ASIC v Rich - [2003] NSWSC 297

No judgment structure available for this case.

CITATION: ASIC v Rich [2003] NSWSC 297

HEARING DATE(S): 28 March, 1, 8 & 9 April 2003

JUDGMENT DATE:
11 April 2003

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: See under heading "Conclusion"

CATCHWORDS: COSTS - longstanding dispute over various discovery issues - plaintiff asserted no obligation to obtain documents in possession of third parties for discovery to defendants - consent orders made giving substantial success to defendants - whether plaintiff should be required to pay defendants' costs of application - whether plaintiff should reimburse defendants for their costs and expenses liabilities to a third party

LEGISLATION CITED: Supreme Court Rules Pt 52A r 9

CASES CITED: ASIC v Rich [2003] NSWSC 257
Gambro Pty Ltd v Fresenius Medical Care of Australia Pty Ltd [2002] FCA 581
Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428

PARTIES :
Australian Securities and Investments Commission (P/R)
John David Rich (D1/A1)
Bradley William Keeling (D2)
John Huyshe Greaves (D3)
Mark Allen Silberman (D4/A2)

FILE NUMBER(S): SC 5934/01

COUNSEL: D Williams (A1, A2)
P Durack with N Beaumont (R)

SOLICITORS: Joanne Kelly, Solicitor (A1, A2)
Jan Redfern, Solicitor (R)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 11 APRIL 2003

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS

JUDGMENT

1 HIS HONOUR: On 20 February 2003 the first and fourth defendants filed an interlocutory application ("the Defendants' Application") for a variety of orders against the plaintiff concerning discovery, including orders with respect to documents in the possession of third parties but allegedly within the control of the plaintiff. For the sake of simplicity, I shall refer to the first and fourth defendants simply as "the defendants" since the other defendants were not parties to the application.

2 The discovery issues in dispute, leading to the application of 20 February 2003, were as follows:

· access to a large quantity of hard copy documents stored in boxes in the possession of the liquidators of One.Tel Limited;

· obtaining a copy of the Adept database;

· obtaining a copy of the SAS database;

· obtaining a copy of the billing directory on the computer system "I" drive;

· access to the "proof of debt files" in the possession of the liquidators;

· access to certain documents in the hands of the purchasers of One.Tel's overseas subsidiaries;

· access to documents collected by Minter Ellison;

· access to documents in the hands of PricewaterhouseCoopers.

3 The application was initially opposed by the plaintiff, but on 8 April 2003 the plaintiff and the defendants agreed upon a complex set of orders that disposed of the application, except for the question of costs. I have heard substantial argument about costs.

4 The defendants say that the plaintiff should be ordered to pay their costs of the application, that those costs should be assessed and paid forthwith, and that the costs should include reimbursement to the defendants of costs and expenses they have become liable to pay to Minter Ellison. Their argument is that the plaintiff took the attitude over many months that it was not obliged to make discovery of documents in the possession of third parties, or otherwise to seek to obtain those documents in order to provide them to the defendants. They say that this attitude was abandoned and reversed by the plaintiff when it agreed to the orders made on 8 April 2003, and that those orders amounted to complete success for the defendants. Their contention is that if the plaintiff had taken, at an earlier stage, the attitude eventually adopted in the consent orders, it would not have been necessary for the defendants to make the application of 20 February 2003, or to engage in a contest with Minter Ellison about access to documents claimed to be privileged (a contest that eventually led to a costs order against the defendants, and is likely to lead also to an order for reimbursement of Minter Ellison's expenses of complying with a subpoena issued by the defendants to the partners of that firm).

5 The plaintiff has vigorously resisted the application for costs, submitting that if one considers the history of the "discovery issues" between the parties, it is evident that the defendants did not (notwithstanding the plaintiff's requests that they do so) provide any reasoned request for access to various categories of documents in the hands of third parties until their solicitor, Joanne Kelly, filed her affidavits of 21, 24, and 26 March and 1 April 2003, in support of the application of 20 February 2003. The plaintiff contends that the proper order is either that the costs of the application be reserved, or that they be costs of the proceedings. Judging from the evidence before me, it appears likely that the amount of costs in contest is a substantial sum.

Background facts

6 The plaintiff filed a statement of claim on 12 December 2001, and subsequently amended it twice. The plaintiff contends that the defendants contravened the statutory duty of care of company directors and officers of One.Tel Limited now found in s 180(1) of the Corporations Act 2001 (Cth), and consequently that the Court should make declarations of contravention, disqualification orders and compensation orders (ss 206C, 1317E and 1317H). Voluntary administrators were appointed to One.Tel on 29 May 2001 and the company went into liquidation in July 2001.

7 The plaintiff's allegations relate to the first five months of the year 2001, and they raise for detailed consideration the financial position of the One.Tel Group of companies during that period. The general business and financial position of the company in the first five months of 2001 was described in the affidavit of Joanne Kelly made on 21 March 2003. She said:

"… One.Tel was one of the top 100 largest publicly listed companies in Australia. It had about 3000 employees and about 2 million subscribers. It operated in seven countries around the world. It had divisions concerned with local and long distance telephone calls, mobile phones and the Internet. It had revenues in excess of $1 billion. It had extremely complex and sophisticated accounting and software packages designed to deal with customer revenues of about $130 million a month involving 13 bill runs a month. It had significant relationships with telephony carriers involving monthly payments to Telstra and Optus for call costs of over $20 million. It was in the midst of rolling out a $1 billion mobile phone network being built by Lucent Technology. Its UK subsidiary was significant. It had 400 employees, in excess of 700,000 subscribers and revenues of $350 million a year."

8 In response to directions of the Court, the plaintiff served affidavits or outlines of the evidence of its witnesses in May and June 2002. One of the affidavits was by Paul Carter, a partner in PricewaterhouseCoopers. The affidavit comprised a 157 page report with approximately 200 pages of appendices, an 84 page index of sources of information and 12 ring binder folders of annexures comprising about 3000 documents ("the Carter Report"). The documents identified in the Carter Report were partly documents in the possession of the plaintiff and partly documents in the possession of the liquidators of One.Tel.

9 A supplementary affidavit and report by Mr Carter was served on 18 December 2002 ("Supplementary Carter Report"). The Supplementary Carter Report was a 54 page report, with approximately 50 pages of appendices, a 34 page index of sources of information and two ring binders of annexures comprising approximately 670 pages. The sources of documents identified in the Supplementary Carter Report included the One.Tel Group computer system and Minter Ellison Lawyers.

