Hornsby Shire Council v Valuer General of NSW

[2008] NSWSC 1281

CITATION:	Hornsby Shire Council v Valuer General of NSW & Ors [2008] NSWSC 1281
HEARING DATE(S):	25, 26 August 2008
JUDGMENT DATE :	2 December 2008
JURISDICTION:	Common Law
JUDGMENT OF:	Adams J at 1
DECISION:	1. The second, third and fourth defendants to pay the plaintiff’s costs of and incidental to the summons. 2. The first defendant to pay the plaintiff’s costs of the application up to the time on 25 August 2008 that it was informed of the first defendant’s change of position; thereafter each party to pay its own costs. 3. The plaintiff is to pay the defendants’ costs of and incidental to the giving of preliminary discovery as ordered.
CATCHWORDS:	Costs - interim discovery - leave to inspect subpoenaed material - losing parties actively opposed both orders - relevance of claimed confidentiality - usual costs order appropriate.
LEGISLATION CITED:	Hornsby Shire Local Environment Plan 1994 Uniform Civil Procedure Rules r 5.3
CATEGORY:	Consequential orders
CASES CITED:	Airways Corporation of New Zealand & Anor v The Present Partners of Pricewaterhouse Coopers Legal & Anor [2002] NSWSC 521 Bio Transplant Inc v Bell Potter Securities [2008] NSWSC 694 Cappuccio v ANZ Banking Group [1999] FCA 1188 Griffiths & Beerens Pty Limited & Ors v Duggan & Ors [2008] VSC 230 Newcrest Mining v Apache Northwest (No 2) [2008] FCA 1663 NRMA v John Fairfax (unreported, Master Macready, 004454/01 Re Application of Cojuango (1986) 4 NSWLR 513 Re Springfield Nominees Pty Limited & Ors v Bridglands Securities & Ors [1992] FCA 472 SmithKline Beecham v Alphapharm [2002] FCA 271 [32] Totalise Plc v The Motley Fool Limited & Interactive Investor Limited [2002] 1 WLR 1233
PARTIES:	Hornsby Shire Council (Plaintiff) Valuer General of New South Wales (First defendant) Brian Nicholson (Second defendant) Alcorn Corbin Nicholson Pty Ltd (Third defendant) CSR Ltd (Fourth defendant)
FILE NUMBER(S):	SC 11458/2008
COUNSEL:	Mr I M Jackman SC with Mr J E Lazarus (Plaintiff) Mr M J Leeming SC with Mr R Weinstein (First defendant) Mr R Potter (Second and third defendants) Mr R Beasley (Fourth defendant)
SOLICITORS:	Storey & Gough Solicitors (Plaintiff) I V Knight (First defendant) DLA Phillips Fox (Second and third defendants) Minter Ellison (Fourth defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ADAMS J

2 December 2008

2008/11458 – HORNSBY SHIRE COUNCIL v VALUER GENERAL OF NEW SOUTH WALES & ORS.

JUDGMENT (as to costs)

HIS HONOUR:

Introduction

1 The plaintiff sought orders by summons, in substance to obtain access to documents that it needed in order to consider whether to commence proceedings against the defendants arising out of the valuation of property that it was obliged to purchase from the fourth defendant pursuant to the Hornsby Shire Local Environment Plan 1994. The plaintiff succeeded in obtaining the orders it sought. The summons was actively opposed by the second, third and fourth defendants. The first defendant, the Valuer General, had initially opposed the making of the orders against him but, when the matter came to hearing, adopted a non-adversarial stance. The plaintiff seeks orders for costs against all defendants. The fourth defendant seeks orders that the plaintiff should pay its costs of the proceedings as well as the costs of and incidental to its compliance with the order for preliminary discovery.

2 Although not distinctly sought in the alternative there is a suggestion in the written submissions of Mr Beasley, counsel for the fourth defendant that the approach taken by Burchett J in Cappuccio v ANZ Banking Group [1999] FCA 1188 might be an appropriate alternative. I will deal with this approach later. The second and third defendants seek an order for costs against the plaintiff or, alternatively, an order that the fourth defendant pay its costs, given its insistence that the documents supplied by it to the second and third defendants not be provided to the plaintiff. The Valuer General seeks an order that the plaintiff pay his costs or otherwise, as between the plaintiff and the Valuer General, there should be no order as to costs.

