April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd

[2009] NSWSC 867

Reported Decision: 75 NSWLR 619

New South Wales

Supreme Court

CITATION:	April Fine Paper v Moore Business Systems [2009] NSWSC 867 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	14/08/09
JUDGMENT DATE :	17 August 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	17 August 2009
DECISION:	Refer to paras 33, 35 and 36 of judgment.
CATCHWORDS:	PROCEDURE – costs – application for security for costs – relevance of proportionality – proper approach to preparing commercial litigation – early involvement of counsel to reduce costs considered
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) Civil Procedure Act 2005 (NSW) Legal Professional Act 2004 (NSW)
CATEGORY:	Procedural and other rulings
CASES CITED:	Mondel v Steele (1841) 8 M & W 858; 151 ER 1288 Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281; (2004) 65 NSWLR 151 Motor Trade Finances Prestige Leasing Pty Ltd v Elderslie Finance Corporation Ltd & Ors [2005] NSWSC 921 Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333
PARTIES:	April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd
FILE NUMBER(S):	SC 50092/09
COUNSEL:	Applicant: J Stoljar SC & P Reynolds Respondent: J Tobin
SOLICITORS:	Applicant: MAS Law Respondent: Gadens Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

WHITE J

Monday, 17 August 2009

50092/09 April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd

JUDGMENT

1 HIS HONOUR: This is an application for security for costs. The plaintiff is a foreign company. There is no issue that it should provide security for the defendant's costs. The issue is how much security should be provided.

2 By its notice of motion filed on 9 July 2009 the defendant sought security in the sum of $326,837.75. At the hearing it sought security in the sum of $275,265 to be provided in two stages: namely $221,515 for past costs and costs up to the hearing, and $53,750 for costs of the hearing. The plaintiff offered security of $35,584 up to the completion of discovery with liberty to apply for further security thereafter.

3 The plaintiff claims $US477,491.39 for paper sold and delivered to the defendant. The defendant denies that all of the goods alleged to have been delivered were delivered. It alleges that the paper that was delivered was required to meet particular specifications and did not do so. It alleges that the goods were required to conform with a sample and did not do so. It says that the goods delivered were not fit for their intended purpose and were not of merchantable quality.

4 The defendant says that the paper delivered suffered from paper delineation, had insufficient ink absorption levels and generated levels of dust that interfered with the printing process. The defendant says that in reliance on a representation as to the quality of the plaintiff's paper, it switched suppliers, expended resources in helping the plaintiff penetrate the Australian market and persuaded a number of its customers to purchase goods. It has not filed a cross-claim for damages. It says that the alleged representations were as to future matters and are taken to be misleading. It does not specifically allege that it relied on the representation in purchasing the goods but that may be implicit in its allegation that it switched to the plaintiff as its main supplier of paper. Although it is has not filed a cross-claim, the defendant purports to apply for an order under s 87(1A) of the Trade Practices Act 1974 (Cth) that any obligation to pay the plaintiff is void or otherwise unenforceable.

5 The defence has elements of a cross-claim, but presumably the defendant contends on the principles in Mondel v Steele (1841) 8 M & W 858; 151 ER 1288 that by reason of the alleged breaches of terms as to fitness and quality its liability to pay the purchase price is reduced or extinguished. The plaintiff did not submit that the defendant's right to security should be reduced because the defendant's claim should be characterised as principally a cross-claim.

6 Although there may be some issues of technical complexity in relation to the alleged defects in the goods and their compliance with specification and sample, the case does not appear to be at all complex. It appears to be a typical sale of goods claim where there is an allegation that the goods supplied were defective, with an added misrepresentation claim. Yet the defendant's solicitor, Mr Kumar, estimates that the defendant's costs in defending the claim on a solicitor and client basis will be approximately $384,500. For a claim of $US477,491.39 such costs would be out of all proportion to the complexity and importance of the subject matter of the dispute.

