Hewitt v Pacific Magazines Pty Limited (No 2)

[2009] SASC 366

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

HEWITT v PACIFIC MAGAZINES PTY LIMITED (No 2)

[2009] SASC 366

Reasons of Judge Lunn a Master of the Supreme Court

26 November 2009

PROCEDURE

Costs orders - action for pre-action disclosure under 6R 32 - whether costs to be ordered to plaintiff or defendant or left for any subsequent substantive proceedings - held as defendant had adopted adversarial position and lost it should be ordered to pay the costs.

PROCEDURE

Pre-action disclosure of documents - form of order - limited, as best able to do so on available material, to documents of evidentiary value.

HEWITT v PACIFIC MAGAZINES PTY LIMITED (No 2)
[2009] SASC 366

Reasons on form of order and costs.

1. JUDGE LUNN: On 15 October 2009 I delivered Reasons [2009] SASC 323 indicating that I largely accepted the plaintiff’s contentions as to her entitlement to an order for pre-action disclosure of documents under 6R 32. I do not repeat what I said in those Reasons. I adjourned the matter for the plaintiff to bring in minutes of order in accordance with my Reasons.

   Form of the Order.

2. The plaintiff has submitted two alternative sets of minutes.  The first version does not materially differ from what had been claimed in its application, except for deleting the references to subsequent editions.  In my earlier Reasons I considered an order in those terms was too wide.  She has also submitted a second version limiting the documents to those on particular topics.  The defendant has also submitted draft minutes in much narrower terms.

3. Under 6R 32(2) the Court is to make its order in respect of “evidentiary material relevant to the possible cause of action”.  Normally, relevance is determined by reference to what is in issue on the pleadings, but here there are no such pleadings.  Such relevance can only be assessed against what would be expected to be in issue on the plaintiff’s alleged possible causes of action.  This is not a particularly satisfactory criterion for relevance, but the Court must do the best that it can on the material before it.

4. 6R 32(2) speaks of “evidentiary material” and not of documents.  “Evidentiary material” is defined in 6R 4 as:

   Evidentiary material means any document, object or substance of evidentiary value in an action and includes any document, object or substance that should, in the opinion of the Court, be produced for the purpose of enabling the Court to determine whether or not it has evidentiary value.

   This means that the Court must look to the “evidentiary value” of the documents in the categories being sought.  This is a similar test to that for relevance: Goldsmith v Sandilands (2002) 190 ALR 370 . Hence, in determining the breadth of the order to be made under 6R 32 the Court needs to look to what documents are likely to be of evidentiary value in proceedings for the possible causes of action for which the threshold has been made out under 6R 32(1). (See my previous Reasons).

5. I do not accept the defendant’s contention that disclosure orders under 6R 32 should be limited to what would be disclosable under 6R 136(1) if the plaintiff institutes a substantive action for all of her possible causes of action for which I have found that she has passed the threshold test under 6R 32(1).  6R 136(1) provides:

   (1)Each party must disclose the documents that are, or have been, in the party’s possession and –

   (a)are directly relevant to any issue raised in the pleadings; or

   (b)are to be disclosed by order of the Court.

   While subr (1)(a) is confined to documents which are “directly relevant to any issue raised in the pleading” it only defines the classes of documents for which disclosure must be made without an order of the Court.  Subr 136(1)(b) is extremely wide on its face, and apparently would authorise the Court to order the disclosure of any documents in the party’s possession, irrespective of their relevance.  This is not the occasion to explore the breadth of 6R 136(1)(b), but it may enable the Court to order the disclosure of documents which are not relevant to any issue raised on the pleadings, but whose disclosure might be beneficial to the action, such as those relating to whether a party has the benefit of insurance, (cf Beneficial Finance v Price Waterhouse (1996) 98 SASR 19). For the purposes of this matter it is only necessary to hold that 6R 136(1) is at least as broad in its scope as 6R 32(2).

6. The primary order sought by the plaintiff, in effect, requires disclosure of the whole of the defendant’s file on the article in question, irrespective of the potential evidentiary value of the individual documents to the possible causes of action.  While it is impossible to fashion an order which will necessarily differentiate between the defendant’s documents which are of some evidentiary value to the possible causes of action on which the plaintiff has passed the threshold test under 6R 32(1) and those which are not, the limitations contained in the plaintiff’s alternative version of the minutes are more in accordance with the interests of justice than the broader set.  The defendant’s version is too narrow, particularly in relation to a possible cause of action in malicious falsehood. 

7. Accordingly, there will be an order in terms of paragraph 1 of the alternative version of the minutes submitted by the plaintiff.  I will hear the parties on the timetable for compliance with the order.