The applicable principle

3 The question of costs of an application for preliminary discovery was considered by Simpson J in Airways Corporation of New Zealand & Anor v The Present Partners of Pricewaterhouse Coopers Legal & Anor [2002] NSWSC 521. In the course of her judgment, Simpson J applied the principles set out by the English Court of Appeal in Totalise Plc v The Motley Fool Limited & Interactive Investor Limited [2002] 1 WLR 1233. In that case an order had been made at first instance equivalent to an order for preliminary discovery under the rules of this Court and had ordered the unsuccessful defendants to pay the successful claimant’s costs of the application. On appeal, the order was reversed. Simpson J noted that the court said that applications of this sort “are not ordinarily adversarial proceedings, where the general rule is that the unsuccessful party pays the costs of the successful party”. The Court of Appeal said in a “normal case” a successful applicant should pay the costs of the other party although circumstances might require a different order. The Court said that they did not include cases where –

“(a) the party required to make the disclosure had a genuine doubt that the person seeking the disclosure was entitled to it;
(b) the party was under an appropriate legal obligation not to reveal the information, or where the legal position was not clear, or the party had a reasonable doubt as to the obligation; or
(c) the party would be subject to proceedings if the disclosure was voluntary; or
(d) the party would or might suffer damage by voluntarily giving the disclosure; or
(e) the disclosure would or might infringe a legitimate interest of another.”

4 Simpson J pointed out that a “party who is a defendant to an application for preliminary discovery is, in one sense, in a difficult position…[because that] party ordinarily has no involvement in what is intended or anticipated to be the substantive proceedings and is, often enough, caught up in a skirmish between two other parties”.

5 This, however, is not the case where an application is made under r 5.3 of the Uniform Civil Procedure Rules as was the case here. That rule deals with discovery by a prospective defendant and not, therefore, a party in the position envisaged by Simpson J. In the particular circumstances considered by her Honour, however, the defendant had not acted in reality as a third party caught up in a dispute between other parties. The plaintiffs had sought information which, as her Honour said, “would have been a simple matter for them to have provided” but they had persistently refused to do so and had defended the proceedings. Simpson J concluded that “the defendants must live with the consequences of their decision to defend the proceedings”. Her Honour commented that this view may not have accorded with that of the English Court of Appeal in Totalise Plc and, in particular, the view as set out in paragraph (a) in the passage cited above. Her Honour nevertheless concluded –

“However, in my opinion, the litigation as it proceeded was adversarial in nature, or at least akin to adversarial litigation. The plaintiffs were, as I decided, entitled to the information they sought; while the defendants were equally entitled to resist the production of that information, the consequences of there making a judgment which turned out to be wrong are the same as such consequences for any other unsuccessful litigants.”

6 I have been referred to other decisions concerning a case of this kind: Re Springfield Nominees Pty Limited & Ors v Bridglands Securities & Ors [1992] FCA 472; Griffiths & Beerens Pty Limited & Ors v Duggan & Ors [2008] VSC 230; Bio Transplant Inc v Bell Potter Securities [2008] NSWSC 694. It is sufficient if I say that nothing in those judgments suggests that the approach adopted by Simpson J was in error.

7 The fourth defendant relies on ReApplication of Cojuango (1986) 4 NSWLR 513, where Hunt J ordered that the successful applicant should pay the unsuccessful respondent’s costs in respect of an application for preliminary discovery. However, that order was made in the context of disclosure of sources of a journalist’s report, which is a special circumstance involving consideration of the so-called “newspaper rule” and a consideration of the special circumstances that apply in light of the policy of the law protective of the public interest in the free flow of information to the media. I do not think that this case is relevant to my present task. Of course, in one sense, it is adverse to the fourth defendant’s submission since it might suggest that, absent the public policy consideration justifying the respondent’s position, an order for costs in its favour might well not have been made: see also NRMA v John Fairfax (unreported, Master Macready, 004454/01. In the Bio Transplant case the unsuccessful defendants obtained costs because they had, as Barrett J found, co-operated to the maximum practical extent in providing the information sought by the plaintiff, stopping short only when disclosure of the identity of a client was involved and permission to disclose the identity of unequivocally refused, thus justifying the course the defendant took of seeking a court order to make the discovery to which, in substance, it offered no opposition.

