Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd
[2002] VSC 32
•1 March 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
BUILDING CASES LIST
No. 7289 of 1998
| KENNEDY TAYLOR (VIC) PTY LTD (In Liquidation) (ACN 004 310 785) | |
| and | |
| CONTINENTAL VENTURE CAPITAL LIMITED (ACN 002 700 361) | Plaintiffs |
| v | |
| GROCON PTY LIMITED (ACN 006 772 238) | Defendant |
| and | |
| CROWN LIMITED (ACN 006 973 262) | Third Party |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 February 2002 | |
DATE OF JUDGMENT: | 1 March 2002 | |
CASE MAY BE CITED AS: | Kennedy Taylor Pty Ltd v Grocon | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 32 | |
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Practice and Procedure – electronic trial – electronic court book – electronic library - whether party and party costs should cover costs of including all discovered documents in electronic database for trial.
Practice Direction No. 4 of 1999.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G.J. Digby QC and Mr A. Hanak | Baker and McKenzie |
| For the Defendant | Ms S. Adams | Deacons |
| For the Third Party | Mr R. Moon | Blake Dawson Waldron |
HIS HONOUR:
This is a substantial building case which has been managed in the Building Cases List. In its interlocutory stages there were problems with discovery due to the volume and location of documents held by the defendant. In the early months of 2000 these problems were overcome and, in due course, affidavits of document were prepared. I mention this to underline that the process of discovery in this case was not undertaken electronically as is envisaged in cl. 14 of Practice Direction No. 3 of 1999, Guidelines for the use of Technology in Litigation in any Civil Matter.[1] I shall refer to this Practice Direction as the “Electronic Trial Practice Direction”.
[1][1999] 1 VR 843.
In due course, on 1 June 2001, directions were given for inspection of the defendant’s documents and for copying such of them as the plaintiff thought appropriate. On that date, too, the proceeding was fixed for trial commencing on 1 October 2002 on an estimate of 10 weeks.
On 5 October 2001 directions for the trial were given. For the most part, these directions were negotiated between the parties, although the orders of that date were not made by consent. Witness statements were ordered to be delivered in electronic format. The following orders were made with respect to documents for the trial:
“Electronic Data Base
15.The Plaintiffs and the Defendant and the Third Party meet and agree the protocols to be adopted in relation to the electronic data base to be used to manage the data base of documents to be prepared for the trial of the proceeding by 23 November 2001.
16.The Plaintiffs progressively provide to the Defendant copies of documents which it has copied, on inspection of the Defendant’s documents, which the Plaintiffs propose to include in the data base, with the number of the file from which each document has been extracted identified as agreed between the solicitors for the Plaintiffs and the Defendant.
17.The Plaintiffs’ solicitors serve on the Defendant’s solicitors and the Third Party’s solicitors a list in the agreed electronic format of the documents the Plaintiffs intend to include in the electronic data base on or before 12 August 2002.
18.The solicitors for the Defendant and the Third Party serve on the solicitors for the Plaintiffs a list in agreed electronic format, of the documents other than those specified in the list referred to in the preceding paragraph of this order, which those other parties require to be included in the electronic database together with the Plaintiffs’ documents on or before 26 August 2002.
Court Book
19.The Plaintiffs’ solicitor have available at the hearing a hardcopy of the Court Book for the exclusive use of witnesses during their examination.
20.The solicitors for the Plaintiffs serve on the Defendant’s Solicitors and the Third Party’s Solicitors and file for the use of the Judge an electronic Court Book of the following documents in the database:
a)the index to the database;
b)the index to the Court Book;
c)the current pleadings and particulars;
d)a copy in electronic form of all images included in the electronic database;
e)one hardcopy of each of the documents in the agreed Court Book arranged in chronological order, paginated sequentially.
on or before 9 September 2002.”
In compliance with this direction, electronic images have been made of about 8,000 of the plaintiffs’ documents and 15,000 of the defendant’s documents. The defendant has, I have been told, a large number of further documents, approximately 100,000 pages. The third party intends to image its own documents for the Court Book and these are expected to number about 3,300 pages. The parties are conducting discussions in order to agree the matters mentioned in cl.16 of the Electronic Trial Practice Direction in accordance with paragraph 15 of the order of 5 October. Notwithstanding that they are late in doing so in terms of the order, they are confident of agreeing the necessary protocols so that the database comprising the imaged documents can be created for use at trial.
The application now before the court is brought by the plaintiffs by summons filed on 6 February 2002 seeking the following order –
“Pursuant to Rule 63.03(1), that for the purpose of taxation of costs all reasonable costs associated with the application of information technology to the preparation for the trial, and the trial itself (including costs associated with the use of external information technology consultants), shall be regarded as necessary or proper costs within the meaning of Rule 63.69 of the Supreme Court Rules.”
