Todd v Novotny
[1999] WASC 219
TODD -v- NOVOTNY & ANOR [1999] WASC 219
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 219 | |
| Case No: | CIV:2281/1996 | 28 OCTOBER 1999 | |
| Coram: | MASTER SANDERSON | 9/11/99 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Costs order varied | ||
| PDF Version |
| Parties: | ROBERT JOSEPH TORRANCE TODD MICHAEL NOVOTNY BACKLOAD PTY LTD (ACN 009 451 192) |
Catchwords: | Practice and procedure Variation of costs order made after application for third party discovery Turns on its own facts |
Legislation: | Nil |
Case References: | Esther Investments Pty Ltd v Markelinga Pty Ltd (1992) 8 WAR 400 Jones v Dunkel (1959) 101 CLR 298 Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241 Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381 Biltoft Holdings Pty Ltd v Casselan Pty Ltd, unreported; SCt of WA (Anderson J); Library No 940252; 20 May 1994 Craig v Kanssen [1943] KB 256 Douglas-Hill v Parke Davis Pty Ltd (1990) 54 SASR 346 Gould v Vaggelas (1985) 157 CLR 215 Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 Midalco Pty Ltd v Simpson, unreported; SCt of WA; Library No 6747; 5 June 1987 Middleton v Western Australia (1996) 17 WAR 201 Monaco v Arnedo Pty Ltd, unreported; SCt of WA; Library No 940695; 29 November 1994 Mount Lawley Pty Ltd v Western Australian Planning Commission, unreported; SCt of WA (Master Bredmeyer); Library No 990132; 19 March 1999 Stowe v Stowe, unreported; SCt of WA; Library No 950556; 16 October 1995 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MICHAEL NOVOTNY
First Defendant
BACKLOAD PTY LTD (ACN 009 451 192)
Second Defendant
Catchwords:
Practice and procedure - Variation of costs order made after application for third party discovery - Turns on its own facts
Legislation:
Nil
Result:
Costs order varied
(Page 2)
Representation:
Counsel:
Plaintiff : Mr N P Gentilli
First Defendant : Mr P Redding
Second Defendant : Mr P Redding
Solicitors:
Plaintiff : Jackson McDonald
First Defendant : Williams & Hughes
Second Defendant : Williams & Hughes
Case(s) referred to in judgment(s):
Esther Investments Pty Ltd v Markelinga Pty Ltd (1992) 8 WAR 400
Jones v Dunkel (1959) 101 CLR 298
Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241
Case(s) also cited:
Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381
Biltoft Holdings Pty Ltd v Casselan Pty Ltd, unreported; SCt of WA (Anderson J); Library No 940252; 20 May 1994
Craig v Kanssen [1943] KB 256
Douglas-Hill v Parke Davis Pty Ltd (1990) 54 SASR 346
Gould v Vaggelas (1985) 157 CLR 215
Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627
Midalco Pty Ltd v Simpson, unreported; SCt of WA; Library No 6747; 5 June 1987
Middleton v Western Australia (1996) 17 WAR 201
Monaco v Arnedo Pty Ltd, unreported; SCt of WA; Library No 940695; 29 November 1994
Mount Lawley Pty Ltd v Western Australian Planning Commission, unreported; SCt of WA (Master Bredmeyer); Library No 990132; 19 March 1999
Stowe v Stowe, unreported; SCt of WA; Library No 950556; 16 October 1995
(Page 3)
1 MASTER SANDERSON: This is the plaintiff's application to vacate a costs order I made when making a conditional order for discovery on 30 April 1998. To understand the nature of the application it is necessary to go into some detail with respect to the interlocutory applications in this matter. However it is not necessary to deal in any detail with the matters at issue between the parties in the action as a whole. It will suffice if I say that the claim concerns certain mining tenements and the relationship said to exist between the plaintiff and the first defendant and, incidentally, the second defendant in relation to those tenements. It is a complex dispute and the question of discovery has occupied a good deal of time.
