Thompson v Albarran

[2008] SASC 112

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

THOMPSON & ORS v ALBARRAN & ORS

[2008] SASC 112

Judgment of The Honourable Justice Gray

28 April 2008

PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION

Application to set aside subpoenas – substantive proceedings discontinued by plaintiffs – plaintiffs made application that there be no order as to costs of the proceedings – defendants issued and served subpoenas seeking documents referred to in affidavits filed in support of the plaintiffs’ application – whether the subpoenas should be set aside as vexatious and oppressive.

Held:  rule 59.02 of the Supreme Court Rules 1987 (SA) provides a summary process for obtaining the production of documents referred to in affidavits – subpoenas stayed pending rule 59.02 request – rule 59.02 procedure is the appropriate procedure to be followed.

Supreme Court Rules (SA) r 52.01, r 52.03 and r 59.02, referred to.
Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; Beneficial Finance Corporation v PriceWaterhouse (1996) 68 SASR 19, considered.

THOMPSON & ORS v ALBARRAN & ORS
[2008] SASC 112

Civil

GRAY J

1. This is an application to set aside subpoenas.

2. The substantive proceedings, commenced by summons in this Court on 24 February 2006, were discontinued on 1 November 2007.

3. Rule 52.01 of the Supreme Court Rules 1987 (SA),[1] provides that a plaintiff may, at any time before the making of the order that the action proceed to trial, discontinue his claim against a defendant. 

   [1]    Which was in force at the time of the discontinuance.

4. Rule 52.03 provides for the costs consequences of discontinuance:

   Unless the Court otherwise orders or the parties consent, the party discontinuing or withdrawing shall pay the costs up until the date of delivery of the notice, of the party against whom the claim or defence was discontinued or withdrawn. No further order shall be required to enable the party against whom the claim or defence was discontinued to tax his costs.

5. The proper construction of rule 52.03 was discussed in Pentroth Pty Ltd v Kirschild Pty Ltd,[2] where White J observed:

   Rule 52.03 is not expressed, at least explicitly, in terms which limit the court's general discretion. It does not, for example, provide that the court may “order otherwise” if satisfied that special or unusual circumstances exist. One might have expected express words if a limitation on the general discretion with respect to costs was intended. The circumstances in which parties may discontinue the whole or part of proceedings, and therefore the circumstances in which the court may be required to exercise the discretion with respect to costs, are diverse. That diversity suggests that r 52.03 should not readily be construed as containing an intention by the court that its discretion with respect to costs should be confined. As to the need for flexibility in cases of discontinuance, Finn J in O'Neill v Mann has said in relation to the counterpart rules of the Federal Court:

   It properly can be said that there is an “underlying policy” in the Rules that the discontinuing party should be liable for the other party's costs unless the court orders otherwise ... But so various can be the reasons for, and circumstances of, discontinuance that that policy cannot safely be said to have hardened into a “usual rule” where leave is granted such as exists where there has been a determination of a claim on its merits ... The conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs ...

   The view that rule 52.03 does not give rise to a presumptive entitlement that the discontinuing party should pay the other party’s costs has support from the decision of the majority in Fordyce v Fordham[3] when considering the comparable rule in New South Wales.

   [2]    Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129 at [24]-[27] (footnotes omitted).

   [3]    Fordyce v Fordham (2006) 67 NSWLR 497.

6. The approach to be taken when considering the general discretion as to costs was outlined by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin:[4]

   In most jurisdictions today, the power to order costs is a discretionary power.

   Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

   In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action ...

   Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried ...

   If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

   In Pentroth, White J, when discussing the above observations of McHugh J, observed:[5]

   This approach suggests that the court should not, in effect, try an action simply for the purposes of determining an appropriate outcome for costs. There may be cases in which the court considers that a party’s conduct in commencing the litigation, or in continuing it, was unreasonable or in which it can, conveniently, form a view as to the probable outcome. In such cases, an order that the discontinuing party pay costs may be appropriate. Much may depend on any explanation provided to the court for the discontinuance, as well as the circumstances surrounding its commencement and continuance generally. However, when the court is satisfied that the conduct of the parties has been reasonable, it will usually be appropriate for the court to make no order as to costs.

   [4]    Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625 (footnotes omitted).

   [5]    Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129 at [35].

7. The plaintiffs’ application seeks a special order as to costs.  The resolution of the application, if successful, will lead to a final order – that there be no order as to costs.  This is the only issue that remains to be determined. 

8. In support of the plaintiffs’ application that there be no order for the costs of the discontinued action, affidavits from one of the plaintiffs and from the plaintiffs’ principal solicitor have been filed.  Both affidavits refer to and draw on the contents of many documents.  The affidavits provide the background facts against which the plaintiffs contend that their conduct in both initiating and discontinuing the proceedings was reasonable. 

9. A perusal of the subpoenas reveals that most of the documents referred to in each of the affidavits supporting the application have been the subject of subpoena. 

