Loney v Luthra Group Pty Ltd trading as Sussex Inlet Service Station

[2022] NSWDC 350

District Court

New South Wales

Medium Neutral Citation:

Loney v Luthra Group Pty Ltd trading as Sussex Inlet Service Station [2022] NSWDC 350

Hearing dates:

16 August 2022

Date of orders:

18 August 2022

Decision date:

18 August 2022

Jurisdiction:

Civil

Before:

Abadee DCJ

Decision:

See paragraph 57

Catchwords:

CIVIL PROCEDURE – plaintiff’s personal injury claim – injury allegedly suffered when plaintiff used gas pump at service station – defendant’s application for deconstruction of nozzle on the gas pump in the possession of a third party – r 23.8 of the Uniform Civil Procedural Rules 2005 (NSW) – application proceeds, then is adjourned to enable the manufacturer to express its opinion on risk of permanent damage to the nozzle on the pump – application subsequently withdrawn by the defendant after manufacturer supplies opinion - whether application might otherwise have failed for discretionary reasons – whether it would have been appropriate for application for deconstruction to be jointly made with the plaintiff

COSTS - costs consequences of withdrawal of the application – whether supervening event occurred since filing of motion – whether respondent’s conduct wholly or partly disentitled it to any costs order – whether obligations of third parties to ‘co-operate’ with parties in progress of proceeding

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 56, 58, 98

Competition and Consumers Act 2010 (Cth)

Uniform Civil Procedure Rules 2005 (NSW) rr 23.8, 42.1

Cases Cited:

Calderbank v Calderbank [1976] Fam 93

Category:

Costs

Parties:

Luthra Group Pty Ltd trading as Sussex Inlet Service Station (applicant)
Elgas Ltd (respondent)

Representation:

Counsel:
Mr N Simone for the applicant
Mr M Best for the respondent

Solicitors:
Holeman Webb for the applicant
Lander & Rogers for the respondent

File Number(s):

2020/00162767

Publication restriction:

Nil

JUDGMENT

Background

1. In this proceeding, which commenced on 22 October 2020, the plaintiff brings a claim for damages for personal injury. The basal circumstances are that on 1 March 2020, he attended a service station at Sussex Inlet to fill his vehicle with LPG, via a Unigas LPG gas pump. The plaintiff alleges that after obtaining some instructions from an operator, he sustained injuries whilst using the gas pump. The service station was operated by the defendant. The Unigas LPG pump was supplied to the defendant by Elgas Ltd. Particulars of alleged negligence include a failure to warn the plaintiff of dangers incidental to the pump, knowing that it was faulty, failing to ensure that the plaintiff stood away from the pump and clear of the gas and failing to repair the pump knowing that it leaked.

2. By its Defence filed 22 April 2021, the defendant denied installing the pump at its premises and said that Elgas Ltd installed it. Although it admitted that it owed a duty to ensure the plaintiff’s health and safety in the course of its business, it denied that it was negligent. In answer to one of the actions that the plaintiff relied upon, being an action for personal injury damages under Part VIB of the Competition and Consumers Act 2010 (Cth), arising from alleged non-compliance with consumer guarantees in the supply of services in trade or commerce, the defendant also averred that if the process of fuel delivery was defective, in that it allowed gas to escape, that it was Elgas Ltd, as the owners of the pump, which should have known that the process was defective and that it was Elgas Ltd which was responsible for maintenance of the pump. Essentially, aside from putting the plaintiff to proof of negligence, its positive defence was two-pronged: the plaintiff failed to properly use the Nozzle and, further or alternatively, if the process for fuel delivery was defective, it was Elgas Ltd, as owner and maintainer of the Nozzle, which was responsible.

3. By a notice of motion filed on 9 February 2022, the defendant, the applicant to the motion, sought an order for the inspection and deconstruction of a nozzle which the plaintiff used to dispense the LPG gas at the service station. Specifically, the applicant sought an order that Elgas Ltd (the respondent to the motion), a third party to the proceeding, make the nozzle that was operated by the plaintiff (the ‘Nozzle’) available to the applicant for inspection and deconstruction by the applicant’s expert (Dr Robert Casey) pursuant to r 23.8 of the Uniform Civil Procedure Rules 2005 (NSW).

