Farmer v Bank of Western Australia Ltd - [2000] WASC 257

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FARMER -v- BANK OF WESTERN AUSTRALIA LTD [2000] WASC 257

CORAM: MASTER SANDERSON

HEARD: 13 OCTOBER 2000

DELIVERED : 20 OCTOBER 2000

FILE NO/S: CIV 1741 of 1998

BETWEEN: AUDREY BERYL TERESA FARMER
Plaintiff
AND
BANK OF WESTERN AUSTRALIA LTD
Defendant

Catchwords:

Practice and procedure - Costs of party giving non-party discovery pursuant to order - Principle to be applied - Significance of non-party giving discovery being liquidators

Legislation:

Nil

Result:

Costs as sought to be paid

Representation:

Counsel:

Plaintiff:     Mr S P Miller
Defendant:     No appearance
Liquidators:     Mr D W Thompson

Solicitors:

Plaintiff:     Lewis Blyth & Hooper
Defendant:     No appearance
Liquidators:     Phillips Fox

Case(s) referred to in judgment(s):

Compagnie Financiere Du Pacifique v Peruvian Guano Co [1882] 11 QBD 55
Jovista Pty Ltd v FAI General Insurance Co Ltd [1999] WASC 44

Case(s) also cited:

Avago Pty Ltd v Mt Burgess Gold Mining Co NL, unreported; SCt of WA; Library No 980319; 12 June 1998
Davis & Ors v Sagar Pty Ltd, unreported; SCt of WA; Library No 980443; 10 August 1998
Hodzic v Bosnian Hercegovinian Muslim Society, unreported; SCt of WA; Library No 980036; 3 February 1998
Verdell Pty Ltd v F & D Nominees & Anor, unreported; SCt of WA; Library No 970588; 5 November 1997