   Costs of the proceedings.

8. There was no dispute that an order should be made under 6R 32(4) that the plaintiff pay to the defendant reasonable compensation for its time and expense in complying with the order for pre-action disclosure of documents.  However, each party applied for an order for the costs of the proceedings.

9. Under s 40 of the Supreme Court Act and 6R 263 the Court has a general discretion about which party should be ordered to pay the costs of the proceedings.  In exercising that discretion I follow what was recently said by McDougall J in the Supreme Court of New South Wales in Steffen v ANZ Banking Group, 31 August 2009, [2009] NSWSC 883, unreported. I accept his analysis of the previous cases in New South Wales, the Federal Court and England on similar rules.

10. Counsel for the defendant referred me to two Victorian authorities which were not mentioned in Steffen’s case.  They relate to costs orders under a somewhat narrower rule than 6R 32 and the equivalent rule in New South Wales.  The Victorian rule is confined to pre-action disclosure applications against only the party who is likely to be the defendant in any subsequent substantive proceedings, but 6R 32 and the New South Wales rule extend to applications for pre-action disclosure against other than potential defendants to any substantive proceedings.  In Schmidt v Won [1998] 3 VR 435, in the last paragraph, Ormiston J suggested that an appropriate order on the pre-trial disclosure proceedings was that the plaintiff should pay the defendant’s costs of the proceedings, but should be able to recover those costs if and when it succeeded in its substantive action. The Court of Appeal in that case apparently had not heard counsel on the point and did not consider the other authorities on the point from the Federal Court, New South Wales and England. In a more recent Victorian case of John Kallitsas v Emerson Finance Pty Ltd, Judd J, 29 May 2008, Judgment No [2009] VSC 180 at [22-23] it was said that there was no general practice that the costs should be made costs in any subsequent substantive proceedings between the parties and a partial order for costs against the plaintiff was upheld where the only issue was whether a greater order should have been made. Again, there was no consideration of the authorities from other jurisdictions. I consider I should follow Steffen’s case in preference to these Victorian cases.

11. The defendant has contested these proceedings in an adversarial fashion.  It has strenuously argued every point open to it to resist the orders sought.  It has not made any offer of partial disclosure.  For this reason, it is appropriate that 6R 263(1) should apply, namely that costs should follow the event. 

12. The defendant complained that the plaintiff had not given advance notice of a possible cause of action in malicious falsehood.  While there may have been some slight reference to it in the earlier correspondence, if the defendant had been taken by surprise by it when it was raised by the plaintiff’s counsel at the hearing, it could have sought a short adjournment to reappraise its attitude.  It did not do so and argued against any order being justified on this head.  Hence I conclude any extension of the claim to injurious falsehood made no difference to the position which it took.

13. An alternative submission of the defendant’s counsel was that the costs of this action should be reserved to the trial Judge in the substantive action between the parties.  This course was endorsed by several Federal Court authorities which were not followed in Steffen’s case.  In my earlier reasons, I had relied upon the utility of the orders in this action being likely to assist the economic and expeditious conduct of the subsequent  action.  If the plaintiff had not brought this action, but had relied on interlocutory processes in her substantive action to ascertain the extent of her causes of action and possible related claims against other persons, it is unlikely, in the light of 6R 265(2), that the costs of those interlocutory proceedings, even if awarded to the plaintiff, would have been payable before final judgment in that subsequent action.  While this would be a factor in making the costs of these proceedings in effect interlocutory costs in the subsequent action, it is not a factor which outweighs the other factors mentioned that the costs discretion should be exercised in favour of the plaintiff.

14. I do not accept the contention of the defendant that the plaintiff should be penalised in costs, and costs ordered to the defendant, because she has not obtained the breadth of the disclosure which she had sought in this action.  She has substantially succeeded in obtaining much of what she sought.  All of the issues were bound up together and it is not an appropriate case to isolate the costs of particular issues. 

15. I do not accept that it has been shown that the defendant had a legitimate interest to protect the sources of its information and that this would justify an order for costs in its favour: Totalise v Motley Fool Ltd [2003] 2 All ER 872; Bio Transplant Inc v Bell Potter Securities Ltd, Barrett J, [2008] NSWSC 694. As I found in my previous reasons the defendant has not put forward any evidence that it did have any external sources for the article in question. It is unknown whether there were such sources or whether the defendant has made up the contents of the article. It has not shown any proper ground on this head for an order for costs in its favour.

16. I will order that the plaintiff is to have her costs of this action as agreed or adjudicated.

17. I certify for counsel including senior counsel.

18. I will hear the parties further on what orders should now be made.