Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd

[2007] NSWSC 1120

CITATION:	Metro Chatswood Pty Limited v CRI Chatswood Pty Limited [2007] NSWSC 1120 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	4 October 2007
JUDGMENT DATE :	10 October 2007
JURISDICTION:	Equity Division Technology & Construction List
JUDGMENT OF:	Bergin J
DECISION:	The defendant is to pay eighty per cent (80%) of the plaintiff's costs of these proceedings.
CATCHWORDS:	[PROCEDURE] - [COSTS] - Whether appropriate to grant costs order against the defendant following plaintiff's discontinuance of proceedings - Whether unreasonable for defendant to withhold true position as to status of possible easements in favour of Telstra - Whether appropriate for plaintiff to file Notice to Produce in respect of same documents the subject of application for preliminary discovery - [PRACTITIONERS] - Need for care in filing 'pleadings' in urgent matters - [CLIENTS] - Duty to Court to facilitate just resolution of real issues in proceedings
LEGISLATION CITED:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
CASES CITED:	Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 Prodromos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335 Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622 Tyco Australia Pty Limited v Leighton Contractors Pty Limited (2005) 142 FCR 428
PARTIES:	Metro Chatswood Pty Limited - plaintiff CRI Chatswood Pty Limited - defendant
FILE NUMBER(S):	SC 55044/2007
COUNSEL:	J Simpkins SC/J White - plaintiff R Carruthers - defendant
SOLICITORS:	Kemp Strang - plaintiff Blake Dawson Waldron - defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

BERGIN J

10 OCTOBER 2007

55044 of 2007 METRO CHATSWOOD PTY LIMITED v CRI CHATSWOOD PTY LIMITED

JUDGMENT

1 The plaintiff, Metro Chatswood Pty Limited, commenced proceedings against the defendant, CRI Chatswood Pty Limited, by Summons filed on 14 June 2007. The plaintiff sought orders for preliminary discovery of documents in the Schedule to the Summons or alternatively an order that the defendant provide the documents in the Schedule to the Summons pursuant to its contractual obligations to the plaintiff. On 4 October 2007 I granted leave to the plaintiff to discontinue the proceedings and heard the parties’ respective applications in relation to costs. Mr J Simpkins SC leading Mr J White appeared for the plaintiff and Mr R Carruthers appeared for the defendant.

2 On 22 September 2005 the plaintiff and the defendant entered into a Retail Development Agreement (the RDA) in respect of the construction of a large commercial complex at Chatswood near the rail line. The plaintiff, referred to in the RDA as the “Retail Purchaser”, agreed to take a transfer of the “Retail Complex Lot” and to become the tenant under the “Retail Space Lease”. The plaintiff agreed to the purchase pursuant to a Contract for the Sale of Land dated 9 January 2006. Under clause 4.2 of the RDA the defendant was obliged to provide to the plaintiff as soon as reasonably practicable information “relevant” to the “Retail Base Works, the Retail Complex Lot, the Retail Space Lease Lot or any other right or obligation” of the plaintiff under the RDA (cl 4.2(b)).

3 The “information” that the plaintiff claims was relevant related to cabling conduits through foundational slabs of concrete to accommodate Telstra cables. Prior to the commencement of construction a number of Telstra cables ran across the construction site. Discussions between Telstra and the defendant had been ongoing after the plaintiff and the defendant entered into the RDA and it was decided between Telstra and the defendant that one of the larger cables, “T4”, would traverse the construction site rather than being relocated around the construction site. On 22 August 2006 at a meeting including representatives of the defendant and Telstra, the defendant’s project manager, Lee Wood, is recorded as having “confirmed that easement will be undertaken at later date”.

4 On 12 February 2007 the plaintiff wrote to the defendant requesting “full details for a proposal to divert Telstra cables within the Retail Stratum”. On 13 February 2007 the defendant provided a “Design Report” to the plaintiff which included a paragraph on Telstra Cable Routes containing information about the Telstra cables that would be “impacted by the [construction] works”. This report included the information that for the largest Telstra cable route a “combination of redirection and reinstatement across the site is required”.