7 Section 60 of the Civil Procedure Act 2005 (NSW) provides:

“ 60 Proportionality of costs

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute. ”

8 Mr J Stoljar SC who appeared with Mr P Reynolds for the defendant submitted that s 60 does not require that costs be proportionate to the quantum of the claim in dispute, but rather that they be proportionate to the importance and complexity of the subject matter in dispute. However, the quantum or value of the claim is an element of the importance of the subject matter of the complaint. On Mr Kumar's estimate, if the plaintiff incurred a similar level of costs, the costs of the parties would substantially exceed the claim. But the legal representatives of both parties have a duty to ensure that the litigation is conducted in a way which facilitates the just, quick and cheap resolution of the real issues in the proceedings (Civil Procedure Act, s 56).

9 The defendants read an affidavit of Ms Nicole Armitage who is employed as a senior solicitor and engaged as a costs consultant by the firm DG Thompson, Legal Costs Lawyers and Consultants. She estimated that if the defendant succeeds in the litigation, its recoverable costs on the ordinary basis would be about $275,265. It is this figure for which the defendant now seeks security.

10 In her affidavit Ms Armitage dealt with an issue raised by Mr Ian Ramsey-Stewart, a costs consultant engaged by the plaintiff. Mr Ramsey-Stewart referred to ss 56 and 60 of the Civil Procedure Act. He said that in his experience a costs assessor may take into account any disproportionate and excessive costs as well as the outcome in determining the reasonable costs of the proceedings. He said submissions are often made in relation to the proportionality of costs in a costs assessment. Ms Armitage responded by arguing as follows:

“ 70. In respect of the issue of proportionality as raised in the Ramsey affidavit at paragraph 17.15 onwards, it should be understood that a costs assessor is only bound by his or her statutory obligation, that is, to apply s 364 of the LPA. A costs assessor, in assessing costs, is exercising a statutory function. As Master Malpass (as he then was) said in Turner v Pride [1999] NSWSC 850, a costs assessor’s duty is ‘to resolve the application by decision or determination which complies with the statutory requirements... In the case of a Costs Assessor, what is required is a performance of statutory functions and the discharging of statutory duties’ :[28-30].
71. A costs assessor’s statutory function in relation to party/party costs is set out in s 364 of the LPA. In order to properly understand the role of proportionality on costs assessment, and a costs assessor’s obligations in respect of proportionality, a distinction must be drawn between proportionality at the level of entitlement to costs (that is, at the level of a court making an order for costs in favour of a party and against another party) and proportionality at the level of quantification of costs that is, on assessment; costs having been decided by the court, what is the appropriate quantification of those costs by the costs assessor?). It is for the Court, when considering entitlement to costs, to take proportionality into account, and, where circumstances warrant it, to make a different order in relation to costs than it otherwise might have done.
72. If the Costs Assessor applies or relies upon Section 60 of the CPA then he or she will have failed to discharge his or her statutory function.
73. In respect of quantification of costs, proportionality is relevant only by reason of s 364(2)(f) being the outcome of the case, which is a matter that a costs assessor may consider when applying the test for costs.
74. In security for costs applications the issue of proportionality is a difficult concept because [s] 364(2)(f) allows a costs assessor to take into account the outcome of the matter. In security for costs applications it is assumed that where the outcome is a successful one for the Defendant, the Defendant shall be entitled to its reasonable costs. If the assumed outcome is a successful one, then the Defendant is ordinarily entitled to the whole of the reasonable costs and not a proportion of those costs. If at the end of this matter the Court considered that the successful Defendant was not entitled to the whole of the reasonable costs on a party/party basis but a proportion of them, the usual practice would be for the excess money held on trust or held by the Court to be returned to the paying party. ”

11 I set this out in full in case Ms Armitage's opinion that a costs assessor cannot apply or rely on s 60 of the Civil Procedure Act in a costs assessment has any adherents or support in the profession or amongst costs assessors. That opinion is wrong. It is contrary to authority (Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281; (2004) 65 NSWLR 151 at 153). It appears from the last paragraph of Ms Armitage's affidavit that she may be confusing the proportionality of costs to the importance or complexity of the subject matter of the dispute with the fixing of a proportion of recoverable costs.