10 Over the first three months of the year 2002 the plaintiff provided, in several tranches, a draft tender bundle in hard copy and electronic form. The documents in the tender bundle include some board papers, some "flash" and management accounts, financial information including some creditors lists and collection statistics and trial balances and bank account statements, and select e-mails and correspondence from some employees and third parties. The draft tender bundle also includes voluminous transcripts of s 19 examinations and copies of documents referred to by the examinees. The final content of the tender bundle has not yet been settled. On 13 December 2002 the plaintiff responded to a request by the solicitors for the first and fourth defendants, saying that the tender bundle would also include the documents referred to in the Carter Report and the Supplementary Carter Report (which had not been served at that stage).

11 What is evident from this brief outline is that the case against the defendants will concern the detailed financial position and circumstances of the One.Tel Group over a fairly short period of time, focusing on the period January-May 2001, and that the plaintiff's evidence will involve a close analysis of financial matters. Mr Carter's two reports are likely to be a critically important component of the plaintiff's case. To respond to the plaintiff's case, the first and fourth defendants need to have access to the documentary evidence upon which the plaintiff and its witnesses will rely. The defendants have indicated an intention to obtain their own expert evidence, and they will wish to make available to their expert the documents to which Mr Carter has had access. They will also need access to documents so as to assess the adequacy of the draft tender bundle.

12 There has been correspondence between the plaintiff and the defendants regarding "issues" emerging out of the discovery process from at least August 2002. To a large degree, the correspondence (to the extent that I have been taken to it by counsel) relates to the machinery of identifying relevant documents and making them available for inspection and then discovery. On the whole, the solicitors for the parties appear to have worked co-operatively to achieve an efficient and relatively quick procedure, subject of course to their dispute in principle as to whether the plaintiff has any obligation to obtain access for the defendants to documents in the possession of third parties. Some issues of potential dispute have been resolved after constructive negotiation. I do not detect any evidence of general lack of co-operation on the part of the plaintiff, nor evidence of unreasonably onerous demands by the defendants or any attempt on their part to delay the discovery process and hence the ultimate hearing. That the hearing of the matter has not yet taken place is a consequence of the complexity and volume of the evidence.

13 Even so, the discovery process has been affected by pressure being brought to bear by the plaintiff to secure at least provisional hearing dates from the Court. The plaintiff has urged the Court to fix provisional hearing dates several times, when the proceedings came before the Court for mention during the year 2002, most recently on 16 December 2002. By an application dated 10 February 2003, the plaintiff has sought (inter alia) orders for the fixing of provisional hearing dates. Not surprisingly, the defendants' response has consistently been that the matter is just not ready for the allocation of hearing dates, because of the large amount of work still to be done by both sides in case preparation, including the work to be done on the discovery issues, and the consequent difficulty in assessing the likely length of the hearing.

14 The correspondence discloses that in November 2002 the plaintiff made some determined efforts to bring all of the discovery issues to a conclusion. It served its first verified list of documents on 20 December 2002. When it became clear that the defendants did not agree with the plaintiff on certain issues, the correspondence between the respective solicitors became more terse and less co-operative.

The plaintiff's attitude to discovery of documents in the hands of third parties

15 The difference between the parties with respect to the plaintiff's discovery of documents in the possession of third parties unfolded and evolved over the period from mid-2002 to February 2003. From an early time, however, the plaintiff took the view that it was not liable to give discovery of documents in the possession of third parties. While preserving its attitude on the question of principle, the plaintiff was prepared, nevertheless, to assist the defendants to inspect documents in the possession of the liquidators and obtain images or copies of them at the defendants' expense; and it was also prepared to make discovery of documents it obtained from Minter Ellison, although it took the view that if the defendants wanted to have access to documents in the hands of independent third parties such as Minter Ellison, they should issue subpoenas to those third parties.

16 Thus, as early as 12 September 2002, Joanne Rees, a consultant solicitor engaged by the plaintiff, sent an e-mail to the liquidators attaching an e-mail from Ms Rock of PricewaterhouseCoopers, which in turn attached a schedule of boxes of documents. In her e-mail Ms Rees said that "Jan" (Ms Jan Redfern, the plaintiff's principal solicitor) "does not want us to consent to discover the boxes to the Defendants at this stage because she wants the issue of whether we are required to do so to be tested in the Court."

17 On 8 October 2002 an officer of the plaintiff sent an e-mail to Ms Rees in which he referred to eight folders of "proof of debt files" of the liquidators. According to the e-mail, the liquidators "do not want them [the proof of debt files] getting into the hands of the Defendants", the reason being that the files "may contain examples of debts that Sherman [one of the liquidators] 'cut a deal' after the voluntary administration commenced". The e-mail also acknowledged that the documents were thought to be "very helpful", because they showed the position of the company when the administration took effect.

18 In the affidavit of Ms Rees made on 28 March 2003, she referred to some meetings held in the second half of 2002, and said that at each meeting she indicated to the lawyers for the defendants that the plaintiff was not obliged to discover third party documents, but would nonetheless do everything possible to facilitate the provision of all requested documents so that the matter could be set down for hearing. In paragraph 22 of the same affidavit, she confirmed that the plaintiff did not agree to discover hard copies of documents in the possession of the liquidators, because the plaintiff was, she said, not obliged to discover documents in the possession of third parties, although the plaintiff did agree to look through boxes of hard copy documents and obtain copies of any that it believed were relevant to the proceedings, and would give discovery of those documents to the defendants.

19 A similar attitude is reflected in the written submissions by the plaintiff in response to the Defendants' Application, dated 25 March 2003. The argument advanced in the submissions (paragraph 19) was that, although the Court had the power under s 76A of the Supreme Court Act 1970 (NSW) to make the orders sought in the Defendants' Application, the exercise of the power has usually involved circumstances in which (1) the party to the proceedings is closely related to the relevant third party, and (2) the third party is a foreign corporation not otherwise amenable to the jurisdiction of the Court, so that the documents are "not otherwise available". It was submitted that the defendants bore the onus of demonstrating a good reason why orders should be made (paragraph 20), why it was not sufficient for the defendants to serve subpoenas on the third parties, and why the orders would not be futile, since (it was contended) the plaintiff had already taken all reasonable steps to obtain all relevant documentation from third parties (paragraph 21).

The emergence of the discovery issues

20 The evidence indicates that the process of discovery of documents was commenced as early as December 2001, and various documents were supplied by the plaintiff to the defendants in the period to June 2002. On 21 June 2002 a disk containing copies of documents stored in One.Tel's computer system that were in the possession of the plaintiff, was provided to the first defendant, and it was offered to the remaining defendants in July 2002. Information included information from the "I" drive, e-mail folders of certain staff members, and voice mail messages and hard drives of a number of staff. On 15 July 2002 a CD-ROM containing all documents obtained by the plaintiff from One.Tel and its liquidators under compulsory notices, and some material obtained voluntarily, was provided to the first defendant. That material comprised approximately 12 of the 35 boxes of documents in the possession of the plaintiff. On 3 October 2002 the plaintiff provided the defendants with six CD-ROMs containing its discovery, imaging approximately 15,000 documents. An index was also provided. On 9 October 2002 another six CD-ROMs containing further discovered documents and documents requested by the defendants’ solicitors from the liquidators were provided to the defendants, together with an index. Three further CD-ROMs were provided to the defendants later in October 2002, containing additional documents in the possession of the liquidators, requested by the defendants.

