for indemnity and related documents [Brinkley at 161].
10. [No longer in issue]

74 The basis upon which it was said by the Burnistons that the court could have 'reasonable grounds for being fairly certain' that the documents exist, and are in the possession, custody or power of Perpetual, appears from the affidavit of Ms Brinkley. She referred to the following:

(1) matters arising from an originator agreement between Perpetual and Collins Securities (the Originator Agreement);

(2) an application by Mortgage Miracles to enter into a sub-originator agreement (the Mortgage Miracles Application);

(3) a suboriginator agreement between Collins Securities and Mortgage Miracles (the SubOriginator Agreement);

(4) a lending manual for Trilogy Asset Securities Pty Ltd credit policies and procedures (the Lending Manual);

(5) an application for finance sent by Mortgage Miracles to Collins Securities with the personal details of the Burnistons (the Mortgage Miracles Burniston Application).

75 It is common ground that the core documents with which the agency argument is concerned are the Originator Agreement and the SubOriginator Agreement. The construction of those agreements may be an important issue at trial as to whether the Burnistons succeed to establish that the alleged relationship of sub-agency between Perpetual - Collins Securities - Mortgage Miracles permits liability to be imposed upon Perpetual for any proved default by Mortgage Miracles.

76 Perpetual says that, with a specific exception, there are no 'reasonable grounds for being fairly certain' that any general 'agency documents and correspondence' exist which have not been disclosed. I accept this to be the case. The Originator Agreement has been disclosed.

77 The broadness of the general category of 'any agency documents or correspondence' is little more than a fishing expedition. The Burnistons cannot point to which type of general agency document they seek, or the meaning of the agency documents they seek, or the nature of the alleged correspondence to which they refer. Nor did they establish why any of those documents are (or were) in the possession, custody or power of Perpetual.

78 But this is not true of the first particular document which is sought by the Burnistons, the Master Trust Deed.

79 In cl 3.1 of the Originator Agreement (Brinkley, page 57), Perpetual empowers Collins Securities, subject to certain conditions, to give a company called HVB Australia Pty Ltd an 'Origination Notice' which proposes the funding of loans by Perpetual.

80 Conditions by which Collins Securities must abide in giving an Origination Notice include that the Origination Notice must comply with the Originator Agreement, the 'Series Notice', the Origination Procedures, and the Eligibility Criteria (cl 3.2) (Brinkley, page 58).

81 The 'Series Notice' is a document which is defined in the Originator Agreement as 'the deed entitled Series Notice between the Trustee, the Trust Manager and the Security Trustee executed under the terms of the Master Trust Deed with respect to the Trilogy Asset Securities Trust Series 1 [(the Master Trust Deed])'.

82 Perpetual properly accepted that the Master Trust Deed exists (ts 81).

83 The Master Trust Deed and the Series Notice, are part of a suite of 'Transaction Documents' by which Collins Securities is authorised to act (cl 1.5; Brinkley, page 54). And it is common ground that the express authority of Collins Securities needs to be construed by reference to the Originator Agreement.

84 Although Collins Securities is given broad authority to 'source Loan Applications from any person and pursuant to whatever arrangements it deems appropriate' (cl 3.5; Brinkley, page 58), the process of construction of the Originator Agreement, and the authority and agency of Collins Securities, cannot be filleted from the other transaction documents to which the Originator Agreement specifically refers.

85 The Master Trust Deed and Series Notice are documents which are relied upon in the Originator Agreement and form an essential part of its construction. They are important documents required to advance the Burnistons' case which depends, in part, upon construction of the Originator Agreement to ascertain the limits of the express, implied or ostensible authority of Collins Securities.

86 For instance, cl 1.6 (Brinkley, page 54) of the Originator Agreement provides that the parties agree that the Originator Agreement is a 'servicing agreement' for the purposes of the Master Trust Deed. But the Master Trust Deed has not been discovered.

87 Further, it may be that the Originator Agreement empowers Perpetual to refuse to fund a loan originated by Collins Securities if Collins Securities does not comply with its obligations under the Originator Agreement (cl 6.2(a)(ii); Brinkley, page 62). In construing, or confining, the extent of any possible express limitation, or in making a submission concerning ostensible authority, the Master Trust Deed and Series Notice are important to the Burnistons' case.

88 It is very difficult to see how the Burnistons could make their submissions concerning the proper construction of the Originator Agreement, or how a court would be able to engage in the process of construction of the Originator Agreement, without any reference to the closely interlinked documents, treated by the Originator Agreement itself as 'transaction documents'.

