Rickard Constructions Pty Limited v Rickard Hails Moretti Pty Limited

[2006] NSWSC 241

CITATION:	Rickard Constructions Pty Limited v Rickard Hails Moretti Pty Limited [2006] NSWSC 241 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	9 March 2006
JUDGMENT DATE :	5 April 2006
JUDGMENT OF:	Bergin J
DECISION:	The respondent is to pay the second defendant's costs thrown away in respect of the appearances on 26 October 2005, 28 October 2005 and 1 November 2005. Each party is to pay its own costs of the appearance on 4 November 2005.
CATCHWORDS:	[COSTS] No matters of principle
PARTIES:	Jeffrey & Katauskas Pty Limited (Second Defendant/ Applicant) SST Consulting Services Pty Limited (Respondent)
FILE NUMBER(S):	SC 55027/00
COUNSEL:	J Steele (Second Defendant/ Applicant) TGR Parker SC (Respondent)
SOLICITORS:	Colin Biggers & Paisley (Second Defendant/ Applicant) J Biady & Associates (Respondent)

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

BERGIN J

5 APRIL 2006

55027/00 RICKARD CONSTRUCTIONS PTY LIMITED v RICKARD HAILS MORETTI PTY LIMITED

JUDGMENT

1 The second defendant, Jeffrey and Katauskis Pty Ltd, by Amended Notice of Motion seeks an order that SST Consulting Services Pty Limited (SST), (the plaintiff’s funder in the litigation, but not a party to the proceedings) pay the second defendant’s costs of appearances at Court on 26 October 2005, 28 October 2005, 1 November 2005 and 4 November 2005 in respect of a Notice to Produce dated 7 October 2005 served on SST. The Motion was heard on 9 March 2006, immediately after the hearing of the Motion in relation to the challenge to the plaintiff’s privilege claim in which judgment has also been delivered today: Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234. Ms J Steele, of counsel, appeared for the second defendant/applicant and Mr TGR Parker SC appeared for the SST, the respondent to the Motion.

2 The Notice to Produce was served prior to a proposed hearing of a Notice of Motion for third party costs against SST. A Notice to Admit Facts was also served. An earlier Notice to Produce dated 28 September 2005 was served on SST on 6 October 2005. SST advised that no leave had been sought to issue the Notice to Produce and the Notice to Admit Facts and that it regarded the Notices as invalid.

3 The second defendant served a second Notice to Produce dated 7 October 2005 without prejudice to any rights in respect of the earlier Notice to Produce. The second Notice to Produce called for documents including those in the following category:

3. For the period from 1 January 2004 to 5 November 2004 communications or records of communications between the solicitors for the plaintiff and SST Consulting Services Pty Limited, Peter Sweeney or Denys Truman (or any of them) which seek or convey instructions to those solicitors as to the conduct of these proceedings with the exception that the call does not extend to such communications which relate solely to the subject of the security for costs.

4 On 17 October 2005, the first return date of the Notice to produce dated 7 October 2005, SST’s representative advised the Court that there was “nothing to produce”. It is apparent that further discussion between the legal representatives exposed a possible misunderstanding and on 19 October 2005 the solicitor for SST, J Biady & Associates (JBA) wrote to the solicitors for the second defendant, Colin Biggers & Paisley (CBP) in terms that included the following:

(a) No documents were produced to the Court on 17 October 2005 as we thought we had made it clear that we did not accept the validity of the Notices to Produce …
(b) As a matter of record, we confirm you were informed that we disputed the validity of the Notice to Produce and that our client intended not to comply with that Notice.
(c) There appears to be a misunderstanding – there may well be documents that do come within the terms of your client’s Notice to Produce. Before the matter was called by the Registrar on Monday, we had been informed by Ms Steele, the counsel who appeared on your client’s behalf, that as we had no documents available she intended to adjourn the Notice to Produce until this morning. Accordingly, we informed the Court that we had no documents, meaning that we had none in our possession. We expected that any arguments about the validity of the Notice would either occur before the next listing of the matter, or else there would need to be argument before the Court about the issue.

5 On 26 October 2005, although the matter did not appear in the published list, the second defendant appeared in respect of the Notice to Produce and called upon it. There was no appearance for SST. Mr Parker SC conceded that there is no proper explanation for the failure of SST to appear on that day and also conceded that SST could not properly resist an order as to costs thrown away on that day.

6 After SST’s failure to appear on 26 October 2005, the second defendant listed the Notice to Produce in the Technology & Construction List on Friday 28 October 2005. On that day the Court noted that on 1 November 2005 documents would be produced in response to the Notice to Produce dated 7 October 2005 subject to a claim for privilege over some or all of the documents.

7 On 1 November 2005 Ms Khoo appeared for SST and Ms Steele appeared for the second defendant. Ms Khoo advised the Registrar that there were documents to produce but that there was a claim for privilege. Ms Steele then sought the production of the documents to the Court with first access being granted to the plaintiff to determine which documents were to be the subject of any privilege claims. Ms Khoo then advised the Court that there was nothing to produce. The Notice to Produce was then stood over to 2 November 2005.

