Preston v Star City Pty Limited

[2007] NSWSC 1205

CITATION:	Preston v Star City Pty Limited [2007] NSWSC 1205
HEARING DATE(S):	18/10/2007
JUDGMENT DATE :	29 October 2007
JUDGMENT OF:	Hoeben J at 1
DECISION:	The defendant and the plaintiff are to agree on an independent solicitor or barrister who will inspect such documents as the plaintiff indicates he wishes access to.; That solicitor or barrister is to be retained by the defendant at the plaintiff’s cost.; The terms of the retainer of the solicitor or barrister and his or her method of payment are to be agreed between that person and the plaintiff.; The reasonable costs of the defendant in arranging for such access and inspection of documents are to be met by the plaintiff.; The results of such access and inspection of documents by the solicitor or barrister are not to be communicated directly to the plaintiff but only to his legal advisers. In that regard the plaintiff’s legal advisers are bound by the undertakings which they have previously given to the Court in relation to the discovery and inspection of documents.; Each party is to pay his or its own costs of this application.
CATCHWORDS:	PRACTICE AND PROCEDURE - Defendant's application to be relieved from discovery obligation - quantity of documents - lack of indexing - substantial costs to be incurred by inspection - limited utility of inspection - if relief granted plaintiff to be allowed to inspect at his own expense.
LEGISLATION CITED:	Uniform Civil Procedure Rules (NSW) 2005
CASES CITED:	Commerce Commission v Telecom Corporation of New Zealand Limited & Anor (2006) NZCA 252
PARTIES:	Alexander Preston - Plaintiff Star City Pty Limited - Defendant
FILE NUMBER(S):	SC 20334/1998
COUNSEL:	Mr J Keesing - Plaintiff Mr R Weber SC/Mr M Condon - Defendant
SOLICITORS:	Gells Lawyers - Plaintiff Corrs Chambers Westgarth - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Monday 29 October 2007

20334/1998 – Alexander PRESTON v STAR CITY PTY LIMITED

JUDGMENT – Re: Relief from Discovery Obligation

1 HIS HONOUR:

Nature of proceedings
The defendant moves by an amended notice of motion dated 17 October 2007 for the following orders:

(1) That pursuant to r 2.1 of the Uniform Civil Procedure Rules (NSW) 2005 (Rules), the defendant be relieved of any obligation it has under Pt 21 of the Rules to give discovery of the documents described as:

(a) “VIP archived documents” (as described in the affidavit sworn by Branwell Black on 25 September 2007).
(b) “Archived email accounts” (as described in the affidavit sworn by Branwell Black on 12 October 2007); and
(c) “Archived accounts payable documents” (as described in the affidavit sworn by Branwell Black on 12 October 2007).

(2) Such further or other orders as the court thinks fit.”

2 Initially the plaintiff opposed that order in respect of all three categories of documents. In the course of the proceedings the plaintiff consented to the defendant being relieved of any obligation it had under Part 21 of the Rules in respect of the documents in category 1(b).

Factual background

3 In view of the concession made by the plaintiff, I only propose to set out the factual background to the documents in categories 1(a) and 1(c) above.

4 The defendant served its original list of documents on the plaintiff in August 2000. This list identified approximately 4,220 discoverable documents. The defendant served a supplementary list of documents on the plaintiff on 4 October 2006, which identified approximately 211 documents.

5 Under cover of letters dated 30 April 2007 and 6 June 2007 the plaintiff’s solicitors sent two bundles of documents to the defendant’s solicitors. Some of those documents were alleged to have been received by the plaintiff from an anonymous source two or three weeks before the date of the letters. Some of the documents provided in that way were not included in the defendant’s original and supplementary lists of documents.

6 The defendant says that as a result of receiving those documents, it undertook further searches and made further inquiries for discoverable documents, particularly of the kind received from the plaintiff’s solicitors and not already included in the defendant’s original and supplementary lists. One of the problems the defendant confronted in carrying out this exercise was that it is now not able to ascertain definitively what documents were inspected before it initially gave discovery.

7 The documents comprising the “VIP archived documents” being documents from the VIP Services Department during the period November 1996 to March 1998 were sent to an external archiving facility. The evidence does not disclose when that occurred except that it was after 1998. There are 333 boxes at the facility which comprise the “VIP archived documents”.

8 Between 14 August and 17 August 2007 an employee of the defendant reviewed 43 of those boxes randomly selected. What the employee was looking for were references to “Alexander Preston”, “Preston” and the plaintiff’s Star City Player Number. The employee did not locate any documents containing those references in the 43 boxes inspected.

9 The 43 boxes which were reviewed contained the following categories of documents:

(i) Hotel booking, restaurant and airfare reimbursement forms for the defendant’s local, domestic and international VIP patrons.

(ii) Guest feedback forms.

(iii) Internal files for staff of the Sales and Customer Relations Department.

(iv) Total Star Reward application forms.

(v) Butlers’ daily operational forms.