12 Section 364 of the Legal Professional Act 2004 (NSW) provides:

“ 364 Assessment of costs—costs ordered by court or tribunal

(1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must consider:
(a) whether or not it was reasonable to carry out the work to which the costs relate, and
(b) whether or not the work was carried out in a reasonable manner, and
(c) what is a fair and reasonable amount of costs for the work concerned.
(2) In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters:
(a) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,
(b) the complexity, novelty or difficulty of the matter,
(c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done,
(d) the place where and circumstances in which the legal services were provided,
(e) the time within which the work was required to be done,
(f) the outcome of the matter.
(3) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs and any relevant regulations.
(4) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal and relevant regulations. ”

13 The first two matters a cost assessor is required to take into account under s 364(1)(a) and (b) are whether or not it was reasonable to carry out the work to which the costs relate and whether the work was carried out in a reasonable manner. In making that assessment a costs assessor must ask himself or herself whether the successful party conducted the litigation so as to achieve not only a just but also a quick and cheap resolution of the real issues (Civil Procedure Act, s 56), and also whether the procedures invoked and the work done, and hence the costs incurred, were in proportion to the importance and complexity of the subject matter of the dispute. In Skalkos v T & S Recoveries Pty Ltd, Ipp JA, with whom Sheller JA and Grove J agreed, said (at [8]):

“ [8] In my opinion, in determining whether costs have been reasonably and properly incurred, it is relevant to consider whether those costs bear a reasonable relationship to the value and importance of the subject matter in issue. See in this regard Szlazko v Travini [2004] NSWSC 610; Moore v Moore [2004] NSWSC 587, Gallagher v CSR Ltd (unreported, Supreme Court of Western Australia, 31 March 1994). This conclusion is supported by s 208G(f) of the Legal Profession Act.”

14 His Honour expressly included the value of the subject matter in issue as a matter relevant to the assessment of whether costs had been kept in proportion.

15 Mr Kumar's affidavit reveals an apparent disregard of these principles. An example is in his approach to discovery. He estimated that the defendant would incur solicitor's costs of $3,200 in preparing and corresponding with respect to identifying categories of documents for discovery, $26,000 in the defendant’s giving discovery of hard copies and electronically stored documents, and $4,000 in inspecting the plaintiff's discovered documents. He also estimated that junior counsel would be required to spend 22 hours of work in relation to the preparation of categories of documents and in relation to the defendant's giving of discovery. That appears to me to be excessive.

16 No doubt the defendant should be required to discover documents relating to the existence and extent of the alleged defects in the paper delivered and any reports in relation to problems allegedly caused in its printing operations from those defects. It might also be required to give discovery of documents referring to the representations and its reliance on them. I would expect such documents already to have been gathered.

17 Mr Kumar says he has at least four or five boxes of documents to review. I do not understand why a review would not already have been made, particularly as there was earlier litigation in relation to this dispute. In that earlier litigation the plaintiff served a statutory demand and the defendant applied to have it set aside; as it was by consent.

18 At the moment, I see no reason why discovery should be required of the plaintiff. Both parties would have in their possession whatever contractual documents are relied on. There appears to be no need to give discovery of correspondence unless one party has lost or deleted documents or there is a dispute as to authenticity. There will be no need to spend $3,200 identifying categories of documents for discovery as I will hear the parties on discovery after dealing with this application and will make the necessary orders.

19 No reason is shown as to why subpoenas are thought to be necessary. Mr Kumar estimates that some $10,500 in solicitors’ costs and counsel’s fees will be incurred in issuing subpoenas to companies which are part of the plaintiff's business group or have acted as its agent and with whom the defendant has corresponded in respect of this dispute.

20 The fact that the defendant has corresponded with other parties connected with the plaintiff is no reason to issue subpoenas, let alone to incur over $10,000 in costs in doing so.

21 Mr Kumar deposes that to date the defendant has incurred costs mostly unbilled work in progress of $66,115. This is estimated to comprise solicitor's costs of $40,600, junior counsel fees of $19,250 and Supreme Court fees of $2,265. Ms Aldridge is of the opinion that a costs assessor would allow total reasonable costs for work to date in an amount of $29,770 or about 44 percent of the amount that it is said that the client will be charged. Given that Ms Aldridge has not approached her estimate of reasonable costs on the basis that a costs assessor should disallow or reduce items of work, where the costs thereof are disproportionate to the complexity and importance of the subject matter in the dispute, I regard her opinion of recoverable costs as being too favourable to the plaintiff. Even so, the very substantial discount of over fifty percent she would allow of costs incurred to date shows that there are grounds for concern.