8 On 1 November 2005 CBP wrote to JBA and advised that it had listed the matter again before the Court on 2 November 2005 because Ms Khoo failed to produce any documents to the Court. That letter alleged that SST’s failure to answer the Notice to Produce “on yet another occasion and to offer no explanation for such failure” was “unacceptable”. That evening JBA wrote to CBP arguing that because the plaintiff needed to inspect the documents to establish whether a claim for privilege ought be made and that the matter was already listed the following day, it was entirely reasonable for the Notice to Produce to stand over to the following day. That letter answered some of the allegations made by CBP in respect of the history of the appearances before the Court and concluded:

The prior events that you insist on re-hashing are not as you record them, but there is little to be gained from revisiting this issue again – those aspects were resolved by discussions between counsel and are no longer relevant.

9 JBA wrote to CBP again on 1 November 2005 referring to the hearing the following day. They advised that any documents in category 1 of the Notice to Produce had already been seen by the second defendant, that there were no documents falling within category 2 and that there may be a small number of documents falling within category 3. By this time Allianz, the third defendant, had served a Notice to Produce on SST and JBA advised the second defendant that it intended to produce the small number of documents in category 3 “as part of the documents produced” in answer to the Allianz Notice to Produce.

10 On 2 November 2005 SST produced three packets of documents to the Court which apparently included documents in answer to both the second defendant’s Notice to Produce and Allianz’ Notice to Produce. On 2 November 2005 CBP wrote to JBA asking for confirmation that they had separated the documents sought under the second defendant’s Notice to Produce from the documents produced pursuant to the Allianz Notice to Produce.

11 On 4 November the Notice to Produce was before the Court when consent orders were made for access to the documents which were not the subject of any claims for privilege.

12 Mr Parker SC submitted that I should not entertain this application because it should have been the subject of an application to the Registrar on the day or days of the appearances. As attractive as that submission is, it seems to me that it is appropriate to deal with this application having regard to the costs that have already been incurred. However, that does not mean that I would endorse such a course in other cases.

13 It is apparent that no leave was granted to the second defendant to serve a Notice to Produce, but the evidence establishes that the parties proceeded on the basis that the Notice to Produce had been served. Although JBA indicated that it had informed the second defendant of its objection to the width and/or validity of the Notice to Produce, no Notice of Motion was filed seeking to set aside the Notice to Produce.

14 Ms Steele submitted that if CPB and/or counsel had given proper attention to the terms of the Notice to Produce, in particular paragraph 3 thereof, it would have been obvious that there were no documents to produce in answer to the Notice to Produce. In those circumstances it was submitted that all dates upon which the second defendant had to appear after the first return date were costs that were thrown away by reason of the inattention of SST.

15 Mr Parker SC submitted that the terms of the Notice to Produce are ambiguous. He submitted that the paragraph calls for any documents which pass between the plaintiff and SST which conveyed instructions. Ms Steele on the other hand submitted that it is quite clear that what is being sought is correspondence between the SST parties and the solicitors for the plaintiff.

16 I do not intend to construe the terms of the Notice to Produce. Irrespective of whether there was an ambiguity in relation to the Notice, a matter that was apparently not raised before the Registrar, the second defendant was put to appearing before Court in circumstances that seem to me to have been quite unnecessary. After the failure to appear on 26 October 2005 the second defendant had to have the matter placed back before the Court to see if it could obtain some satisfactory response from SST. Although, as Mr Parker SC submitted, it was in the usual Friday List, SST should pay any costs that have been thrown away by that listing.

17 On 28 October 2005 SST agreed that the documents would be produced on 1 November 2005 subject to a claim for privilege. That is not what happened. A further listing was necessary. That was because SST refused to produce the documents on 1 November 2005 when they obviously could have been produced. Ms Steele’s suggestion that the documents be produced with the plaintiff having first access would have obviated the need for the appearances on 2 November 2005. Additionally when the documents were produced on 2 November 2005 it is apparent that they had to be separated.

18 This process seems to me to have been very unsatisfactory and I am satisfied that the second defendant was forced to incur costs on 26 October 2005, 28 October 2005 and 1 November 2005 that could have been avoided. The heat generated in the solicitors’ letters is regrettable and I have little doubt that a more co-operative and less combative approach could have avoided these additional costs.

19 There are obviously differing points of view that have been expressed in relation to the history of the matter and I agree with Mr Parker SC that the more prudent and efficient course would have been to request the Registrar to make the appropriate costs orders on the day. It is difficult to ascertain five months later what actually occurred at various appearances before a Registrar. It seems to me that the appropriate orders are that the SST pay the costs of the second defendant thrown away by its appearances on 26 October 2005, 28 October 2005, 1 November 2005 and that each party pay their own costs of the appearance on 4 November 2005. That last mentioned order accommodates the differences of views between the solicitors in relation to the history of the matter.

20 I order that SST pay the second defendant’s costs thrown away in respect of the appearances on 26 October 2005, 28 October 2005 and 1 November 2005. In respect of the appearance on 4 November 2005 I order that each party pay their own costs. If the parties are unable to agree on a costs order in respect of this Motion I will hear argument on 7 April 2006 when the matter is listed for further directions.

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10/04/2006 - Add Bergin J as Judge - Paragraph(s) Coversheet