Warragamba Winery Pty Ltd v State of New South Wales - [2010] NSWSC 1314

No judgment structure available for this case.

CITATION: Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 1314

HEARING DATE(S): 7 May 2010

JUDGMENT DATE :
16 November 2010

JUDGMENT OF: Harrison J

DECISION: 1. Order the first defendant to pay the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009.
2. Order the costs referred to in order 1 be payable forthwith in accordance with UCPR 42.7(2).
3. Order that in addition to and separately from the costs referred to in order 1, to the extent if at all that the plaintiffs also incurred wasted costs that were occasioned or thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009 or 18 September 2009, being costs that are referrable to work that cannot still be utilised in the conduct of the plaintiffs' cases, such costs be paid by the first defendant.
4. Order that the costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 are to be the costs in the proceedings.
5. Order that the costs of the plaintiffs' motion for discovery are to be the costs in the proceedings.
6. Order the first defendant to pay one half of the plaintiffs' costs of this application.

CATCHWORDS: COSTS – application for costs referable to failure by first defendant to serve evidence as ordered by certain date – where plaintiffs sought to enforce the order – whether mediation of no utility in the circumstances – whether costs thrown away as a result – whether first defendant should be ordered to pay the costs – UCPR 42.7(2) -whether order should be made for payment of costs forthwith – costs of motion for discovery – where motion settled – first defendant ordered to pay some costs forthwith – some costs to be costs in the proceedings

LEGISLATION CITED: Uniform Civil Procedure Rules

CATEGORY: Procedural and other rulings

CASES CITED: ASIC v Rich [2003] NSWSC 297
Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1
Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc [2010] NSWSC 351

PARTIES: Warragamba Winery Pty Ltd (Plaintiff)
State of New South Wales (First Defendant)
Sydney Catchment Authority (Second Defendant)

FILE NUMBER(S): SC 2005/269559

COUNSEL: D Nock SC with K Odgers (Plaintiffs)
L King SC with N Newton (First Defendant)

SOLICITORS: McLachlan Chilton (Plaintiffs)
General Insurance Law Department (First Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HARRISON J

16 November 2010

2005/269559 Warragamba Winery Pty Ltd & Ors v State of New South Wales and Sydney Catchment Authority
JUDGMENT

1 HIS HONOUR: The plaintiffs seek orders for costs against the first defendant in three categories. First, costs referrable to an alleged failure by the first defendant to comply with orders made by me on 10 March 2009 in respect of the service of evidence. In particular, these costs relate to the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, the costs of the appearance before me on 19 October 2009 and costs said to have been thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009. Secondly, costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009. Thirdly, costs with respect to the plaintiff's motion for discovery dated 17 September 2009. The plaintiffs also ask for orders that any costs that are ordered be made payable forthwith.

Background

2 On 10 March 2009 I made the following orders:

" ORDERS

The Court notes that the plaintiffs have served all statements of expert evidence, which they propose to tender/lead in their case (except for their case on the dollar value of their loss and damage).

The Court orders that:

1. The first defendant provide a response to the plaintiffs’ solicitor’s letters of 18 November 2008 and 15 July 2008 requesting particulars by 17 March 2009.

2. Pursuant to s 26 of the Civil Procedure Act 2005 the whole of the proceedings and the 16 related matters are referred to mediation before a mediator to be agreed between the parties.

3. The parties are to agree on a mediator by 10 May 2009.

4. A preliminary conference to be held with the mediator by Wednesday 1 July 2009.

UCPR

(a) statements of lay evidence

(b) expert reports; and

which they propose to lead/tender in their case as they propose to serve for the purposes of the mediation.

6. The mediation to be completed by 18 September 2009.

7. Costs of the mediator and the facilities to be borne as to one third by the first defendant, one third by the second defendant and the other third by the plaintiffs in such proportions as they may agree amongst themselves.

8. Matter listed for mention and report as to the mediation at 9.30am on Thursday 24 September 2009.

9. Paragraphs 3-6 of the First Defendant’s Notice of Motion filed 14 October 2008 are stood over to 24 September 2009. The Court notes that it will not be heard that day.

3 On 16 July 2009 Kirby J made the following orders:

"1. By 5.00 pm on Tuesday 21 July 2009, the 1st Defendant to provide to the Plaintiffs the names of the experts (and their areas of expertise), a report of whom it is likely it will serve in accordance with the order in paragraph 3(b) below.

2. By 5.00 pm on Tuesday 21 July 2009, the 1st Defendant is to identify by letter to the Plaintiffs any documents additional to the Plaintiffs' bundle which it intends to rely upon.

