Aesthetics Architecture Pty Limited v Camilleri & Ors No 2

[2007] NSWSC 1176

CITATION:	Aesthetics Architecture Pty Limited v Camilleri & Ors No 2 [2007] NSWSC 1176
HEARING DATE(S):	18/10/2007
JUDGMENT DATE :	29 October 2007
JUDGMENT OF:	Hoeben J at 1
DECISION:	I order the second defendant to pay the plaintiff’s costs of complying with its Notice to Produce dated 2 July 2007.; I assess those costs at $4,906.; I order the second defendant to pay the plaintiff’s costs of this application.
CATCHWORDS:	Practice and procedure - costs incurred by a party in responding to Notice to Produce - whether costs should be separately assessed or part of costs generally - prospects of success of claim for privilege - conduct of parties.
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CASES CITED:	Aesthetics Architecture Pty Limited v John Camilleri & Ors [2007] NSWSC 1129
PARTIES:	Aesthetics Architecture Pty Limited - Plaintiff John Camilleri trading as JCB Partners Chatswood - First Defendant Christian Borkowski - Second Defendant
FILE NUMBER(S):	SC 12700/2004
COUNSEL:	Ms S Walsh - Plaintiff No appearance - First Defendant RA Cavanagh - Second Defendant
SOLICITORS:	Maurice Blackburn Cashman Lawyers - Plaintiff No appearance - First Defendant Lander & Rogers - Second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Monday 29 October 2007

12700/2004 - AESTHETICS ARCHITECTURE PTY LIMITED v JOHN CAMILLERI trading as JCB PARTNERS CHATSWOOD & Ors ( No 2)

JUDGMENT

1 HIS HONOUR:

Nature of claim
This is an application by the plaintiff that the second defendant pay its costs of compliance with a Notice to Produce pursuant to r 34.3(1) of the Uniform Civil Procedure Rules 2005 (UCPR). The application is opposed by the second defendant.

Factual background

2 The general factual background is more fully set out in Aesthetics Architecture Pty Limited v John Camilleri & Ors [2007] NSWSC 1129. That was an application by the second defendant for leave to file an Amended Defence. As part of the contest in that matter, the second defendant’s solicitors, Lander and Rogers (L & R) by letter dated 4 June 2007 gave notice to the plaintiff’s solicitors, Maurice Blackburn Cashman (MBC) that a Notice to Produce would be served in the form of the notice annexed to the letter. The draft notice referred to eight categories of documents most of which, at least on a prima facie basis, would be subject to a claim of legal professional privilege. They included such matters as advices provided to the plaintiff by MBC and advice received from counsel.

3 By letter dated 8 June 2007 MBC responded to the draft Notice to Produce by raising the legal professional privilege point and by advising that substantial costs would be involved in reviewing and identifying the documentation sought in the draft notice. L & R were asked to confirm whether they still wished the documents to be produced. No response was received and follow up letters to similar effect were sent on 14 June and 21 June by MBC.

4 By email dated 21 June 2007 L & R responded to MBC’s letters by saying that they would respond to the matters raised in those letters “shortly”. On 2 July 2007 a Notice to Produce in substantially the same form as the draft was served on MBC. By letter dated 3 July 2007 MBC referred to the service of the Notice to Produce and again requested a response to the earlier letters.

5 By letter dated 23 July 2007 L & R responded to the matters raised in MBC’s letter of 8 June 2007. L & R asserted that there had been a waiver of privilege in the affidavits filed by Mr Geisker and Ms Tang in the proceedings concerning the Amended Defence. L & R asserted (correctly) that a claim for privilege did not excuse compliance with a Notice to Produce. They further submitted that there should not be significant costs involved in the documents being produced since they were documents which should have been readily to hand given the stage which the principal proceedings had reached. Finally, L & R submitted that the costs of complying with the Notice to Produce should not be treated any differently to the plaintiff’s entitlement to costs of discovery generally.

6 By letter dated 14 September 2007 MBC disputed the assertion that legal professional privilege had been waived and requested particulars of the basis on which the assertion of waiver was being made. No response was received to that letter. By letter dated 21 September 2007 MBC wrote to L & R asserting that the UCPR provided for a Notice to Produce to be treated differently to discovery. That letter had attached to it an account from the plaintiff setting out its costs of complying with the Notice to Produce and an account from MBC setting out their costs of complying with the Notice. The total of both accounts was $7,119.75. The accounts showed that the plaintiff was claiming that it had spent eight and a half hours collecting documents and MBC claimed that they had spent ten and a half hours reviewing and identifying documents at a rate of $409 per hour.

