Multiplex Constructions P/L v HSH Hotels (Aust) Ltd as trustee of the SHR Kent Street Trust and Stamford Property Services Pty Limited

[2001] NSWSC 864

CITATION:	Multiplex Constructions P/L v HSH Hotels (Aust) Ltd as trustee of the SHR Kent Street Trust & Stamford Property Services Pty Limited [2001] NSWSC 864
CURRENT JURISDICTION:	Equity Division Construction List
FILE NUMBER(S):	SC 55002/2000
HEARING DATE(S):	21 and 28 September 2001
JUDGMENT DATE:	3 October 2001
PARTIES :	Multiplex Constructions P/L (Plaintiff) HSH Hotels (Aust) Ltd as Trustee of the SHR Kent Street Trust & Stamford Property Services Pty Ltd (Defendant)
JUDGMENT OF:	Bergin J

COUNSEL :	D Miller (Plaintiff) A Sullivan QC (Defendant)
SOLICITORS:	Minter Ellison (Plaintiff) Griffins (Defendant)
CATCHWORDS:	[SUBPOENAS] - [INDEMNITY COSTS] - Application for indemnity costs incurred in, and incidental to issuing subpoenas alleged to be necessary because of unreasonable and improper conduct by plaintiff.
LEGISLATION CITED:	Supreme Court Act 1970 (NSW) Supreme Court Rules - Part 52A.4
CASES CITED:	Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd (1984) 1 NSWLR 710 Waind v Hill and National Employers Mutual General Association Ltd (1978) 1 NSWLR 372 Wentworth v Rogers [1999] NSWCA 403 [Challenging Subpoenas Duces Tecum: Is there a third party view? P.M. Wood. Sydney Law Review (1984) Vol. 10. No.2 p.379] [Laws of Australia - Vol. 5 Section 5.7]
DECISION:	Motion dismissed.

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

BERGIN J

3 OCTOBER 2001

55022/00 – MULTIPEX CONSTRUCTIONS P/L v HSH HOTELS (AUST) LTD AS TRUSTEE OF THE SHR KENT STREET TRUST & STAMFORD PROPERTY SERVICES PTY LIMITED

JUDGMENT

1 This is an application on Notice of Motion brought by the first defendant (HSH) in which it seeks orders (1) that the plaintiff (Multiplex) pay its costs of and incidental to the issuing of certain subpoenas (2) that Multiplex pay the legal costs and other charges on an indemnity basis which in the ordinary course it has been required to meet in issuing the subpoenas and (3) that Multiplex pay the costs of the Motion.

2 The main proceedings are brought by Multiplex against HSH and the second defendant, Stamford Property Services Pty Ltd (Stamford) in which Multiplex, as builder, is suing HSH as Principal, and Stamford as contract administrator, in relation to a contract for the design and construction of certain works at Stamford Plaza Sydney and Stamford on Kent (the Project).

3 On 13 June 2001 and 22 June 2001,Mr Gregory Phillip King, of Griffins Lawyers, solicitor for HSH and Stamford, caused a standard form letter to be forwarded to certain of the sub-contractors and consultants who were engaged by Multiplex to perform work on the Project. It is not clear how many letters were sent out on 13 June and how many were sent out on 22 June, nor is there any evidence as to why the letters were sent out on the separate dates. However all the letters relevant to this Notice of Motion were sent out on 13 June 2001 (GPK 1). After referring to the proceedings, the nature of the dispute and the fact that the recipient had been subcontracted on the Project by Multiplex, the letter continued:

We wish to inspect your files and any other documents, correspondence, memoranda, reports, log books notebooks and diaries which you have in relation to this project, as these will be relevant to the issues in dispute between our client and Multiplex.
We would be obliged if you would contact the writer on (telephone no supplied) to arrange a mutually convenient time to inspect your files.
If you are not willing to allow us to inspect your files, or we have not received a reply within 7 days, it will be necessary for us to issue a subpoena requiring you to produce the files to the Court. We would, of course, prefer to avoid this if possible.