(Note: The 1st Defendant has leave to amend and/or supplement the documents identified in accordance with this order in the course of complying with the order in para 3(c) below.)

(a) statements of lay evidence;

(b) expert reports; and

which they propose to lead/tender in their case as they propose to serve for the purposes of the mediation.

6. The mediation scheduled to commence on 10 September 2009 is vacated and re-scheduled to commence on 20 October 2009, or on such other date and time as is agreed between the parties and the mediator or as is appointed by the mediator.

7. Costs of the mediator and the facilities to be born as to one third by the 1st Defendant, one third by the 2nd Defendant and the other third by the Plaintiffs in such proportions as they may agree amongst themselves.

8. A further preliminary conference to be held with the mediator on Thursday, 23 August 2009.

9. Matter listed for mention and report as to the mediation at 9.30am on 20 November 2009.

9A. Paragraphs 3-6 of the 1st Defendant's Notice of Motion filed 14 October is stood over to 20 November 2009. The Court notes that it will not be heard that day.

10. Costs thrown away as a result of the non-compliance by the 1st Defendant with order 5 of the short minutes of order made by Justice Harrison on 10 March 2009, and vacation of the mediation are reserved.

4 Then on 24 September 2009 I made orders that included the following:

"1. The first defendant should serve the statements of the following people by the dates indicated:

(a) Steve Wolter by 25 September 2009;
(b) Mark Williams by 28 September 2009;
(c) Ross Smith by 30 September 2009;
(d) Alan Brinkworth by 2 October 2009;
(e) John Pearson by 2 October 2009; and
(f) Kernin Lambert by 5 October 2009.

2. I will re-list this matter for directions before me at 9.30am on Monday 19 October 2009.

5 The plaintiffs complain that the first defendant did not comply with these orders so that the mediation was wholly or substantially ineffective and the preparation for it was wasted. They also complain that the first defendant did not notify them when it was, or must have been, apparent to the first defendant that it was not going to be able to comply with the orders and that the mediation would have to be aborted or severely restricted in its scope and usefulness. In support of that submission the plaintiffs rely largely upon the correspondence that passed between the parties in the period between the making of the orders and the dates set for the mediation. Some of that correspondence is referred to below.

6 On 18 March 2009 the first defendant's solicitor Mr Keleher wrote to the plaintiffs' solicitor Mr Torrisi in terms that included the following:

"Please note that despite best endeavours we are unable to provide the first defendant's response to the subject request for particulars in accordance with the orders made by his Honour 10 March 2009.

We will provide the first defendant's response to same by Wednesday 25 March 2009.

… my client is still in the process of finalising its instructions on a number of matters arising in the request which we had informed the Court at the mention on 13 February 2009 would be a lengthy and costly process in advance of finalising the evidence.

We will respond to your request by Wednesday 25 March 2009.

7 Mr Torrisi replied on 27 March 2009. Among other things, this letter included the following:

"The Plaintiff has allowed a number of extensions to the Orders which were made by consent and indulged the First Defendant's assurances.

8 Mr Keleher provided lengthy particulars by letter to Mr Torrisi dated 30 March 2009. Only the last paragraph of that letter need be noted. It was as follows:

"Copies of the documents referred to in the above response that are not included in the discovery will be forwarded within 7 days."

9 The documents alluded to in that last paragraph were not provided by 15 April 2009, as Mr Torrisi's letter of that date confirms.

10 By letter dated 5 May 2009 Mr Keleher proposed a mediation on 10 and 11 September 2009 and sought confirmation that the plaintiffs would agree to set those days aside for that purpose. He even sought confirmation that the plaintiffs would meet a condition in these terms:

"5. As a condition of the mediation, the first defendant requires that each plaintiff (or a representative of each plaintiff with authority to provide instructions) be present at the mediation and that a representative from or on behalf of each insurer with an interest in the matter be present at the mediation with authority to provide instructions."

11 Mr Torrisi replied on the same day. Part of what he said is as follows:

"4. We do not agree with the dates indicated given that we are aware that Mr Morling is available for the whole of August excepting the 10th and from the 20th onwards. The case has been delayed enough without the delay of another month. We for our part, provided you comply with the timetable relating to statements, will be available to undertake the Mediation in the week commencing 3rd August and from 10th August…

12 Mr Keleher also responded on this day. Part of his letter was as follows:

"1. I consider that your attitude towards fixing a date for mediation is obstructive. You are not in a position to dictate to me what is important to my client in making arrangements for the mediation.