10 The defendant estimates that to inspect the other 290 boxes of “VIP archived documents” would take approximately 202 hours, ie in excess of five working weeks. Not only would that exercise be time consuming and expensive but given the results achieved in relation to the 43 boxes randomly inspected, the utility of such an exercise would be low.

11 The defendant also relies on another consideration. The defendant archived backup tapes for its entire electronic database for the period November 1997 to November 1998. Those backup tapes contain a record of the documents created in and stored on every program in each disc drive used by the defendant during the relevant period in respect of the defendant’s VIP Services Department. Although the defendant no longer possesses the technology required to restore those backup tapes, it has set in motion a process whereby a third party company at a cost of $55,000 will restore the backup tapes. This will enable the defendant to make further discovery if documents relevant to these proceedings come to light when the backup tapes have been restored.

12 In relation to the “Archived accounts payable documents”, the evidence of the defendant is that it has not been possible to confirm definitively that these documents were inspected during the original document review before discovery was first made.

13 These documents consist of invoices from third parties that the defendant was liable to pay. They include invoices in respect of the day-to-day operations and management of the defendant’s business, but also invoices issued to the defendant in respect of goods or services provided to patrons of the Casino. These documents are filed alphabetically according to the first letter of the name of the third party goods or service provider. The format of and information in each document differs from third party provider to third party provider.

14 There are 756 boxes of documents for the relevant period at an external facility operated by a third party. Of those boxes, 135 contain archived accounts payable documents. Neither the defendant nor the facility has an index which would enable one to identify which of those boxes contained archived accounts payable documents. In other words, it would be necessary to review the contents of all 756 boxes to identify those boxes which contain the “archived accounts payable documents”.

15 There is another difficulty with these documents. The defendant says that some of the third party invoices may contain patron specific information but others do not. The invoices might simply refer to the service or goods provided without giving any indication of the identity of the patron who benefited from the provision of those goods or services. It follows, so the defendant submits, that the utility of inspecting all 756 boxes would be quite limited.

16 The defendant says that it has already discovered to the plaintiff in summary form the benefits which it provided to him during the period. The “archived accounts payable documents” merely provide the source material from which those summaries were derived. The only benefits which are not included in those summaries are what are described as “event complimentaries” and “Endeavour Room beverage complimentaries”. “Event complimentaries” are invitations to prominent sporting and social events, the costs of which were fully covered by the defendant. “Endeavour Room beverage complimentaries” is the term used to denote the purchasing of beverages for Casino patrons that were members of the Endeavour Room. Those records would not of their nature have any reference to the name of a specific patron.

17 The defendant says that 20 boxes were randomly selected from the facility with a view to locating at least one box of “Archived accounts payable” documents. This exercise was successful and one such box was located. That box did contain some third party invoices which had references to Casino patrons, but none referred to the plaintiff. It took a paralegal employed by the solicitors for the defendant 1.7 hours to inspect the box. On that basis it has been estimated that it would take approximately 1,280 hours (or approximately 32 standard 40 hour working weeks) to review all 756 finance boxes. If a paralegal carried out that exercise, the cost would be in the order of $256,000.

Submissions

18 In relation to the “VIP archived documents”, the defendant submits that discovery would be oppressive because 290 boxes would still have to be examined which would take at least 202 hours. It submits that discovery would be of no real utility since the 43 boxes already inspected by way of sample did not reveal discoverable documents and that the restoration of the backup tapes may well provide the same information. The Court was asked to have regard to the fact that the plaintiff’s case is not directed to the events of a particular day or days, but is focused on a pattern of conduct that occurred over a number of years.

19 In relation to the “archived accounts payable documents”, the defendant submits that discovery would be oppressive because there are 756 boxes which would need to be inspected, the documents are not indexed and without reviewing each of the 756 boxes, it is not possible to say whether that box contains documents relevant to the issues in dispute. The defendant submitted that the cost of carrying out that task was also prohibitive in that it would take 1,280 hours at a cost of $256,000 if a paralegal were involved.

20 The defendant submits that discovery of those documents would in any event be of limited utility. This is because the defendant has already discovered in summary form documents recording the provision of complimentary goods and services and that these documents are at best the source material from which the summaries were produced. The exceptions, which are not included on the summaries, ie “event complimentaries” and “beverage complimentaries” would of their nature not assist the plaintiff in this case. The “event complimentaries” are irrelevant and the “beverage complimentaries” do not refer specifically to patrons.

21 On behalf of the plaintiff it was submitted that the defendant had been aware since December 1997 at the latest that these proceedings would be brought. Accordingly the defendant should have from that point in time been active in gathering and securing documents which were relevant to the proceedings. The plaintiff referred to some internal documents of the defendant which indicated that this process was in fact taking place in late 1997. It was the plaintiff’s submission that despite that awareness the defendant had archived documents in such a way as to create the difficulties which presently confront it in making proper discovery. The Court was referred to the decision of the New Zealand Court of Appeal in Commerce Commission v Telecom Corporation of New Zealand Limited & Anor (2006) NZCA 252.

