Fairweather, J.G. v Oates, B.C

Re: J.G. FAIRWEATHER and ANOR
And: B.C. OATES and ANOR
No. D G5 of 1990
FED No. 790
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Foster J.(1)

CATCHWORDS

Practice and Procedure - failure to comply with discovery timetable - notice of motion seeking vacation of trial date in consequence thereof - costs of notice of motion - costs resulting from vacated trial date.

HEARING

DARWIN

#DATE 6:12:1990

Counsel for the Applicant: Mr S. Southwood

Instructed By: Ward Keller

Counsel for the Respondent: Mrs S. Gearin

Instructed By: Close and Carter

ORDER

The respondents pay the costs of the applicants' Notice of Motion of 25 October 1990.

The applicants' costs thrown away by the vacation of the 3 December 1990 trial date be applicants' costs in the cause.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

On 25 October 1990 the applicants took out a notice of motion in these proceedings. The motion has been before me by telephone on two prior occasions. On the second occasion I made order three as asked, vacating the hearing date. I have now heard argument as to whether the cost orders sought in paragraph 4 should be made. There have been read two affidavits of the applicants' solicitor and one of the respondents' solicitor. The following facts emerge to my satisfaction.

The substantive proceedings between the parties were commenced by application and statement of claim in January of this year. The nature of the proceedings and the relief claimed made it obviously desirable that they be heard as speedily as possible.
It was clear to all concerned, from the outset, that much would depend upon the effect of documents bearing upon the transactions in question. On 10 April 1990 the solicitors for the applicants sought discovery of the respondents' documents within seven days. A list of documents was subsequently provided and inspection took place at the office of the respondents' solicitors on 26 July 1990. This led to an application for further and better discovery by letter of 30 July 1990. Further discovery was sought within seven days of (inter alia) the respondents' income tax returns for the years 87/88, 88/89 and 89/90, the last to be provided as soon as possible. A similar request was made for financial statements of the partnership business. It is clear that the documents relating to the year ended 30 June 1989 were of particular importance.
By letter of 13 August 1990 the respondents' solicitors advised that: "The income tax returns for the years ended 30 June 1988 and 30 June 1989 are relevant and will be discovered. Mrs Oates will bring these documents into our office and they should be available for inspection on or after midday on Tuesday 14 August". It was also clearly stated that the financial statement for the year 88/89 was available and could be inspected at the same time.
It appears that this inspection did not take place as, on 23 August 1990, the applicants' solicitor wrote to the respondents' solicitor referring to a conversation that day and confirming that "your clients are prepared to discover the following documents as previously requested: (1) taxation return for year ending 30 June 89; (2) financial statements for year ending 30 June 89".
There was a callover of the matter on 14 September 1990 when a further callover was fixed for 25 September 1990, there having been no delivery of interrogatories nor completion of inspection.
On 25 September 1990 the matter was listed for hearing for 5 days on 10 December 1990. The Court was advised that at that stage neither side had delivered interrogatories or served expert reports. The evidence before me as to this callover is sparse. I assume that it must have been the case that both sides indicated, expressly or impliedly, that outstanding interlocutory matters could be attended to and the matter would be ready to proceed on a final basis early in December.
It is clear that following on the callover the applicants' solicitor sought that outstanding aspects of discovery be attended to. On 26 September 1990 the applicants' solicitor consulted with Messrs Coopers and Lybrand, chartered accountants, in relation to the provision of expert evidence for the applicants and provided them with such relevant documentation as was then in their possession. They sought advice as to what else would be required. On the same day they wrote to the respondents solicitors referring to the letter of 23 August 1990, noting that the tax returns had not been received and requesting that copies be sent that day as "our accountants require same urgently for the purpose of preparing a valuation report".