It is important that my client has senior counsel at the mediation, as it is important that your client's senior counsel attends the mediation…

The first defendant is not able to take a date for the mediation in August 2009. Please confirm that the plaintiffs are agreeable to setting down 10 and 11 September 2009 as the dates for mediation.

13 Mr Torrisi replied on 6 May 2009. His letter contained the following:

"…we note that you may require discussions on individual cases, presumably on liability and quantum. This will again take considerable time and cause difficulties for us if we are negotiating on a global basis with the defendants.

It was for this reason that we sought your comments concerning the conduct of the mediation so that it could be concluded by the court ordered date of 18 September 2009.

14 Mr Torrisi raised certain complaints about discovery in his letter of 7 May 2009. He wrote again on 3 June 2009 as follows:

"We refer to the above and to our letter dated 7 May 2009.

We have not received a response to the above and ask if you would kindly attend to this within seven (7) days. The matters in our correspondence are important to our proper preparation for the mediation.

15 Mr Torrisi wrote on 18 June 2009. That letter was in these terms:

"We note that we wrote to you on 5 May, 7 May and again on 3 June to have you provide us with details of any documents upon which you intend to rely in relation to your Defence so that we might consider them in preparation for Mediation. We note that we have not had the courtesy of a reply.

1. That the First Defendant comply with Orders of the Court regarding Discovery and provide the documents listed in our letter of 5 May 2009. Alternatively,

16 Mr Torrisi's next letter dated 24 June 2009 was in these terms:

"Further to our letter of 18 June 2009, we note that in your letter of 23 February 2009 you stated … in relation to discovery that your client was 'undertaking an onerous cross-check of archives' in order to ensure that the instructions referred to in your letter of 23 February 'are correct'. You further advised that 'this process is not complete'.

17 Mr Torrisi wrote again on the following day in these terms:

"We refer to our further letter dated 18 June 2009.

We note that the time we have nominated for you to respond has now expired.

We repeat, failure of the First Defendant to reply to the correspondence leaves us with no alternative but to proceed by way of Notice of Motion to have the documents produced or for you to advise that you have no such documents.

18 A letter that the first defendant contends is important in the current context is Mr Keleher's letter dated 26 June 2009 as follows:

"I refer to your letters dated 18 June 2009 and of today's date.

As you are aware, the Court timetable requires the defendants to serve evidence by 10 July 2009.
You would appreciate that this office and my clients are fully engaged in the preparation of evidence in order to serve evidence by that date.

It is for this reason that I have not been able to respond to the matters raised in your abovementioned letters (and previous letters) by your self-imposed deadline.

Further, I will not be in a position to respond to those matters before 10 July 2009.

I note the mediation is listed to commence on 10 September 2009 and respectfully suggest that you are not prejudiced by waiting for my response to those matters until shortly after 10 July 2009.

19 Mr Torrisi's response to that letter was as follows:

"As long as you provide the information requested by 10 July we will be in a position to provide advice to our clients in time for the Mediation. In this respect you should know that we are commencing conferences for the purpose of advising our clients in relation to the Mediation on 20 July with Counsel having set aside the week of 13 July for the purposes of dealing with the material that you are to provide by 10 July. We do not have sufficient time to engage in any extension of the Orders already made by the Court for your material to be provided by 10 July.

The main reason that we address this issue as if there were a time limit is because of your letter of 30 March where you set one for yourself. We have relied upon that deadline and its subsequent extensions.

20 The plaintiffs contended that there had been no indication in any of the correspondence up to that last letter that the first defendant was having any difficulty whatsoever complying with my orders. However, on 9 July 2009 Mr Keleher wrote to Mr Torrisi in these relevant terms:

"I refer to your conversation with Sean Keleher of this office and the consent orders made by his Honour on 10 March 2009.

As discussed today, while it had become logistically impossible for the first defendant to serve its evidence by 10 July 2009, the first defendant was endeavouring to serve its evidence with a reasonably short space of time thereafter in order to maintain the mediation dates.

Unfortunately, it is apparent that this will now not be possible due to the logistics of finalising the first defendant's lay and expert evidence. Illustrative of the logistical difficulties the first defendant faces is the fact that one of its experts is fully occupied by the Victorian Royal Commission into the recent bushfires and cannot devote any time to this matter until the end of July 2009.

*****

I have estimated that the first defendant will require a further 10 weeks to finalise and serve the evidence within the terms of the order made on the last occasion, i.e. by 18 September 2009. Accordingly, it will be necessary to vacate the mediation dates on 10 and 11 September 2009.

*****

Please advise whether the plaintiffs are agreeable to rescheduling the mediation for 7 - 9 October 2009.