4. The applicant’s primary purpose was to allow Dr Casey the opportunity to observe, with a microscope, any damage or wear marks to the internal components of the ratchet mechanism of the connection nut of the Nozzle; with a view to ascertaining whether there was any internal damage to the Nozzle and, if so, whether the damage was pre-existing.

5. It was surmised that only the manufacturer could take the Nozzle apart and reassemble it again, without damaging the Nozzle.

6. The motion was before Coleman SC DCJ on 9 May 2022. On that occasion, his Honour directed the parties to the motion to cooperate with a view to contacting the manufacturer of the Nozzle to ascertain whether an experiment by Dr Casey could be undertaken without damaging the Nozzle; and directed that the parties report back to his Honour. During the present hearing, both parties’ Counsel alluded to things said, in and outside Court, on that occasion. In the context of voluminous evidence already before the Court and the dogged determination of the parties to this particular dispute, I indicated that I did not wish to hear of things said inside or outside the Courtroom other than by proper evidence.

7. On 11 May 2022, the parties to the motion prepared a joint letter to the Proper Officer of Elaflex, essentially outlining the above account and specifying the ambit of the experiment that Dr Casey was proposing to undertake (Exhibit D).

8. On 21 June 2022, the Managing Director of the manufacturer of the Nozzle, Elaflex Pty Ltd, answered (without elaboration) the three questions which the parties jointly posed for his consideration (Exhibit E). The questions and answers were as follows:

“(The parties) would be grateful if you can confirm that:

1. That Elaflex Pty Ltd was the manufacturer of the Nozzle.

Yes

2. That Elaflex can disassemble the ratchet mechanism of the Nozzle, without damaging or destructing the Nozzle.

No

3. That Elaflex can re-assemble the ratchet mechanism of the Nozzle, without damaging or destructing the Nozzle.

No

9. In the light of this report, the motion came before me, as the Judge managing the Court’s 3-week sittings for civil matters in Parramatta, which commenced on 15 August 2022. The applicant, at least, had expressed a preference that the matter be heard by Judge Coleman. But there was no indication in the record that his Honour regarded himself as part-heard and, in any event, my own inquiries ascertained that his Honour was unavailable to hear the matter until this October.

10. More materially, following on from the recent short report, subject to a qualification, the dispute has narrowed to be one of costs: whilst not letting go of the possibility that its application may be revived at a future point, the applicant conceded that its motion cannot be adjourned indefinitely, but rather has been rendered “otiose” by what it characterised as a supervening event.

Suggested other orders

11. The qualification is that the applicant seeks orders that the respondent be directed:

1. to preserve the Nozzle until the conclusion of the proceeding; and

2. to notify the applicant should any party apply to inspect, test or deconstruct the Nozzle.

12. About these applications, which had not been brought formally in the notice of motion, the respondent’s Counsel indicated that it would accede to a direction that it preserve the Nozzle until the conclusion of the substantive proceeding. As the evidence unfolded on the application, this was consistent with its prior position. But it opposed the latter proposed direction. The respondent did not wish to get in the way of either party wishing to get access to the Nozzle for its own forensic purposes and the direction, if made, may result in its being required to divulge legally privileged information.

13. In answer to the respondent’s concern about the second of the two proposed directions, the applicant referred the Court to the very recent indication that it had received from the plaintiff; to the effect that he had engaged a liability expert and that it was very likely that the plaintiff’s expert may wish to inspect, test or experiment on the nozzle (Exhibit C).

Consideration

14. In my view, the second of the directions proposed by the applicant is unnecessary and premature. First, it is hard to see, in the light of the manufacturer’s recent indication, how the respondent’s accession to the direction that it preserve the Nozzle would not be breached should it permit the plaintiff, or someone else, to test, inspect and examine it. Secondly, there is merit in the notion that if there is to be any future examination, testing or experiment on the subject Nozzle, it should proceed on a joint basis; that is, with the oversight and observation of all the parties; not just one; in a race to obtain a perceived forensic advantage. Conceivably, the plaintiff, or some other party not yet involved in the proceeding, may later want to be afforded similar opportunity. The Court was informed that the position may be that the pleadings remain unsettled and other parties may potentially be added. It appears to be desirable that on the assumption that any future inspection, testing or deconstruction of the Nozzle is contemplated, notwithstanding the manufacturer’s recent indication, all parties, the present and future ones, should have input into the application. This view is fortified when reading the opinion of Mr Reynolds in his affidavit of 6 May 2022 (Exhibit 2 on the application) at paragraph 23(e).