5 On 28 February 2007 the plaintiff wrote to the defendant requesting once again “details for the proposed Telstra cables traversing the Retail Space”. On 19 March 2007 the defendant wrote to the plaintiff enclosing a drawing which the defendant claimed “may assist in your understanding of the route of the Telstra conduits across the site”. The defendant advised that if the plaintiff had any queries it should not hesitate to contact the defendant. In response to the provision of this drawing, the plaintiff advised the defendant by letter dated 22 March 2007 that it would not accept “the provision of any major infrastructure services traversing through the Retail Complex” and that it required such facilities to be relocated outside any real estate that the plaintiff was acquiring. On 3 April 2007 the defendant advised the plaintiff by letter that the Telstra “conducts” were currently installed in Stage 1 and were encased into the concrete structure; that the installation of the “conducts” was a “requirement” of Telstra for future cable installation; and that the defendant was complying with the Authority’s requirement.

6 On 4 April 2007 the plaintiff requested the defendant to provide all appropriate and relevant correspondence from Telstra indicating that the current specific proposed positioning of the conducts was being instigated as a “requirement of Telstra”. On 24 April 2007 the defendant wrote to the plaintiff enclosing what it said it regarded as the “relevant portions” of a contract between it and Telstra relating to the T4 relocation. The Recitals to that contract recorded that the development required the relocation of the “Network Assets” to the relocated site.

7 On 8 May 2007 the plaintiff’s solicitors wrote to the defendant advising that regardless of who instigated the “requirement”, the defendant had no right to unilaterally require installation of infrastructure or easements over the land that the plaintiff was purchasing. That letter referred to the RDA provisions that set out the circumstances in which the draft section 88B instrument, the draft sub-division plans and the Retail Base Works could be changed. This was a reference to clause 6.2 of the RDA which required the defendant to submit any amendments to the plaintiff for its approval if the amendments related to or affected the plaintiff’s rights under the RDA. The letter also included the following:

Our client is very concerned that works in relation to the Telstra conduits which have not been authorised by our client and which adversely affect the property which our client is acquiring are proceeding.
In the circumstances, we require that you confirm to us in writing by not later than 5.00 pm on 10 May 2007 that you will not take any further steps to authorise, permit, suffer or otherwise allow any further easements to be granted or any further conduits or telecommunications infrastructure which has not been expressly authorised by our client to be installed or placed on or within the property which our client is acquiring pursuant to the Retail Development Agreement (namely, the Retail Complex Lot or the Retail Space Lease Lot as defined in the Retail Development Agreement) and that within seven days of today’s date you provide to us or to our client all information within your possession, knowledge or control in relation to any Telstra conduits or any other Telstra infrastructure placed or proposed to be placed within the aforesaid Retail Complex Lot or Retail Space Lease Lot other than expressly contemplated by the Retail Base Works (as defined in the Retail Development Agreement) or in the easements noted on the draft sub-division plans or referred to in the draft section 88B instrument.

8 On 14 May 2007 the defendant’s solicitors wrote to the plaintiff’s solicitors advising that the defendant regarded the Telstra requirement for the routing of the conduits as a requirement of an “Authority Approval”. That term was defined in the RDA as any “licence, permit, consent, approval, determination, certificate or permission” from any authority and also referred to requirement made under any Law. There was at this stage of the communications between the plaintiff and the defendant a serious issue as to whether the Telstra “requirement” was firstly a requirement imposed by Telstra and secondly whether it could be characterised appropriately under the RDA as an “Authority Approval”. This letter also advised the plaintiff that the drawing that the defendant had sent it on 19 March 2007 was no longer applicable because the conduits were contained wholly within the floor slabs and stairs. The solicitors also advised that the defendant took the view that any affectation from the conduits were only minor or immaterial and did not affect the Retail Base Works, thus preventing the plaintiff from making any claim against the defendant in respect of them. The letter also advised that the defendant had not yet determined whether any amendment was to be made to the Draft Registration Documents and that if, “and only if” the defendant determined that an amendment related to or affected the plaintiff’s rights would it be in a position to submit the relevant amendment to the plaintiff. The solicitors said:

However, we note that the application of clause 6 has not yet arisen because no amendment to the Draft Registration Documents has been proposed, nor is the requirement for any amendment to those documents certain at this stage, in relation to this issue.

9 The solicitors advised that the defendant was not prepared to provide an undertaking but that it would continue to communicate with the plaintiff in accordance with the RDA.