21 Mr Torrisi wrote to Mr Keleher on 13 July 2009. Shortly thereafter, the matters came before Kirby J in his duty list on 15 and 16 July 2009 when, as appears above, he ordered the mediation to be rescheduled to commence on 20 October 2009. It ultimately took place on 4 and 5 November 2009 having been once again rescheduled following a pre-mediation conference with Mr Morling QC on 23 July 2009 after Kirby J's orders had been made.

22 In his affidavit of 4 December 2009 Mr Keleher said at par 23 that from 10 March 2009 until 14 July 2009, he was involved with Mr Allan and Messrs Newton and Gregory of counsel in the preparation of the first defendant's evidence. This required approximately 785 man-hours. At par 25 of his affidavit Mr Keleher said that the process took longer than he had expected and by early July 2009 it became apparent to him that the first defendant would not be able to complete the task within the time as directed.

23 The matters came before me on 24 September 2009 after the failure of the first defendant to comply with the orders made for the service of evidence. The orders that I made on that occasion are set forth above. The matters returned to me on 19 October 2009. I made the following orders:

"1. Confirm mediation dates for 4 and 5 November 2009.

2. Grant liberty to the parties to apply on 48 hours notice if necessary.

24 In his affidavit of 21 April 2010 Mr Torrisi said this:

"5. The matter came back before the Court on 19 October 2009. I am unaware of any instance at any of the mentions before the Court prior to the mediation where the first defendant indicated the nature of the further evidence that may be served after the Mediation and in particular made no mention of any further expert reports other than [Mr] Leonard.

6. After the Mediation, the matter came back before the Court on 20 November 2009 when the first defendant sought to put on a further 20 statements, an additional report of Mr Smith and the concluded report of Mr Leonard.

7. On 16 February 2010 the Court ordered that the first defendant have until 31 March 2010 to file any further witness statements and expert reports.

8. On 31 March 2010 the first defendant served a further 15 witness statements, a complete report of the expert Mr Leonard and a supplementary report of Mr Smith. They also served a further 72 pages of material plus maps and photographs which were not the subject of discovery…

*****

14. The recommendations given to the plaintiffs in conference as to settlement of their claims at the Mediation were based on my and Counsel's assessments of the strengths and weaknesses of the first defendant's case, and those assessments in turn were made on the basis of the evidence as served by the defendants prior to the Mediation. The matters taken into account in making these assessments included the fact that the first defendant had not served statements of Messrs Healy, McLachlan or Koperberg and had not served any expert evidence in respect of the plaintiffs' failure to warn case.

*****

Costs of mediation and non-compliance with orders to serve evidence

25 In summary, the plaintiffs contended that all of the material that was in fact served by the first defendant by 31 March 2010 could and should have been served prior to the mediation and that the utility of the mediation would have been greater if that had occurred.

26 The plaintiffs originally sought a declaration that the first defendant had not conducted the mediation in good faith. That allegation was ultimately not pressed and a prayer for relief of that sort was abandoned. Given the difficulties arguably associated with such an application it was not surprising that the plaintiffs adopted that course.

27 One of the problems with an assertion that the mediation was less valuable than it might otherwise have been, or that costs incurred in preparation for it and in conducting it have been forever lost or have been wasted, is the achievement of a satisfactory understanding of what turned out to be the actual utility of the mediation in the circumstances. For example, even if the first defendant had complied in all respects with the orders that were made concerning the delivery of evidence and statements beforehand, it is not possible on the material before me to say that the end result would have been different or to quantify the difference if there was one. It is also not possible to give content to the contention that it was in fact a waste of time and money. The plaintiffs do not explain the way or ways in which the outcome may have been different or precisely how the report of Mr Smith and the witness statements "would have materially altered the recommendations made to the plaintiffs as to the settlement of their claims". There may be good reason for this in the wider context of yet to be concluded litigation, but it remains unsatisfactory in terms of the proper adjudication of the present application.

28 This issue was discussed at some length before me on this application. This occurred before the plaintiffs had discarded their claims that the first defendant had not conducted the mediation in good faith. Part of the transcript of that discussion is as follows:

"NOCK: …The question that your Honour has to consider is whether all of that material was material that should have been provided before a mediation took place and whether it is significant material which of the type that your Honour referred to that should have been available.

*****

When you're discussing with your client, there are 2 ways to look at it to give them the evidence that is there and talk to them the evidence that is there and then say to them the following evidence is not there and without explanation, we're entitled to say they either not got it or they've got it, they have either not served upon it and therefore we can probably think that it's not favourable to the other party's case.