89 Where a document is referred to in a discovered document then the document referred to will generally be relevant and discoverable, see C Kendall and J Curthoys (eds) Civil Procedure in Western Australia [26.6.1] and the authorities cited there. In the context of a contract the reason for this is plain: construction of a contract requires the contract to be read as a whole. This can rarely proceed without reference to other incorporated documents in the contract.

90 In written submissions (par 35), Perpetual asserted that the Master Trust Deed concerned the relationship between Perpetual and Collins Securities, and was therefore irrelevant to the pleaded issues which concerned the relationship between Collins Securities and Mortgage Miracles. This submission misconceives the nature of the Burnistons' case, particularly as construed in light of the reply and defence to counterclaim. The case, as senior counsel for Perpetual properly conceded (ts 93) involves the issues arising from an assertion of a relationship of agency (actual or ostensible) between Mortgage Miracles and Collins Securities as well as a further relationship of agency (actual or ostensible) between Collins Securities and Mortgage Miracles.

91 Although the Master Trust Deed was not supported by an affidavit as required by O 26 r 6, it should be discovered under O 26 r 7(3).

92 The second particular document(s) sought in this category are documents concerning the 'appointment of Trust Manager and agreement identifying its role and obligations' (Appointment Documents).

93 HVB Australia Pty Ltd (HVB) is the Trust Manager under the Originator Agreement. It is a party to the Originator Agreement. Recital A to the Originator Agreement explains that Perpetual may, at the direction of HVB, acquire eligible loans. Under the Originator Agreement, the Origination Notices from Collins Securities proposing the funding of a loan by Perpetual are provided to HVB Australia Pty Ltd (cl 3.1; Brinkley, page 57). The delivery of an Origination Notice is a direction to Perpetual to fund the loan (cl 3.4; Brinkley, page 58).

94 It may be that Appointment Documents setting out the role and obligations of HVB Australia Pty Ltd could be relevant to the relationship between Collins Securities and Perpetual and to the scope of the authority of Collins Securities. This is particularly so given the interrelationship between the three parties in the process by which Perpetual entered into loan agreement.

95 However, it is not currently apparent from the pleadings how those documents (if they exist), or the role and obligations of HVB Australia Pty Ltd, relate to the dispute.

96 Further, the Burnistons did not adduce any evidence concerning the existence of any Appointment Documents. It was merely speculation by counsel that they might exist and be in the possession, custody or power of Perpetual. For instance, it might be the case that the appointment of HVB Australia Pty Ltd as Trust Manager was fully established by the Originator Agreement itself.

97 I do not have reasonable grounds for being fairly certain that any Appointment Documents exist which are relevant to the dispute in its current state.

98 Once again, the very broad opening words which seek category 4 documents amount to a fishing expedition. The Burnistons seek discovery orders concerning '[a]pproval of the loan process, correspondence and audit documents dated or operative in the Period'.

99 Paragraphs 9(h), 12, 16(a) and 16(b) of Perpetual's defence to the Burnistons' counterclaim assert that an approval process for the loan to the Burnistons was followed. Mr Willoughby's evidence was that the loan approval process was delegated by Perpetual to Collins Securities as agent for Perpetual (par 13). The loan to the Burnistons was described on the Mortgage Miracles Burniston Application to Collins Securities as a 'no doc' application (see Brinkley, page 345).

100 I do not have reasonable grounds for being fairly certain that any unspecified documents exist in this broad ranging category, apart from those identified below.

101 The Minute referred specifically to seven different documents, or types of document, in the Originator Agreement, and to four different documents in the Lending Manual. I consider each of these below.

102 Perpetual's solicitors are instructed by Mr Willoughby, who is the general manager of Collins Securities and who swore the affidavit verifying the list of discoverable documents provided by Perpetual (Willoughby, pars 1, 3, 30). As a general matter, it would be remarkable if Collins Securities and Perpetual were in possession of the Originator Agreement and the Lending Manual, but were not in possession of the related transaction documents which are inextricably linked to those two documents.

103 Clause 6.1 (Brinkley, page 61) of the Originator Agreement provides that the right of Collins Securities to give a Funding Request (which includes an Origination Notice) to Perpetual is subject to various conditions precedent. One of those conditions is that HVB Australia Pty Ltd receives guidelines and a verification certificate.