15. In the event that the opportunity presents itself for all parties, be those who are in existence now or those who may be brought into the proceeding, to jointly participate in any testing or deconstruction, then the respondent’s undertaking in relation to the first of the proposed directions may be expected to require review.

The costs application

The evidence

16. The applicant relied on the affidavits of Mithrah Baskaran dated 9 February 2022, 4 May 2022 and 12 August 2022 (Exhibits A, B and C, respectively). It also relied upon a Calderbank letter dated 15 August 2022 (Exhibit F).

17. The respondent relied on an affidavit from James Batchen dated 5 May 2022 and Steve Reynolds (Exhibits 1 & 2, respectively). Separately, the respondent also relied upon its own letter, expressed to be “without prejudice save as to costs”, dated 15 May 2022 (Exhibit 3). The terms of that letter offered a continuation of the undertaking (reflected in the first of the proposed directions above), the dismissal of the applicant’s notice of motion and for the applicant to pay the respondent costs of its motion in the sum of $18,000 (all inclusive). This offer was open for acceptance until 9:30am (on 16 August 2022).

18. The evidence on the costs application, emphasised by Counsel in the hearing, centred principally upon the annexures to the affidavit of Ms Baskaran (Exhibit A). The annexures amounted to some 320 pages. Counsel for both parties isolated correspondence perceived as supporting their clients’ respective positions.

19. The respondent’s position was that this correspondence revealed that:

1. the applicant had requested (in June 2021) and the respondent eventually acceded to the request, that the Nozzle be made available for the applicant’s inspection;

2. some delay was experienced in permitting the inspection to occur; partly because of the ‘Lockdown’ imposed in the second half of 2021;

3. eventually the inspection occurred on 4 November 2021;

4. in December 2021, the applicant had foreshadowed a new need for the deconstruction of the Nozzle. It explained that its purpose was to enable its expert (Dr Casey) to finalise his report, so that he could see the inside of the ratchet mechanism;

5. however, the plaintiff (not party to the present application) asserted that the applicant had already served on the plaintiff a report from Dr Casey on 9 November 2021. The respondent’s Counsel, noting that this report was not before the Court on the motion, argued that it may have been expected that if Dr Casey believed he had insufficient information to complete the expression of his views, he would have said so;

6. on 16 December 2021, 13 January 2022 and 17 January 2022, the applicant pursued the respondent about further inspection, in the correspondence on 13 January, citing the applicant’s need to comply with a Court direction that cross-claims be filed and served by 21 December 2021; and in the last correspondence, citing Dr Casey’s insistence on deconstruction to finalise his report;

7. in that last correspondence from the applicant to the respondent, the applicant conveyed Dr Casey’s advice that he would be able to reconstruct the Nozzle once he had completed testing;

8. on 17 January 2022, the respondent inquired of the applicant what the basis was for deconstruction of the Nozzle; arguing that the applicant’s correspondence of 17 January was not a sufficient basis for its agreeing to a deconstruction. The next day, it also argued that the applicant had not provided a reasonable basis at law to justify the proposed deconstruction and reconstruction;

9. on 19 January 2022, the applicant’s solicitor invoked r 23.8 of the UCPR as providing the legal basis for what it sought. The view was also expressed that inspection was necessary to enable the “proper determination as to whether or not your client (the respondent, Elgas) is a party in the proceeding”;

10. after the motion was filed on 14 February 2022, on 4 May 2022, the applicant served an affidavit from Ms Baskaran (Exhibit B in the application), in which she deposed to conversations with Dr Casey which had occurred the previous December and, more recently, on 17 January 2022. The gist of this was Dr Casey’s reiteration of his need to deconstruct the Nozzle to inspect wear marks with a microscope and his expression of confidence that it was possible to reconstruct the Nozzle (after deconstruction);