21 On 17 June 2002 the Court made various orders by consent, including a direction that the plaintiff grant access to the defendants to:

22 Following the making of consent orders in June 2002, Ms Rees attended two meetings at the chambers of Mr Williams of counsel for the defendants, and the solicitors instructing Mr Williams. The meetings took place on 16 July and 12 November 2002, for the purpose of discussing the means by which the plaintiff could facilitate access to all One.Tel business records required by the defendants from various third parties. At the end of the November meeting, according to Ms Rees, she was under the impression that all documents issues had been largely resolved.

23 On 15 November 2002 Ms Rees wrote to the solicitors for the first defendant to address "certain documents issues" raised by them at the meeting on 12 November. This was evidently an attempt to bring all of the discovery issues to a conclusion. Amongst other things, the letter confirmed that the plaintiff would provide an electronic image of an inventory of stored One.Tel boxes in the near future. The letter noted a contention by the defendants' solicitors that there were further relevant documents in the possession of the liquidator, which they would like the plaintiff to provide to them. The letter recorded an arrangement that the defendants' solicitors would indicate to the plaintiff which boxes of material were believed to be relevant and why, and then those documents would be inspected jointly. As to the Adept database (which contains the whole of the financial records of One.Tel, including debtor and creditor ledgers), the letter said that the plaintiff intended to meet with the liquidators of One.Tel in the following week to discuss the possibility and manner of copying and/or extracting information from the Adept database, and Ms Rees said she would inform the defendants' solicitors of the result. The letter concluded by expressing confidence that its contents adequately dealt with all current document queries, and asking it that if this was incorrect, the defendants' solicitors inform the plaintiff of any outstanding issues within 48 hours.

24 The plaintiff says that there was no specific response to the letter of 15 November, and although certain issues were addressed in letters in January 2003 from Ms Kelly, who had by then become the defendants' solicitor, there was no fully reasoned request in writing to provide a foundation for the notice of motion, before it was served on 20 February 2003. According to the plaintiff's submission, it was not until Ms Kelly's affidavit of 21 March 2003 was filed and served that the first and fourth defendants specifically articulated which boxes of hard copy documents in the liquidators' possession they believed to be relevant to the proceeding, and the reasons for that belief.

25 Clearly the plaintiff and the defendants have adopted differing views of relevance. For example, Ms Kelly took the view that the material contained in one box, relating to the debtor collection practices, aged debtor summaries and collection reports, was relevant to the defendants establishing the historical practice within One.Tel in relation to debtors and collections, and trends in debtor management. This box had been archived in April 1998, and the plaintiff has taken the view that the contents of the box could not be relevant to any issue in this proceeding. Disputes as to the relevance and discoverability of particular documents or classes of documents are inevitable, given the complexity and volume of the discovery process. What has at all stages been needed, in my opinion, is a procedural framework within which individual documents or classes of documents can be assessed for relevance and discoverability. The consent orders have at last provided such a framework.

26 I agree that there was no comprehensive response to the letter of 15 November until Ms Kelly's affidavits were filed, but nevertheless the issues discussed in the letter that eventually emerged as issues of contention were the subject of further, more piecemeal correspondence. It is not correct to say that until Ms Kelly's affidavits were served in March 2003, the plaintiff did not have a good idea of the defendants' stand on the controversial issues.

27 On 19 November 2002 the plaintiff wrote to the defendants' solicitors saying that its officers had met with the liquidators that day, to discuss document management issues, and that the liquidators would address the defendants' lawyers directly on access to the Adept database and other computer systems, and access to certain recall tapes. The letter reiterated that the defendants would indicate which boxes of material in the possession of the liquidators were believed to be relevant, and why.

28 On 21 November 2002 the liquidators' solicitors wrote to the defendants' solicitors, saying that except for awaiting a response concerning the cost of extracting certain information from the Adept system relating to debtors and creditors, all requests for information to the liquidators had been complied with, and upon written acceptance of the quoted cost of the information from the Adept system, that information could be compiled and provided. In a letter dated 3 October 2002, the liquidators had informed the defendants' solicitors that the cost of providing data from the debtors and creditors ledgers on the Adept system would be $3500. There is no suggestion in the letter of 21 November that the liquidators would seek to exclude customer lists from the Adept data on grounds of confidentiality.

29 The plaintiff says that there was no response to its letter of 19 November 2002, or the letter from the liquidators' solicitors dated 21 November 2002. It seems to me, however, that although there was no direct response to these letters in terms, the defendants' attitudes became quite plain in their letter of 5 December 2002.

30 That was a long letter by the defendants' solicitors to the plaintiff regarding discovery of the Adept accounting system database. The letter complained that despite the orders of the Court of 17 June 2002, and notwithstanding significant discovery given by the plaintiff, the plaintiff had still not discovered critical financial records from the Adept system which were, according to the letter, vital to the preparation of the defence in the proceeding. The letter explained the relevance and importance of the Adept database in the litigation. It noted that the plaintiff's case made allegations about the entire financial position of One.Tel in the period January to May 2001. It referred to the Carter Report, noting that the report purported to analyse the true financial position of One.Tel, and Ambani made specific reference to information and reports derived from the data contained in the Adept database. The letter contended that in order to meet the plaintiff's allegations and to respond to the material contained in the Carter Report, the defendants needed access to the underlying accounting records of One.Tel contained in its financial accounting system, namely the Adept database.

31 According to the letter of 5 December, although the plaintiff had not granted the defendants free access to the Adept database as required by the Court's order, the defendants had been prepared to deal directly with the liquidators, under protest. At the defendants' cost of nearly $10,000 paid to the liquidators, the liquidators provided a copy of part of the general ledger, up to a point in mid-May 2001, taken from the Adept database. Obviously, said the letter, the complete ledger until at least 31 May 2001 was necessary for the purposes of the litigation. I should note that the cost of nearly $10,000 was in fact charges of $6,000 and $3,500 made by the liquidators to cover the cost of engaging a computer expert to copy the relevant material.