2 The defendants first provided discovery on oath by way of affidavits dated 22 October 1997 and 24 February 1998. The first of these two affidavits discovered 985 documents, the second discovered 3,922 documents. Thus, the first stage of the defendants' discovery process (which I will refer to as the "initial discovery") referred to just under 5,000 documents. By letter dated 11 December 1997 the plaintiff's solicitors requested from the defendants discovery of specific classes of documents as set out in a schedule annexed to that letter. At the same time the plaintiff also sought discovery of documents from one Luke John Martino ("Martino"). Martino is not a party to this action although he is the first defendant's accountant and adviser. He has also from time to time been a director of companies which are peripherally relevant to matters in issue. It has always been the plaintiff's position that Martino had in his possession certain documents related to matters in issue between the parties and that he should give discovery of those documents.
3 It is relevant at this point to note that the request for discovery of particular documents made by the plaintiff to the defendants mirrored the request made by the plaintiffs to Martino. Furthermore, a copy of the letter sent to Martino was attached to the letter sent to the defendants' solicitors. Two things are apparent from this correspondence. First, it must have been plain to the defendants' solicitors that the plaintiff's solicitors regarded the initial discovery to be inadequate. Secondly, it must have been apparent to the defendants' solicitors that if there were documents which they had not discovered which should have been discovered it was likely these documents would be thrown up by discovery from Martino. These two factors must surely have provided the defendants and their solicitors with a powerful incentive to review the initial discovery and if it was incomplete to rectify the position.
(Page 4)
4 The solicitors for the defendant responded to the plaintiff's request for specific discovery by letter dated 24 December 1997. They advised the plaintiff that there were no further documents of the categories requested by the plaintiff's solicitors which the defendants were obliged to discover. Prior to receipt of that letter the plaintiff's solicitors had been advised by Martino by letter dated 15 December 1997 that he would not provide discovery unless an order was obtained from the court requiring him to do so. Faced with Martino's stated position, the plaintiff's solicitors made an application for third party discovery on or about 12 February 1998. The documents of which discovery was sought were those covered in the request made on 11 December 1997. Upon the receipt of the application for third party discovery, Martino appointed solicitors to act on his behalf. The fact that the same solicitors were acting for Martino and the defendants meant they had a detailed understanding of the nature of the dispute between the plaintiff and the defendants and they were more readily able to ascertain what documents related to the matters in issue between the plaintiffs and the defendants. It also must necessarily follow that, as they were acting for both parties the solicitors must have been aware of the discovery obligations of both parties. In other words, as they were preparing the discovery affidavit for Martino, they could not but have given consideration to whether or not the discovery obligations of the defendants had been met. To suggest otherwise would be to erect a Chinese wall when there was no basis for doing so.
5 On 30 April I made the conditional order for discovery. The order was expressed to be subject to the condition that the plaintiff pay into court the sum of $8,000 within 21 days of the date of the order. This order for security was made under the provisions of O 26A r 7(1). I made a number of other orders and then, by par 5 of the order, ordered that the costs of the plaintiff and the defendants be reserved to the trial Judge.
6 On 23 June 1998 Martino filed and served an affidavit which verified a list of documents. Prior to that list of documents being provided, on 6 May 1998 the plaintiff had paid into court the sum of $8,000 pursuant to the order of 30 April. There then followed discussion between the parties as to the extent of the professional costs incurred by Martino in giving discovery and the liability of the plaintiff to meet these costs. On 29 July 1998 I ordered that the sum of $8,000 paid into court as security be paid out to Martino's solicitors and that timesheets be provided to justify the full amount Martino was seeking by way of costs which then stood at an amount of $10,571.60. There then followed a deal of correspondence between the plaintiff's solicitors and Martino's solicitors
(Page 5)
- in relation to costs. It is now common ground that in relation to Martino's application the plaintiff has paid just over $15,500 to Martino in relation to costs. This amount covers both the costs of making the application and the costs of actually giving discovery. What is more, it is the full amount of the costs incurred by Martino so that he has been protected entirely from the costs occasioned by his giving discovery in an action in which he is not involved.