11. on 5 May 2022, Mr Batchen, a person experienced in the gas industry, responded to Ms Baskaran’s affidavit on 4 May 2022 and her account of what Dr Casey had reportedly said, in an affidavit (Exhibit 1 on the application). Mr Batchen expressed his opinion that, contrary to Dr Casey’s view, it was possible to disassemble, and thereafter reassemble the Nozzle without the risk of permanent damage to one or more of the internal components of the nozzle;

12. on 6 May 2022, Mr Steve Reynolds, a compliance manager with the respondent, swore an affidavit (Exhibit 2 on the application) in which he also disagreed with Dr Casey’s expectation that the Nozzle could be reconstructed without risk. He expressed his own view that there was significant risk of irrevocable damage to component parts of the Nozzle if it was disassembled and, further, there was also a significant risk that this would adversely affect any further testing by other experts.

20. The applicant supplemented the chronology, as manifested in these annexures, and indicated its position that the correspondence revealed that:

1. the respondent was on notice of the issues in the proceeding since August 2021 when the applicant’s solicitors emailed the pleadings;

2. after other follow up steps on the matter of the initial inspection in July through to August 2021, it was obvious to the respondent by then that it was aware of the significance of the condition of the Nozzle to the issues in dispute in the substantive proceeding;

3. between 16 December 2021 and 19 January 2022, the respondent did not engage in correspondence that, the applicant hoped, might obviate a need for the motion to be brought;

4. the respondent had not, prior to the eve of the hearing of the motion in May 2022, identified a basis for objection to the application, such as an improper misuse of process, or that it amounted to a de facto application for preliminary discovery;

5. when Mr Batchen’s evidence was served, on the eve of that hearing, it was the applicant, not the respondent, who engaged constructively, by proposing that the manufacturer of the nozzle venture an opinion as to the likely risk of damage through deconstruction.

Submissions

The applicant’s submissions

21. The applicant set out its position in supplementary written submissions on the motion (MFI 2), which substantially superseded the submissions advanced before Judge Coleman on 9 May 2022 (MFI 1); the latter of which were directed to the merits of its application for deconstruction.

22. The applicant submits that it should receive its costs of the motion for the following reasons:

1. lateness in the respondent’s indication (7 May 2022) that it would oppose the motion (filed on 14 February 2022), which opposition itself was unreasonably based;

2. if the respondent had taken the point about the prospective damage to the Nozzle in any experiment earlier than it did, the applicant could have inquired of the manufacturer directly of its attitude to the risk of damage and thereby have spared the Court the hearing that occurred before Coleman SC DCJ;

3. a lack of responsiveness in the respondent to correspondence sent to it before the motion was filed, from December 2021 to January 2022;

23. Alternatively, the applicant seeks an order that the parties to the motion bear their own costs, subject to the applicant receiving its costs of today’s attendance, on an indemnity basis. It relies on a Calderbank offer, dated 15 August 2022 (Exhibit F on the application), sent after yesterday’s call-over of motions in the sittings list, and open for acceptance until 9:30am this morning, being rejected by the respondent. The gist of the offer was that the applicant was prepared to pay the respondent the sum of $15,000, inclusive of costs, disbursements and GST. This offer, it asserts was generous, to the respondent.

24. The applicant further submits that it would be inappropriate to order the applicant to pay the respondent’s costs; either because the motion did not fail or, even if it did, the usual rule that costs should follow the event is displaced. It was the applicant who put up before Judge Coleman the notion that the manufacturer’s view as to the efficacy of conducting the experiment with the Nozzle in terms of risking damage to it. That was a supervening event. Further, even if it could be said that the respondent was ‘successful’, it should be disentitled to its costs by reason of its failure to engage constructively with the applicant in a way which might have avoided the motion.

25. In its Counsel’s oral submissions in reply to the respondent’s decisions, the applicant submitted that the outcome did not represent failure. Rather a supervening event had occurred, being the manufacturer’s expression of view about risk. If it could be said that the respondent was vindicated in its opposition, it should have conveyed that view earlier.

26. Counsel also argued that the respondent’s own offer of settlement of the motion (Exhibit 3) was not a valid Calderbank offer and, if it was, it was not unreasonable for the applicant to reject an offer that it should pay the respondent the sum of $18,000 which had been unsupported by evidence indicating how that proposed amount to settle the motion was arrived at.