32 The letter of 5 December contended that the plaintiff's obligation was to make full and proper discovery of all relevant documents including the records contained in the Adept database, and that the defendants should not be required to take steps themselves and at their own considerable cost to seek to obtain relevant and critical financial information from the liquidators. The letter complained that the plaintiff appeared to have adopted the position that it would discover only some of the relevant financial records of One.Tel, and contended that the plaintiff had fundamentally misconceived its discovery obligation by taking the view that it was not obliged to discover financial records in the possession of the liquidators, although the financial records held by the liquidators were documents in the possession, custody or power of the plaintiff. The letter complained that the liquidators' solicitors had said, in their letter of 21 November 2002, that the liquidators would not extract information from the Adept system unless the defendants agreed to pay the cost of extraction, which could be considerable. The letter concluded by saying that unless the plaintiff confirmed that it would discover all relevant financial records in the Adept database, including the complete general ledger and the creditors and debtors ledgers, together with the Adept month-end backup tapes, it would be necessary for the defendants to move the Court for appropriate orders.

33 The plaintiff notes that the letter of 5 December focused on the Adept database, and did not address documents in the hands of international subsidiaries or Minter Ellison. This was so, notwithstanding the fact that on 6 November 2001 the plaintiff had notified the solicitors for the defendants that counsel for Publishing & Broadcasting Limited had additional material relating to One.Tel's overseas operations, which had been inspected by the plaintiff. In fact, however, the issue of the Minter Ellison documents was addressed by the defendants' solicitors shortly afterwards, in their letter to the plaintiff dated 12 December 2002.

34 The letter of 12 December 2002 pointed out that the plaintiff's allegations in the proceeding concerned the financial position of the entire One.Tel Group of companies, not only the Australian operations, in the period January to May 2001. It referred to the Carter Report, which had made specific reference to the operations of the international subsidiaries for the purpose of analysing the true financial position of the One.Tel Group. The letter said that for the defendants to be able properly to defend themselves, and for their retained accounting experts to respond properly to the matters in the Carter Report, access would be needed to the financial records of international subsidiaries. The letter noted that in his report, Mr Carter made several references to the information available to him relating to the Group's international operations being incomplete, and therefore it was necessary for him to make various assumptions. The letter then referred to the fact that some relevant documents from the international subsidiaries had been obtained by the plaintiff from the lawyers for Mr James Packer and Publishing & Broadcasting Limited (now known to be Minter Ellison), and said that this material would be made available to Mr Carter for the purposes of a supplementary report that was in preparation. The letter contended that the plaintiff should give discovery of relevant financial records of the international subsidiaries, including the documents obtained by Minter Ellison.

35 I regard the letters of 5 and 12 December as amounting, together, to something of a watershed in the dispute about discovery issues. I regard those letters as reasoned articulations of the grounds upon which the defendants were seeking access to the Adept database and the Minter Ellison documents. That reasoning could be readily extrapolated to the other matters in dispute. My opinion is that, prior to receiving these two letters, it was open to the plaintiff to adopt the approach that until a properly reasoned case was received from the defendants, it would not take any steps to obtain for the defendants documents in the hands of third parties, beyond the steps it had already taken. After receiving those letters, the plaintiff was in a position to anticipate, by and large, the matters that would be agitated in the defendants' application, and it was put on notice that in the absence of a satisfactory response by it, such an application would be made.

36 The plaintiff replied to the letter of 5 December relating to the Adept database, by a long letter dated 13 December 2002. The letter said that the defendants' contention that the plaintiff was under an obligation to discover documents merely because they were in the liquidators' possession was "unsupported by authority and fundamentally wrong". It said that the Adept database was not in the plaintiff's possession, and that it had consented to the orders made on 17 June 2002 under the mistaken belief that it had possession of the database. It asserted that the liquidators would provide unrestricted access to the database but that their computer consultant's fees of $3500 would need to be paid.

37 The letter of 13 December is of general importance, although it relates specifically to the Adept database. It is important because it is an unambiguous application of the plaintiff's attitude in principle to discovery of documents in the possession of third parties (as described above), to one of the specific discovery issues. It left the defendants in no doubt that, if they wished to have the plaintiff do more, by way of making discovery or otherwise providing access to the Adept system, it would be necessary for them to make an application to the Court. Given that the plaintiff's attitude was an attitude taken in principle, it would have been reasonable for the defendants to infer that the same position would be taken in relation to all other discovery issues regarding documents in the possession of third parties.

38 On 13 December the defendants' solicitors wrote to the plaintiff for the purpose of setting out the matters outstanding, in preparation for the directions hearing on 16 December 2002. Under the heading "Discovery by ASIC", the letter noted that there had been good progress but there were some matters where there may be "real areas of dispute". As to the Adept database, the letter asserted the defendants' view that the plaintiff was obliged to give discovery of the database, and that it should not be for the defendants to have to approach the liquidators and pay what might be significant sums for access. As to documents of international subsidiaries, the letter asserted that the plaintiff was obliged to give discovery of those documents. As to the hardcopy documents in boxes held by the liquidators, the letter noted that the plaintiff and PricewaterhouseCoopers had reviewed some of those documents and had made discovery of a limited number of them. The letter expressed uncertainty as to the criteria used by the plaintiff and PricewaterhouseCoopers to determine which documents were relevant for discovery, and also a concern that there was still a significant number of documents held by the liquidators that had been reviewed by the plaintiff and PricewaterhouseCoopers but not discovered, but which might well be relevant and discoverable. The letter said that the defendants would attend at the liquidators' offices over the ensuing 14 days to review the documents, and depending on the outcome of that review, the defendants might require further discovery by the plaintiff. (The plaintiff submitted that the review envisaged by the letter did not occur comprehensively within those 14 days or at all, but there was piecemeal review later, followed up by Ms Kelly's affidavit of 21 March 2003.) The letter referred to the documents obtained by Minter Ellison, expressing uncertainty as to the basis upon which Minter Ellison selected material to copy and bring back to Australia, and as to the criteria used by the plaintiff and PricewaterhouseCoopers to review the Minter Ellison documents and to discover only a select number of them.

39 This letter articulates a central concern held by the defendants as to the procedure that had been adopted by the plaintiff for making available documents in the possession of third parties. The concern was that the defendants did not know the criteria for selection adopted by the third parties and by the plaintiff for documents eventually made available.

40 Ms Kelly wrote to the plaintiff on behalf of the defendants on 8 January 2003, identifying various boxes of documents that may contain material relevant to the proceeding, and giving brief reasons. The letter asked for arrangements to be made so that the identified boxes could be inspected at the liquidators' office. Inspection of the boxes occurred shortly afterwards.