10 This letter could hardly have allayed the plaintiff’s concerns that the property it had agreed to purchase would be adversely affected by the conduits that were being laid across the construction site. The determination of whether an amendment to the Draft Registration Documents needed to be made depended in part on whether Telstra sought or “required” an easement for the conduits and/or the future access to the conduits. Although it may not have been “certain” at that stage that such an amendment was needed, the defendant had certainly been in communication with Telstra at monthly meetings requesting it to “confirm” whether an easement would be required for the conduits through the site. Also at this time the defendant knew that its project manager, Mr Wood, had advised Telstra that “an easement” would be “undertaken at a later date”.

11 On 16 May 2007 the plaintiff’s solicitors wrote to the defendant’s solicitors claiming that “you have not advised whether Telstra will want an easement relating to the conduits or any ongoing rights of access to them”. They advised that because the defendant had failed to provide the undertaking the plaintiff would issue proceedings. Notwithstanding this letter the plaintiff’s new solicitors wrote to the defendant’s solicitors on 25 May 2007 referring back to their predecessor’s request for information in the letter of 8 May 2007. The letter of 25 May 2007 included the following:

Our client wishes to access and inspect the above information pursuant to its rights under the RDA. Our client is entitled to receive those documents pursuant to clause 4.2 of the RDA. To the extent that it becomes relevant for any subsequent proceedings, our client wishes to inspect these documents to form its own view as to the obligation upon your client to seek our client’s consent in relation to the relevant work.
Our client repeats its previous request and requires that the following specific documents be provided to our client by 4.00 pm on Wednesday 30 May 2007:
1. Any information or documents concerning:
(a) the current progress of construction or installation of ; and
(b) any proposed future construction or installation of; and
(c) any proposed use of
any cabling conduits constructed, being constructed, or which may be constructed through the Retail Complex, Retail Complex Lots or Retail Base Works on the CTI site…

12 This letter also requested all proposed easement plans and documents identifying parties benefiting and burdened by any proposed relocation of the conduits. By 29 May 2007 the plaintiff’s solicitors had not received a response from the defendant’s solicitors and once again asked them for the information by letter of that date.

13 On 30 May 2007 the defendant’s solicitors wrote to the plaintiff’s solicitors providing an analysis of why the defendant claimed the Telstra “requirement” amounted to an Authority Approval under the RDA. It confirmed that the T4 cable conduit was contained wholly within concrete and stated that it “does not enter the retail stratum freehold or leasehold lot”. That letter also included the following:

Our client is not aware of any other agreement, works or proposed easements for services provided by Telstra in relation to which an amendment to the Draft Registration Documents is proposed or required at this stage.

14 The letter responded to the plaintiff’s solicitors’ specific request in paragraph 1 of its letter of 25 May 2007 in the following terms:

1. Based upon its enquiries in the time available and as at the date of this letter, CRI is not aware of any documents or information relevant to this paragraph of your Specific Request other than as provided in this letter.

15 The defendant’s solicitors letter of 30 May 2007 also advised that the defendant was not aware of “any proposed easement, plans or documents” relevant to the matters in paragraph 1 of the plaintiff’s solicitors letter.

16 From the contents of the defendant’s solicitors’ letters it would appear that the defendant failed to instruct its solicitors that it had been discussing an easement with Telstra and was awaiting confirmation from Telstra in relation to its requirements for easements for the conduits. Throughout the period February to the end of May 2007 whilst the plaintiff and the defendant were corresponding in relation to the plaintiff’s request for information, the defendant had attended a number of meetings with Telstra. A standing item on the agenda for the meetings of 5 February 2007, 20 February 2007, 6 March 2007 and 3 April 2007 was for Telstra to “confirm if any easement/tenure is required for T4 conduits through the site”. The Minutes of the meeting of 19 June 2007 record that “Telstra easement requirements sent to CRI”. It is fairly clear therefore that some time prior to 19 June 2007 Telstra had advised the defendant of its requirements for easements through the site.