104 The 'Guidelines' are defined in the Originator Agreement as having 'the meaning given in the Series Notice, but only to the extent they relate to Collins Securities'. Clause 19 (Brinkley, page 94) of the Originator Agreement is concerned with changes to the Guidelines and other matters, including resolution of inconsistencies between the Guidelines and the Originator Agreement.

105 As I have iterated, and reiterated, a core issue in the Burnistons' case involves the scope of the actual or ostensible agency of Collins Securities, and the associated responsibility of Perpetual for conduct by Collins Securities or its alleged agents such as Mortgage Miracles. The scope of any conditions precedent to the authority of Collins Securities to give an Origination Notice is plainly an important part of this exercise of construction.

106 Both the verification certificate and the Guidelines should be discovered.

107 Mr Willoughby's affidavit deposed to the existence of the Guidelines, but explained that the Guidelines are 'contained in the Trilogy Asset Securities Pty Ltd Credit Policies and Procedures' (par 15). This is the Lending Manual (Willoughby, par 47). It has been discovered. It is at page 172 of Ms Brinkley's affidavit.

108 But the verification certificate has not been discovered. It was sought in the Burnistons' summons, and supported by Ms Brinkley's affidavit. Orders should be made in relation to it under O 26 r 6(1).

109 I have explained above why the Origination Notice is relevant. It is the document which Collins Securities provides to HVB Australia Pty Ltd which proposes the funding of loans by Perpetual (cl 3.1 of the Originator Agreement; Brinkley, page 57).

110 The Origination Notice is a document which is directly relevant to the construction of the scope of the express, implied, or ostensible authority of Collins Securities.

111 The Origination Notice was sought in the Burnistons' summons, supported by Ms Brinkley's affidavit. Orders should be made in relation to it under O 26 r 6(1).

Series Notice, Origination Procedures and Eligibility Criteria

112 For the same reasons as immediately above, any possible restrictions upon the express, implied or ostensible authority of Collins Securities must be considered in ascertaining the proper scope of that authority.

113 Clause 3.2 (Brinkley, page 58) of the Originator Agreement provides that an Origination Notice must be made 'in accordance with' the Originator Agreement, the Origination Procedures, the Eligibility Criteria and the Series Notice (Brinkley, page 58).

114 Each of the Origination Procedures, Eligibility Criteria, and Series Notice documents is relevant to the matters in issue in these proceedings (see also [81] [83] above in relation to the Series Notice).

115 The Series Notice was sought in the Burnistons' summons with supporting affidavit. For the reasons set out at [102] above, I have reasonable grounds for being fairly certain that it exists and is in the possession, custody or power of Perpetual. Discovery orders should be made in relation to the Series Notice under O 26 r 6(1).

116 Origination Procedures are defined in the Originator Agreement (cl 1.1) as having 'the meaning given in the Series Notice, but only to the extent they relate to Collins Securities'.

117 'Eligibility Criteria' is not defined in the Originator Agreement.

118 Although documents such as Origination Procedures and Eligibility criteria would be relevant documents, I am not satisfied on the evidence presently before me that there are reasonable grounds for being confident (still less, fairly certain) that these documents exist. It may be that the procedures for origination and the eligibility criteria for loans are matters which are dealt with in the Lending Manual. I do not consider that any discovery order should be made in relation to these categories of document on the current evidence.

119 Collins Securities is defined in the Originator Agreement, cl 1.1, as also having the capacity of Servicer under the agreement (Brinkley, page 53).

120 Servicing Procedures are defined in cl 1.1 of the Originator Agreement as having 'the meaning given in the Series Notice, but only to the extent they relate to Collins Securities Loans'. As I have mentioned, the Series Notice was not discovered.

121 Clause 9 of the Originator Agreement is entitled 'Servicer' (Brinkley, page 66). It is concerned with the powers and duties of Collins Securities as Servicer. It provides that the Servicer (Collins Securities) is an independent contractor, and not an agent (cl 9.2), although as senior counsel for Perpetual properly conceded, this is not conclusive (ts 87).

122 Clause 9.3 sets out the general duties and standard of care required of Collins Securities in its capacity as Servicer, including the obligation to perform the Services 'in accordance with the Servicing Procedures'.

123 Perpetual submitted that the undertakings by Collins Securities as Servicer in relation to the Burnistons' loan from Perpetual could not have any relevance to the scope of any relationship of agency prior to, or at, the time of the loan (ts 91). I have explained above at [63] [67] why questions of authority cannot be cleanly divided so as to ignore authority conferred subsequent to the granting of the loan. This is particularly the case where, as in this case, issues of ostensible authority are raised.

