Discovery sought by the applicants
10 The parties have communicated fruitfully on narrowing the issues in relation to the applications for discovery, and they are to be congratulated on having refined the issues, so that I need only deal with a small number of matters which have arisen between them. It is conceded by the applicants that discovery ought be given by way of categories, pursuant to r 20.15 of the Federal Court Rules 2011 (Cth) (Rules), rather than by standard discovery pursuant to r 20.14. I approach the question of appropriate discovery mindful of r 20.11, which provides that a party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively, and efficiently as possible.
11 The first issue which arises is whether certain of the categories should be limited to the Next Generation platform on which the applicants traded, or should extend also to the platform known as MetaTrader 4 and the legacy platform known as MarketMaker.
12 Mr Withers SC, counsel for the applicants, emphasises the allegations made in the ASOC, particularly paragraph 69, as to a "CMC System", which embraces all the platforms offered by the respondent. Mr Withers also submits that the question of whether sample group members, or subgroup representatives, should be selected for consideration at an initial trial in the proceedings is a matter which can be dealt with at a subsequent stage, and should not prevent the order for discovery being made now. Mr Withers relied upon the judgment of Gleeson J in Asirifi-Otchere v Swann Insurance Australia Pty Ltd (No 2) [2020] FCA 1355; (2020) 148 ACSR 14.
13 Mr Darke SC, counsel for the respondent, emphasised the differences in the three platforms, which are potentially relevant, by reference to the affidavit of his instructing solicitor, Ms Farrant, of 18 April 2023. Those differences are set out by Ms Farrant on information and belief from her client, but it is not common ground that that is a correct and complete statement of the relevant differences, nor is it common ground that the differences are sufficiently material to adversely impact the applicants' allegations of a CMC System. It seems to me that they are not matters which I can resolve on the present application, and are likely to have to await the trial for a determination on those matters. The trial of these proceedings is a long way off and there will be considerable debate at future case management hearings concerning the definition of common questions, the question of sample group members or subgroup representatives, and the manner in which the initial trial will be conducted. It seems premature to me to confine the discovery only to documents relating to the Next Generation platform and I agree with the applicants' submission that such a limitation to the relevant categories should not be made for the purposes of discovery by the respondent.
14 The next issue concerns documents concerning regulatory materials referred to in the ASOC (category 23). Mr Darke resists this category, first, on the basis that the defence filed by the respondent indicates that the respondent admits knowledge of the alleged regulatory material, although there may be a lingering dispute as to what that material in fact discloses. I accept that discovery of the documents contemplated in category 23 would not be necessary to resolve that particular dispute. However, the category may well have a further relevance in that documents which concern the regulatory materials issued by various regulators may well contain admissions as to the fundamental allegations made by the applicants, such as the suitability of the products for retail investors and, on the other hand, they may well contain evidence as to the respondent's products falling outside what may have been perceived to be general criticisms of offering of products within the industry as a whole.
15 Mr Darke submits that category 25, which concerns documents discussing various risks and features of contracts for difference, is likely to include anything of value which may have been captured by category 23. There is considerable force in that submission. However, I cannot be confident that category 25 renders category 23 otiose, and it seems to me that it would be a useful prompt for the legal representatives of the respondent who are reviewing documents to have category 23 before them so that there is specific attention given to documents which discuss or concern the alleged regulatory materials. Accordingly, in my opinion, category 23 is appropriate, noting that the applicants have deleted in the first line the words "the correctness of" in the course of argument. I therefore allow category 23.
16 Category 32 is headed: "Documents of which CMC has actual knowledge". Category 32 had its genesis in a category which was akin to one dealt with by O'Bryan J in Kemp v Westpac Banking Corporation (No 2) [2020] FCA 1392 at [41], which sought discovery of "documents that meet at least one of the criteria specified in r 20.14(2) of the Rules and of which [the respondents] are already aware, or become aware, without the need to undertake further searches".
17 O'Bryan J rejected that category on the grounds that it raised practical problems in terms of the attribution of knowledge to a company of the size of Westpac and also on the ground that the applicant had not shown that such an order was necessary to ensure the fair resolution of the real issues in dispute. The applicants have modified category 32 substantially to deal with the first of those objections and the category in its present form reads as follows:
Documents of which CMC has actual knowledge
Documents not covered by the preceding categories but which CMC and its legal representatives (second level reviewers and higher) have identified since the commencement of these proceedings or identify in the course of reviewing the documents gathered as potentially responsive to the categories set out above, which:
a) adversely affect or support the applicants' case; or
b) adversely affect or support CMC's defence.
