Eden Construction v State of NSW

[2004] NSWSC 178

CITATION:	Eden Construction v State of NSW [2004] NSWSC 178
HEARING DATE(S):	12/03/04
JUDGMENT DATE:	19 March 2004
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Barrett J
DECISION:	Notice to produce set aside
CATCHWORDS:	PRACTICE AND PROCEDURE - notice to produce served by plaintiff - next step in proceedings is determination of application for security for costs - whether plaintiff, having fully pleaded its claims, has legitimate need of documents sought
CASES CITED:	Bailey v Beagle Management Pty Ltd (2001) 182 ALR 264 Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311 Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No 2) [1977] 1 NZLR 516 K P Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Process Engineering Pty Ltd v Derby Meat Processing Co Ltd [1977] WAR 145 Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 Wenlock v Moloney [1965] 1 WLR 1238
PARTIES :	Eden Construction Pty Limited - Plaintiff State of New South Wales - Defendant
FILE NUMBER(S):	SC 55025/03
COUNSEL:	Mr P R Arden SC/Mr B R Young - Plaintiff Mr R W Hunt - Defendant
SOLICITORS:	Johninfo Lawyers - Plaintiff Bartier Perry - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND
CONSTRUCTION LIST

BARRETT J

FRIDAY, 19 MARCH 2004

55025/03 – EDEN CONSTRUCTION PTY LTD v STATE OF NEW SOUTH WALES

JUDGMENT

1 The defendant’s notice of motion filed on 13 February 2004 seeks orders that two notices to produce served by the plaintiff on the defendant be set aside. By the time the notice of motion came on for hearing on 12 March 2004, the parties had reached an accommodation regarding the scope of the notice to produce the subject of the first order sought and identification of the documents to be produced in relation to it. That aspect may therefore be regarded as resolved, subject to any question of costs. In relation to the second order sought, the plaintiff, being the party by which the relevant notice to produce was served, has produced an amended description of the documents to be produced. I approach the notice of motion on the basis that, again subject to any question of costs, it should be regarded as referring to this amended description of documents. The defendant’s objections to the second notice to produce nevertheless remain.

2 The defendant has filed a notice of motion seeking security for costs. This predated the notice of motion in relation to the notices to produce, having been filed on 21 November 2003. The notice to produce with which I am concerned was served at a time when the next step in the proceedings was determination of the application for security for costs which, if wholly successful, may well bring a stay of proceedings into operation, given the evidence of the plaintiff’s principal as to its financial resources. Although the plaintiff sought to say that the notice to produce relates to the proceedings as a whole (and not just to the security for costs application), I consider the appropriate course, in view of the matter I have just mentioned, to be to assess the notice to produce as it relates to the security for costs application. The central issue is therefore as to the pertinence of the documents sought to that application itself.

3 The plaintiff’s substantive claims advanced in its amended summons filed on 24 August 2003 are to the effect that the defendant – or, more particularly, a department or section of the civil service concerned with letting and administration of contracts for construction and like work for State and local government projects – wrongfully made to certain persons misrepresentations as to the abilities of the plaintiff in its sphere of work and, by that means and by removing or omitting the plaintiff’s name from a list of acceptable contractors, caused damage to the plaintiff. The documents sought by the plaintiff through the notice to produce (assumed to be varied by the narrowing to which I have referred) fall into two basic categories. First, there are documents prepared for or as a consequence of each of several meetings identified by date and persons attending. There are then documents related, in defined ways, to particular decisions or tenders concerning particular works.

4 A central issue in the determination of any security for costs application is as to the strength and bona fides of the plaintiff’s case (see Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 at 626; Process Engineering Pty Ltd v Derby Meat Processing Co Ltd [1977] WAR 145 at 147; Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311 at 312-313; Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No 2) [1977] 1 NZLR 516 at 520). Danckwerts LJ, in Wenlock v Moloney [1965] 1 WLR 1238 referred to the nature of the assessment (at 1244):

“… this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power.”

5 In Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514, French J said:

“It is consistent with authority and the existence of a broadly based discretion that the bona fides and merits of the claim be taken into account where there is material which from such an assessment can be made.
Where there is a claim prima facie regular and disclosing a cause of action, I see no reason why the court would, in the absence of evidence, proceed on the basis that the claim was other than bona fide with a reasonable prospect of success.”

6 This passage was cited with approval by Beazley J in K P Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189. Her Honour referred to six additional matters that are typically taken into account on a security for costs application. They are:

1. The promptness with which the applicant has acted.

2. Whether any impecuniosity of the plaintiff has been caused by the defendant.

3. Whether the security application is oppressive in the sense that it is advanced merely to deny an impecunious party a right to litigate.

4. Whether there are any persons standing behind the plaintiff company who are likely to benefit from the litigation and who are willing to provide security.

5. Whether any such persons have offered any personal undertaking to be liable for costs.

6. Whether the person against whom security is sought is in triuth and in substance the plaintiff.

7 In Bailey v Beagle Management Pty Ltd (2001) 182 ALR 264, Heerey, Branson and Merkel JJ said at 270:

“If a security for costs application is properly brought we can see no reason for imposing any criterion upon the trial judge in respect of a notice to produce given to the other party by the applicant for security other than that, generally, the judge be satisfied that the documents the subject of the notice are specified with reasonable particularity and are properly being sought to advance the case to be put by the applicant. Of course, in determining whether a notice to produce should be set aside the court will consider the relevance of the documents sought and the extent to which the notice might be fishing, vexatious, oppressive or inappropriate for any other reason.”

This, of course, refers to attempts by the applicant for security to obtain, through notice to produce, documents relevant to the question whether the criteria for ordering security for costs are met. I am dealing here with the opposite situation, namely, where it is the plaintiff attempting to resist an order for security who seeks to obtain documents from the applicant for security.

8 Of the issues potentially relevant upon an application, it seems to me that there is only one to which documents of the kind sought could conceivably be relevant. That issue is the one concerning the bona fides and prospects of the plaintiff’s claim. On the basis of the cases to which I have referred, I approach that issue on the basis that there is no need, in assessing this matter, to look beyond the plaintiff’s claim as advanced. I am, in this respect, satisfied that the amended summons filed on 24 August 2003 may be seen on its face to assert a claim that is “prima facie regular” and to disclose an arguable cause of action. The plaintiff has pleaded its claims in full without any apparent need for the documents it now seeks.

9 This being so and in the absence of the plaintiff’s pointing to any other particular issue relevant to the security for costs argument which might be enhanced by the availability of the documents sought, I am not satisfied that the notice to produce serves any forensic purpose at this stage of the proceedings. The plaintiff did not, as it might have done, offer to defer calling upon the notice to produce until after the security for costs motion had been determined. I am therefore bound to deal with the notice to produce in a context where the documents it seeks do not appear to bear any relationship of probative value to the issues upon the security for costs application and, in addition, that application might well result in the proceedings being stayed, with the result that issues to which the documents may have relevance are never litigated between the parties. Any requirement that the defendant produce the documents in question should therefore be regarded as oppressive, at least at this stage.

10 The appropriate course is that the notice to produce be set aside. This, however, will be without prejudice to the plaintiff’s right and ability to issue new notices to produce within acceptable bounds in relation to the substantive claims in due course – by which I mean at a point when the security for costs application has been determined and no resultant stay of proceedings is operative.

11 I make order 2 in the defendant’s notice of motion filed on 13 February 2004. I shall hear the parties on costs at a time to be fixed.

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Last Modified: 03/23/2004