17 On 13 June 2007 the plaintiff’s solicitors advised the defendant’s solicitors that as the defendant had failed to provide the requested information they had been instructed to commence proceedings for preliminary discovery. On 14 June 2007 the defendant’s solicitors wrote to the plaintiff’s solicitors in terms that included the following:

CRI has informed Metro on a number of occasions, most recently in our letter dated 30 May 2007, that CRI will continue to communicate with Metro in accordance with the requirements of the Retail Development Agreement (RDA). Our letter of 30 May requested that you let us know should Metro request any further information in relation to matters the subject of our letter.
Your letter dated 13 June 2007 notes your instructions to commence proceedings for preliminary discovery, presumably without making further and reasonable enquiries. Should those proceedings be commenced our client will tender this letter in support of an application that Metro pay CRI’s costs of the application.

18 The plaintiff’s Technology & Construction List Statement was filed on 14 June 2007 and identified the Nature of the Dispute between the parties as an application for preliminary discovery or alternatively for mandatory production of documents that related to the installation of conduits and associated telecommunications cabling “including but not limited to documents relating to any easements that may be created”. That List Statement claimed that in February 2007 the plaintiff became aware that twelve conduits were proposed to be built in an east-west direction through that portion of the land that the plaintiff had agreed to purchase. The correspondence to which I have referred above was then referred to and it was claimed that in breach of the RDA the defendant had failed to provide “any information concerning any rights (including easements) which may be created in respect of the conduits”. The plaintiff also claimed an entitlement to preliminary discovery to decide whether or not to commence proceedings against the defendant in respect of any actual or proposed future use of the conduits or the grant or proposed grants of rights in respect of the conduits. It claimed that the defendant may have, or have had, documents or things that could assist the plaintiff in determining whether or not the plaintiff was entitled to make a claim for relief against the defendant.

19 On 26 June 2007 the plaintiff’s solicitors wrote to the defendant’s solicitors disagreeing with the contention in the defendant’s solicitors’ letter of 14 June 2007 that the plaintiff had failed to make further and reasonable enquiries and advising that the plaintiff was prepared to finalise the proceedings if the defendant consented to the provision of the documents requested. On 2 July 2007 the defendant’s solicitors responded in terms including the following:

Our client is willing to consider a compromise. Indeed, prior to this action being commenced and in an effort to avoid it, our client invited you to let us know what further information your client requested beyond that provided in our letter dated 28 May 2007 in relation to Telstra conduits or other services relevant to the Retail-Base Works, the Retail Complex Lot and the Retail Space Lease Lot. Without responding to that invitation your client commenced these proceedings. Your client’s conduct in that regard will be relevant to the question of costs.

20 On 11 July 2007 plaintiff’s solicitors wrote to the defendant’s solicitors enclosing five colour photographs of the construction site taken on 7 July 2007 showing conduits, the subject of the plaintiff’ application, laid across the site. The plaintiff’s solicitors advised that they were instructed that work to lay the conduits had been continuing. That letter included the following:

In your letter of 30 May 2007, you advised that the routes of any conduits on the eastern side of the CTI site were “not yet determined and relevant drawings will be supplied once the route is finalised”. Our client has relied upon this statement when determining the nature of the proceedings it has commenced to date. Clearly the route is known to your client and it has failed to provide the said drawings or other sufficient information in relation to the route of the conduits to enable our client to properly consider its position.

21 That letter went on to request from the defendant a written undertaking to cease work relating to the laying of the conduits until the proceedings could be determined.

22 The defendant filed a Technology & Construction List Response on 12 July 2007. It agreed with the general description of the Nature of the Dispute that had been given by the plaintiff in its List Statement. The defendant denied that it had failed to provide any information concerning any rights (including easements which may be created in respect of the conduits). It also denied that it had any document or thing that might assist in respect of any actual or proposed future use of the conduits or the grant or proposed grant of rights in respect thereof. That List Response was filed almost a month after Telstra had advised the defendant of its requirements.