4 On 19 June 2001 Multiplex forwarded a letter to “all Stamford Subcontractors and Consultants”. Multiplex advised that it had become aware that the recipient had received the letter from Griffins and continued:

We would ask that you ignore this request and do not respond . There is no obligation on you to comply with Griffins request.
Please wait until you receive a subpoena. This would assist both you and Multiplex as:
1 Griffins must pay your reasonable cost to comply with the subpoena.
2 if the subpoena is too wide and it would be onerous for you to comply, the Court can be asked to intervene; and
3 our lawyers, Minter Ellison can review the documents before you send them to the Court to make sure that you have only provided the documents that you need to provide in order to satisfy your obligations to the Court.
If you have received a letter from Griffins and you have not already notified ourselves or Minter Ellison, would you please do so.
Once you’ve received your subpoena, would you please contact either (names and telephone numbers provided) at Minter Ellison.

5 Four of the subcontractors responded to Griffins and made arrangements either directly or through their own solicitors for Griffins to inspect their documents. Griffins issued subpoenas to twelve entities, nine of which were served on 17 July 2001 and the other three of which were served on 19 July 2001, 26 July 2001 and 1 August 2001. All the subpoenas sought the following:

All original documents (or if there are none, any photocopies) of all files (including but not limited to memoranda, correspondence, file notes, diaries, programs, minutes, emails, instructions, drawings and assessments (whether in hard or electronic form, in your possession relating to:
(a) your engagement in the project, including copies of any contract of engagement;
6 The subpoenas then requested documents relevant to the particular sub-contractor, for example, the supply and installation of carpet, carpentry work, supply and installation of glazing and the like.


7 On 17 July 2001 Minter Ellison wrote to Griffins apparently requesting the identity of the recipients of subpoenas issued by Griffins. Griffins responded on 19 July 2001 identifying seventeen entities upon which subpoenas had been served. HSH only seeks costs in relation to twelve of the subpoenas.

8 One of the recipients of a subpoena was the subcontractor, Optipark Australia Pty Ltd (Optipark) which provided goods and services in relation to the Mechanical Car Parking System in part of the Project. It was served with a subpoena on 17 July 2001. Multiplex wrote to Optipark on 20 July 2001 and advised it that Multiplex had been informed that Optipark had been served with a subpoena in relation to the matter. The letter continued:

In complying with a subpoena, we understand from our solicitors that the following may be relevant:
1 You are entitled to your reasonable costs of complying with the subpoena. To this end, you may wish to estimate the costs that you are likely to incur in complying with the subpoena, and send this amount, with a short breakdown of how this estimate was arrived at, to Griffins Lawyers so that arrangements can be made by them for the payment of these costs.
2 If the volume of documents subpoenaed is so large as to make it impossible to compile and send these documents to the court within the time specified, it is possible for the return date of the subpoena to be stood over by agreement between the parties or on application by yourself. To this end, you may contact Griffins in an attempt to nominate a date by which you are comfortably able to comply with the subpoena.
3 In compiling the documents requested, issues of confidentiality and privilege may arise. Generally, documents which are confidential and privilege may not need to be produced. In this regard, the following documents will be privileged:
(a) documents created for the dominant purpose of litigation, such as communications between yourselves and Minter Ellison or other legal consultants, or drafts of statements created for use in the litigation; and
(b) documents created for the purpose of any settlement negotiations.
4 In addition, you may simply not have any documents on a particular issue because you were not involved in that issue. Further, the subpoena may in itself be vague so that you are not able to identify with any reasonable particularity the documents required.
In deciding how best to comply with the subpoena, it would be prudent for you to seek legal advice on this. Generally, you may apply for the costs of seeking such legal advice to be paid by HSH Hotels. Should you need a recommendation on a legal consultant in this regard, we suggest that you may wish to contact either (legal advisers named).


9 The letter concluded with a request that Optipark forward to Multiplex or a named solicitor at Minter Ellison, at Multiplex’ cost, a copy of all the documents Optipark intended to produce.

10 Griffins’ file in relation to the subpoenas was tendered, without objection. That file (Ex 1) contains correspondence with and file notes of the solicitors’ telephone conversations with the recipients of the subpoenas. Mr King had a discussion with an employee of Stone-Tech Holdings Pty Ltd on 17 July 2001. That employee asked Mr King what documents were needed “in compliance with the subpoena”. Mr King informed the employee “everything relating to the project”.