22 On the basis of that decision and because the defendant was responsible for the archiving system after it became aware of the likelihood of these proceedings, the plaintiff submitted that random and scientific sampling of the boxes of documents should take place at the defendant’s expense. Implicit in the submission was the proposition that the defendant’s application should not be finally decided until after that sampling process has taken place.

Decision

23 In relation to the “VIP archived documents” I am satisfied that an appropriate sampling exercise has taken place. I am also satisfied that the reconstruction of the backup tapes which the defendant has agreed to undertake is more likely to provide the sort of information which the plaintiff is seeking than further searching of the 290 remaining boxes. Accordingly, I am prepared to make the order sought by the defendant in respect of the “VIP archived documents”.

24 The “archived accounts payable documents” are in a slightly different category. There has been no attempt to properly sample those documents. Accordingly there is some force in the plaintiff’s proposal in that regard. On the other hand, it seems to me that the summaries provided to the plaintiff as a result of the records kept on the IGS and LSI databases is adequate for the plaintiff’s purposes in this matter. I have difficulty in seeing what additional utility there is for the plaintiff, given the nature of his claim, in having access to source material from third party providers of goods or services.

25 I am also influenced by the nature of the “archived accounts payable documents”. Invoices from third parties which were referred to the defendant for payment would only incidentally refer to the patron who benefited from the goods or services and that would certainly not occur on every invoice. Accordingly any records produced would not be comprehensive and would not provide an accurate picture of what benefits were being provided for the plaintiff.

26 Accordingly I propose to make the order sought by the defendant in relation to the “archived accounts payable documents”.

27 I am, however, concerned that the plaintiff may believe that documents important to his case are being kept from him. In the course of the hearing I proposed to the parties that should the plaintiff wish to examine these boxes of documents he should be allowed to do so but at his own expense and under supervision.

28 The defendant was asked to obtain instructions on that proposal.

29 The defendant’s instructions were communicated to the Court in the form of a supplementary written submission. The Court was advised that in the past the plaintiff had provided documents discovered in these proceedings to a third party. As a result the plaintiff’s legal advisers had in 2004 provided undertakings to the Court in which they agreed to a regime relating to discovery where personal access by the plaintiff to discovered documents was restricted. In its supplementary submissions the defendant sought similar restrictions if access was to be granted to the documents the subject of this application.

30 In the circumstances I accept the submission of the defendant that given the nature of the “VIP archived documents” and the “archived accounts payable documents” confidential and commercially sensitive information are likely to be contained. Personal information regarding patron’s hotel stays, payment details and information about patrons generally would not only be confidential and commercially sensitive but would be subject to privacy legislation. In those circumstances it seems reasonable that if access is to be granted to the plaintiff it should be on a restricted basis.

31 The defendant put forward three alternatives which would enable the plaintiff’s legal advisers to obtain access to the “VIP archived documents” and the “archived accounts payable documents”. In view of the decision which I have reached in respect of the application, option one is not appropriate. In my opinion option two would be unduly onerous for the plaintiff in that he would be required to pay in advance the defendant’s costs in inspecting and providing access to the documents.

32 The option which I favour is a variation of that identified by the defendant as option three. In that option the defendant and the plaintiff are to agree on an independent solicitor or barrister to be engaged by the defendant at the plaintiff’s cost, to review as many of the archived boxes as the plaintiff requires.

33 The only outstanding matter is the cost of this application. The defendant has been largely successful in the application which was in part opposed by the plaintiff. On the other hand the defendant is seeking an indulgence from the Court in that it seeks to be relieved of the burden of discovery which would otherwise fall upon it. The application has been marked by substantial common sense and goodwill on both sides. In those circumstances I do not propose to make any orders as to costs in relation to the motion with the intention that each party pay his or its own costs.

Orders

34 I make the following orders:

(1) That pursuant to r 2.1 of the UCPR , the defendant be relieved of any obligation it has under Pt 21 to give discovery of the documents described as:

(a) “VIP archived documents” (as described in the affidavit sworn by Branwell Black on 25 September 2007).
(b) “Archived accounts payable documents” (as described in the affidavit sworn by Branwell Black on 12 October 2007).

(2) If the plaintiff wishes to have access to and inspect any or all of the “VIP archived documents” and “archived accounts payable documents” the following procedure is to apply:

(a) The defendant and the plaintiff are to agree on an independent solicitor or barrister who will inspect such documents as the plaintiff indicates he wishes access to.
(b) That solicitor or barrister is to be retained by the defendant at the plaintiff’s cost.
(c) The terms of the retainer of the solicitor or barrister and his or her method of payment are to be agreed between that person and the plaintiff.
(d) The reasonable costs of the defendant in arranging for such access and inspection of documents are to be met by the plaintiff.
(e) The results of such access and inspection of documents by the solicitor or barrister are not to be communicated directly to the plaintiff but only to his legal advisers. In that regard the plaintiff’s legal advisers are bound by the undertakings which they have previously given to the Court in relation to the discovery and inspection of documents.

(3) Each party is to pay his or its own costs of this application.

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