22 Mr Kumar's affidavit, and indeed an answering affidavit from the plaintiff's solicitor, Ms Vojvodic, reflects a common and misguided approach to preparing commercial litigation. Mr Kumar describes the work done and to be done in an apparent chronological sequence as follows:

“ a) analysing the Plaintiff’s Commercial List Statement & Summons and the asserted bases for relief;
b) preparing a brief to Junior Counsel;
c) preparing a brief to Senior Counsel;
d) drafting a Request for Further and Better Particulars to the solicitor for the Plaintiff, together with a request for specified documents;
e) reviewing and analysing the Plaintiff’s response to the Request for Further and Better Particulars;
f) reviewing a bundle of documents provided by the Plaintiff in answer to the Defendant’s request;
g) preparing for and attending the mention on 26 June 2009;
h) drafting a Commercial List Response;
i) arranging for the Defendant to collate various documents relevant to the proceedings and taking instructions on various matters;
j) reviewing the documents provided by the Defendant to date. This has amounted to a review of approximately 2 lever arch files of documents to date;
k) conferring separately with 4 witnesses;

l) drafting a motion for security for costs and affidavit in support.”

m) review further pleadings, including the plaintiff's reply to the defendant's commercial list response, provide counsel with a copy of the pleading for review and inclusion in brief.

n) confer with counsel in relation to the same and advising the defendant in relation to the same.

o) preparing categories of documents, discovering and exchanging correspondence with other parties in relation to categories of discovery and conferring with counsel in respect of the same.

p) giving discovery of all hard copy documents and relevant electronically stored documents.

q) inspection of documents discovered by the plaintiff.

r) issuing subpoenas to third parties.

s) analysing the plaintiff's evidence in chief, providing counsel with a copy of the same for an analysis, conferring with counsel and advising the defendant in relation to the same.

t) preparing the defendant's evidence

u) analysing the plaintiff's evidence in reply, providing counsel with a copy of the same for analysis, conferring with counsel and advising the defendant in relation to the same.

v) general preparation leading up to the hearing including research, review of plaintiff’s tender bundle, prepare a detailed chronology, meeting with witnesses, conference with counsel, preparing objections to affidavits and liaising with counsel in relation to the preparation of submissions, preparing bundles of authorities.

w) attending the final hearing of the matter, conferring with counsel and general correspondence with the plaintiff's solicitor during the hearing. Advising the defendant from time to time and conferring with counsel.

23 That general approach leaves the obtaining of all relevant documents of the client to the stage of giving of discovery, that is, after pleadings have closed; and it leaves the taking of statements of evidence to the end of the preparation of the case for hearing. Such an approach too often involves duplication of work, delays the identification of the real issues in the proceedings and results in late applications for amendments to pleadings. Such an approach can sometimes prove fatal to the client’s case, through no fault of the client. The assembly of relevant documents and the taking of statements of evidence should be done at the earliest possible stage so that pleadings are prepared with the benefit of proofs of evidence and the client's documents. Thus in preparing their case, although the solicitor has had conferences with four witnesses, it seems they will have to be interviewed again in order to prepare witness statements as well as there being conferences again with counsel before the hearing. Without witness statements and all the relevant documents of the client, the solicitor or barrister will often be uncertain as to what documents might be required from the opposing party, or from third parties, with the result that wide-ranging demands for documents are made. In other words, and speaking generally, a case will not assume its proper focus until those essential preparatory steps of obtaining and organising documents and taking proofs of evidence are taken.

24 No doubt that throws a heavier burden of costs to the earlier stage of preparation of proceedings but the approach saves costs in the long run. In particular, it minimises the risk of the real issues not emerging until late in the process.

25 Ms Vojvodic deposes that at this stage of the proceedings junior counsel should only be briefed to settle the commercial list matter and notice of motion for security of costs. I do not agree.