As a result of a conference held with the first applicant on 26 September 1990 it became apparent to the applicants' solicitor that a further document, being a financial statement provided by the first respondent in January 1989 for the purpose of the applicant seeking financial accommodation from their bank and which had been given back to the first respondent, had not been discovered. It had apparent relevance to the case. After attempting unsuccessfully to obtain a copy of this document from the bank, and from a bookkeeper who had had a hand in its preparation, the applicants' solicitor sought discovery of it by letter dated 1 October 1990 to the respondents' solicitor. In the same letter reference was made to the previous letters of 26 September 1990 and 23 August 1990 and it was stated that they were "embarrassed by the present state of your discovery in these proceedings". The request was made again (inter alia) for discovery of the partnership and personal tax returns and financial statements of the respondents for the year ending 30 June 89. A request for full discovery within seven days was made in the context of the "obvious defective discovery" to date with an indication that failure to comply would lead to an application to the Court. It was also made plain that the documents sought were required by the applicants' accountants for the preparation of the valuation report.
There was a telephone conversation between the solicitors the next day. The respondents' solicitor stated that he had just sent the 1989 financial statements by post and that he would be seeing his client at the end of that week in relation to other financial statements referred to in the letter of 1 October 1990. On 3 October 1990 the applicants' solicitor received the letter referred to. It did not have enclosed with it the respondents' tax returns. It in fact enclosed the applicants' own tax returns. This was reported to the respondents' solicitor by the applicants' solicitor by telephone that day with a request that the correct returns be sent. The respondents' solicitor said "I will see what I can do". Later that day the respondents' solicitor said to the applicants' solicitor that the financial statement which had been presented to the bank in January 1989 should be available within half an hour. This apparently did not occur on 4 October 1990 and the applicants' solicitors wrote to the respondents' solicitor confirming what had occurred, noting that they had been requesting the returns since July and had asked for them by 5 October 1990.
In a further conversation of 9 October 1990 the solicitor for the respondents, in relation to a further request for these documents, said "I will see if I can get on to it".
On 10 October 1990 the applicants' solicitor received a letter from Messrs Coopers and Lybrand detailing information required by that firm in order to prepare a valuation report for the proceedings. In response to this the applicants' solicitor sent them the material that they then had.
On 18 October 1990 the solicitor for the respondents sent certain documents to the applicants' solicitors. Despite submissions to the effect that these documents answered the previous requests, I am satisfied that they did not. The financial statements for January 1989 were not included nor were the personal income tax returns of the respondents for the year ending 30 June 1989. These had been sought repeatedly in the past and their provision had been promised.
The proceedings were again mentioned before the Court on 22 October 1990. On this occasion an alteration was made in the hearing date from 10 December 1990 to 3 December 1990. Although the respondents' solicitor avers in his affidavit that the case is "nowhere ready for trial", it does not appear that the Court was so informed by him at this callover. It must also be noted that the applicants' legal representatives do not appear to have advised the Court that they had not yet received the full material necessary for the preparation of the expert's report. I am prepared to assume, however, that, as they had received some if not all the material on 19 October 1990, they anticipated receiving the balance and being in a position to proceed with their client's case on the appointed day. It certainly does not appear that the respondents advanced any reason to the Court why the matter would not be ready. Complaint is not made as to there being outstanding answers to interrogatories on behalf of the applicants. It does not appear that this complaint was made or advanced as a reason for not setting the matter down for hearing at this callover.
On 25 October 1990 the applicants took out the present notice of motion. The outstanding documents had not at that time been received. Orders that they be provided and discovery generally finalised are sought in paragraphs 1 and 2 of the notice of motion. A telephone hearing of this notice of motion took place on 2 November 1990 but by that time satisfactory arrangements in respect of the documents had been made. The respondents' solicitor had delivered an amended list of documents and the required material on 30 October 1990. These two paragraphs were not pressed. Discussion as to the adherence to the trial date ensued and it was accepted that efforts would be made on both sides to complete preparation for trial. In the meantime, the order for vacation of the trial date was left in abeyance.