23 The matter came before the Court on 13 July 2007 for directions. On that occasion both parties were represented and the plaintiff’s solicitors wrote to the defendant’s solicitors after the Court appearance that day in terms that included the following:

First, we note that your client’s counsel advised the Court that the concrete slab in which the conduits are located was being poured “as we speak”. This is so notwithstanding our letter to your firm dated 11 July 2007 to which we received no response. It is extraordinary that your client would permit this to happen in the face of the clear statement it gave in your letter dated 30 May 2007 that the route of the conduits was not yet determined, and that the relevant drawings would be supplied once the route was finalised. Clearly, that route was finalised before the conduits themselves could be laid.
Our client can only draw the conclusion that your client intends to continue to take its own course without regard to our client’s contractual rights nor even to express statements intended to persuade our client not to commence the current proceedings.
Your counsel further stated that there is “no suggestion” that any cables will be laid within the conduits at present. Your counsel did not elucidate the basis upon which he made that statement but we presume that it was on express instructions.
Our client requires your client to provide it with an undertaking that no cables or any other item (however such may be technically described) will be laid within the conduits nor any proprietary rights such as easements or licences (or any similar interest) created, without first providing our client with 7 days’ notice in writing.

24 In a further letter of 13 July 2007 the plaintiff’s solicitors noted that at the directions hearing that morning the defendant’s counsel had submitted that if the defendant was provided with two weeks in which to file and serve its evidence, many of the documents that the plaintiff was seeking would be provided “consensually” before the hearing date. The plaintiff’s solicitors suggested that if such attitude had been taken previously the litigation would not have been necessary. They then invited the defendant to immediately provide all of the documentation requested in the originating process as there did not seem to be any reasonable basis for the defendant to continue to refuse to provide the requested information.

25 On 17 July 2007 the plaintiff served a Notice to Produce on the defendant requiring the production of:

All documents which fall within the categories of documents required for production pursuant to the Summons filed in the proceedings.

26 On 23 July 2007 the defendant’s solicitors advised the plaintiff’s solicitors that they were of the opinion that the Notice to Produce was an abuse of process in that it sought production of documents which replicated the final relief sought in the proceedings. In support of this claim the defendant’s solicitors referred to the decision in Tyco Australia Pty Limited v Leighton Contractors Pty Limited (2005) 142 FCR 428. On 23 July 2007 the plaintiff’s solicitor advised the defendant’s solicitors that the Notice to Produce had been issued for the following two reasons:

1. to verify the existence of the documents that the Plaintiff has requested for several months prior to and since the commencement of the above proceedings; and
2. given the conduct of your client prior to and since the commencement of proceedings our client may form the view that urgent interlocutory relief should be sought. Any delay by your client in producing documents if our client’s application is successful may be prejudicial.

27 By this time the hearing date had been set for 2 August 2007 and it was suggested by the plaintiff’s solicitors that the defendant should make any application in respect of the Notice to Produce on that day. The defendant subsequently filed a Notice of Motion returnable on 27 July 2007 seeking to set aside the Notice to Produce. Further correspondence ensued with each side putting their points of view in relation to the validity of the Notice to Produce.

28 By letter dated 26 July 2007, without admission, the defendant provided to the plaintiff a rather large volume of material and information. That letter referred to the history in relation to the routing of the T4 conduits and continued:

… the route of the T4 conduits and the T4A conduits have been the subject of consideration and revision until, most recently, 4 June 2007. In this period, many versions of design drawings have been issued showing various amendments and additional design details in respect of the T4 conduits and the T4A conduits.
We enclose drawings and a schedule of these drawings which notes the dates upon which that version of the drawings was issued. It can be seen that these drawings and the T4 and T4A conduits design details shown in the drawings have gone through many amendments and additions.
We note in particular, that drawings AR-700 224 (version 12) and AR-700 226 (version 7) (concrete set out plans) were issued for construction on 4 June 2007 with the route of the T4A con dudes amended.
…
We note that the original location of the T4 conduits, if not relocated at all, would have run through the length of the Retail Complex Lot in the Retail Space Lease Lot (the Retail Lots) along and East West axis. In consequence of the relocation, the T4 conduits are not located within the Retail Lots at all and the T4A conduits generally follow the same route of the pre-existing T4 conduits, but run underneath the Retail Lots (rather than through the middle of this space) at the eastern end and only enter the Retail Lots where they run through the suspended slab under the public stairs.

29 The letter then referred to the Minutes of the Telstra meetings that were enclosed with the letter and advised that they recorded the following:

(a) that Telstra’s consultant Colin Dove asked for the first time on 4 July 2006 whether an easement would be granted in respect of T4A conduits;
(b) on 22 August 2006 CRIC stated that an easement would be dealt with later; and
(c) on 19 June 2007 minutes note for the first time that Telstra’s easement requirements had been sent to CRIC.