The respondent’s submissions

27. The respondent addressed the points raised by the applicant in MFI 2.

28. In response to the applicant’s complaint that the respondent had not communicated with the applicant until virtually the eve of the hearing of the motion after it had been filed, the respondent submitted that its position, of opposing relief, was not untenable. It had formed a view that the application was a de facto attempt to obtain preliminary discovery i.e. to ascertain whether to proceed against Elgas as a cross-defendant. Even if that argument did not appear to by sympathetically received by Judge Coleman, it was not untenable; particularly in view of the applicant’s correspondence on 19 January 2022, referred to above.

27. In response to the applicant’s argument that, following service of Mr Batchen’s and Mr Reynolds’ evidence, the applicant reasonably had suggested (in MFI 1, at paragraphs 4.3(b) and 4.4) that the manufacturer might be approached to see if deconstruction of the Nozzle might damage it in the face of the view of its own expert, the respondent submitted that the applicant had made no application to adjourn its motion to enable that process to occur (or to elicit any view by Dr Casey in response to the respondent’s evidence). Nor did it object to the admission, into evidence, of Mr Batchen’s or Mr Reynolds’ views.

28. In response to the applicant’s argument that the respondent did not properly engage with the applicant, the respondent argued that it acted in its perceived interests, as it was entitled to do. It was inaccurate to say that it did not co-operate with the applicant. It did, after all, permit the initial inspection of the Nozzle in November 2021. It was not persuaded by the applicant’s requests that it permit a further inspection, with the added deconstruction and was within its rights to decline. The procedural requirements of Court rules do not force parties to relinquish their rights if they wish to assert and maintain them. Further, the evidence that the applicant had amassed to support the application was not complete at the time the motion was filed and served. It was supplemented by Ms Baskaran’s affidavit of 4 May 2022, which prompted the respondent to obtain its own evidence from Messrs Batchen and Reynolds. When the matter came on before Judge Coleman, there was a live contest as to whether the application might fail on account of a risk that the Nozzle would be permanently damaged if it was deconstructed.

29. The applicant submitted that when the matter was initially called on, on 15 August 2022, before me, the applicant had wished to pursue its motion. In this regard, it is noted that the applicant had supplied to the Court, prior to the mention of the matter on 15 August, a document titled ‘Consent order’, which was not executed (or agreed to) by the respondent, in which (proposed order 1) was that the Notice of Motion be adjourned to be listed at the first available date before Judge Coleman. But it was not until the morning of 16 August that the applicant withdrew the motion, for reasons supported by MFI 2.

30. As to the applicant’s Calderbank offer (Exhibit F), the respondent agreed to two of the 4 proposed terms: the exceptions were the applicant’s offer to pay the respondent $15,000; and the applicant’s requested direction from the Court that the respondent notify the applicant should any other party request the inspection, testing or deconstruction of the Nozzle. It was justified in (and for reasons given above vindicated in) its refusal to agree to this proposed direction.

31. In summary, Counsel for the respondent emphasised that, being a non-party (in the substantive dispute), it had co-operated to facilitate an initial inspection, it opposed the application for deconstruction; that the merits of that application had not been determined by Judge Coleman, who had practically ascertained whether, in fact, the Nozzle could be deconstructed without damage before making any determination. If the manufacturer said ‘yes’, the respondent would likely have facilitated its deconstruction. At any rate, the motion did not succeed. Costs should reflect that outcome and there was no disentitling conduct depriving it of its costs entitlement.

Consideration

34. As is often the case with procedural motions (if not also sometimes the case with applications which follow a substantive hearing), arguments about costs loom larger than they should having regard to the real differences in the parties’ positions. Here, the differences between the parties, in terms of (without prejudice) offers that had been exchanged the day before the hearing on costs in an attempt to obviate the hearing on costs, boiled down to whether (a) a procedural direction should be made (which occupied approximately 10 or 15 minutes of the hearing that ensued) and whether (b) a settlement sum payable to the respondent should be $15,000 (as the applicant offered) or $18,000 (as the respondent indicated it would accept).