This, however, regrettably, did not prove possible. The applicants' solicitors had received information from Messrs Coopers and Lybrand on 31 October 1990 that because of other commitments of that firm to other clients a period of two to three weeks would be required for the preparation of the report. After 2 November 1990 further complications ensued. An accountant retained by the respondents sought access to the original accounting records of the applicants. This was obviously for the purpose of the respondents preparing for trial. These records were accordingly returned from Messrs Coopers and Lybrand to enable inspection by the other accountant, which took place on 7 November 1990. The accountant indicated that he would need further access and the records were therefore retained at the office of the applicants solicitors. Further access, however, was not sought. The records were returned to Coopers and Lybrand on 21 November 1990 to enable them to continue with the preparation of their report. This was as a result of a request made by the firm.
In the upshot Coopers and Lybrand advised they would not be able to have the report prepared by 3 December 1990. I am not satisfied, however, that, as indicated by them to the applicants' solicitors, had they had the whole of the discovered material by 10 October 1990 they would have produced the required report by the end of that month. In this regard I note that the respondents' solicitor states in his affidavit that "the 1989 partnership income tax returns and copies of the financial statements for 1989 which were forwarded to the applicants' solicitors on 18.10.90 had only just come into his possession as a result of delivery by his client". The other necessary material was not provided until 30 October 1990. It is clear that other interruptions referred to had already produced the result that the report could not be prepared in the month of November.
I deal firstly with the applicants' claim for the costs of the notice of motion. This is opposed. Indeed, the respondents seek an order that the costs be paid by the applicants. It is submitted on behalf of the respondents that the notice of motion was unnecessary and that it should not have been taken out only three days after the mention at which the trial date was fixed for 3 December 1990 and that, in effect, having regard to the general state of preparation for trial, the applicants should not have obtained a trial date in December. In relation to this last submission I note that the respondents did not apparently oppose the fixing of the trial date and that, in correspondence in November, asserted that any application to vacate it would be opposed. The respondents also rely on the fact that after material was supplied by them on 30 October 1990 the first two paragraphs of the notice of motion were not proceeded with.
I reject the respondents submissions. The applicants' solicitors, in view of the history of the matter in October and previously, had reasonable grounds for assuming that discovery would be completed in time for the trial. When nothing occurred to finalise this after 22 October 1990, it was reasonable, in my opinion, for them to take out the motion to protect their clients position. It was only after this was done that the further material was supplied. Nothing in the respondents affidavit indicates that this notice of motion did not have the effect of producing that result. The order vacating the hearing date was made in terms of the notice of motion when it became apparent that no amount of reasonable effort could have the case ready for hearing. I am satisfied that it was reasonable for the applicants to take out the motion and that it has been successful. I order the respondents to pay the applicants costs of the motion.
In relation to the costs thrown away because of the vacation of the trial date, many of the same considerations apply. The evidence satisfies me that the ultimate cause of this was the continuing failure of the respondents to make proper discovery of documents. The respondents make the points that the applicants sought and obtained a trial date in September at a time when they had not sought the expert evidence which was ultimately unavailable in time for trial. This matter was, however, expressly made known to the Court at that callover. There was still at that stage adequate time for the evidence to be obtained. I am satisfied that this had no causal effect on the vacation of the trial date.
It is further put, however, that in late October, in circumstances when it was necessary to take out this notice of motion three days later, an even earlier trial date was accepted and that this should not have occurred. This, indeed, caused me to hesitate as to whether the order sought should be made in the absolute terms in which it is sought. There is no doubt that at that point of time it would have been necessary for everything to have proceeded smoothly and expeditiously for the matter to be ready for trial, especially having regard to the position of the accountants. There was something of a risk in the acceptance of the trial date and I find it impossible to say that the taking of that risk had no effect upon the ultimate need to vacate it. I consider, however, that by far the major reason for the vacation was the respondents' failure, despite repeated requests, to make full and proper discovery.
Ultimately, I consider that justice can effectively be done by my ordering that the applicants' costs thrown away by the vacation of the trial date should be applicants' costs in the cause. I so order.

[1990] FCA 790

06 DECEMBER 1990