30 That letter then referred to and enclosed correspondence between the defendant and the Contractor’s representative (the Builder) between 28 May 2007 and 30 June 2007. In its letter of 28 May 2007 the defendant asked the Builder whether Telstra had made any specific request to use the conduits at that stage and whether Telstra had advised of any proposed easements or access rights required. On 15 June 2007 the Builder advised that:

Telstra were requested since February 2007 (refer to Telstra meeting minutes attached) to advise any requirements for easements in relation to the T4 conduits through the CTI-site. Telstra has now responded with confirmation that an easement is required to be created for the T4 conduit route.

31 From that letter it is clear that Telstra had provided its requirements for an easement prior to 15 June 2007, however from the documents attached it is not clear what actual date it was provided. The defendant responded to the Builder by e-mail on 25 June 2007 in the following terms:

Please find marked-up draft easement attached for discussion.
As discussed this is not our formal response at this stage as I have not run it by other parties-so this is without prejudice to conditions which may be imposed by other parties (ie. the eventual land owners).
It is also subject to further advice from our lawyers.
The attached would however be a better starting point if it is generally to your satisfaction.
Please call to discuss.

32 Although this e-mail was written by Mr Coffey as development manager of CRI Australia Pty Ltd, the chain of correspondence clearly included the defendant. It is obvious that the defendant had Telstra’s easement requirements the day after it received the plaintiff’s Summons and List Statement. At the very same time that Mr Coffey was amending the draft easement and entering into discussions with Telstra via the Builder, advising it that it had not yet sought the eventual land owners’ (the plaintiff’s) views, its solicitors were resisting the production of any documents or information about easements and filed the defendant’s List Response in which the defendant denied that it had in its possession a document or thing that would assist the plaintiff in determining whether it was entitled to make a claim for relief in respect of any actual proposed future use of the conduits or the grant or propose grant of rights in respect of the conduits.

33 The letter of 26 July 2007, enclosing this information and correspondence, and with reference to the draft easement that Mr Coffey was discussing with Telstra, concluded as follows:

Please seek instructions from Metro and respond. It is CRIC’s position, having regard to the information provided with this letter, that pursuing these proceedings any further is unnecessary.

34 Once the plaintiff received the information and further documentation under cover of the defendant’s solicitors’ letter of 26 July 2007 it saw no utility in proceeding with the application as the material had been provided to it.

35 Part 42 r 19 of the Uniform Civil Procedure Rules 2005 (the Rules) provides that unless otherwise ordered, the plaintiff must pay such of the defendant’s costs as at the date on which the Notice of Discontinuance is filed, that had been incurred in relation to each claim in respect of which the proceedings are discontinued. The plaintiff contends that the Court should order otherwise in this instance and require the defendant to pay the plaintiff’s costs of the proceedings. Part 42 r 19 does not give rise to a presumption that costs will be ordered against the discontinuing party, however it places the onus on the discontinuing party to make an application in respect of costs if it does not intend to pay the costs of the party against whom it is discontinuing: Prodromos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335 per Beazley JA, with whom Giles and Ipp JJA agreed, at [65]. Where proceedings are concluded without a trial on the merits it is inappropriate for a Court then to endeavour for itself to determine the case on the merits: Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 at 201. However it may be appropriate to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them: ASIC v Aust-Home at 201. The much cited passage from McHugh J’s judgment in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622 at 624-625 was relied upon by both parties. His Honour noted that in some cases the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should have obtained the costs of the action.

36 In the present case the plaintiff submitted that the defendant’s actions were unreasonable and that it achieved total success in obtaining the documents after it commenced the proceedings and only as a result of commencing the proceedings. It submitted that the provision of the documents to the plaintiff on 26 July 2007, just prior to the hearing date, was an intervening event in which the defendant capitulated, thus rendering the proceedings of no utility.

37 It was submitted that the production of the substantial collection of material and information shortly before the hearing was in stark contrast to the very limited production made on 30 May 2007 and that although the defendant’s solicitors advised that relevant drawings would be supplied once the route of the conduits was finalised, such was not provided. In this regard reliance was placed on what counsel for the defendant said in open Court on 13 July 2007 about the concrete slab being poured “as we speak”. In any event the drawings that were issued dated 4 June 2007 were labelled “for construction”. This was prior to the proceedings being commenced and could have been provided to the plaintiff with an explanation of the route the conduits were to take. Additionally the Minutes of the meetings with Telstra indicate clearly that the defendant had on numerous occasions attended meetings throughout the period of the correspondence between the parties at which confirmation from Telstra was sought in relation to any proposed easements.