26 In a usual case of commercial litigation, counsel, at least junior counsel, should be briefed early. Where there is work that can be done either by the solicitor or by junior counsel, and, as often happens, junior counsel is more experienced than the solicitor and charges at a significantly lower rate, then the solicitor's duty to his or her client is to ensure that the work is done at the lower cost. That general statement is, of course, subject to the ability of the individual legal practitioners involved. But very often one sees work done by a solicitor in a firm which could be done equally well or better at a fraction of the cost by junior counsel with considerably more experience as a litigation solicitor and with more expertise.

27 In the present case Mr Kumar charges and hourly rate of $400 exclusive of GST. He was admitted as a legal practitioner in July 2004. Prior to taking up his employment as an in house legal counsel with the defendant in 2008, he was employed as an Acting Legal Officer in the New South Wales Office of Liquor Gaming and Racing managing litigation for that department. On the other hand, junior counsel was admitted as a legal practitioner in 2002 and after almost six years of practice was admitted to the Bar in June 2008. His hourly charge is $250 per hour. Mr Kumar is not to be criticised for using counsel too much. If anything, the criticism would be that counsel is not used enough. However, that is not to say that there is any justification for duplicating work, and it does appear to me from Mr Kumar's affidavit that he has allowed for excessive duplication. As to the plaintiff's criticism of the use of junior counsel early in the proceedings, I repeat my observations in Motor Trade Finances Prestige Leasing Pty Ltd v Elderslie Finance Corporation Ltd & Ors [2005] NSWSC 921 at [28] and [29]. I adhere to the view that I there expressed, that a costs assessor should consider whether it is just and reasonable for a losing party to pay more towards a successful party's costs than would have been incurred if the successful party made efficient use of the resources of the junior Bar.

28 That takes me to the hourly charge of Mr Kumar. Although he is employed by the defendant as an in-house legal counsel, he also is the principal of a firm known as MAS Legal. He deposes that the defendant has engaged his services as the principal of that firm and has entered into a costs agreement pursuant to which he is entitled to charge at the hourly rate of $400 inclusive of GST. His evidence is that his arrangement with the defendant is that he can keep the fees charged. In any event, even if the work done and to be done by him were done as an employed solicitor, it is likely that on an assessment the costs to be recovered would be assessed as if he had acted as an external solicitor, unless there were good and sufficient cause to investigate whether this would infringe the indemnity principle (Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333). I express no view as to the appropriateness of the fee of $400 per hour for the carrying out of skilled solicitor’s work. However, it is difficult to envisage that on an assessment, a costs assessor would allow that charge for the full range of services Mr Kumar is to provide. It is one thing for a solicitor of about five years’ standing to charge $400 per hour for skilled work such as preparing witness statements and ensuring that they are in admissible form. It is quite another to allow that rate for any solicitor for mundane activities that could properly be undertaken by a clerk.

29 There are other aspects of the defendant's assessment of future costs with which I am not satisfied. For example, in discussing costs likely to be incurred in obtaining expert evidence, no allowance is made for the fact that if the Court were satisfied of the need for expert evidence it is likely that a single expert would be required to be engaged.

30 I do not consider it appropriate to assess the amount of security using Mr Kumar's estimate of the work to be done and the charges for such work, even as moderated by Ms Armitage. I have already said that Ms Armitage's approach is vitiated by her erroneous belief as to the irrelevance, on a costs assessment, of the proportionality between costs to be allowed and the importance and complexity of the subject matter of the dispute.

31 The matter is very much one of impression. It appears to me that the case should be no more than a three or four day matter. Mr Ramsey-Stewart deposes:

“ In my experience and opinion, I would expect to draw a party/party bill (on the usual order basis) for a commercial recovery of this type, with 2 parties, no cross-claims, standard directions/interlocutory proceedings and run for 2 to 4 days on final hearing in the Supreme court, in the range of $150,000 to $170,000 exclusive of GST. This would then be reduced, potentially, on assessment to $120,000 to $140,000 (approximately 15% to 20% reduction). This is a very general summation of my experience and expectation for costs only and there are of course many variables that would affect those costs – for example – different hourly rates being charged by law firms and use of ‘teams’ of solicitors. It is still a useful yardstick to use in comparing figures generated by other methods. "