HIS HONOUR: If you say that you had less evidence from the first defendant at the mediation than you should have had, presumably the evidence that subsequently came for the reason that the defendants chose to serve it, strengthened the defendant's case. Is that a fair assumption or not?

NOCK: It is not. It depends on how you look at it. Some of the evidence has strengthened the plaintiffs' case. Some of the evidence has raised issues which I will come to in a minute that we didn't think were in issue.

HIS HONOUR: The reason I raise it will be obvious to you. If you're getting material from the defendants that strengthen their case but you settle cases at the second mediation without knowing that was to come, presumably you settled with a more optimistic view of your case in any event and that that would have been arguably reflected in the view you took about how much the cases should be settled for.

NOCK: Yes.

HIS HONOUR: I can understand the complaint if it is that there was material that the defendants produced that suggested your case or cases were better than you had thought they were, but I'm not certain. For example are you taking collateral proceedings to set aside any of the settlements that occurred at the mediation?

NOCK: No, we don't need to do that. I don't want to go into what happened in at the mediation.

HIS HONOUR: My point is, Mr King perceives this is an application for a declaration that the mediations were not conducted in good faith. Is the only consequence of that, if there is a consequence, the costs of the mediation? You don't seek any form of substantive relief or--

NOCK: -- no I only seek the costs.

HIS HONOUR: You need to address I suppose how I cope with the proposition that Mr King will no doubt advance, that if the mediation managed to settle some cases, how do I accommodate that fact with your contention that the playing field was not level.

NOCK: That means that we have got to deal with what happened in the mediation.

HIS HONOUR: I'm not sure about that.

NOCK: It's the only way that it can be explained.

HIS HONOUR: It might have a collateral result that I can't hear the case.

NOCK: Yes, it may have that but your Honour is aware that the mediation was to be held on a global basis. The mediation was not successful on a global basis as we all know. What occurred and how it occurred or what happened is a matter that I don't propose in this Court because of the situation that's there where. I raise those issues which are open and we know about.

As far as the effect that it has upon all of the plaintiffs because the majority of this evidence deals with the whole of the plaintiffs' case; only a few, I will come to those in a minute, where they're individual matters that had we known about them, we might have dealt with the mediation or might deal with the situation in a different way.

HIS HONOUR: In talking about dealing with it in a different way, don't you have to say that you wouldn't have mediated at all

NOCK: I'm certainly saying that.

HIS HONOUR: Did somebody depose to that conversation.

NOCK: Yes.

HIS HONOUR: If you knew then what you know now you would not have mediated at all.

NOCK: No. We would have waited until that material came.

HIS HONOUR: Does Mr Torrisi say that?

KING: No. He says the advice would have been materially different.

NOCK: Mr Torrisi can go into the witness box.

HIS HONOUR: This is an interesting application. I need to understand the relationship between your proposition that it wasn't negotiated in good faith and the costs that were incurred when it did happen, having regard to the fact that it was partly successful.

NOCK: That is something that I would dispute strongly.

29 A little later this appears in the transcript:

"HIS HONOUR: --your proposition is if you had been forewarned that your case was likely to have this difficulty you might have been more amenable to settle generally and to be frank for a lower sum in which case the costs of the mediation might have been not wasted.

30 In the way that I have described, the nature and extent of the costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 cannot properly be understood at this time. The plaintiffs do not appear to go as far as to say that the mediation was aborted because of the first defendants' failings and in fact that did not occur. Two matters at least were settled. A proper assessment of the plaintiffs' claim for these costs has to be informed by the difference between what the plaintiffs say happened at the mediation and what they say would otherwise have happened. This is not apparent on the evidence and may never be apparent. The unadorned proposition that the advice given at the mediation would have been materially different does not advance the plaintiffs' argument in a meaningful way. In my opinion, the costs incurred by the plaintiffs and allegedly thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 should be the costs in the cause. In a consideration and assessment of those costs in due course, the relationship between the final outcome in the proceedings and the significance, if any, that the first defendant's unserved evidence may have achieved in the determination of that outcome, will no doubt be important. These costs should be costs in the proceedings.

31 On the other hand, there does appear to have been a failure on the part of the first defendant to recognise or to appreciate in a timely way that compliance with the orders that were made was going to be difficult and to apprise the plaintiffs of this in advance of the mediation. The correspondence between March and July in particular demonstrates that the plaintiffs were pressing for compliance and were getting less than satisfactory responses from their point of view. The fact that the first defendant actually required until 31 March 2010 to provide the evidence that it had originally been ordered to provide by 10 July 2009 is a fair indication of the extent to which it miscalculated or underestimated the task that confronted it and the time that it would take to complete. This is not an underestimation or miscalculation in which the plaintiffs were in any way complicit or for which their conduct was in any way a cause.