8 As I mentioned the fourth defendant has pointed to the approach taken in the Federal Court in Cappuccio v ANZ Banking Group [1990] FCA 1188, Newcrest Mining v Apache Northwest (No 2) [2008] FCA 1663 and SmithKline Beecham v Alphapharm [2002] FCA 271 [32]. This approach is that, if an action were brought by the successful applicants against the respondents by a specified date (of some weeks), the costs of the application would be at the discretion of the court which heard that proceeding, whilst if no action were brought within that period, the applicants would pay the costs of the application for preliminary discovery. This approach, which (if I may respectfully say so) has much to commend it, was not brought to the attention of Simpson J in Airways Corporation of New Zealand. However, the advantage of the latter approach is both simplicity and consistency with the general principles attaching to costs orders. Quite apart from my own respectful view that Simpson J’s view is plainly correct, I think it appropriate that I should adopt it at all events for reasons of comity.

The conduct of the proceedings

9 In this case, the second, third and fourth defendants, in opposing the summons, relied on the fact that the material or almost all of it had previously been produced to the Court and, after its return when the proceedings were settled, the plaintiff was seeking to look at it again. This was, as it seems to me, scarcely an argument of substance. There is no rule of practice, let alone principle, that suggests a second examination should be denied. To the contrary, such a circumstance indicates that there is no good reason to refuse leave to inspect for the purpose of using the material for a purpose which would have been proper (as conceded by the fourth defendant) had it been used for that purpose in the first place, providing that no countervailing prejudice has arisen. So far as the confidentiality claim is concerned, the fact that no such claim was made when the documents were first produced suggests that its subsequent utilisation was rather opportunistic than substantial. I think it is true that the first, second and third defendants were, to some extent, hindered in making a disclosure to the plaintiff by the adamant position insisted on by the fourth defendant that the documents were provided under cover of confidentiality but that situation could easily have been accommodated by their undertaking a passive role, abiding the order of the Court and leaving the principal protagonist – the fourth defendant – to argue the case. This, however, they did not do. The second and third defendants actively participated in attempting to resist the plaintiff’s applications and the first defendant (it is conceded) desisted only on the morning of the hearing, and then opposed an order for preliminary discovery only so far as it extended to material already provided, a mere matter of machinery which could and should have been dealt with at an earlier stage. It is clear that the plaintiff needed to join the Valuer General as a party to its application so that the leave granted to have access to the subpoenaed documents permitted any information gleaned from those documents relevant to its proposed case against the Valuer General could be used by it for the purpose of that litigation whilst, of course, the preliminary discovery covered documents that might be held in the possession of the Valuer General and not otherwise available.

10 I have already commented critically on the attitude of the parties to the question of confidentiality. It is indeed surprising that the first, second and third defendants saw fit to agree to the fourth defendant’s condition of confidentiality as against the plaintiff when the documents were first supplied. In the circumstances, as I have said, unless there were very good reasons (and commercial confidentiality as against the Council was not one of them) the condition should have been rejected and the fourth defendant left to consider whether or not it was in its interests to supply the material in order to obtain a favourable valuation. Be that as it may, the condition having been demanded and acceded to, the first, second and third defendants were in a somewhat difficult position. It is difficult, however, to understand why they did not perceive the essential artificiality of maintaining a claim for confidentiality when it had, for all practical purposes been either waived or destroyed at least so far as the plaintiff was concerned when the documents were initially produced without any such claim being made. Their active opposition to the grant of the orders sought shows they were not strangers being caught up willy-nilly into the dispute between the plaintiff and the fourth defendant. This circumstance also means that the application by the second and third defendants for costs against the fourth defendant should be refused.

Orders

11 1. The second, third and fourth defendants to pay the plaintiff’s costs of and incidental to the summons.

2. The first defendant to pay the plaintiff’s costs of the application up to the time on 25 August 2008 that it was informed of the first defendant’s change of position; thereafter each party to pay its own costs.

3. The plaintiff is to pay the defendants’ costs of and incidental to the giving of preliminary discovery as ordered.

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