11 On 19 July 2001 Gye Associates, solicitors for John R Keith Pty Limited, which had been served with a subpoena on 17 July 2001 wrote to Griffins advising that the “subpoena appears to be extremely wide and is akin to a form of discovery” and that “conduct money tendered by you in the amount of $20 is unreasonable and fails to meet our client’s projected costs of complying with the subpoena”. Gye Associates then suggested a regime in which John R Keith Pty Ltd would be excused from compliance with the subpoena and Griffins would attend the subcontractor’s premises to inspect the documents on the provision of a written undertaking to pay the subcontractor’s reasonable expenses.

12 HSH did not agree with the proposed regime and further correspondence ensued between Griffins and Gye Associates. Gye Associates advised that John R Keith had approximately 10,000 documents “which may possibly fall within the scope of the subpoena” which needed to be reviewed for the purpose of assessment of whether they were to be the subject of a privilege claim. A further timetable was proposed. It is apparent that agreement was reached in respect of some parts of the proposal.

13 Another subcontractor served with a subpoena, Kone Elevators Pty Ltd, advised Griffins that despite its best efforts, the documents were not in one central place, and it could not comply within the time frame. It requested a further 4 weeks to comply with the subpoena. Other similar requests were made by other subcontractors, including Roles Electrical Pty Ltd, which was in the process of copying 7,000 pages of records to comply with the subpoena.

14 It is also apparent that Griffins wrote to Stone-Tech (Holdings) Pty Ltd and that such letter was given to Minter Ellison who wrote to Griffins referring to a portion of the letter in which Griffins had advised Stone-Tech “if you would like a member of this firm to attend at your offices to assist you in the identification process please do not hesitate to contact the writer” . Minter Ellison suggested that Griffins appeared, at the very least, to be contemplating providing legal advice to Stone-tech as to which documents it should produce pursuant to the subpoena. Minter Ellison advised Griffins that they had consulted with the Law Society in relation to the letter and that the Law Society had expressed the view that the “course of action” which Griffins had proposed to Stone-tech was “inappropriate”. Minter Ellison requested written confirmation from Griffins that it would refrain from engaging in the proposed course of action with all and any of the subpoenaed parties.

15 HSH filed the Notice of Motion on 14 September 2001 which was returnable before me on 21 September 2001 when Mr A Sullivan QC appeared for HSH and Mr D Miller of counsel appeared for Multiplex. Consequent upon the production of Griffins’ file in response to a Notice to Produce the matter was adjourned, by consent, for further argument on 28 September 2001 after which I reserved my judgment.

HSH Submissions
16 Mr Sullivan QC relied upon s 76 of the Supreme Court Act 1970 (NSW) which provides:

76 (1) Subject to this Act and the rules, and subject to any other Act -
(a) costs shall be in the discretion of the Court;
(b) the Court shall have full power to determine by whom
and to what extent costs are to be paid; and
(c) the Court may order costs to be assessed on the basis
set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis.
(2) In subsection (1) the expression “costs” includes -
(a) costs of or incidental to proceedings in the Court,
including the administration of estates and trusts;
……..


17 It is submitted that the breadth of the discretion is wide enough to make the orders sought in the Notice of Motion on the basis that Multiplex’ conduct was not only highly unusual, but unreasonable and improper. Mr Sullivan submitted that HSH was forced to incur the costs of issuing the subpoenas to each of the subcontractors who did not allow access to their records in response to Mr King’s June 2001 letter.

18 It was submitted that a subpoena for production is the proper procedure to obtain documents from a stranger who is not willing to produce the documents willingly: Laws of Australia Vol. 5 Section 5.7 par.36. It was submitted that there are sound policy reasons for not resorting to the process of issuing subpoenas. These included the avoidance of the burden that is placed on scarce judicial resources by such processes, the avoidance of the costs that are incurred in the process and the avoidance of the serious consequences of non-compliance, for instance a finding of contempt. It was submitted that this latter matter highlighted that it was in all parties’ interests to proceed in a voluntary mode of providing access to the documents sought.