35. Section 98 of the Civil Procedure Act 2005 (NSW) confers a broad discretion on the court as to costs. This was a discrete procedural application affecting a third party. The plaintiff did not participate. Accordingly, this is not a case where the justice of the case is sometimes only capable of being determined at the conclusion of the substantive hearing; and should accordingly be deferred until then. Rather, a third party, (presently) with no interest in the litigation, has been put out of pocket in opposing an application brought against it which has since been withdrawn. Prima facie, it would ordinarily be expected that the third party would obtain an order for costs in its favour.

36. Counsel for the applicant conceded that there are other occasions where court process affects third parties, and in order to comply with such process, third parties are often compensated for their expense in doing so. Rule 33.11 of the UCPR and, obviously also, third party discovery are examples. But as Counsel for the applicant correctly submitted, the anterior point had not been reached where it had been determined that the respondent had to comply with court process, as distinct from giving consideration to whether or not it should consent to a request made by one party (but not all parties) in litigation.

37. Contrary to the applicant’s submission, it did not ultimately achieve its objective when it filed its motion. The ‘event’, enlivening the usual rule as to costs in r 42.1, was the question whether the applicant obtained a court order that the applicant be entitled to experiment on the Nozzle, by deconstructing it. It had already inspected it. The applicant did not succeed in establishing such entitlement.

38. But there is more force in the applicant’s position that it did not lose, in the Court actually rejecting the claimed entitlement. What occurred was that the applicant either proposed, encouraged or acquiesced to the proposal that a manufacturer give its view as to whether the proposed experiment would damage the Nozzle; possibly permanently, in a way that would preclude other present, or future, parties to the litigation from conducting its own experiment. As I indicated to the parties Counsel in oral argument, in the absence of a transcript of what was said in the hearing before Judge Coleman, it was not appropriate for me to speculate what motivated his Honour to adjourn the motion to enable the manufacturer’s view to be ascertained.

39. When the manufacturer came back with a negative view, the applicant’s initial response was not unequivocally to withdraw the motion. Its initial position, on 15 August 2022, was to have motion adjourned for determination by Judge Coleman. But its changed its position overnight, so that when the parties appeared in Court before me on 16 August 2022, the applicant applied for the withdrawal of its primary application; and indicated that it would agree to its motion being dismissed.

40. In my opinion, what occurred in the brief interval from at least 5 or 6 May 2022, until the eve of the hearing of the motion on 9 May 2022, was that the applicant was on notice that a basis for the respondent’s opposition to the applicant’s primary application was the risk of damage to the Nozzle from its deconstruction, with the ancillary risk that no other party may be able to subsequently test it in the way that the applicant wanted to.

41. With that notice, the applicant pursued its motion before Judge Coleman. It did not say that it did not have enough time to consider the evidence only recently served by the respondent, so as to enable (for example), Dr Casey to respond to that evidence. As I understand what had occurred, it did not immediately suggest that the motion be deferred until inquiries were made with the manufacturer. But it did propose, if not went along with, the idea that the manufacturer should express its view; which the manufacturer subsequently did. Much rode on the outcome of what the manufacturer said. In this case, the manufacturer’s view vindicated the respondent’s opposition to the motion; supported as that opposition was by the evidence of Mr Batchen and Mr Reynolds.

42. It is not now necessary for me to finally consider what I would have done if the manufacturer had given the opposite answer but, in the event that it did, and further, in the event that the application was acceded to on the basis of the manufacturer’s view, with the benefit of the parties’ determined positions, it would have been a surprise if the applicant would not have sought its costs of the motion in those circumstances. Indeed, by prayer 3 of its motion, the applicant signalled that it would have sought its costs against the respondent had it obtained the relief that it sought. It is not in a strong position now to complain about the converse costs consequences applying now that the deconstruction is not to proceed and the boot is on the other foot.