32 As the correspondence suggests, the costs of the appearance before Kirby J on 15 and 16 July 2009 were largely if not entirely caused by reason of the first defendant's failure to serve its evidence by 10 July 2009. In these circumstances I consider that the first defendant should pay the costs reserved by his Honour on 16 July 2009. The costs of the appearances before me on 24 September 2009 and 19 October 2009 appear to fall into a similar category so that the first defendant should also pay those costs. In addition to and separately from those costs, to the extent if at all that the plaintiffs also incurred wasted costs, in the sense that they were occasioned or thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009 or 18 September 2009 and that are referrable to work, apart from the appearances, that cannot still be utilised in the conduct of the plaintiffs' cases, I consider that those costs should also be paid by the first defendant.

Motion for discovery

33 The plaintiffs' motion filed 22 December 2009 sought discovery of the following documents:

(a) All situation reports in respect of the 20 fires specified in the letter from GIO to McLachlan Chilton dated 30 March 2009 ("the 20 Fires") for the period from 9.00am on 23 December to 4.00pm on 24 December 2001.

(b) All incident summaries in respect of the 20 Fires for the period from 9.00am on 23 December to 4.00pm on 24 December 2001.

(c) All operational status reports of significant incidents in respect of the 20 Fires current between 9.00am on 23 December and 4.00pm on 24 December 2001.

(d) All incident action plans in respect of the 20 Fires for the period from 9.00am on 23 December to 4.00pm on 24 December 2001.

34 The application for discovery was supported by an affidavit of Mr Torrisi sworn 18 December 2009. Paragraph 14 of that affidavit encapsulated the plaintiffs' reasons for wanting to have the documents in question:

"14. It is clear from the First Defendant's Defence and particulars that the First Defendant intends to defend the Plaintiffs' claims by arguing, inter alia, that its officers acted in good faith partly by reason of the 'demands' placed on those officers by the 20 bush fires alleged to be burning prior to 24 December 2001. The Plaintiffs seek discovery of the … documents [referred to in the notice of motion] in relation to the bush fires … which documents will disclose what 'demands' were placed on the said officers by the said bush fires…"

35 The first defendant emphasised that this motion was served at a time when it was attempting to finalise its evidence "under considerable time pressure" and at a time when the plaintiffs were attempting to limit the time within which that evidence was to be provided. There was as well on foot an application by the first defendant to invite me to revoke an order that I had earlier made for the separation of the issues of liability and damages. The plaintiffs' motion was subsequently amended to seek further relief.

36 In response to the amended motion Mr Keleher wrote to Mr Torrisi on 15 February 2010. Part of that letter is as follows:

"We refer to the plaintiffs' Amended Notice of Motion returnable 16 February 2010…

In response to paragraph 1 of [the] motion, the first defendant states that it relies on those fires particularised at page 6 of our letter dated 30 March … solely for the fact that they were being actively managed by the first defendant on the morning of 24 December 2001 and that all available aircraft were tasked on a number of those fires on the morning of 24 December 2001.

On that basis we consider that the only possible relevant documents are the Flight Operations Returns for 24 December 2001 which we are prepared to discover forthwith.

We consider that the other categories of documents sought by you are not relevant and would be extremely onerous to produce given the possibility that documents within those categories could be located within numerous regional offices of the RFS and NPWS and New South Wales.

We note that we have already discovered all Incident Summaries, Commissioner's Briefings and Operational Status Reports for 24 December 2001 which gave details of the 20 fires being managed on the morning of 24 December 2001 which is the time period [on] which we relevantly rely. Further the Plaintiffs have included some of these reports in their tender bundle thus making it part of their case as the defendants would see it. As we have stated in previous correspondence, the first defendant does not understand that it is to be suggested by the plaintiffs that the content of these documents are not accurate or bona fide.

*****

37 In response to that letter the plaintiffs asked the first defendant to modify the second paragraph of the letter so that the final sentence read as follows:

"The First Defendant does not intend to rely on any other deficiencies in its equipment or manpower which would have prevented the First Defendant from fighting the Mt Hall fire on the morning of 24 December 2001."

38 Mr Keleher responded to that suggestion by writing another letter on 15 February 2010. It set out a number of proposals that he asked the plaintiffs to consider, and which he indicated the first defendant was prepared to include at any convenient point in correspondence so as, in effect, to formalise them. He said, however, that the first defendant "cannot accept your suggestion which does not accurately reflect our client's case." The letter concluded with the following paragraph:

"We would add that as we see it, the evidence now on from our client (which is the bulk of the evidence on this issue) makes the points above clearly and the documents we have discovered cover them to the extent of the documents available."

