Kell & Rigby Ltd v Reddam House Ltd

[2006] NSWSC 1039

CITATION:	Kell & Rigby Ltd v Reddam House Ltd [2006] NSWSC 1039
HEARING DATE(S):	3 October 2006
JUDGMENT DATE :	4 October 2006
JURISDICTION:	Equity Division Technology & Construction List
JUDGMENT OF:	Palmer J
DECISION:	Defendant’s Amended Notice of Motion dismissed.
CATCHWORDS:	PRACTICE AND PROCEDURE – DISCOVERY – whether plaintiff had fully complied with discovery orders – whether plaintiff’s proceedings should be dismissed.
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) – s.67 Uniform Civil Procedure Rules 2005 (NSW) – 13.4, 21.1
PARTIES:	Kell & Rigby Ltd – Plaintiff/Cross Defendant Reddam House – Defendant/Cross Claimant
FILE NUMBER(S):	SC 55070/03
COUNSEL:	P.M. Wood – Plaintiff/Cross Defendant R.J. Cheney – Defendant/Cross Claimant
SOLICITORS:	Atanaskovic Hartnell Plaintiff/Cross Defendant Carlisle Attorneys – Defendant/Cross Claimant

1 The Plaintiff (“the Builder”) sues the Defendant (“the School”) for the balance of monies claimed to be due under a building contract made between the parties in December 2002. The School denies liability on the ground that it was a term of the contract that the amount to be paid to the Builder was to be capped at $2M, and it has paid that amount in full. By its Cross Claim, the School sues the Builder, in contract, tort and upon other causes of action, alleging that the Builder breached a duty to it to manage the building project such that the costs would not exceed $2M. 2 An order for discovery was made on 12 March 2004. The Builder has filed seven Discovery Lists, the last being filed on 22 September 2006. 3 By its Notice of Motion filed 28 July 2006, the School seeks an order that the Builder’s Summons be dismissed or stayed on either of two grounds. The first ground is that, so the School says, despite the filing of Discovery List 7 the Builder has not yet made full discovery in compliance with the discovery orders, so that, in the light of the long history of inadequate discovery on the Builder’s part since March 2004, the Builder’s Summons should be dismissed as an abuse of process pursuant to UCPR 13.4 or stayed permanently pursuant to s.67 Civil Procedure Act 2005 (NSW), for failure to comply with the Court’s directions and orders. 4 The second ground is that, so the School says, after the discovery order was made in March 2004, the Builder has destroyed certain e-mails which, on the Builder’s own admission, were relevant to the proceedings and were within the terms of the discovery order made in March 2004. Again, the School invokes s.67 Civil Procedure Act or the Court’s inherent jurisdiction. 5    Alternatively, if the Builder’s Summons is not dismissed, the School seeks orders for further discovery. 6    The Builder says, first, that by virtue of its Discovery List 7 filed on 22 September 2006, it has now fully complied with the order for discovery. In short, it says that that there is nothing left to discover. 7    Second, the Builder concedes that certain e-mails within the terms of the discovery order were deleted from its computers and its server after 12 March 2004 but it says that the deletion was inadvertent and in the ordinary course of its business, and that all such e-mails have now been retrieved from back-up tapes and have been discovered. 8    The Builder’s discovery has certainly been protracted. However, I am satisfied that it has now made a complete discovery. The affidavits of Ms Wright of 5 April 2006 and 11 August 2006, and the affidavit of Mr Kell of 5 April 2006 satisfy me that all reasonable efforts have been made by the Builder to locate and retrieve all documents not previously discovered, particularly e-mails deleted from the computers of individuals within the Builder and from the Builder’s server. Those e­-mails have been retrieved, with some difficulty and expense, from back-up tapes and are shown in the Builder’s latest Discovery List. 9    Mr Cheney of Counsel, who appears for the School, says that it is possible that some deleted e-mails have not been retrieved from the back-up tapes so that, even now, full discovery has not been made. Mr Cheney points to a statement in a letter from the Builder’s solicitors dated 30 January 2006 to the effect that back-up tapes were regularly overwritten, thereby presumably obliterating information previously stored thereon. 10    However, the explanation given in the Builder’s solicitor’s letter of 30 January 2006 has since been corrected. Information has been retrieved, not from the overwritten back-up tapes, but from certain other back-up tapes which were not found until recently. 11    In so far as e-mails were deleted from the computers of individuals and from the Builder’s server, I am satisfied from the Builder’s affidavit evidence that the deletion was not done in an attempt to withhold discoverable documents from the School but was done in the ordinary course of record maintenance within the Builder. Mr Cheney does not submit otherwise. 12    The School says that the Builder has not yet given full discovery because it has discovered hard copy of e­-mails rather than the e-mails in electronic form. It says that the e-mails in electronic form would show the headers, in which there could be relevant information such as whether there was an attachment to the e-mail, whereas the hard copy may not show the headers and the information disclosed therein. 