White Oak ordered to produce WhatsApp messages in Greensill insurance dispute

The Federal Court has ordered White Oak Commercial Finance Europe to produce two WhatsApp message chains concerning its dealings with Sanjeev Gupta, finding the communications relevant to White Oak’s knowledge and reliance in its insurance claims arising from the collapse of Greensill Capital.

Justice Thawley rejected White Oak’s claim that the August 2020 messages were protected by without prejudice privilege, holding that they did not amount to settlement negotiations and contained no admission, concession or observable element of compromise.

The Court otherwise dismissed an application by Insurance Australia Ltd (IAL) seeking inspection of another 12 WhatsApp message chains and a draft term sheet, finding those documents were not relevant to the issues in the proceeding.

The interlocutory dispute forms part of 11 related Greensill proceedings before the Federal Court. White Oak is seeking recovery from IAL and other defendants in connection with approximately US$142.7 million of receivables it acquired through Greensill financing programs involving companies in Gupta’s GFG Alliance.

White Oak alleges that the receivables were insured under a trade credit policy purportedly issued by BCC Trade Credit Pty Ltd as an authorised representative of IAL. It also brings misleading conduct, negligence and breach of authority claims against BCC, former trade credit head Greg Brereton and several insurers.

White Oak purchased 29 payment obligations from Greensill Capital UK between December 2020 and February 2021. The receivables were linked to Liberty Commodities Ltd and customers said to owe amounts under the Greensill financing arrangements.

Administrators later advised White Oak that many of the customers either owed no money to Liberty Commodities or had conducted no recent trade with it.

IAL alleges White Oak entered the arrangements while Liberty Commodities and the broader GFG Alliance were insolvent and that White Oak became aware of concerns about non-existent receivables before increasing its investment.

The insurer argues that White Oak did not reasonably rely on the existence of the insurance policy and failed to conduct adequate inquiries into the underlying transactions, customers and receivables. It also raises proportionate liability and contributory negligence issues.

The two documents ordered to be produced were WhatsApp exchanges between White Oak Global Advisors co-founder and chief executive Andre Hakkak and Gupta on August 19 and August 24, 2020.

White Oak attempted to resist production, saying the messages concerned an earlier dispute between Liberty Commodities and a different White Oak entity and were sent in an attempt to resolve that dispute without litigation.

Justice Thawley found that, although the messages concerned a different dispute, they were likely to be directly relevant to White Oak’s knowledge of Liberty Commodities’ financing needs and business affairs before the investments at issue were made.

Hakkak was a member of the investment committees responsible for deciding whether White Oak would fund investments in the Greensill and Liberty programs. His knowledge was therefore relevant to White Oak’s claimed reliance on the insurance and to whether it made reasonable inquiries.

The Court also noted that White Oak had initially identified the messages as relevant, they had undergone several layers of review by its Australian lawyers and its discovery had been verified by a White Oak director.

White Oak claimed that the messages were protected by without prejudice privilege. Justice Thawley accepted that the messages were broadly directed towards resolving an existing dispute and that litigation may have been contemplated. However, the communications did not directly discuss settlement, refer to possible litigation or contain an offer, concession or admission of liability or fact. They indicated only that a party was open to suggestions about possible approaches. As a result, this was insufficient to attract without prejudice privilege.

The remaining messages were sent after the principal dispute between White Oak and Liberty Commodities arose in March 2021 and related to a term sheet and broader commercial negotiations involving possible financing for another GFG Alliance entity. These were found to be not relevant.

White Oak was ultimately ordered to produce unredacted copies of the two August 2020 WhatsApp message chains by 19 June. IAL’s application was otherwise dismissed.

Read the decision here.

Julian Sexton SC of Tenth Floor Chambers, Harry Rogers of Eleven Wentworth and Ashurst represented White Oak, while David Hume SC and Madeleine Ellicott, both of Sixth Floor Selborne Wentworth Chambers, and Allens represented IAL.