This application was opposed by the defendant and the third party. In correspondence they proposed an order in the following terms:
“For the purposes of taxation of costs, reasonable costs associated with the application of information technology to preparation of the Court Book or otherwise for compliance with any order of the Court (including costs associated with the use of external information and technology consultants), shall be regarded as necessary and proper costs within the meaning of Rules 63.69 of the Supreme Court Rules.”
Rule 63.69 dealing with necessary or proper costs provides as follows:
“All costs shall be allowed as are necessary or proper for the attainment of justice or for enforcing or defending the rights of any party.”
Notwithstanding the terms of these competing proposals, it became apparent in the course of argument that the point of difference between the parties was, not as to the use of imaged documents in an electronic trial nor as to the costs associated with applying information technology to those documents, but rather to the ambit of the database of documents. The plaintiff wanted the database to contain all, or nearly all, of the discovered documents; the other parties sought a much more restricted database comprising, as the solicitor for the defendant said, “only those documents with a reasonable prospect of being tendered”. And so the focus shifted to the issue whether the electronic database should be a traditional court book in electronic format or something approximating an “electronic library”, to adopt the expression of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd[2].
[2][2000] NSWSC 338 at [51].
On behalf of the plaintiffs I was urged to make the orders sought so that they might be confident, if they obtain an order for costs, that the taxation will include the reasonable costs of preparing the electronic library. My power to make such an order was not in issue. It was submitted in support of the application that this extension of the electronic database was reasonable and would be useful for all parties and for the court. The uses suggested were the selection of documents for the court book, the preparation of witness statements, the better understanding of the strengths and weaknesses of the witness statements of other parties and the preparation of cross-examination of witnesses. It was said, too, that it would enable the easy transmission of documents between parties and, generally, that it would be useful for the court and the parties to know the totality of documents available. I was pressed, too, with cl. 21 of the Electronic Trial Practice Direction which is in the following terms:
“21.If parties have electronically exchanged data and/or images to facilitate discovery and inspection, the parties should also consider and make submissions regarding how best to use technology at the hearing.
For example, the parties’ electronic data could form the basis for an index to an agreed bundle, for lists to assist with the tendering process, or for the creation of a database of documents admitted into evidence and rulings on the admissibility of documents.
More generally, parties should consider:
(a)the equipment and services (including appropriate hardware, software and additional infrastructure) that they and the court may require at the trial; and
(b)the arrangements that may need to be made between the parties, the court and any third party service providers to ensure that appropriate equipment and services are available at the hearing.”[3]
[3][1999] 1 VR 843 at 846.
If the parties had decided to create an electronic library rather then an electronic court book, the database might include the material which was ordered on 5 October 2001 to be filed and served electronically or which otherwise might be ordered to be dealt with in this way. This might include pleadings, chronologies, charts, outlines of openings or arguments and witness statements with hypertext links to the imaged documents. It would also include images of documents which will have been produced to the court pursuant to subpoenas which will be returnable sometime prior to the commencement of the trial. All material available for use at the trial would be available in electronic form.
As I have mentioned, there was no issue before me as to the type of work which would be covered by a party and party costs order insofar as it concerns the application of information technology at the trial. It was accepted that this would include:
¨The acquisition of software including necessary licences.
¨External information technology consultants, the cost of which was estimated to be in the “low thousands”.
¨The scanning of documents, the cost of which was given as 20 cents per page.
¨The coding of documents in accordance with an agreed protocol.
In considering this application I must have regard to the interest of the parties in having their trial conducted speedily and efficiently and without undue cost. The electronic management of documents at interlocutory stages and at trial is but a means to achieve this objective. For my present purposes, the costs aspect of this exercise is the cost incurred by one or more parties of performing this process and which the unsuccessful party should be required to bear. These are party and party costs, not solicitor and client costs. Party and party costs are described in Rule 63.29 as follows:
“On a taxation on a party and party basis all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed.”
Having heard argument on 14 February, I reserved my decision since it seemed to me that the arguments raised questions which might have implications beyond the facts of this case. With the agreement of the parties, I have consulted with other trial judges and with masters on the matters of principle. Needless to say, the decision which I have reached is my own and based on the evidence before me.
In modern commercial non-electronic litigation it has become customary to direct the preparation of court books. The content of these court books has been from time to time the subject of disquiet among practitioners, the Court and, it may be, the client who must bear the cost, in the first instance at least.