38 It is quite clear that prior to the defendant filing and serving its Technology & Construction List Response, it was aware of Telstra’s requirements and it had information relevant to the plaintiff’s property rights and/or rights under the RDA. The defendant knew that the conduits were entering the retail area at a particular point and it also knew that Telstra would require easements in respect of those conduits. Those facts were relevant information in respect of the plaintiff’s legal or equitable interest in the land and were relevant for consideration by the plaintiff in deciding whether to seek an injunction against the defendant and/or Telstra in respect of the laying of the conduits through the land that it was acquiring.

39 The defendant seeks an order that the plaintiff pay its costs of the proceedings, including the costs and expenses of locating and providing documents. It also seeks an order that the plaintiff pay the defendant’s costs of its Notice of Motion to set aside the Notice to Produce on an indemnity basis. Alternatively the plaintiff seeks an order that each party pay their own costs of the proceedings; the plaintiff pay the defendant’s costs of its Notice of Motion to set aside its Notice to Produce on an indemnity basis; and that the plaintiff pay the defendant’s costs and expenses of locating and providing documents to it.

40 The defendants submitted that the plaintiff’s conduct was manifestly unreasonable because the defendant had offered to continue communicating with the plaintiff pursuant to the RDA. It is true that the defendant did make such an offer, however I am of the view that having regard to what it knew and did not tell the plaintiff, it was hollow offer. It appears to me that the solicitors for the defendant were not properly instructed about what the defendant knew or what information it had in respect of the easements possibly affecting the land the plaintiff had agreed to purchase. That conclusion is drawn from the terms of the List Response that was filed. As at the date of the filing of that List Response the defendant had Telstra’s draft easement and was going through the process of settling the draft in a manner that recognized the plaintiff’s right to be included in the discussions about the draft. To then claim in the List Response, by denial, that it did not have in its possession any information that would assist the plaintiff in determining whether or not it was entitled to make a claim for relief in respect of the actual or proposed future use of the conduits, or the grant or proposed grant of rights in respect thereof, is extraordinary. It seems to me that it can only be explained on the basis that the solicitors were not aware of these documents. I understand that this case was brought on very urgently and involved a large volume of material, however, this demonstrates the enormous care that practitioners need to take when filing ‘pleadings’ in this List. Clients must be made aware of the fact that they too owe a duty to the Court to assist in the facilitation of the just resolution of the real issues between the parties: s 56 Civil Procedure Act 2005. The denial that it had possession of such material created an issue that was not real.

41 When I raised this matter with Mr Carruthers in final submissions he suggested that one explanation of the denial may have been that the defendant believed that the plaintiff did not have any proper claim against it. That is not the point. This was an application for preliminary discovery and it is obvious that the defendant had in its possession, information and documentation relating to the very issue of the grant of easement over the land that it had agreed to purchase, some of it well prior to the commencement of the proceedings (such as the Telstra Minutes and the construction drawings of 4 June 2007), and some of it clearly of significant relevance (the draft easement) well prior to the filing of its List Response.

42 The defendant also submitted that the issuing of the Notice to Produce was the clearest case of an abuse of process and that the costs of the Notice of Motion should be awarded in its favour on an indemnity basis.

43 In Tyco Australia Hill J, at 437, said that it would clearly be an abuse of process for an applicant for pre-action discovery to issue a notice to produce the very documents sought by the applicant for pre-action discovery. His Honour also said at 438:

[36] It is obvious that the issues that will arise in an application for pre-action discovery are and indeed should be, very limited. However, it is not true that those issues cannot involve a factual dispute.

44 His Honour also said at 440:

[46] … I am of the view that there is power to issue, in an appropriate case, a notice to produce in pre-action discovery proceedings. Whether the notice should be confined clearly depends upon the issues that are said to arise and in respect of which the production of documents is sought. An applicant that seeks to use a notice to produce, in effect, to gain production of the very documents which are the subject of the pre-action discovery will not have given the notice to produce in good faith, but rather, would have acted in a way that is an abuse of process. Otherwise, in principle at least, the notice to produce procedure may be exercised by both parties if otherwise relevant to issues in dispute.