19 It was also submitted that as the subcontractors were in a commercial relationship with Multiplex the correspondence placed pressure on them to accede to Multiplex’ request to “ignore” the request for voluntary access and thus force HSH to issue the subpoenas. Properly understood it is a submission that Multiplex interfered unreasonably and improperly with the litigious process which caused HSH to incur costs that it would not otherwise have incurred. It is on that basis that HSH submitted that Mutiplex should pay its costs on an indemnity basis of and incidental to issuing the subpoenas.

20 Absent a claim of privilege an opposing party has no right to object to the Court making documents produced on subpoena available for inspection : Waindv Hilland National Mutual General Association Ltd (1978) 1 NSWLR 373; see also Challenging Subpoenas Duces Tecum: Is there a third party view? P.M.Wood The Sydney Law Review (1984) Vol. 10 No. 2 p.379 at 382; Southern Pacific HotelServices Inc v Southern Pacific Hotel Corporation Ltd (1984) 1 NSWLR 710. It was submitted that Multiplex was seeking to achieve what it was not otherwise able to achieve as a party to the litigation. It was seeking to object to or prevent the production of documents by third parties by the writing of the letters to the subcontractors in the atmosphere in which it was able to bring inappropriate pressure to bear on those subcontractors.

Multiplex submissions
21 Mr Miller submitted that there is no basis in law or fact to support the granting of the orders sought. He submitted that there is nothing in the evidence to suggest that any recipient of Mr King’s letter did not comply with the request by reason of any conduct by Multiplex. There were responses and co-operation from four of the recipients prior to subpoenas being issued to the other subcontractors. It was submitted that the costs that were incurred by HSH were incurred by the oppressive and inappropriate terms of the subpoenas evidenced by complaints from the recipients and their lawyers.

22 Mr Miller submitted that what Multiplex did was not unreasonable or improper. It was in the interests of Multiplex as a party to the litigation to see that there was orderly production of documents in circumstances where its rights were relevantly affected. Indeed from the terms of some of the letters sent by Griffins in which it was suggested it purported to be contemplating giving advice to the recipients as to what documents should be produced, it is submitted that the Multiplex conduct was justified.

Consideration
23 The powers and discretions of the Court under s 76 of the Supreme Court Act 1970 (NSW) are to be exercised subject to and in accordance with Part 52A of the Supreme Court Rules 1970 : (Part 52A.4). I am satisfied that if the evidence established that a party to litigation improperly interfered with the procedures of the Court, either at trial or pre-trial, so that costs were unnecessarily incurred by another party, there is power to order that party to pay costs thrown away or incurred by that conduct. I am also satisfied that the breadth of the powers and discretions is such that if a party were forced to resort to compelling a stranger to produce documents by the issuing of a subpoena when, but for the conduct of the intervening party, resorting to such process would not have been necessary, the Court has power to order the intervener to pay the costs unnecessarily incurred. The Court has power to order indemnity costs against a party who causes unreasonable delay and expense: Wentworth v Rogers [1999] NSWCA 403 at [85].

24 Griffins gave the subcontractor recipients of Mr King’s letter 7 days to respond, otherwise, as advised, they intended to issue a subpoena. The Multiplex letter requesting the subcontractor to “ignore” Griffins’ request was dated 6 days after the first batch of letters were sent out by Mr King on 13 June 2001. The subpoenas were not issued until the middle July 2001. It is apparent that any subcontractor who wished to respond, either to accede to Griffins request or advise that a subpoena should be issued, had ample time to do so prior to the issuing of the subpoenas.

25 There is no direct evidence that any of the recipients of the Multiplex letter of 19 June 2001 ignored Griffins request because they were asked to so by Multiplex. I am asked to draw the inference that the reason that there were no responses from the other recipients of Griffins letter is the request by Multiplex. In considering whether I should draw such inference I have taken into account the fact that the time limit within which to respond to the letter had but 24 hours remaining at the time the Multiplex letter was written. There is no evidence of when the recipients received the Mutiplex letter, however there is evidence of a telephone conversation between an officer of Kone, Mr Warren Jackson, and Mr King on 25 June 2001 (Ex 1 & par 4 of Mr King’s affidavit) from the terms of which I conclude that Kone had received it by that date.