13    In a letter dated 31 July 2006 to the School’s solicitors, the Builder’s solicitors say that the e-mails discovered do not show, in their electronic form, any matter relevant to a fact in issue in the proceedings which is not also shown in the hard copy. Accordingly, they say, the e-mails in electronic form are within the definition of “excluded document” in UCPR 21.1. 14 The School’s information technology expert says only that an e-mail in electronic form could disclose in its header additional relevant information not shown in the hard copy, such as whether there was an attachment to the e-mail. He gives as an example the header to an e-mail dated 17 January 2003 from Mr Ian McLeod to Mr James Kell. The Builder produces the hard copy of that e-mail, which clearly identifies the attachments. There is no relevant information in the header to that e-mail which does not appear in the hard copy. 15    I am not satisfied that the electronic form of the e-mails is likely to fall outside the definition of “excluded documents” as defined by UCPR 21.1, as asserted by the Builder’s solicitors. I am not satisfied that the Builder’s discovery obligations require it to discover in electronic form e-mails already discovered in hard copy. 16 The School submits that the Builder has failed to comply with a discovery order made on 31 March 2006 that it provide discovery of all electronic data in a specified data base in electronic form. The School says that only e-mails, rather than all other documents, have been discovered in electronic form. 17 However, as the Builder points out, the School’s solicitors requested, by letter dated 19 July 2006, discovery in electronic form only of e-mails, not of all other documents. Further, although the order of 31 March 2006 refers to “discovery” by the provision of documents in electronic form, the provision of the documents themselves in this way is more accurately described as “inspection”, rather than as discovery. 18 In summary, I conclude that there is no reasonable basis upon which I could hold that the Builder has not, by its Discovery List filed on 22 September 2006, now completed the discovery which it was ordered to make on 12 March 2004. Accordingly, the School has not made out the factual basis of the first ground upon which it seeks the dismissal or stay of the Builder’s Summons. 19 As to the second ground, as I have said, I am satisfied that the deletion of certain e-mails by the Builder was done without any intention of frustrating proper discovery. I am satisfied that the Builder has exercised all reasonable diligence in retrieving and discovering the deleted e-mails and that the School will suffer no prejudice in the conduct of its case by reason of the deletions which have occurred and which have now been retrieved. 20 I am satisfied that the exercise of retrieving the deleted e-mails has been time-consuming as well as costly for the Builder, so that its delay in providing its final Discovery List has been properly explained. It follows that I can see no proper basis, in the exercise of the Court’s discretion, for dismissing or staying permanently the Builder’s proceedings. The Amended Notice of Motion is, therefore, dismissed. 21 The Builder submits that the costs of the motion since 31 March 2006, when the last discovery order was made, should be costs in the cause, as the Builder has been earnestly endeavouring to comply with the orders made that day. Alternatively, it submits that it should have its costs of the Amended Notice of Motion as from 11 August 2006, when it served Ms Wright’s affidavit explaining the steps which were being taken to retrieve information from the back-up tapes and that a further discovery list would be filed when that process was completed. As an ultimate position, it says that it should have its costs of the Amended Notice of Motion from 22 September onwards, when it finally completed its discovery by filing the last discovery list. 22 The School submits that it should have all its costs of the motion as the proceedings were necessary to force the Builder to comply with its discovery obligations. 23 In my view, the School was justified in filing the Amended Notice of Motion when it did because the Builder was, at the time of filing, in breach of the orders made on 31 March 2006: it had not filed the affidavit referred to in paragraph 2 of the orders by the stipulated time. 24 The School was justified in pressing ahead with the Amended Notice of Motion notwithstanding the affidavit of Ms Wright of 11 August 2006. In view of the delays already experienced in the giving of discovery by the Builder, the School could not place any confidence in the Builder’s assurance that discovery would be completed in a timely fashion. 25 However, once the Builder’s final discovery list was provided on 22 September 2006, the School was not, in my opinion, justified in proceeding further with the Amended Notice of Motion. 26 I think that the proper order for costs is that the Plaintiff pay the Defendant’s costs of the Amended Notice of Motion up to and including 22 September 2006, and that the Defendant pay the Plaintiff’s costs of the motion from 23 September 2006 onwards. Costs will be assessed on the party/party basis. These orders do not affect the costs orders made by Bergin J on 31 March 2006.
– oOo –