124 Documents concerning servicing procedures were sought in the Burnistons' summons. Discovery orders should be made in relation to them under O 26 r 6(1).

125 Four other documents which are referred to in the Lending Manual were sought by the Burnistons. These were (i) a serviceability guide worksheet; (ii) a delegated lending authority; (iii) guidelines for self employed and PAYG applicants; and (iv) guidelines for self employed who have an ABN.

126 There is insufficient evidence before me by which I could conclude with any certainty that any of these four documents, or categories of document, exist. It is likely that they do not for three general reasons.

127 First, cl 12.4 of the Lending Manual (Brinkley, page 186) provides for a category of 'Self Certified Mortgage Loans' in which '[a]ll applicants must complete and sign a statement confirming that they can service all commitments without hardship'. It was common ground at the hearing of this application that the Burnistons' loan was a 'self certified mortgage loan'. It is likely that such a loan would not have considerable documentation.

128 Secondly, the loan to the Burnistons was described as a 'no doc' application in the application provided to Collins Securities (see Brinkley, page 345).

129 Thirdly, the Lending Manual which covers lending procedures generally is 166 pages (Brinkley, page 172). Page 42 of the Lending Manual (Brinkley, page 213) sets out guidelines for self certified mortgage loans including maximum term, repayment periods, security, maximum loan to value ratio, and the purposes for which the loan is available.

130 As to document (i), Appendix B to the Lending Manual is entitled 'Serviceability Worksheet'. The page is 'intentionally left blank' in the Lending Manual. There is no evidence that this worksheet was completed in relation to self certified mortgage loans, or in relation to the Burnistons' loan.

131 As to document (ii), cl 13.1 of the Lending Manual (Brinkley, page 187) provides that all loans are to be 'authorised by the Originator's appropriate delegated officer/s on behalf of that Originator'. There is no evidence that for a 'no doc' loan this authorisation occurred in writing.

132 As to documents (iii) and (iv), in relation to self-certified mortgage loans, the Lending Manual in Appendix C (D) provides for 'Additional Guidelines' as follows (Brinkley, page 213):

Additional Guidelines: Self employed and PAYG applicants

Self employed applicants to have an ABN

133 As senior counsel for Perpetual submitted (ts 99), this does not appear to be a reference to the existence of two additional documents. Instead, it appears to be a reference to an additional guideline for self employed and PAYG applicants; the guideline being that those applicants are to have an ABN.

134 No orders should be made in relation to documents (i) (iv) referred to in the Lending Manual.

135 With one exception, all the documents sought in category 5 in the Minute replicated those documents which were sought in category 4. I have addressed those above. The exception was 'due diligence reports'.

136 One of the conditions precedent to the right of Collins Securities under cl 6.1 of the Originator Agreement to give a Funding Request (which includes an Origination Notice) to Perpetual is that HVB Australia Pty Limited has received, in form and substance satisfactory to it, 'results of due diligence on Collins Securities of Collins Securities' systems and operating procedures conducted by [HVB Australia Pty Limited]' (cl 6.1(e), Brinkley, page 62).

137 Mr Willoughby's evidence concerning an audit of Collins Securities was as follows:

1. HVB arranged for the audit of three originators including [Collins Securities]. [Perpetual/Collins Securities] were not involved in retaining the auditor and [Perpetual/Collins Securities] was not provided with any reports with respect to the audit, other than a redacted copy of a report from the auditor forwarded to [Collins Securities] by HVB in November 2008.
2. The visible parts of the auditor's report issued to HVB details the audits conducted in relation to three originators and focuses on any breaches of the lending policy set out in the Manual.

There was no evidence of any other due diligence report received by HVB Australia Pty Ltd which was in the possession, custody or power of Perpetual.

138 During the hearing, senior counsel for Perpetual properly conceded that the audit report, in a redacted form, was in the possession of Perpetual. He said that it would be discovered, although in a further redacted form (ts 38). At this stage, there are no further orders necessary in relation to the 'due diligence reports'.

139 In the summons issued by the Burnistons they sought discovery orders in relation to 'the rules that [Perpetual] imposed on Mortgage Miracles and referred to in clause 3 of the sub originator agreement'.

140 Mr Willoughby's evidence is that Perpetual's relationship with each of its originators and suboriginators is mutually exclusive, and that all the rules and regulations applicable to Mortgage Miracles are contained in the SubOriginator Agreement (Willoughby pars 51 52).