41 On 22 January 2003 Ms Kelly wrote to Ms Rees about various discovery issues, inquiring whether the plaintiff had in its possession the One.Tel "I" drive for billing. The letter explained that the "I" drive contained important files relating to billing accruals which formed part of reconciliation of flash reports with management accounts. Ms Rees replied to Ms Kelly on 3 February 2003, saying that the plaintiff did not possess a copy or image of the billing subdirectory of the "I" drive. In fact it has emerged that the computer system "I" drive can be obtained from the liquidators, and the consent orders ultimately made include an order that the plaintiff use its best endeavours to obtain an image of all directories on the "I" drive from the liquidators.

42 On 3 February 2003 Ms Kelly wrote another letter to Ms Rees as a result of inspection of boxes of documents at the liquidators' offices. The letter noted that a number of documents had been identified on behalf of the defendants, said to be relevant to the proceeding, and it asked for those documents to be copied and made available. The letter noted that the plaintiff had also identified a category of boxes that were described as potentially or definitely relevant, and access to further boxes (referred to in submissions as "the proof of debt files") was requested.

43 Thereafter the correspondence between the legal representatives of the parties became increasingly terse. The plaintiff wrote to Ms Kelly on 10 February 2003, referring to Ms Kelly's letter of 3 February and saying that the plaintiff had reviewed the documents selected as being relevant, and had reached the conclusion that none of the documents were in fact relevant, and consequently that the plaintiff did not propose to provide Ms Kelly with copies. The letter claimed that on numerous occasions, the liquidators had offered to provide copies of documents in their possession to the defendants, and would no doubt do so again if asked. On 11 February 2003 Ms Kelly replied to the plaintiff's letter, noting that the plaintiff was not prepared to provide copies of the documents she had identified, and seeking the numbers of certain documents. On 17 February Ms Rees replied to Ms Kelly, claiming that Ms Kelly had misrepresented the plaintiff's position, and asserting (yet again) that it was not necessary for the plaintiff to provide documents to the defendants, as the defendants could acquire them directly from the liquidators. On 17 February 2003 Ms Kelly wrote a follow-up letter to Ms Rees concerning the "proof of debt files" in the boxes held by the liquidators. On 17 February 2003 Ms Kelly wrote to the plaintiff, requiring access to some 26 boxes in the possession of the liquidators, asking that her request be passed on by the plaintiff to the liquidators.

44 On 19 February 2003 (the date that the first and fourth defendants’ application was signed), Ms Kelly wrote to Ms Rees regarding discovery of documents obtained from Minter Ellison. The letter expressed concern that only a relatively small number of the total amount of documentation collected by Minter Ellison had been discovered by the plaintiff. The letter said the inadequacy of the plaintiff's discovery of material concerning the international operations of One.Tel remained of concern, particularly in relation to the defendants' ability to meet the plaintiff's claims and to respond to the evidence of Mr Carter. The letter said that the defendants were not in a position to know whether any relevant material was being held at the offices of Minter Ellison which had not been discovered by the plaintiff.

45 According to the submission by counsel for the plaintiff, at no earlier time had there been a reasoned request in respect of the Minter Ellison documents. I disagree. In my opinion the basis for the defendants' request concerning the Minter Ellison documents was set out in the letter by the defendants' solicitors dated 12 December 2002.

46 On 26 February 2003 Ms Kelly wrote to the plaintiff seeking to find out when the liquidators would have the requested boxes available for inspection. On 3 March 2003 Ms Kelly wrote to Ms Rees regarding the plaintiff's discovery of the Minter Ellison documents. The letter noted that no reply had been received to her earlier letter of 19 February, and then asked specific questions about particular documents. On 10 March 2003 Ms Rees wrote to Ms Kelly informing her that the plaintiff now had access to the proof of debt files. On 11 March 2003 Ms Kelly responded, seeking to arrange inspection of the proof of debt files. On 18 March 2003 Ms Rees wrote to Ms Kelly again regarding the proof of debt files, saying that Ms Kelly could have access to the files by making suitable arrangements with the liquidators.

47 Mr Farago, a director of the liquidators' firm responsible for assisting the liquidators in the administration of One.Tel, gave evidence by affidavit made 28 March 2003 that the liquidators had responded to all direct requests from the defendants for access to documents, while noting that the defendants' requests for electronic copies of the Adept database and the billing directory in the "I" drive were still outstanding. He said that in the absence of a subpoena, the liquidators were not in a position to provide these electronic copies because the computer systems contained data relating to One.Tel's subscriber customer list, which had been sold by the liquidators to Optus and Telstra, under contracts requiring that the lists be kept confidential. In her affidavit made on 1 April 2003, Ms Kelly said that according to the defendants’ computer expert, it would not be a complicated task to copy the databases with any confidential information masked or extracted. She said that confidential information could be encrypted by developing an encryption program. There was a meeting between representatives of the parties and their computer experts on 3 April 2003, to develop the proposed encryption of the databases, and on 8 April 2003 the plaintiff agreed to orders which provided for encryption to take place.

48 It is true, as the plaintiff contends, that if all of the discovery issues had been comprehensively addressed in November 2002, the problem of protection of confidential customer lists by encryption could have been solved at that time without the necessity for any application to the Court. In my opinion, however, any such co-operative process was stopped by the attitude taken by the plaintiff in its letter of 13 December, which (as I have said) made plain that the defendants would need to make an application to the Court to make further progress concerning access to the Adept database. The alleged problem of confidentiality was advanced only in Mr Farago's affidavit in response to the application, and the encryption process was resolved only by virtue of the negotiations to which the application led.

49 On 3 April 2003 Ms Rees wrote to Ms Kelly making an open offer to resolve the issues raised in the first and fourth defendants' application. The substance of the offer was that the plaintiff would agree, without admissions, to use its best endeavours to have the liquidators give the defendants access to all electronic or hardcopy business records as the defendants may request, subject to the defendants identifying the documents or categories of documents to which they wished to have access. The plaintiff would also agree to request from such overseas parties as the defendants might specify, such business records of One.Tel or any of its subsidiaries as the defendants may specify on an individual basis or by category. Those agreements by the plaintiff would be conditional upon the plaintiff having liberty to apply on 3 days’ notice for variation.

50 I do not regard the making of this open offer as having any great significance on the question of costs. The offer fell substantially short of addressing all of the defendants' concerns, and the consent orders that ultimately emerged from the process of negotiation which included the making of the open offer were more refined than, and in some respects different from, the terms of the open offer.

51 The defendants contend that over a substantial period of time, they were led by the plaintiff and the liquidators to believe that the SAS system was not available. On 22 August 2002 the defendants' solicitors wrote to the plaintiff concerning various requests for information and documents. They referred to the Court's orders made on 17 June 2002 requiring the plaintiff to provide the defendants with access to the SAS system. They asked for access to the SAS database as soon as possible, preferably by obtaining an image of it. On 5 August 2002 the liquidators wrote to the plaintiff saying that the SAS system was a statistical analysis and reporting package and not a sub-program of Adept. It was used to produce a variety of reports for management of the business. The letter said that as far as the liquidators could determine, no data was still currently available from that system and it was never used after approximately September 2001. It appears, however, that back-up tapes have been found, with the result that the consent orders make provision for access to the SAS system.