For the avoidance of doubt there is no obligation on CMC to conduct searches for the documents covered by (a) or (b) above beyond those searches to be conducted in order to gather documents potentially responsive to categories 1-31 above.
18 However, that reformulation does not deal with the second of O'Bryan J's grounds, namely, that it has not been shown that such an order is necessary to ensure the fair resolution of the real issues in dispute. In particular, categories 1 to 31 appear to me to be comprehensive and bespeak relevance in terms of the fair resolution of the real issues in dispute, and I do not see the need to have a general catch-all of the kind expressed in category 32. In addition, there is a risk that the discovery of documents within category 32 may infringe the respondent's privilege in advice given to the respondent from time to time in relation to discovery. While the documents would not themselves be privileged, category 32 as reformulated does refer to the identification of documents by the respondent and its legal representatives which adversely affect or support either side's case.
19 It would be readily apparent from a document produced under category 32 whether it supported or adversely affected a particular party's case and, to that extent, may well involve the implicit disclosure of privileged advice. A similar point was made by Foster J in Cantor v Audi Australia Pty Ltd (No 3) [2017] FCA 1079 at [79] in relation to a category of discovery which was similar to that considered by O'Bryan J in Kemp v Westpac. For those reasons, I reject category 32.
20 The final issue concerning the discovery sought by the applicants concerns the cash summary data sought in category B2 to the applicants' interlocutory application, such data being data as shown in annual statements or other documents for the applicants and by account ID for each retail investor across the relevant period. The information pertaining to the applicants will be disclosed in any event pursuant to category B1. I have been taken to an example of such cash summary data, which comprises a high level statement of losses sustained by one of the applicants in a particular period.
21 The applicants contend that these documents are necessary for the just resolution of the real issues in dispute for several different reasons. One relates to the modelling which the applicants propose to undertake in relation to the products and systems of the respondent, but there is no evidence that the discovery sought in category B2 is necessary for that modelling to be done. There strikes me as being great force in the submission made by Mr Darke that any such modelling will depend on the detailed formulae, matrices and inputs, rather than generalised summaries of loss.
22 Second, a number of paragraphs in the ASOC are referred to by the applicants as making allegations as to the number and percentage of customers of the respondent who suffered losses during the relevant period, being paragraph 80(i), paragraph 85(d) and paragraph 230(d). The last of those paragraphs makes allegations of knowledge on the part of the respondent of the losses incurred. As to those matters, category 27(b) of the discovery which has been agreed between the parties requires disclosure of documents sent, received or created by a Director, Head of Compliance or Head of Sales Trading during the relevant period reporting on or summarising relevantly the likelihood or quantum of client losses and the number or percentage of clients experiencing losses or predicted or modelled to experience losses (but excluding reports which show daily trading results that are not specific to losses), and the number of accounts in negative balance and/or client debt owing to CMC. Category 27(c) then extends that category to the topic of identification of any clients with significant or repeated losses. It seems to me at this stage that discovery of documents within category 27 will capture documents of probative value in relation to the overall assessment of the number of customers who suffered losses or the percentage of the total pool of customers who suffered losses without imposing upon the respondent the burden of making new queries of its data in order to extract the relevant data and, in the process, diverting valuable resources from their ordinary business activities.
23 The third basis on which category B2 is said to be relevant is that the statement of annual losses pertains to the assessment of damages and may also facilitate a mediation in the proceedings. In my opinion, it is premature to consider what discovery may be required for the assessment of damages. That is a matter which can await the making of any findings as to liability at the conclusion of the initial trial, and the discovery necessary for quantificationof losses can then be assessed in light of the findings of liability (if any) which have been made. In terms of a mediation, I do not regard that as a proper purpose of discovery. Discovery should be directed to matters which are required for resolution by the court, a point which is reinforced by the terms of r 20.11 of the Rules and its implicit cross-reference to s 37M of the Federal Court Act. Accordingly, in my opinion, category B2 should be rejected, at least at this stage.
24 The applicants raised issues in their interlocutory application concerning the potential of referral of issues to a referee and also a claim for interrogatories to be administered, but the applicants have withdrawn those applications for present purposes. It seems to me that for the sake of good order, I should dismiss those aspects of the interlocutory application, although that is of course without prejudice to the applicants' ability to renew or modify those applications in a future application.