39 The motion was returned before me for the first time on 16 February 2010. It was given a hearing date on 26 February 2010. Before the hearing took place, Mr Keleher wrote a very long and detailed letter to Mr Torrisi in what Mr Keleher describes at par 27 of his affidavit as "a final attempt to resolve the plaintiffs' motion". The letter is too long to be recorded here. It is sufficient to note that Mr Torrisi replied to the letter on 24 February 2010 in which he said that, subject to the provision of some minor matters "and agreement as to costs, we would regard the [first] Defendant's action as satisfying the Orders that we have sought in the Amended Notice of Motion". Mr Keleher completed the cycle of correspondence on 25 February 2010. His letter of that date included this paragraph:

"In relation to costs of the Motion, we respectfully submit that the outcome of the Motion would indicate that the most reasonable order is for costs of the Motion to be costs in the cause."

40 The first defendant maintained that submission at the hearing of this costs application. It submitted that the motion was resolved by consent without a hearing on the merits. In those circumstances it submitted that it is not normally appropriate to make an order for costs except as agreed between the parties. In particular, on any application for costs in such circumstances, the Court should take into account the desirability of encouraging and not penalising a party that responds to an application by negotiating a compromise: see, for example, ASIC v Rich [2003] NSWSC 297 at [78].

41 The plaintiffs argue in effect that the motion was necessary to provoke the agreement that was ultimately achieved and that they should have their costs in the circumstances.

42 As with so many issues in long running and complicated proceedings such these, it is often not possible to form even a preliminary view about the respective merits of the parties in order to assess whether or not an application for costs on a discrete issue can be made with confidence in its fairness or whether the ultimate outcome in the proceedings ought to be permitted to inform where the burden of the order should fall. In the present case, the parties resolved the discovery issue by consent. The plaintiffs were the moving parties and in that sense achieved a result where none appeared likely before they took action. On the other hand, as the first defendant points out, a resolution of the matter must necessarily indicate that the plaintiffs were prepared to draw back from their original position to achieve an unlitigated outcome.

43 I consider that there is merit in the first defendant's submission that the costs of the discovery motion should abide the outcome in the principal proceedings. I will order that the costs of the motion are to be the costs in the proceedings.

Payment forthwith

44 The plaintiffs sought orders that any costs that the first defendant was ordered to pay should be payable forthwith. The ordinary rule is that the costs will not be payable until conclusion of the proceedings. UCPR 42.7 provides as follows:

42.7

Interlocutory applications and reserved costs

(a) costs that are reserved, and

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

45 The circumstances when costs might be paid otherwise than at the conclusion of the proceedings were considered by Barrett J in Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 at [11] – [13] as follows:

"[11] This identifies the first recognisable category of case, namely, where the application or aspect in respect of which the particular costs order is made before conclusion of the proceedings represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect. Examples of this may be found in Charlie Brown Pty Ltd v Green (unreported, NSWSC, McLelland CJ in Eq, 3 July 1995) and Bagley v Pinebelt Pty Ltd [2000] NSWSC 830.

[12] A second factor which may incline the court to order that costs be payable forthwith is some unreasonable conduct on the part of the party against whom costs have been ordered. That was a factor taken into account by Simpson J in Gattellari v Meagher [1999] NSWSC 1279, although, in the end, her Honour did not think that the particular conduct warranted such an order.

Doran Constructions Pty Ltd v University of Newcastle

Horrobin

Allstate Life Insurance Co

v Australia and New Zealand Banking Group Ltd

46 In Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc [2010] NSWSC 351 at [19], Biscoe AJ said this to the same effect:

(a) where the costs order is relevant to a discrete, separately identifiable aspect of the proceedings;

(b) where there is some unreasonable conduct by the party against whom the costs have been ordered;

Fiduciary Ltd v Morning Star Research Pty Ltd

Hamod v State of NSW

ASIC v Rich

Jazabas Pty Ltd v Haddad

Perpetual Trustee Co Ltd v McAndrew

Herbert v Tamworth City Council (No 4)

47 By reason of the decision I have reached, the only costs that fall to be considered by reference to these categories are the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009. The first defendant contended that these costs in the present case did not attract attention as costs falling within any of the three identified categories.