52 In her affidavit made on 28 March 2003, filed in respect of the Defendants' Application, Ms Rees gave evidence of what ASIC had done with respect to the subject matter of the various paragraphs of the application. Under the heading "Order 9", the following appears in the affidavit:

53 Ms Rees made a further affidavit on 1 April 2003, filed to explain the steps taken by the plaintiff to obtain documents from international subsidiaries of One.Tel Ltd. That affidavit includes the following:

"16. ASIC has also inspected documents in the possession of Minter Ellison and in that process obtained copies of One.Tel business records from the European subsidiaries of One.Tel, together with a copy of Drew Boaden’s computer, all of which have been or are in the process of being discovered to the defendants."

54 On 4 April 2003 Ms Rees wrote to Ms Kelly in the following terms:

55 Ms Rees gave supplementary oral evidence about these matters on 8 April 2003. She said that she was informed that Minter Ellison had possession of some additional documents regarding the Netherlands subsidiary of One.Tel, and she arranged for those documents to be inspected at the office of Minter Ellison in Melbourne. Two of the personnel of PricewaterhouseCoopers carried out the inspection on 25 and 26 March. They reported back to Ms Rees, probably on 27 March, after they had finished the inspection. They told her that they had seen some relevant documents and that they had arranged to obtain copies. The additional documents were received in the plaintiff's Sydney office on 1 or 2 April, where they were processed in some fashion, and they arrived on Ms Rees' desk on about 3 April.

56 In light of the letter of 4 April 2003, and with the benefit of hindsight, it can be seen that the extracted paragraphs of Ms Rees' affidavits were incomplete in a material respect. I am satisfied, however, that in all the circumstances there is no proper basis for criticising Ms Rees in this respect.

A comparison of the application with the consent orders

57 An important component of the defendants' argument on costs is their contention that their application has been completely or substantially successful by virtue of the terms of the consent orders. To assess this contention, it is necessary to compare the Defendants' Application with the consent orders that I have made.

58 The Defendants' Application sought, first, an order (paragraph 1) that the plaintiff give verified discovery of specified electronic computer accounting and financial systems of the One.Tel Limited Group. In the alternative, paragraph 2 of the application sought an order that the plaintiff make such requests and do all such things as may be reasonably necessary to obtain electronic copies of these systems from the liquidators of One.Tel Limited.

59 Paragraph 3 of the application sought an order that the plaintiff make such requests and do all things as may be reasonably necessary to obtain from the new owners and managers of the businesses formerly conducted by One.Tel's subsidiaries in the United Kingdom and the Netherlands, electronic copies of certain specified ledgers, and correspondence and documentation relating to disputes between One.Tel's international subsidiaries in the United Kingdom and the Netherlands with certain specified carriers and suppliers during the period January 1999 to June 2001.

60 Paragraph 4 sought an order that the plaintiff give verified discovery of the documents obtained pursuant to the requests referred to in paragraphs 2 and 3.

61 The application sought orders in the nature of discovery, in respect of documents in the possession of the liquidators of One.Tel. The orders were sought on two alternative bases. The first alternative was as follows:

"5A. Order that the Plaintiff give verified discovery of all One.Tel Limited's files, documents, computer records and systems in the possession of the Liquidators of One.Tel Limited relevant to any matter in issue in the proceedings."

62 The second alternative comprised the following:

63 Paragraphs 9 and 10 sought orders with respect to documents in the possession of Minter Ellison Lawyers, as follows:

64 Paragraphs 11 and 12 were as follows:

65 Paragraph 13 of the application sought an order for the plaintiff to file and serve affidavits making a claim for privilege, to the extent that a claim was made in respect of documents listed in its verified list of documents dated 20 December 2002. There is no controversy with this order.

66 To the extent that the application sought, as an alternative to orders for verified discovery, orders that the plaintiff make requests and do things reasonably necessary to obtain documents from third parties, they were based on similar orders made by the Federal Court of Australia in Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428.

67 It is evident from the terms of the agreed orders that there is a degree of correspondence between the orders obtained and the orders sought. To understand how high a correspondence there is, it is necessary to compare the application with the orders in detail. Before I do so, however, I should note one matter that applies to all of the agreed orders concerning access to documents in the possession of third parties. Instead of an order for verified discovery of those documents by the plaintiff, the plaintiff and the defendants have agreed to the establishment of a procedure that I shall describe.

68 Orders 9, 10, 11 and 13 set up a procedure ("the Agreed Discovery Procedure") by which, after documents have been received pursuant to requests to third parties made under other orders, the documents will be registered and indexed by the plaintiff under its LSS litigation support system, and then electronic copies will be provided to the defendants as part of the plaintiff's index of discovered documents. Order 9 also provides for the plaintiff to exclude documents from this process, by identifying documents that it claims to have been discovered already, and documents that it claims, for stated reasons, not to be discoverable. Order 10 permits the defendants to require that the plaintiff furnish to them copies of its requests to third parties for documents, and any response, including copies of business records accompanying any such response. The plaintiff must give the provider of the response at least three business days' notice of its intention to provide the response and accompanying documents to the defendants, to permit any claim for privilege or other objection to be made. Order 11 gives the parties liberty to apply on three days' notice, so that any dispute arising out of the process can be referred to the Court for adjudication. Order 13 requires the plaintiff to file and serve a further verified list of documents as soon as practicable after it has imaged, registered and indexed the documents received from third parties pursuant to its requests.

69 The plaintiff submitted that the Agreed Discovery Procedure represented a real and substantial compromise of the defendants' claims. Counsel for the plaintiff pointed out that if an order for verified discovery had been made without such a procedure, it would have been incumbent upon the plaintiff to review all of the boxes of One.Tel documents and computer files to identify which documents should be discovered, an enormous enterprise. Under the Agreed Discovery Procedure, it is the defendants who nominate the documents or classes of documents to which the procedure should apply. That, said counsel for the plaintiff, is a real improvement from the plaintiff's point of view. In my opinion, this submission overlooks the fact that the amended application sought, as an alternative to verified discovery, the procedure in paragraphs 5 to 8, which as far as I can see is a procedure indistinguishable from the Agreed Discovery Procedure. By consenting to the Agreed Discovery Procedure, therefore, the plaintiff gave the defendants everything they had sought on this point.