MASTER SANDERSON: By application to the Case Management Registrar dated 20 January 1999 the plaintiff sought an order for non‑party discovery against the liquidators of Farmer Furniture Pty Ltd. On 3 February 1999 Registrar Rimmer made orders on the application which, relevantly, read as follows:
"1.Norman Mel Ashton and Simon Read as liquidators of Farmer Furniture Pty Ltd (ACN 008 705 762) (Receiver and Manager Appointed) (In Liquidation) give discovery to the Plaintiff of all documents that are or have been in the possession of the said liquidators relating to the relationship between Farmer Furniture Pty Ltd in liquidation and the Bank of Western Australia Limited from 1 January 1992 until the present and all company records which are referred to or are the basis of the Liquidator's insolvency review of the company by Lynne Walton the date of which is to the Plaintiff unknown.
2.…
3.Paragraph 1 of this order is conditional on the Plaintiff paying to the Liquidators an amount representing reasonable costs and expenses calculated at $150.00 per hour for time spent by his staff in complying with this order and further the Liquidator's reasonable legal expenses incurred to comply with this order calculated at the rate ordinarily charged by the Liquidator's solicitors, Hely Edgar."
In compliance with these orders the liquidators filed an affidavit of Simon Andrew Read sworn 31 May 1999. This affidavit (which appears as annexure "PBP2" to the affidavit of Paul Berkeley Pell, sworn 1 August 2000) is in a form which is generally used for affidavits of discovery. The first schedule and Part 1 of the second schedule list some 118 documents and a further seven documents are listed in Part 2 of the second schedule. The plaintiff makes no complaint about the discovery and it is common ground that the liquidators have complied with par 1 of the orders of 3 February 1999. By chamber summons filed 3 August 2000 the liquidators have sought an order for payment of their costs of giving non‑party discovery in an amount of $8089.20. The plaintiff opposes the making of such an order. The plaintiff does not dispute that the liquidators are entitled to their costs but says that the amount claimed is, in all the circumstances, excessive and unreasonable. Although counsel for the plaintiff did not put a precise figure on what he regarded as reasonable costs, it was clear that he took the view the amount allowed should be something less than $2000.
Order 26A deals with discovery from non‑parties and potential parties to an action. Rule 7 deals with costs. It is in the following terms:
"(1)An order made under this Order may be made on the condition that the applicant give security for the costs and expenses of the person against whom the order is made, both in respect of the application and of complying with the order and with this Order.
(2)On an application under this Order the Court may make orders as to the costs and expenses -
(a)of any person in respect of the application, and
(b)of a person against whom an order is made in respect of complying with the order and with this Order."
It is apparent that Registrar Rimmer's order was made pursuant to r 7(2). Order 3 of the learned Registrar's orders clearly anticipates that the liquidators will be fully indemnified for their costs when giving discovery. It is true that the order is not couched in the same language as is generally used when an order is made providing for full indemnity costs. However, the reference is to an hourly rate "… for time spent by his staff in complying with this order …". What is anticipated is an indemnity to the liquidators for the time spent by their staff with the hourly rate fixed by the order.
Order 26A gives no indication of the basis upon which any costs order should be made. There are a number of decisions by Masters in this jurisdiction in relation to costs under O 26A but the matter is yet to be considered by the Full Court. Reference to decisions in other jurisdictions is of limited value because each jurisdiction has an order which is in a slightly different form. In Jovista Pty Ltd v FAI General Insurance Co Ltd [1999] WASC 44, I determined that a party who is required to give discovery under O 26A r 5 will, as a general rule, be entitled to:
(a)its costs of the application, and obtaining legal advice in respect to it;
(b)its costs of obtaining legal advice in respect of the provision of discovery once orders had been made;
(c)the costs "associated with actually giving discovery, that is compensation for time spent actually collating documents, assessing evidence, and otherwise preparing the affidavit of discovery".
The plaintiff's opposition to the order sought by the liquidators was based on two broad grounds. First it was said that in any circumstances it was necessary for the liquidators to organise the documents of Farmer Furniture Pty Ltd and, once that task had been undertaken, the task of providing discovery was necessarily simplified. It was submitted that the plaintiff was being charged for work which was a necessary part of the liquidation in any event.
In my view this submission ignores the obligations on a party giving discovery. Discovery must be given of all documents related to any matter in question between the parties: see Compagnie Financiere Du Pacifique v Peruvian Guano Co [1882] 11 QBD 55 per Brett LJ at 63. The burden on a party giving discovery is not lightly discharged; nor is the process to be undertaken carelessly. To properly discharge their obligations the liquidators had no choice but to consider each of the documents in their possession in light of the order made for discovery. Whether or not the documents of Farmer Furniture Pty Ltd had to be sorted in any event is beside the point. It is, in my view, entirely reasonable to expect that the liquidators will examine all documents in their possession to ensure proper compliance with the order. No criticism can be made of the liquidators for the course they have adopted.
Secondly, it was submitted by the plaintiff that a significant number of documents discovered by the applicant had previously been discovered in an action brought by the liquidators against the plaintiff (COR 219 of 1998). It was said in light of this discovery and the work that must have been undertaken to complete the discovery process, the costs sought by the liquidators in this instance were excessive.
In my view, the position is in no way affected by what may have occurred in earlier proceedings. The fact is an order was made against the liquidators in these proceedings and the order was quite specific in its terms. The liquidators were required to comply with that order and I can see nothing unreasonable in the approach they adopted. While the plaintiff's submission is not without merit, I am not satisfied in the context of this application it justifies any reduction in the amount of costs sought by the liquidators.
There is a further matter which is particular to this case and of which I should make mention. The order sought by the plaintiff was against the liquidators of Farmer Furniture Pty Ltd. There is no suggestion that the work the liquidators say was necessary to comply with the order was not actually done. The argument put by the plaintiff is that the work done was either unnecessary or excessive in the circumstances. But that is not to say that the work was not done. If that is the case and the plaintiff is not to pay for the work undertaken by the liquidators, the costs incurred by them will become part of the costs of the liquidation. The costs will, in effect, be borne by the unsecured creditors. That fact sets this case apart from many others which come before the court. In my view it is an additional reason for making the order sought by the plaintiff.
In all the circumstances I am satisfied that the costs sought by the liquidators are reasonable. I would make orders in terms of par 1 of the chamber summons. I will hear the parties as to costs.