32 Because I am not satisfied as to the methodology used by the defendant and its costs assessor and do not consider that appropriate regard has been had to the principle of proportionality, I propose to use this general yardstick. I propose to adapt a figure at the upper end of the range used by Mr Ramsey-Stewart as the likely amount of recoverable costs on the ordinary basis of a piece of commercial litigation with no unusual features expected to run up to four days. Mr Ramsey-Stewart's estimate of the recoverable costs in this particular matter, having regard to the individual items of work as deposed to by Mr Kumar was in the range of between $73,800 to $131,600. The upper end of that range coincides with his experience as to the general level of recoverable costs of commercial litigation of that length. The plaintiff did not adduce any evidence or suggest there would be any hardship if it were required to provide security at the upper end of that range (nor indeed if it were required to provide security in the amount sought by the defendant). If the plaintiff succeeds, its money will be returned with interest.

33 I determine that the amount for which security should be provided is the sum of $130,000. That security should be provided in stages. $85,000 should be provided for work to be done up to a date which is four weeks before the date which will be fixed for hearing, and $45,000 thereafter.

[The parties addressed on costs.]

34 The defendant submits that neither party has been wholly successful. Both have had a measure of success and failure. The defendant also points to correspondence from the plaintiff of 17 June 2009 in which the plaintiff did not concede that the defendant was entitled to security for costs. It was, therefore, necessary for the defendant to bring the application and it was not until 28 July 2009 that the plaintiff advised that it did not oppose giving security for costs.

35 On the other hand, on the issue that was litigated, namely as to the reasonableness of the defendant's demand as to the quantum of security sought, the plaintiff has been substantially successful. Whilst its offer at the hearing was to provide security in stages with the first amount of security to be provided being in an amount of $35,584 up to the end of discovery, its assessment of that sum was based on the evidence of Mr Ramsey-Stewart and I have, in large measure, accepted his approach on the quantum issue. Both sides made without prejudice offers as to the amount to be provided by way of security, but neither bettered the order made. I think, having regard to the plaintiff's substantial success on the issue that was litigated and the issue which was the subject of the affidavit evidence, that it would not be appropriate to order that costs be costs in the proceedings. In my view the appropriate order is that the costs of and incidental to the defendant's notice of motion filed on 9 July 2009 be the plaintiff's costs in the proceedings.

[The parties addressed on categories of documents for discovery.]

36 I make the following orders:

1. That within 28 days, the plaintiff provides security for the defendant's costs in the sum of $85,000 in such form as may be agreed or may be determined by the Registrar.

2. That the proceedings be stayed until such security is given.

3. That by a date which is 28 days before the date to be fixed for hearing of the proceedings, the plaintiff give security for the defendant's costs in the sum of $45,000 in such form as may be agreed or as may be determined by the Registrar.

4. I direct that within 28 days after the provision of the security for costs, the subject of order 1 that I made, the plaintiff give discovery of the categories of documents that I just identified.

5. I direct that 28 days after the providing by the plaintiff of the security the subject of order 1, the defendant give discovery of those five categories of documents, namely the defendant's standard terms and conditions referred to in paragraph 3B of the Commercial List response; secondly the document alleged to contain the representations in paragraph 20 of the Commercial List Response; thirdly, documents recording the receipt of goods, the subject of the plaintiff's sale confirmation notice and invoices referred to in paragraph 8 and 9 of the Commercial List Statement; fourthly, documents relating to the existence and extent of the alleged defect in the paper delivered by the plaintiff to the defendant and any reports in relation to the problems allegedly caused in the defendant's printing operations; and fifthly documents relating to the plaintiff's reliance on the representations alleged in paragraph 20 of the Commercial List response. Inspection of documents is to be provided forthwith after the giving of discovery.

6. I grant liberty to the defendant to apply in the event that security is not provided in accordance with previous orders. On that timetable discovery should be given by 19 October 2009.

7. I stand the matter over to the Commercial List on Friday 23 October for directions.

******

02/09/2009 - "(sol'r)" removed after Counsel for Respondent's name on cover sheet - Paragraph(s) 0