(1) Defendants' Application, in paragraphs 1,2 and 4

70 Order 15 requires the plaintiff by a certain date to use its best endeavours to obtain images of various specified databases of One.Tel from the liquidators. Order 17 makes a similar requirement with respect to the directories on One.Tel's computer system "I" drive. The databases referred to in Orders 15 and 17 include all of the databases sought in paragraphs 1 and 2 of the Defendants' Application, and order 15 extends as well to all other databases of One.Tel including the One.Tel e-mail server. Orders 15 and 17 require that the images of the databases obtained by the plaintiff from the liquidators be provided to the defendants. While the orders do not quite amount to the verified discovery sought in paragraph 4 of the application, they have substantially the same practical effect.

71 Order 16 requires that the images of databases to be supplied pursuant to order 15 are to be subject to the application of an encryption program to be submitted by the defendants, designed to remove from the databases the names and addresses of any former customers of One.Tel. While this is a qualification to the relevant claims for relief, it does not in my opinion detract from the proposition that what has been agreed substantially corresponds to what was sought in paragraphs 1 and 2. It appears from the evidence and submissions that the defendants have no interest in obtaining the allegedly confidential customer lists and, moreover, as soon as the confidentiality problem was raised, a solution was found by the defendants' computer expert.

(2) Defendants' Application, paragraphs 3 and 4

72 Order 8 requires the plaintiff, before a stated date, to use its best endeavours to obtain from the owners and managers of the businesses formerly conducted by One.Tel subsidiaries in the United Kingdom, all of the documents specified in paragraph 3 of the application. The only qualification is that the application sought correspondence and documentation relating to disputes between the international subsidiaries and certain specified carriers and suppliers for the period from January 1999 to June 2001, and the agreed order restricts that time to the period from January 2000 to June 2001. While there is obviously a difference between discovery of documents for a two and a half-year period as opposed to a one and a half-year period, the more important documents are likely to be the later ones, and my view is that, therefore, the consent orders on this matter amount to substantial success for the defendants. Paragraph 4 of the application sought verified discovery of these documents. The Agreed Discovery Procedure will apply to documents received under order 8.

(3) Defendants' Application, paragraphs 5A, 5, 6, 7, 8, and 12

73 The provision of access to business records of One.Tel held by the liquidators is dealt with in orders 1-6. Those orders subdivide the business records into two categories, namely those which pre-date the liquidators' appointment, and those which post-date that appointment. As to pre-liquidation documents, order 1 requires the plaintiff to use its best endeavours to have the liquidators give the defendants access to all the business records of the One.Tel Group in their possession, by a certain date, and directs the defendants to inspect those documents by a certain date (order 2). Thereafter the defendants are required to supply the plaintiff with a list of the documents or classes of documents, so inspected, in respect of which they assert that discovery should be given, and the documents to be imaged, registered and indexed in the LSS system (order 3). As to post-appointment documents, the defendants are required by order 4 to supply the plaintiff with a list of documents or classes of documents from the business records of the One.Tel Group brought into existence after the appointment of the liquidators, of which they assert that discovery should be given. The plaintiff is then directed by order 5 to use its best endeavours to have the liquidators provide access to those documents or classes of documents, and then the defendants are required by order 6, by a certain date, to notify the plaintiff which documents they wish to have imaged, registered and indexed on the plaintiff's LSS system. The Agreed Discovery Procedure applies to the documents to be imaged, indexed and registered under order 3 or 6.

74 The agreed orders are not closely similar to what was sought in paragraphs 5A to 8. In particular, paragraph 5A of the application referred to "all of One.Tel Ltd's files, documents, computer records and systems in the possession of the Liquidators of One.Tel Limited relevant to any matter in issue in the proceedings". The agreed orders are confined to business records of One.Tel limited and any of its subsidiaries in the possession of the liquidators. While there is a theoretical difference between these descriptions, it does not seem to me that the difference is of any great practical significance. Additionally, the agreed orders make a distinction between pre-liquidation and post-liquidation documents, but in each case the Agreed Discovery Procedure is substantially similar to what was sought in paragraphs 5 to 8 of the application.

(4) Defendants' Application, paragraphs 9, 10 and 11

75 Order 7 of the agreed orders requires the plaintiff, by specified date, to use its best endeavours to obtain, from such overseas and local persons and entities as the defendants may specify by a certain date, business records of One.Tel or any of its subsidiaries in the possession of such persons. The persons who may be identified by the defendants include Minter Ellison, James Elliot of Counsel, Publishing & Broadcasting Limited, News Corporation, Consolidated Press Holdings, James Packer, Lachlan Murdoch and other witnesses of the plaintiff other than the liquidators and the new owners of former overseas subsidiaries of One.Tel. Under order 9, documents obtained under order 7 are subject to the Agreed Discovery Procedure, in that either they are to be processed and discovered, or the plaintiff must say that they have already been discovered or that they will not for specified reasons be discovered. If there is a dispute, then the liberty to apply in order 11 is available. Under order 10, the plaintiff must at the request of the defendants make available the requests to third parties and their responses, subject to arrangements for the third party to raise any privilege claim. In my opinion the agreed orders give the defendants, in substance, everything they sought in the application regarding these matters.

76 The agreed orders contain other provisions regarding particular documents, and the Court has noted certain agreements between the plaintiff and the defendants. One of those agreements is the defendants' agreement to keep the information so discovered confidential to themselves, their legal representatives and others such as expert witnesses who are required to have access to the information for the purposes of preparation of the defence, with a proviso that any such person must sign a written confidentiality undertaking. The agreement concerning confidentiality goes beyond what was specifically sought in the application, but in the absence of that agreement, the defendants would be constrained as to their use of discovered material under general principles, and it therefore seems to me that there is no difference in substance between what has been agreed and what would otherwise be obtained.

77 My overall conclusion is that the agreed orders represent substantial success on the part of the three defendants in respect of every part of their application, as regards documents and electronic systems in the hands of third parties. Further, it is clear that the orders are inconsistent with the attitude adopted by the plaintiff, in principle, to providing discovery or other access to documents in the possession of third parties, an attitude maintained by the plaintiff up to the hearing of the application.

Conclusions

78 I have reached the conclusion that the defendants have been substantially successful in obtaining, by consent orders, the relief they sought in their application. Where an application is disposed of by consent, it is not normally appropriate to make an order for costs except as agreed between the parties. In particular, on any application for costs in such circumstances, the Court will take into account the desirability of encouraging and not penalising a party who responds to an application by negotiating a compromise: see, for example, Gambro Pty Ltd v Fresenius Medical Care of Australia Pty Ltd [2002] FCA 581 (10 May 2002), paragraph 26.