141 This evidence of Mr Willoughby is consistent with cl 2.2 of the SubOriginator Agreement (Brinkley, page 145) which asserts that an approved sub-originator 'is an independent contractor exercising free and independent judgment'.

142 In light of the evidence before me, I do not consider that it is likely that any rules and regulations in relation to Mortgage Miracles exist which have not been discovered.

143 However, in the Minute, the category 6 documents sought were broadened to all of the rules which apply to 'originators and sub originators of [the Master Trust]' in the Period.

144 In relation to 'rules' which apply to Originators, I have explained above why there is no evidence that apart from the Lending Manual there are any other rules in existence concerning origination procedures and eligibility criteria. The same is true of 'rules' generally in relation to originators.

145 The Burnistons' written submissions did not address why rules and regulations relating to all other suboriginators, apart from Mortgage Miracles, should be discovered. The written submissions were concerned only with Mortgage Miracles (submissions pars 44 47; reply submissions par 21).

146 In oral submissions, counsel for the Burnistons invited an inference to be drawn by the court that Collins Securities treated its suboriginators in a standardised manner (ts 112). It was said that with the benefit of this inference, discovery orders should be made in relation to rules and regulations for other suboriginators.

147 There is some evidence to support a possible inference of standardised treatment. Mr Willoughby estimated that there are over 100 suboriginators that presently introduce loans to Collins Securities (Willoughby, par 22). The evidence of Ms Saunders was that, as an Associate Director of Collins Securities, she was managing the affairs of approximately 10 20 suboriginators on a daily basis (Saunders, par 5.1).

148 But it is unclear why such an inference, if drawn, should entitle the Burnistons to discovery orders under O 27 r 7(3) (since this was a matter which went beyond the summons and supporting affidavit).

149 First, if a standardised approach were taken then the inference to be drawn would be that, like Mortgage Miracles, there are no rules and regulations relating to other suboriginators, other than the Lending Manual.

150 Secondly, the relevance to this case of any rules and regulations which might exist for the hundred or more suboriginators for Collins Securities is peripheral. Counsel for the Burnistons suggested in oral submissions that other rules and regulations might be relevant to foreseeability of any economic loss which might be suffered as a result of conduct of a suboriginator which was in breach of a duty of care owed by Perpetual to a borrower.

151 Any question of foreseeability would have to start with the particular circumstances and contractual arrangements governing the relationship between Perpetual, Collins Securities and Mortgage Miracles. The burden flowing from ordering the discovery of rules and regulations in relation to all other suboriginators (assuming that such rules and regulations existed and that they were different from the SubOriginator Agreement) would not be proportionate to the peripheral relevance (if any) of those documents to the Burnistons' case.

152 Initially, in the summons, the Burnistons had sought the insurance requirements imposed upon Mortgage Miracles and the demands that Perpetual made of its suboriginators, including Mortgage Miracles, and any of their insurers.

153 Clause 15.1 of the SubOriginator Agreement (Brinkley, page 161) is a broad provision which provides for the approved suboriginator and the originator to indemnify, and keep indemnified, the other against actions, claims etc 'of whatever nature'.

154 Clause 11 of the SubOriginator Agreement (Brinkley, page 158) provides for the suboriginator (Mortgage Miracles) to provide the originator (Collins Securities) with the suboriginator's professional indemnity insurance policy, which it is required to maintain for an amount of $2 million, unless otherwise agreed.

155 Perpetual has discovered all documents that identify insurance requirements with respect to Collins Securities' relationship with Mortgage Miracles. At page 135 of Ms Brinkley's affidavit, there is also the professional indemnity insurance certificate for Mortgage Miracles.

156 No demands have been made by Perpetual or Collins Securities in relation to losses suffered as a result of Mortgage Miracles' failure to observe the terms of the SubOriginator Agreement (Willoughby, pars 60 61; see also ts 101).

157 However, in the Minute, the Burnistons sought all documents concerning insurance requirements and indemnity demands 'and related documents' for all of Perpetuals originators and all the suboriginators during the Period.

158 The Burnistons argued that this information was relevant to the question of whether Perpetual could reasonably foresee economic loss deriving from the conduct of a sub-originator to those persons in the class of borrower such as the Burnistons (ts 52). This was said to be relevant to the question of the existence of a duty of care by Perpetual to warn the Burnistons of 'the risk of loss through the approval of [their] application for the home loan' due to the way that Perpetual conducted its business (counterclaim, par 41).