7 After receipt of Martino's affidavit, the plaintiff's solicitors wrote again to the defendants' solicitors requesting further and better discovery of documents specified in a schedule annexed to the letter. There followed correspondence between the plaintiff's solicitors and the defendants' solicitors. It is unnecessary to detail that correspondence. However, it is to be noted that in a letter dated 1 October 1998 written by the plaintiff's solicitors to the defendants' solicitors it was pointed out to the defendants' solicitors that: "A substantial number of such documents as discovered by Martino have not been discovered in the defendants' list."
8 By letter dated 7 October 1998 the defendants' solicitors conceded, for the first time, that further and better discovery should be provided by the defendants. In mid-October 1998 the plaintiff filed a chamber summons seeking that further and better discovery. On or about 21 October 1998 the defendants filed and served an affidavit of the first defendant sworn 20 October 1998 which verified a supplementary list of documents. A comparison of Martino's affidavit sworn 23 June 1998 and the first defendant's affidavit sworn 20 October 1998 shows that all those documents listed in Part 1 of Martino's affidavit were subsequently discovered as documents numbered 1 to 1,113 in the first defendant's affidavit. In other words, by filing the affidavit of 20 October 1998 the defendants concede that, as at 20 October 1998, they had in their custody, possession or power over 1,100 documents which relate to a matter in issue between the parties and which had not previously been discovered.
9 The plaintiff's position on this application can be summarised in the following way. When they first received the plaintiff's discovery in October 1997 they reached the conclusion that the discovery was inadequate and they advised the defendants' solicitors accordingly. The defendants' solicitors protested the adequacy of the discovery and refused to provide further and better discovery. Faced with the prima facie conclusive nature of the affidavit of discovery from the defendants, the plaintiff determined he would seek discovery from Martino. When that discovery was provided it became apparent to the plaintiff's solicitors that
(Page 6)
- their claim the discovery provided by the defendants to that date was inadequate. Despite an initial denial by the defendants' solicitors of the inadequacy discovery, the point was eventually conceded. It is argued on behalf of the plaintiff that if proper discovery had been given by the defendants in December 1997 or soon thereafter, it would not have been necessary to seek third party discovery from Martino. It is submitted that all the costs associated with Martino giving discovery were wasted and that rather than leave these to be determined by the trial Judge, the order with respect to costs ought now be vacated and these costs ought be paid forthwith by the defendants.
10 In response, the defendants raise two points. First, they say that the discovery provided in April 1998 was provided pursuant to an obligation to give continuing discovery and should not be taken as an admission that discovery initialling given was inadequate. Secondly, it is said that the order of 30 April has been settled and extracted and there is no basis upon which it can now be set aside. As a further argument in support of this second proposition, the defendants point to the fact that the supplementary discovery was given in October 1998. This present application was not brought until late August 1999. The defendants submit that the ten month delay in making the application, unexplained as it is, mitigates against vacating the perfected order.
11 The plaintiff submitted that, on the evidence available, the court should find as a fact that the defendants had in their custody, possession or power as at October 1997 the documents not discovered until October 1998. There is no direct evidence on this point. The defendants do not deny this to be the case. They have adduced no evidence on the point. The plaintiff says, in these circumstances, the court can rely upon the rule in Jones v Dunkel (1959) 101 CLR 298 to infer that the silence of the defendants indicates that they can say nothing which would assist their position. This, in turn, leads to the conclusion that the documents in question were in the custody, possession or power of the defendants when their first affidavit was sworn.
12 Reference is not infrequently made to the rule in Jones v Dunkel when dealing with what is to be made of the lack of evidence by one party. The limits on the scope of the rule were considered by Murray J in Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241. This case involved an application for security for costs against a company. The company had failed to provide any evidence as to its financial position. It was submitted by the applicant that, based upon the failure of the company to provide this information, an adverse
(Page 7)
- inference could be drawn as to the company's financial position. His Honour said (at 244):
"For the defendant it is argued that I may have regard to the failure of the plaintiff to provide complete information about its financial position and prospects by applying what is generally referred to as the rule in Jones v Dunkel, that unexplained failure of a party to give evidence may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party's case, so entitling the court the more readily to drawn an inference against the party which might otherwise fairly be drawn from the evidence which was adduced. That is, of course, an important limitation upon the operation of the rule. It is limited to assisting the court to draw an inference which is available from the circumstantial evidence. The absence of evidence to the contrary may not, however, be directly converted into circumstantial evidence itself tending to prove the fact in issue against the silent party, as was made clear in Jones v Dunkel itself. The rule cannot be used to fill gaps in the evidence or to convert conjecture or suspicion to a matter of inference … "
(Page 8)
- the limited evidence suggests that at all material times the documents discovered in October 1998 were in the defendants' power.