79 Nevertheless, there are cases, of which this is an example, where it is appropriate for the Court to make a costs order, in circumstances where the parties have reached agreement to dispose of the substance of the application but there is no agreement as to costs. My view is that in the present case, the plaintiff adopted an attitude to discovery of documents in the possession of third parties that left the defendants with no realistic option but to make the application. Although the plaintiff's attitude was adopted at an early stage, insistence upon that attitude brought disputed discovery issues between the parties to a head only in December 2002, specifically by virtue of the plaintiff's letter of 13 December 2002. The consent orders eventually agreed to by the plaintiff were inconsistent with the attitude of principle that it had previously adopted. The consent orders represented substantial success for the defendants on all issues, and did not embody the kind of "constructive compromise" to which Tamberlin J referred in the Gambro case.

80 Although the defendants did not fully and comprehensively articulate all aspects of their position until Ms Kelly's affidavits were filed in March 2003, the basic ingredients of their claim for discovery were articulated, in the context of the Adept database and the Minter Ellison documents, in letters of 5 and 12 December 2002. It was open to the plaintiff to re-evaluate its attitude to discovery at that stage, but instead it chose by letter of 13 December 2002 to adhere to the principle that was abandoned only when the agreed orders were made.

81 Therefore, in my view, the defendants should be entitled to their costs of and incidental to the application, limited to costs incurred on and after 13 December 2002.

82 The defendants seek an order, akin to a Bullock order, requiring the plaintiff to reimburse or indemnify them in respect of their liability to Minter Ellison. The liability to Minter Ellison arose in this way. The defendants wished to obtain evidence to support their claim that the plaintiff should be ordered to take steps to obtain documents relating to the overseas subsidiaries collected by Minter Ellison on behalf of Mr Packer and his companies. They issued a subpoena to the partners of Minter Ellison to produce communications between the firm and the plaintiff regarding any requests by the plaintiff for production or inspection of documents, and regarding any inspection of documents in their possession. They issued a notice to produce to the plaintiff in similar terms.

83 The partners of Minter Ellison made an application to set aside the subpoena or, in the alternative, to deny the defendants access to produced documents. The application to set aside the subpoena was dismissed with a costs order in favour of the defendants: ASIC v Rich [2003] NSWSC 257 (3 April 2003). The contest regarding access to documents produced by Minter Ellison was to be heard on 8 April 2003, but it became unnecessary to hear that matter when, on that day, the defendants and the plaintiff reached their agreement as to the consent orders that disposed of the defendants' application.

84 In the circumstances, I made an order that 50% of the costs of Minter Ellison on and incidental to the application with respect to access be paid by the defendants. I also entertained an application by Minter Ellison for an order under Part 37 rule 9, that is likely to have the effect that the defendants will be ordered to pay Minter Ellison's expenses of compliance with the subpoena (in excess of $40 conduct money tended upon service of the subpoena), once an affidavit is provided with respect to those expenses.

85 The defendants say that, were it not for the plaintiff's adoption of an attitude of resisting in principle discovery of documents in the possession of third parties, it would have been unnecessary for them to make the application filed on 20 February 2003, and it would also have been unnecessary for them to issue the subpoena and notice to produce for the purpose of obtaining evidence to support the relevant part of their application (paragraphs 9 and 10 of the application). Further, they say that if the plaintiff had agreed to the consent orders at an earlier time, it would have been possible to notify Minter Ellison so that the costs incurred by the firm in preparing for the application concerning access might have been wholly or substantially avoided. I agree with those submissions. It seems to me that the attitude adopted by the plaintiff, until it agreed to the consent orders on 8 April 2003, effectively forced the defendants to embark on a course of action leading them to incur liability for costs to Minter Ellison and an obligation to pay Minter Ellison's reasonable expenses of complying with the subpoena.

86 The defendants say that this is a case where the Court should make an order that their costs be assessed and paid forthwith. The normal rule in this Division of the Court, stated in Part 52A rule 9, is that if the Court makes an order for payment of costs on an interlocutory application, the costs are not payable until conclusion of the proceeding "unless the Court otherwise orders". However, the Court will make an order for assessment and payment of costs immediately in an appropriate case. Amongst the relevant considerations (Ritchie’s Supreme Court Procedure, paragraph [52A .9.2]) are whether the interlocutory decision relates to a discrete question (as it does here), whether costs have been unnecessarily incurred (as has happened in the present case, according to my findings), and whether there is likely to be a long delay in the final resolution of the proceedings. On the last point, while I take into account that prodigious efforts are being made by the plaintiff to bring the case to trial as soon as possible, and that it is strongly in the public interest that a matter such as this be resolved expeditiously, the unavoidable fact is that the issues to be resolved at the final hearing are likely to require consideration of a great volume of complex evidence over an extended hearing time.

87 It is relevant to note that according to Practice Note 100 (Commercial List and Technology and Construction List), paragraph 23, where an order for costs is made on an interlocutory application in that List, the normal rule is that the party benefiting from the order may proceed to assessment forthwith. It seems to me that the present case is much more akin to the kinds of cases litigated in the Commercial List than to the more typical Equity Division cases.

88 I have decided, therefore, that this is an appropriate case in which to order that costs be assessed and paid forthwith. In reaching this conclusion, I have decided that it is unnecessary and inappropriate to attach any significance to any aspect of the conduct of the plaintiff or its officers in the course of the litigation.

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Last Modified: 04/14/2003

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Citations

ASIC v Rich [2003] NSWSC 297

Most Recent Citation

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CITATION:	ASIC v Rich [2003] NSWSC 297
HEARING DATE(S):	28 March, 1, 8 & 9 April 2003
JUDGMENT DATE:	11 April 2003
JURISDICTION:	Equity
JUDGMENT OF:	Austin J
DECISION:	See under heading "Conclusion"
CATCHWORDS:	COSTS - longstanding dispute over various discovery issues - plaintiff asserted no obligation to obtain documents in possession of third parties for discovery to defendants - consent orders made giving substantial success to defendants - whether plaintiff should be required to pay defendants' costs of application - whether plaintiff should reimburse defendants for their costs and expenses liabilities to a third party
LEGISLATION CITED:	Supreme Court Rules Pt 52A r 9
CASES CITED:	ASIC v Rich [2003] NSWSC 257 Gambro Pty Ltd v Fresenius Medical Care of Australia Pty Ltd [2002] FCA 581 Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428
PARTIES :	Australian Securities and Investments Commission (P/R) John David Rich (D1/A1) Bradley William Keeling (D2) John Huyshe Greaves (D3) Mark Allen Silberman (D4/A2)
FILE NUMBER(S):	SC 5934/01
COUNSEL:	D Williams (A1, A2) P Durack with N Beaumont (R)
SOLICITORS:	Joanne Kelly, Solicitor (A1, A2) Jan Redfern, Solicitor (R)