10. Rule 59.02 of the Supreme Court Rules 1987 (SA) provides:

    Where a party has filed a pleading or an affidavit referring to a document he shall within seven days of receipt of any request from another party in accordance with the request either make such document available for inspection by that other party, or furnish that other party with a copy of the document at that party’s cost.

    The reach of rule 59.02 was considered in Beneficial Finance Corporation v PriceWaterhouse,[6] where Lander J remarked:

    The purpose of r 59.02 is to make available, without the necessity of going through the discovery process in the case of a pleading or in the case of an interlocutory proceeding requiring a deponent to attend for cross-examination in the case of an affidavit, those documents to which a party has referred in the pleading or affidavit. The rule assumes that if a party believed that those documents were important enough to refer to in that party's pleading or affidavit they ought to be made available immediately and in a summary way to the opposing party. The rule also assumes the documents are necessary for an understanding of the pleading or affidavits.

    However as r 59.03 states, an order for production of any document shall not be made unless the court is of the opinion that the order is necessary for disposing fairly and expeditiously of the action.

    [6]    Beneficial Finance Corporation v PriceWaterhouse (1996) 68 SASR 19 at 50.

11. In the present case, this reasoning has direct application.  The plaintiffs, through the two affidavits, refer to and draw on the contents of documents presumably in the belief that the documents and their contents are important and have relevance to the issues to be determined.  Accordingly, where the terms of the rule are met, those documents should be produced.  The defendants acknowledged during submissions that consideration had been given to the use of rule 59.02, but did not use it.  It was suggested that the rule was directed to circumstances that arise before the close of pleadings and before the crystallisation of issues.  It was submitted that the rule did not provide any exclusive code that foreclosed applications for discovery or use of subpoenas. 

12. It may be accepted that rule 59.02 does not provide an exclusive code.  However, as Lander J pointed out, the rule provides a summary process for the obtaining of documents and is a process that, if used appropriately, should provide the relevant documentation promptly and with a minimum expense. 

13. Rather than following through the rule 59.02 process the defendants issued and served subpoenas.  This has led to an application to set aside the subpoenas, raising a number of complex issues for determination that would not arise under rule 59.02.  In the course of argument, the plaintiffs accepted that rule 59.02 could be utilised in the present case. 

14. The only questions remaining for determination in the within proceedings are the plaintiffs’ application for a special order for costs and the defendants’ counter-application for an order for indemnity costs.  The determination of these issues should be as far as practicable dealt with in an expeditious manner.  They should not, if possible, be allowed to open up a re-litigation of the substantive issues that arose in the discontinued proceedings.  The application should not be used as a vehicle for other purposes, for example, fishing for evidence to support an application for costs against a non-party.  It is to be observed that such a suggested purpose is disavowed by the defendants.

15. As earlier observed, the evident purpose of the defendants is to obtain documents referred to in the plaintiffs’ affidavits supporting the application for a special costs order.  There is no basis to infer that the plaintiffs will not comply with their rule 59.02 obligations.  Arguments may develop as to the extent of production required.  In that event, those arguments can be raised, addressed and resolved.  In my view there is no need at this time for the issued subpoenas to be answered.  The better course to be followed is for a request to be made pursuant to rule 59.02 and for that request to be answered.

16. The defendants contended that as the subpoenas had been issued and served, it was simpler now to simply proceed through that avenue.  I disagree.  The rules of Court are made to facilitate the efficient disposal of proceedings.  Where the rules have direct application they should be used, and not alternative, more cumbersome and more costly procedures adopted. 

17. As earlier observed, the determination of the issues concerning costs should be capable of being dealt with expeditiously and in a straight-forward manner.  Regrettably, that has not occurred to date.  Lengthy written submissions have been received from the parties.  There are requests for further time to be allocated for the making of oral submissions.  An application to cross-examine deponents to affidavits has been foreshadowed.  Without the co-operation of the parties, it is difficult for the Court to address the issue of costs in an expeditious manner.  With these observations in mind, this is a case where the summary procedure provided by rule 59.02 should be followed.

18. For these reasons, I consider it appropriate to stay until further order obligation to answer the subpoenas.  I propose to make the following orders:

    -that the defendants, within seven days, make such request as they may be advised pursuant to rule 59.02 for the production of documents referred to in the affidavits filed in support of the plaintiffs’ application that there be no order as to costs.

    -that the plaintiffs respond to that notice by producing the requested documents subject to all proper exceptions within seven days of receiving the defendant’s request. 

    -insofar as objection is taken to the production of any requested document, that the plaintiffs identify the ground of objection. 

    -insofar as the defendants wish to challenge any ground of objection, they should do so within a further four days, specifying the basis of their challenge. 

    -liberty to the parties to apply for further directions as necessary.  A final ruling on the setting aside of the subpoenas is deferred until further order. 

    -the question of costs of the application to set aside the subpoenas is reserved.