48 In my opinion, the aspect of the proceedings that generated the costs was the failure by the first defendant to comply with orders that it serve its evidence by 10 July 2009. The plaintiffs fairly and persistently sought to hold the first defendant to the timetable by which they had become bound. In the events that occurred, the first defendant did not satisfy the order in any final way until 31 March 2010. Whatever real or apparent significance the evidence might have had upon the looming mediation, the plaintiffs were within their rights to insist upon strict performance of the first defendant's obligation to complete its evidence by the date required. That did not happen. That is a discrete and separately identifiable aspect of the proceedings that will not reappear.

49 I am not satisfied that the first defendant was guilty of unreasonable conduct in the sense contemplated by the second category. Something more than delay would in my opinion be required before it could be said that the first defendant had acted unreasonably. Moreover, there was an explanation for the non-compliance, amounting in effect to a miscalculation by the first defendant concerning what was or what might have been anticipated was necessary to comply with the order. No different costs order should be based on considerations such as those.

50 Finally, there is some prospect that these proceedings have some distance yet to run and that there is a likelihood that there will be a fairly long time before they are disposed of. I have been hopeful, if not necessarily optimistic, that these proceedings could be resolved entirely. I have in that context delayed dealing with the present application against the contingency that any decision I may reach could have a tendency to entrench the current impasse and make settlement of the proceedings in full much less likely. Be that as it may, I do consider that the costs I have ordered the first defendant to pay are costs that will not be paid for a considerable time unless a special order is made.

51 I consider that the costs that I have identified as payable by the first defendant should be paid forthwith.

Costs of this application

52 Neither party made submissions before me with respect to the costs of the present application on 7 May 2010. Subject to any submissions that either party may in due course wish to make, it seems to me that the plaintiffs were partly successful and that they should be entitled to an award of costs that reflects that part. Doing the best I can, I consider that the first defendant should pay one half of the plaintiffs' costs of the present application.

Orders

53 In these circumstances I make the following orders:

1. Order the first defendant to pay the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009.

2. Order the costs referred to in order 1 be payable forthwith in accordance with UCPR 42.7(2).

3. Order that in addition to and separately from the costs referred to in order 1, to the extent if at all that the plaintiffs also incurred wasted costs that were occasioned or thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009 or 18 September 2009, being costs that are referrable to work that cannot still be utilised in the conduct of the plaintiffs' cases, such costs be paid by the first defendant.

4. Order that the costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 are to be the costs in the proceedings.

5. Order that the costs of the plaintiffs' motion for discovery are to be the costs in the proceedings.

6. Order the first defendant to pay one half of the plaintiffs' costs of this application.

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Citations

Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 1314

Cases Citing This Decision

0

Cases Cited

9

Statutory Material Cited

1

ASIC v Rich [2003] NSWSC 297

Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432

CITATION:	Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 1314
HEARING DATE(S):	7 May 2010
JUDGMENT DATE :	16 November 2010
JUDGMENT OF:	Harrison J
DECISION:	1. Order the first defendant to pay the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009. 2. Order the costs referred to in order 1 be payable forthwith in accordance with UCPR 42.7(2). 3. Order that in addition to and separately from the costs referred to in order 1, to the extent if at all that the plaintiffs also incurred wasted costs that were occasioned or thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009 or 18 September 2009, being costs that are referrable to work that cannot still be utilised in the conduct of the plaintiffs' cases, such costs be paid by the first defendant. 4. Order that the costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 are to be the costs in the proceedings. 5. Order that the costs of the plaintiffs' motion for discovery are to be the costs in the proceedings. 6. Order the first defendant to pay one half of the plaintiffs' costs of this application.
CATCHWORDS:	COSTS – application for costs referable to failure by first defendant to serve evidence as ordered by certain date – where plaintiffs sought to enforce the order – whether mediation of no utility in the circumstances – whether costs thrown away as a result – whether first defendant should be ordered to pay the costs – UCPR 42.7(2) -whether order should be made for payment of costs forthwith – costs of motion for discovery – where motion settled – first defendant ordered to pay some costs forthwith – some costs to be costs in the proceedings
LEGISLATION CITED:	Uniform Civil Procedure Rules
CATEGORY:	Procedural and other rulings
CASES CITED:	ASIC v Rich [2003] NSWSC 297 Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc [2010] NSWSC 351
PARTIES:	Warragamba Winery Pty Ltd (Plaintiff) State of New South Wales (First Defendant) Sydney Catchment Authority (Second Defendant)
FILE NUMBER(S):	SC 2005/269559
COUNSEL:	D Nock SC with K Odgers (Plaintiffs) L King SC with N Newton (First Defendant)
SOLICITORS:	McLachlan Chilton (Plaintiffs) General Insurance Law Department (First Defendant)