7 By letter dated 25 September 2007 L & R reiterated their contention that the plaintiff’s costs of complying with the Notice to Produce should be treated in the same way as its costs for discovery and requested particulars which would justify the costs which it was asserted had been incurred in answering the Notice to Produce. Those particulars were provided by MBC in a letter dated 26 September 2007. On 3 October 2007 MBC wrote to L & R on a “without prejudice except as to costs” basis and offered to accept $7,119.75 in settlement of their claim for costs in complying with the Notice to Produce.

8 The application to amend the Defence came before me on 27 September 2007. In the course of that hearing counsel for the second defendant called on the Notice to Produce (T.24). After an exchange between both counsel and the Bench, counsel for the second defendant did not proceed with his call. He said:

“Yes. My instructing solicitor says to me that bearing in mind the time and the way in which this case has progressed so far and the time that it would take to argue the privilege point, we are content to proceed but on the basis we are not to be hit with some application for costs because costs would be costs in the cause obviously in a Notice to Produce. So long as I can reserve that position. I don’t want it to be said that we have abandoned our rights to costs because of the waiver.”

Consideration

9 Rule 34.3 of the UCPR upon which the plaintiff relies provides as follows:

“34.3(1) The Court may order the party requiring production to pay the amount of any reasonable loss or expense incurred by the party required to produce in complying with a Notice to Produce.
(2) If an order is made under subrule (1), the Court must fix the amount or direct that it be fixed in accordance with the Court’s usual procedure in relation to costs.”

10 The primary submission made by the second defendant in resisting the plaintiff’s application was that the Notice to Produce should not be looked at as a separate item for costs purposes but should be looked at as simply part of the application by the second defendant to file an Amended Defence. If so it would be governed by the costs order which I made in relation to that matter. In support of that proposition the second defendant referred to the purpose of the Notice to Produce (ie to enable the assertions in Mr Geisker’s affidavit to be tested). Reference was also made to the express reservation of costs in the transcript when counsel for the second defendant decided not to pursue his call on the Notice to Produce.

11 In many cases those submissions would be persuasive. On the particular facts of this case, however, they do not carry such weight.

12 It was clear from the correspondence from MBC following the serving of the draft Notice to Produce that the compliance with the notice was being dealt with as a discrete issue and that there was going to be a significant contest in relation to it. The position of the second defendant, of course, is not helped by L & R’s failure to respond in a timely way to the sequence of reasonable requests for such a response by MBC.

13 The use of the Notice to Produce by L & R in this case is, it seems to me, analogous to the issue of a subpoena. The particular documents sought in the Notice were only relevant to the application to amend the defence and would have had little relevance to the issues ultimately to be litigated. It is therefore appropriate to look at the Notice to Produce as a separate item and not as part of the overall argument relating to the amending of the defence.

14 Having carefully read the affidavit of Mr Geisker, I am not persuaded that there has been an actual or an implied waiver of legal professional privilege in relation to the documents referred to in the Notice to Produce. Although I have not reached a final decision, there was a strong likelihood that had the Notice to Produce been called upon the claim for legal professional privilege would have been upheld. This was a possibility clearly foreshadowed by MBC in correspondence and the risk of pursuing the notice were well known to L & R. Despite that possibility it was still necessary for MBC to produce the documents as was forcefully pointed out by L & R in correspondence. It is also not without significance that compliance with the Notice was not pursued at the hearing.

15 Those matters and the course of correspondence satisfy me that the plaintiff is entitled to its costs of complying with the Notice to Produce. Rather than have further costs expended in having the matter go before a Costs Assessor, I propose to make an assessment of the costs myself.

16 Although I am not aware of the content of the documents required to be produced in answer to the Notice, I do have some appreciation of the number because of the photocopying charges. The particulars provided by MBC in correspondence also provide some assistance. In a general way I can also appreciate the nature of the documents. In that regard I find it difficult to accept that it would have taken the plaintiff eight and a half hours to examine and produce from six folders the fifty two documents which were ultimately sent to MBC. I propose to allow four hours at $220 per hour.

17 In relation to the fees charged by MBC, I am sympathetic to the more difficult task confronting the solicitors in such a situation. Firstly they had to identify documents subject to the Notice and then appropriately categorise them pending the anticipated contest as to whether waiver of privilege had taken place. Even so I find it difficult to accept that it would have taken a competent solicitor ten and a half hours to carry out that task. I propose to allow eight hours.

18 On that approach, it seems to me that the amount properly payable by the second defendant to the plaintiff is $1,027.40. The amount payable by the second defendant to MBC is $3,878.60.

19 The orders which I make are as follows:

(1) I order the second defendant to pay the plaintiff’s costs of complying with its Notice to Produce dated 2 July 2007.

(2) I assess those costs at $4,906.

(3) I order the second defendant to pay the plaintiff’s costs of this application.

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