45 In the same case Hely J said at 442:

[54] … There is no reason why the ordinary interlocutory procedures should not be available to assist in the resolution of those contestable issues of fact, subject to the overriding consideration that the invocation of those procedures does not amount to an abuse of process of the court … Thus, at least prima facie, it would be an abuse of process for an applicant for preliminary discovery to seek to compel the production of documents by notice to produce, when the production of those documents is sought under [the Rules].

46 The plaintiff submitted that the determination of the costs of the defendant’s Notice of Motion to set aside the Notice to Produce should be determined as part of the costs of the whole proceedings. Once the plaintiff received the documentation it agreed to the setting aside of the Notice to Produce. However it was argued that the Notice to Produce was appropriate in circumstances where there were issues of fact on the pleadings. Mr Simpkins submitted that the Notice to Produce was an appropriate method to bring before the Court documents that the defendant held which it denied it held in its List Response. It was submitted that the parties joined issue as to whether the defendant had the relevant documents and the appropriate interlocutory mechanism for obtaining the documents was utilised.

47 It may have been arguable that the plaintiff was entitled to issue a Notice to Produce in respect of the disputed fact that the defendant did not hold any documents in relation to easements, for instance. However that is not what the plaintiff sought. The breadth of the Notice to Produce was, in my view, inappropriate and although not embarking on a hypothetical interlocutory hearing, it would seem to me that the plaintiff’s position in respect of its Notice to Produce was not strong. But for the inappropriate breadth of the Notice there may have been a reasonable argument that the Notice was permissible. It seems to me that the defendant should have some costs in relation to the Notice to Produce but this needs to be balanced against the false issue that was set up in the List Response. However those costs should not be awarded on an indemnity basis.

48 There is the additional order sought by the defendant for the costs of collecting, collating and forwarding the documents to the plaintiff in July 2007 after the proceedings had been commenced and before the hearing of the matter. I am not satisfied that it is appropriate in this instance, having regard to the parties’ contractual relationship, to make an order that the plaintiff pay the defendant’s costs of that process in these proceedings.

49 I am of the view that the defendant did act unreasonably in failing to inform the plaintiff of the route of the conduits in an open and clear manner. It knew that the plaintiff was the purchaser of the land and that it, the defendant, was about to authorise entry into that land with possible consequential adjustments to property rights of the plaintiff by the necessity to grant an easement to Telstra, without properly notifying the plaintiff of this matter. Mr Carruthers submitted that the defendant did not really know with certainty that the easements would be sought until some time just prior to 19 June 2007. Even then the defendant did not notify the plaintiff of that position. I regard the defendant’s conduct in the proceedings as unreasonable in this regard.

50 I regard the plaintiff’s conduct in commencing proceedings as reasonable and in fact necessary to obtain the relevant information. Indeed the plaintiff provided a number of opportunities to the defendant to provide the relevant information and withheld commencing proceedings until 14 June 2007. As I said to Mr Carruthers in the course of his submissions, the defendant could have indicated to the plaintiff that it had sought confirmation from Telstra as to whether it would seek easements in respect of the conduits. Rather the defendant instructed its solicitors to inform the plaintiff that it was not aware of any “proposed easements”. In the circumstances I am satisfied that the defendant’s conduct was unreasonable. I am satisfied that the defendant’s provision of the information and material virtually on the eve of the trial was an intervening event and a capitulation rendering the proceedings of no utility and that the plaintiff is entitled to an order for costs.

51 In doing the best I can to ensure that the dictates of justice are served and the order for the payment of costs is fair to the parties, I am of the view that the costs of the defendant’s Notice of Motion to set aside the Notice to Produce should be paid by the plaintiff. However it seems to me that the percentage of those costs is small compared to the costs that were incurred by the plaintiff between February 2007 and 17 July 2007 when the Notice to Produce was issued. I am satisfied that it is appropriate to assess the amount of costs on a percentage basis. I order that the defendant pay eighty per cent (80%) of the plaintiff’s costs of these proceedings.

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01/11/2007 - Typographical error - Paragraph(s) 47