Background
This interlocutory decision arises within the sprawling “Greensill Proceedings” — a cluster of eleven related cases before the Federal Court of Australia. White Oak Commercial Finance Europe (Non-Levered) Ltd (White Oak) claims indemnity from Insurance Australia Ltd (IAL) under a trade credit insurance policy allegedly issued to Greensill Bank AG and Greensill Capital Pty Ltd. White Oak contends it purchased 29 accounts receivable from Greensill Capital (UK) Ltd between December 2020 and February 2021, relying on the existence of that policy, and has suffered losses after the underlying Liberty Commodities Ltd (LCL) receivables proved worthless or non-existent. IAL’s defence includes allegations that White Oak failed to conduct adequate due diligence and knew of problems with the LCL receivables before making further investments.
IAL brought an interlocutory application seeking production of fifteen documents White Oak had identified in discovery but refused to provide for inspection: fourteen WhatsApp message chains (between White Oak executives and GFG Alliance head Sanjeev Gupta) and a draft Term Sheet dated August 2021. White Oak resisted production on two grounds — irrelevance and without prejudice privilege (WPP). The documents fell into two groups: two WhatsApp messages from August 2020 (before White Oak’s investments), and twelve later WhatsApp messages plus the draft Term Sheet from after the dispute with LCL arose in March 2021.
The two August 2020 messages passed between White Oak Global Advisors CEO Andre Hakkak and Mr Gupta. White Oak asserted they concerned settlement negotiations over a separate, earlier dispute between a different White Oak entity and LCL, unrelated to the GCUK receivables program at issue. The later documents, White Oak said, were generated during attempts to negotiate resolution of the very dispute underlying the current proceedings.
The Court’s Holding
Justice Thawley ordered White Oak to produce the two August 2020 WhatsApp messages (documents WOC.0002.0002.0395 and WOC.0002.0002.0411) and dismissed IAL’s application in respect of all remaining documents. On relevance, the Court found the two pre-investment messages were likely directly relevant to multiple live issues — including White Oak’s knowledge of LCL’s financing needs and the genuineness of receivables, its alleged reliance on the insurance policy, whether its reliance was reasonable for the purposes of its claims under Part 7.6 of the Corporations Act 2001 (Cth), and questions of proportionate liability and contributory negligence. White Oak’s bare assertion of irrelevance, unsupported by any explanation tied to the issues in the proceedings, was insufficient to displace production.
On WPP, the Court held that the two August 2020 messages did not attract the privilege. Although the communications arose in the context of a dispute that might have required litigation, they did not constitute negotiations: they contained no admissions, no concessions, no reference to litigation, and no element of compromise. They reflected at most an openness to suggestions and a general orientation toward possible approaches — falling short of the frank settlement communications that WPP exists to protect. The Court applied the principle that communications must be indicative of an intention to compromise or offer some concession for the sake of peace; these were not.
The twelve post-dispute WhatsApp messages and the draft Term Sheet were found not relevant to any issue in the proceedings. IAL’s suggested bases for relevance — including that the documents might illuminate whether LCL repurchased the purchased receivables under the Settlement Agreement, or assist in construing that agreement — were not substantiated by reference to any ambiguous provision of the Settlement Agreement or other evidentiary foundation. Because those documents were not relevant, the Court declined to consider whether WPP applied to them.
Key Takeaways
- WPP requires more than communications occurring in the vicinity of a dispute — the communications themselves must constitute genuine settlement negotiations, involving some element of compromise, concession, or admission; general exploratory discussions do not qualify.
- A party resisting production of discovered documents on grounds of irrelevance must provide a reasoned explanation linked to the actual issues in the proceedings; an unsubstantiated opinion from a solicitor’s affidavit is insufficient.
- Pre-investment communications between key decision-makers and counterparties are readily characterised as relevant to knowledge, reliance, and due diligence issues in insurance indemnity disputes, even where the communications concerned a different transaction.
- Where documents are found irrelevant, a court need not proceed to determine whether WPP also applies.
Why It Matters
This decision offers a precise restatement of the boundaries of without prejudice privilege in Australian federal litigation. It confirms that the privilege is narrowly confined to communications that genuinely seek to compromise a dispute, and cannot be claimed merely because messages were exchanged while a dispute existed in the background. Practitioners advising on document review in complex multi-party proceedings should note that pre-transaction communications — even concerning different disputes — may be compellable if they are relevant to a party’s state of knowledge or the reasonableness of its conduct.
The case also sits within the broader Greensill Proceedings, one of the most significant financial-services insolvency litigations in Australian legal history. The ruling signals that courts will scrutinise privilege claims carefully where the documents in question relate to the knowledge and conduct of key decision-makers whose awareness of underlying asset quality is central to the dispute.