159 The contract between the Burnistons and Perpetual was entered on 23 July 2008. But insurance documents and indemnity demands were sought for the period from 1 January 2008 until 4 November 2009, whether 'dated' or 'operative' during that period (by which I understand to mean claims made during that period or claims arising during that period). Hindsight is generally irrelevant to issues of reasonable foreseeability. Reasonable foreseeability must be determined at the time of the alleged breach: Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158; (2007) 34 WAR 109, 176 [301] (Steytler P & McLure JA). However, no submissions were made on this point concerning the period in relation to which these documents were sought so I have not considered this timing matter further.

160 I accept that any demands made by Perpetual against Collins Securities, in relation to conduct by Mortgage Miracles during a relevant period could advance the Burnistons' case concerning the extent to which Perpetual could foresee economic loss to the Burnistons. But it is not clear whether any such demands have been made (the disclosure by Perpetual is that no demands have been made by Perpetual or Collins Securities in relation to losses suffered as a result of Mortgage Miracles).

161 Although documents concerning these demands by Perpetual against Collins Securities should be discovered if they exist, the short point is that no orders can be made to that effect: there is not sufficient evidence of any demands being made in the relevant period for reasonable grounds to be fairly certain that such documents exist.

162 As I have explained above, the exercise of discretion to make discovery orders requires consideration to be given to the value of the discovery to the party seeking it, the burden imposed on the party giving it, and the need for the court should restrict the volume of documents and the labour and expense involved to that which is needed for fairly disposing of the issues in the proceeding.

163 The broad category of document concerning insurance arrangements and indemnity demands has only peripheral relevance to the question of the foreseeability by Perpetual of the risk of economic loss from the conduct of a suboriginator to a person in the position of the Burnistons (or in a class of persons into which the Burnistons would fall).

164 Not only is this category of only peripheral relevance, but it is not needed for fairly disposing of the issues in the proceeding. Demands and insurance, for every type of claim, against every originator or suboriginator (of which there are more than 100), in relation to every type of borrower, and for every type of borrowing, are far beyond what Perpetual ought reasonably be expected to disclose in the conduct of this proceeding.

165 No orders should be made in relation to the documents concerning insurance arrangements and indemnity demands between Collins Securities and the hundred or so suboriginators.

166 This application for further and better discovery was brought after several directions hearings, and considerable conferral, failed to resolve the dispute. It is unfortunate that the parties were unable to resolve this matter without the necessity for this application. The application involved hundreds of pages of affidavit evidence and annexures, nearly forty pages of written submissions, and nearly a day of hearing time.

167 Some parts of the Burnistons' application involved a fishing expedition, or a quest for documents which are unlikely to exist or which were not proportionate to the need for fair disposal of the issue in the proceedings. However, other parts of the Burnistons' application sought discovery of documents which are discoverable.

168 It is clear that at the heart of the Burnistons' case are arguments about agency. The Burnistons' defence and counterclaim may need to be amended following the receipt of the reply. But it was common ground that the issues between the parties include questions of agency and subagency. These labels commonly conceal questions including the extent to which the actions or liability of Mortgage Miracles can be attributed to Perpetual and the extent to which Collins Securities is responsible for, or can be attributed with, the alleged actions of Mortgage Miracles. The resolution of these questions may also require close examination of the interrelated contracts between these persons.

169 Relevant to this 'agency' case is therefore the contractual arrangements, and transaction documents (as they are described in the Originator Agreement), between Perpetual and Collins Securities. The transaction documents are closely interlinked. Words in the Originator Agreement are defined in relation to other transaction documents. Conditions precedent in the Originator Agreement are picked up from other transaction documents.

170 Perpetual did not discover the verification certificates. It did not discover the Series Notice. It did not discover the Master Trust Deed. All of these are transaction documents. It is very difficult to see how the Burnistons could develop their argument, or how the court could decide issues, concerning actual or ostensible authority of Perpetual without these closely interrelated transaction documents which governed the relevant transaction.

171 Discovery orders should be made under O 26 r 7(3) in relation to the Master Trust Deed. And discovery orders should be made under O 26 r 6(1) in relation to the Origination Notice, Series Notice, Servicing Procedures, and verification certificate.

172 I will allow the parties the opportunity to confer as to the appropriate form of discovery orders; as to the remainder of the discovery issues in this action; and as to any other consequential matters arising from this decision. If agreement cannot be reached, orders can be made on the papers or at the next directions hearing in this matter.