14 In those circumstances the rule in Jones v Dunkel can operate. It would have been open to the defendants to explain the whereabouts of the documents subsequently discovered and to explain why they were not included in the initial list. The fact they have chosen not to provide such an explanation provides support for the inference which can be drawn from the circumstantial evidence. It is not a case of silence proving a fact against the defendants. It is a matter of inference from the circumstantial evidence being more readily drawn.
15 Accepting then that the defendants had these documents and they should have been discovered prior to the application for third party discovery against Martino, does it then follow that the application brought against Martino was unnecessary and would not have been made? There is certainly no evidence provided by the plaintiff to that effect. During the course of submissions I put to counsel for the plaintiff the proposition that, no matter what discovery was provided by the defendants, the plaintiff would have sought third party discovery against Martino. He agreed that was likely. However, he suggested that the discovery required would have been very much reduced and the costs incurred by Martino, and consequently by the plaintiff, would also have been very much reduced. Once again, there is no direct evidence to support that proposition. Counsel submitted that it followed as a matter of logic. If the defendants had given proper discovery, it was submitted, the plaintiff could have eliminated those documents from the documents Martino was to discover. If that had been done, the discovery given by Martino would have been very modest indeed and the costs would have been significantly reduced. In response, counsel for the defendants made the point that no indication had been provided by the plaintiff of the extent to which costs might have been reduced by full discovery from the defendants and further suggested that, given the suspicion that exists between the plaintiff and the defendants, full discovery would have been required from Martino in any event. Counsel submitted such a result was at least as likely as the prospect of the extent of discovery being reduced.
16 On balance, I am satisfied that, had proper discovery been given by the defendants in the first instance, the extent of discovery asked of Martino would have been significantly reduced. The extent to which the costs would have been reduced is problematical and to a degree is speculation. However, taking into account the extent of the discovery produced by Martino and the likelihood that the plaintiff would have
(Page 9)
- required discovery from him in any event, I am satisfied that it would be appropriate if I varied the order for costs. Taking into account all of the evidence, I am satisfied that the proper order is that the costs associated with Martino giving discovery should be the plaintiff's in any event. I am not satisfied that the plaintiffs are entitled to have the costs they have paid to Martino repaid to them by the defendants forthwith. However, I am satisfied that if proper discovery had been given the extent of the discovery required from Martino may have been reduced. At the very least the plaintiff was entitled to have the defendants put the true position in relation to discovery prior to orders being sought against Martino. Given that they did not take this step, it seems to me proper they should bear the consequences.
17 This leaves the defendants' submission that the order has been perfected and cannot be set aside. It was accepted by both parties that the court can in certain circumstances recall a perfected order: see Esther Investments Pty Ltd v Markelinga Pty Ltd (1992) 8 WAR 400 per Malcolm CJ at 407. While mindful that power to vary the judgment exists and should only be exercised in the most unusual circumstances, I am satisfied that in this case I ought exercise the power. I have reached that conclusion for two reasons. First, the matter was fully argued before me and if I were to decline to make an order the matter would have to be re-argued before the trial Judge. That would seem to be an unnecessary duplication to be avoided if possible. Secondly, I have dealt with the discovery issues in this matter throughout. That being the case, I am at least well placed to deal with this cost question as would be a Judge after trial. For these entirely practical reasons, it would seem to me that I ought vary par 5 of the order I made on 20 April 1998.
18 I will hear the parties as to the precise form of the order.
0
9
0