26 I have also taken into account the terms of Griffins letter. It was a letter seeking a very broad range of documents in files, and any other documents, correspondence, memoranda, reports, log books, note books and diaries in relation to the Project. Although the submission has been made that Multiplex was in a position to pressure the subcontractors, no evidence other than the fact that they were subcontractors has been led. I am thus asked to find that by reason of this relationship all Multiplex subcontractors will be rendered supine by Multiplex requests. On this evidence alone I do not intend to make such a finding.

27 The terms of the Multiplex letter of 19 June 2001 were in my view imprudent. There is nothing improper in gratuitous statements to third parties informing them of what one believes to be their rights, so long as the statements are accurate and there is no improper pressure applied. But when a third party or stranger to litigation is invited to ignore communications from an opponent in litigation it may well cause suspicion about the bona fides of the person making the suggestion. There is however in the Griffins letter the existence of a prospect that the letter may be ignored. This comes from the suggestion that a subpoena will have to be issued if “we have not received a reply within 7 days”. That prospect in my view leaves the categorization of the Multiplex letter of 19 June 2001 as imprudent rather than improper, although it is a borderline case.

28 Those who did not respond to Griffins letter may well have ignored the letter wholly or partly because Multiplex asked them to do so. For the purposes of this Motion I will assume that is so. However what HSH has to establish to persuade me to exercise my discretion in its favour in this application is that, but for the request by Multiplex, the subcontractors would not only not have ignored the request but also would have been willing to allow Griffins to roam free in their documents and that more probably than not a subpoena would not have been necessary. The evidence falls far short of establishing that and HSH must therefore fail on this aspect of it submissions in this Motion.

29 HSH also relied upon the letter of 20 July 2001 to Optipark after the subpoena had been served upon it. Although it was suggested that all recipients of subpoenas would have received a letter in these terms Multiplex submitted that the evidence does not establish that fact. On 17 July 2001 Minter Ellison requested Griffins to provide the names of the recipients of the subpoenas and Griffins provided that information by letter dated 19 July 2001. The letter to Optipark was dated 20 July 2001. The reasonable inference from this evidence is that the information provided to Minter Ellison by Griffins was provided to Multiplex. For the purpose of the submission that the 20 July letter evidences unreasonable and improper conduct warranting the making of the orders sought in the Motion I am going to assume that the same letter was sent to all the other recipients of a subpoena.

30 In the 20 July letter to Optipark Multiplex informed the recipients of what they understood from their solicitors may be relevant to consider in “complying with a subpoena”. There was therefore a premise from which the communication began which was quite proper, that is, that the recipient would “comply”. The matters raised for consideration were (1) an entitlement to reasonable costs, (2) an adjournment, consent or otherwise, to enable full compliance, (3) categories of privilege and (4) possible difficulties in identification of documents. It seems to me these matters are not controversial. There was nothing within the explanations given in respect of each of those topics that was unreasonable or improper. The letter concluded by suggesting that the recipient may think it “prudent” to seek legal advice and providing access to their own solicitors for the provision of a “recommendation on a legal consultant”.

31 But for the previous letter of 19 June 2001 suggesting that the recipients ignore Griffins’ June letter, this Court would probably not be asked to consider this later letter. However HSH has found a trail of letters and conduct which has lead it to the conclusion that Multiplex has acted improperly and unreasonably and has submitted that all the costs incurred in the process should be paid by Multiplex on an indemnity basis. The 20 July 2001 letter is not unreasonable and in my view it is not improper. The recipients were not told anything that was unreasonable or improper. They were entitled to consider the matters including whether to instruct solicitors which a number of them did. All of this is quite proper.

32 Although Mr Sullivan’s submission that the issuing of a subpoena should only be resorted to when a third party is unwilling is an obviously sound one, it must also be recognised that there are some protections available to third partes in the process. The Courts will protect not only its own processes from abuse but also third parties from requirements to produce documents if a subpoena is drawn too widely or is an abuse of the process for some other reason. The taking of legal advice by recipients of subpoenas may therefore delay a party’s access to documents but it is not to be viewed as an unreasonable delay. HSH has not proved that the recipients were motivated by Multiplex to do anything they were not entitled to do. HSH must fail in this regard as well.

Order
33 The Notice of Motion is dismissed. If the parties are unable to agree on an appropriate costs order I will hear argument when the matter is next listed for directions.

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Last Modified: 10/08/2001