It is useful to recall that in the Guide to Commercial List Practice (Revision 1996) the court book is to contain “only those relevant documents which are intended to be or form part of an exhibit”.[4] In the Guide to Long Cases List Practice (1996) much the same test is expressed: “documents which are to be tendered at the trial”.[5] To my mind, a preferable test is “documents which are reasonably expected to be tendered or used at trial”. This formulation acknowledges the reality that a relevant document might be put to a witness or otherwise used at trial without its being tendered. In such an event, there is likely to be a saving of trial time and cost, and a minimisation of inconvenience for all parties and the witness, as well as for the Court, if all of these are working from a common paginated bundle of documents. This, after all, is the purpose of creating a court book. The formulation also accommodates the reality that the task of selecting the documents for inclusion in the court book involves the exercise of professional judgment, often some months before the trial. This will, in most cases, be at a time when the tactics for the trial may not have been fully worked out, when witnesses for cross-examination have not been identified and when, perhaps, the real issues have not been separated from non-issues. For these reasons at least, practitioners charged with the task of making the selection for the court book might properly be inclined to err on the side of inclusion rather than exclusion. The disquiet which I have mentioned, however, has arisen in cases where, for no apparent good reason, the number of documents tendered or used at trial represents a relatively small part of those included in the court book.
[4]Para. E2.03.2.
[5]Para. 4.8.
In principle, the position is the same where the trial is an electronic one, using imaged documents. The facility with which documents may be imaged and managed electronically does, however, bear upon the application of the principle. This may mean, in a given case, that an electronic library is no more expensive, or even cheaper, than an electronic court book. If all discovered documents have been imaged then there may be little further cost involved in transferring the images of all, rather than of a selection of them, to the database for use at trial. Indeed, there may be a saving in the long term, for the task of selection will involve professional time and expense. Moreover, the inclusion of all these documents diminishes the risk that the database will have to be updated during the trial to accommodate extra documents whose significance emerges late. Furthermore, if lists of discovered documents have been exchanged electronically and these lists include the fields of information with respect to each document that will be required for the database for use at trial, then, again, the cost of including this data on the database is not likely to be great. Unlike a hardcopy court book, there is little extra inconvenience in handling an electronic database where it contains an excess of documents. Finally, the existence of an electronic library common to all parties means that all parties approach the trial on an even footing. It avoids the risk of disadvantage to one party which, due to lack of resources or otherwise, is working from paper documents whereas the other parties have the advantages of electronic document management. Modern civil litigation is characterised by general disclosure of documents. If each party has imaged and coded its own documents, there should be no reason why this benefit should not be shared and the cost of this benefit to all parties spread among them. It will in due course be adjusted, to some extent at least, in favour of the successful party when an order for party and party costs is worked out.
It will be seen from this brief summary that the cost of creating an electronic database, whether it be in the form of a court book or a library, is very much less if it is undertaken at an early stage before discovery. It may be for this reason that cl. 21 of the Electronic Trial Practice Direction is introduced by the words, “If the parties have electronically exchanged data and/or images to facilitate discovery and inspection…”. Experience shows that the later the decision to conduct the trial in electronic form is taken, the consequent savings of time and cost at trial and in preparation for trial are less.
I return to the particular circumstances of this case. That part of the order of 5 October 2001 which I have set out above contemplates the creation of an electronic database of documents to be prepared for the trial. The criterion of selection for these documents is not spelt out. I take it, however, to mean a database which comprises only those documents which are reasonably likely to be tendered or used at trial, so that it is a court book, in the sense that I use that term. In addition, there are to be two paper copies of the court book, one for the exclusive use of witnesses and one for the Court.
The question before me is whether, seen from this time some six months before trial, it is necessary and proper for the attainment of justice or for enforcing the rights of the plaintiffs that this electronic court book be expanded as they propose. In addressing this question I am, of course, mindful of the direction contained in Rule 1.14 -
“(1) In exercising any power under these Rules the Court –
(a)shall endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined;…”
Moreover, as I have mentioned, I address this question, not in the abstract, but in the context of the proceeding as it now stands and in the context of the costs involved.
It does not appear from the material that this is a case where the parties other than the plaintiff have already created their own database which they are reluctant to share with the plaintiff.
To my mind it has not been demonstrated by the plaintiffs that the course they propose is necessary or proper in terms of the test for party and party costs. Given the fact that all documents which are reasonably likely to be tendered or used at trial are to be included in the electronic court book as presently ordered, the further documents in question are presumably seen as not likely to be deployed at trial. Insofar as they may assist the plaintiffs to prepare their own case, this is a benefit for them; the other parties do not see it as a benefit for themselves. Nor can the extension of the database be justified on the basis that the cost of doing so will be minimal. Using the imaging cost which I have been given, the cost of this process alone for 100,000 documents will be of the order of $20,000. The cost of coding the documents, while unknown, is not likely to be much less.
I conclude this judgment with some further general remarks. Experience has shown the very great value of electronic management of documents in the efficient disposition of major litigation. This Court has been in the forefront of moves to exploit this process and will continue to do so. Its enthusiasm, however, must yield to the fundamental objective of its civil procedure which is conveniently stated in Rule 1.14(1)(a) which I have set out above, one of whose components is the elimination of unnecessary cost.
In short, I am not satisfied on the material before me that the plaintiffs have shown that the extension of the database which they propose will have the consequence that the trial of this proceeding will be more completely, promptly, and economically determined. Accordingly, the application will be refused.
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