43. I have indicated that it is unnecessary to finally determine what would have occurred if the matter had proceeded. However, to some extent, it is desirable to express a preliminary view, having regard to the applicant’s submission that the manufacturer’s intercession represented a supervening event; that is, a circumstance not anticipated or contemplated by the parties, which, without either party’s fault, was apt to completely negate the utility of the motion. In my view, there is a serious question whether, if the applicant had proceeded with the application, as a matter of discretion, the Court would, or might, have rejected the application on another basis. This arises from the circumstance that, according to Ms Baskaran’s most recent affidavit, there are intimations that the plaintiff itself may wish to have the Nozzle tested. It is not apparent on the (vast) paperwork before the Court whether, in advance of filing this motion, the applicant had inquired of the plaintiff whether it wished to join the application for deconstruction and if it did, what its response was. But by reason of the issues thrown up by the pleadings, the plaintiff had an interest in the question since the defendant had raised the matter of the quality of the condition of the pump in its Defence. In modern civil litigation, it is a truism, indeed an obligation (ss 58(1)(iii) and (2) of the Civil Procedure Act 2005 (NSW)), that a Court will make procedural directions designed to limit cost and avoid delay. This is why, for example, a court might, in certain circumstances, appoint a joint expert to report on a question. It seems to me that it is at least arguable that, returning to the present context where there was evidence to be adduced indicating a risk of permanent damage to the nozzle by deconstructing it, Judge Coleman may have been persuaded to defer, or even reject the application until the plaintiff’s position - as to whether it wished to join the application – had been ascertained. This is even before the manufacturer’s view had been ascertained and regardless of whether the respondent had submitted to like effect.

44. Relevant in this regard is the manufacturer’s view that the nozzle, once deconstructed, is to all intents and purposes, thereafter useless. The direction which the applicant raised on 16 August 2022, and which the Court has rejected, regarding notice if another party sought to raise a similar application underscored the undesirability of the Nozzle being deconstructed more than once.

45. This undesirability should have been apparent to the applicant even before the hearing before Judge Coleman commenced. It certainly should have been apparent by 21 July 2022. It is not apparent whether, after the respondent had served its evidence in early May 2022, and when the applicant was thereafter on notice of the respondent’s view that there was a risk of permanent damage to the nozzle – thereby depriving the plaintiff of any future opportunity to conduct the same experiment - whether the applicant had considered the plaintiff’s potential interest when it pressed ahead with its motion before Judge Coleman on 9 May 2022. Nor is it apparent, since the manufacturer expressed its view on 21 June 2022, whether the applicant had considered the plaintiff’s interest. It is also not apparent that it considered the plaintiff’s interest once put on notice, as at 21 July 2022, that the plaintiff was contemplating his own inspection of the Nozzle. Up until 15 August 2022, objectively, the applicant appeared to wish to proceed with its application which, if it was successful, would have carried the prospect that it might have procured for itself an effective monopoly over the results of any deconstruction of the Nozzle amongst parties (existing and potentially to be added) interested in the question of the condition of that Nozzle.

46. I am mindful that I am raising matters concerning the plaintiff’s position, not raised by the respondent, which the applicant might have convincingly answered. Of course, some of the matters arose subsequently to the adjournment of the hearing on 9 May 2022. Nevertheless, the respondent was hardly in a position to know about the plaintiff’s position (nor obliged to inquire into it) and the respondent’s attitude (i.e. whether or not it consented to the application) is not determinative, at any rate, of the Court’s attitude in whether it would have granted the relief sought in the application. But, the applicant was, or should have been, aware that the plaintiff was likely to be interested in the outcome of the application because of the issues in the case. If it was the case that the plaintiff had indicated that it was not interested in the application, or did not oppose it, this might have been explained. However, there was no reference to the plaintiff’s attitude in either of Ms Baskaran’s affidavits of 9 February 2002 or 4 May 2022 and no evidence of its attitude after the respondent had served its evidence before the hearing. As indicated, the applicant did not seek time to ascertain the plaintiff’s attitude at or before the matter came before Judge Coleman.

47. Subsequent to the hearing on 9 May 2002, by the directions it sought before the Court on 16 August 2022, and by its reference to an email received from the plaintiff’s solicitors earlier on 21 July 2022, the applicant was clearly conscious of the plaintiff’s interest in the condition of the Nozzle. But there is nothing to indicate how, if at all, after 9 May 2022, it took steps to alert the plaintiff to the manufacturer’s views.

48. The matters I have raised would have cast real doubt on whether, if the application had been determined by Judge Coleman in May (on the basis of an arguable risk, supported by expert opinion, that no future testing could occur because of likely damage following the applicant’s deconstruction), or determined by myself (on the basis of the manufacturer’s view that no future testing could occur following the applicant’s deconstruction), the applicant would have succeeded in procuring for itself, and itself alone, a deconstruction in any event, given the Court’s discretion. It is not the case, therefore, in my view, that the manufacturer’s expression of opinion represented a pure intervening, or supervening event, forestalling or frustrating the applicant’s likely success on the application. On the other hand, the negative view of the manufacturer, which has since materialised, would have made it very hard for the applicant to maintain its application; which the applicant’s withdrawal of its motion appropriately recognised.

49. Distilled to its essentials, however, the applicant did not obtain the outcome it sought. It withdrew its motion in the face of evidence from, in effect, an independent third party, supporting the respondent’s opposition to the motion.

50. Subject to two potential qualifications, costs should follow that practical outcome.

51. The first potential qualification is the argument that the respondent should be disentitled through its conduct from obtaining its costs. I do not accept that submission. The respondent was entitled to oppose the application and face the potential costs consequences if it lost. This was especially so, in circumstances where, as at 19 January 2022, the applicant had telegraphed that it might bring a cross-claim against the respondent. Why should a third party, facing the prospect of being added as a party to a suit involving other parties, voluntarily submit itself to a process which might confirm, in the minds of one of the suitors, the desirability of the third party being so added unless it was clearly of the view that it had no practical option to do so? Further, it was not even the case that the applicant had served all of its evidence on the date it filed its motion (14 February 2022). Contrary to the applicant’s submission, that the respondent essentially withheld its concern about the permanent damage that might be caused by deconstruction, the fair inference is that the concern arose from Ms Baskaran’s reference to Dr Casey’s conversations to her recorded in her affidavit of 4 May 2022. The service of that affidavit prompted the respondent to promptly obtain and serve the evidence of Messrs Batchen and Reynolds, whose views were ultimately vindicated.

52. I do not find it useful or necessary to form a view as to the reasonableness of the respondent’s conduct prior to its receiving court process in February 2022. Recipients of court process may often change their position after they have been served with court process; in comparison to the statement of their position before service of such process. Obligations of the kind referred to in s 56(3) of the Civil Procedure Act 2005 (NSW) apply to persons who are “parties” to proceedings. Prior to 14 February 2022, the respondent was not a party even in the broadest sense of the word.

53. Further, it is no answer for the applicant to argue that had the respondent served its evidence earlier than it did, or had it suggested that the manufacturer’s view be ascertained earlier, these matters would have made any difference. I have touched upon this earlier in these reasons. In its outline of submissions before Judge Coleman (MFI 1), the applicant was still pressing for the order for deconstruction and reassembling of the Nozzle in the face of the respondent’s evidence. Its position, as conveyed to the Court through its written submission, was that steps could be taken to arrange the deconstruction by the manufacturer to “alleviate” the respondent’s concerns. But the manufacturer’s view, consistent with the respondent’s concern, was that no such ‘alleviation’ was possible.

54. The second prospective qualification concerned the two settlement offers exchanged on 15 August. The applicant’s offer may be put aside: it could not have been unreasonable to accept an offer whose terms included a direction which the respondent later successfully opposed.

55. In the circumstances, in my view, the appropriate exercise of the Court’s discretion is to dismiss the motion and order the applicant to pay the respondent’s costs.

56. I did not understand the respondent to submit, on the basis of the applicant’s rejection of its own without prejudice letter of 15 August 2022, that the costs of the hearing on 16 August 2022 should be payable by the applicant on an indemnity basis. But if I am wrong, I would not have been inclined to make a partial indemnity costs order. The respondent’s letter lacked all of the conventional hallmarks of a Calderbank offer; most obviously a reference to that case itself. At any rate, there was nothing to convey to the applicant, as offeree, how the sum of $18,000 represented a reasonable amount to reflect costs and disbursements.

Orders

57. The Court makes the following orders:

1. the defendant’s notice of motion dated 14 February 2022 is dismissed.

2. the defendant is to pay the costs of and occasioned to Elgas Ltd by its motion, on the ordinary basis.

58. The Court further directs that, with its consent, Elgas Ltd is to preserve the subject Nozzle until the conclusion of the substantive proceeding.

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Decision last updated: 18 August 2022