Land and Environment Court New South Wales Medium Neutral Citation: Verde Terra Pty Ltd v Central Coast Council (No 6) [2020] NSWLEC 64 Hearing dates: 2 June 2020 Date of orders: 02 June 2020 Decision date: 02 June 2020 Jurisdiction: Class 4 Before: Pepper J Decision: See orders at [43]. Catchwords: PROCEDURE: slip-rule amendment occasioned by mistake of parties in consent orders – inadvertent misleading of court in making order for production in answer to a subpoena – apology to court - application to amend order to ensure compliance with subpoena – order amended. Legislation Cited: Civil Procedure Act 2005, s 56 Evidence Act 1995, Dictionary Uniform Civil Procedure Rules 2005, rr 33.6(4), 36.17 Cases Cited: Greg Barnes, Chief Regulatory Office, Natural Resources Access Regulator v O'Haire [2019] NSWLEC 158 Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411 Sony Music Entertainment (Australia) Ltd v University of Tasmania [2003] FCA 532; (2003) 129 FCR 472 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 Verde Terra Pty Ltd v Central Coast Council (No 4) [2020] NSWLEC 45 Verde Terra Pty Ltd v Central Coast Council (No 5) [2020] NSWLEC 48 Wilson v Gilles (No 2) [2020] NSWSC 658 Category: Procedural and other rulings Parties: Verde Terra Pty Ltd (Applicant/First Cross Respondent) Central Coast Council (Respondent/Cross Claimant) Environment Protection Authority (Second Respondent) Mangrove Mountain Landfill Pty Ltd (Second Cross Respondent) Mangrove Properties (NSW) Pty Ltd (Third Cross Respondent) Representation: Counsel: P Larkin SC with G Tsang (Applicant) T Howard SC with M Astill (Respondent/Cross Applicant) P Larkin SC with G Tsang (First, Second and Third Cross Respondents) N/A (Second Respondent) Solicitors: Ashurst (Applicant/First, Second and Third Cross Respondents) MBM Legal (Respondent/Cross Applicant) N/A (Second Respondent) File Number(s): 2019/101279 Judgment Verde Terra Parties Seek to Amend the Terms of an Order for Production of Financial Records to be Produced in Answer to a Subpoena 1. In Verde Terra Pty Ltd v Central Coast Council (No 4) [2020] NSWLEC 45 the Court made the following order in respect of a subpoena issued by Central Coast Council ("the Council") to Mangrove Mountain Landfill Pty Ltd ("MML") ("order 1"): in answer to the MML subpoena (as amended), MML is to produce to the Court on a USB stick all MYOB database files referred to in the MML subpoena for the financial years ending 30 June 2014 to 30 June 2018 and the Quickbook database files for the financial years ending 30 June 2018 to 30 June 2019, otherwise the notice of motion to set aside that subpoena is dismissed… 1. The background to this application, not repeated here but nevertheless relied upon, is found in Verde Terra (No 4). All abbreviations used in that judgment are, for the sake of convenience, adopted here. 2. The subpoena to MML was originally in these terms (Verde Terra (No 4) at [14]): 1. The accounting data files of the company for the years ended 30 June 2015, 2016, 2017, 2018 and 2019. 2. The name and version of the accounting software. 3. Log in and passwords for each file. 1. In the course of an application to set aside the MML subpoena by the Verde Terra parties, the terms of the subpoena were amended by consent on 24 April 2020 to (Verde Terra (No 4) at [38]): The MYOB and Quickbooks files of MML for the years ended 30 June 2015, 30 June 2016, 30 June 2017, 30 June 2018 and 30 June 2019 that were used to produce general ledger printouts included in Exhibit TARTAK-03. 1. The application did not conclude in one day and the matter was adjourned part-heard to 30 April 2020. 2. Prior to the matter resuming, on 28 April 2020 a letter was sent from Ashurst (the solicitors representing the Verde Terra parties) to the legal representatives of the Council ("the 28 April Ashurst letter"). The 28 April Ashurst letter made the following offer to resolve the dispute (Verde Terra (No 4) at [43]): 1. MML is to produce to the Court, pursuant to an order of the Court in answer to the MML Subpoena, the following, on a USB stick: (a) MYOB database files referred to in the MML Subpoena for the financial years ending 30 June 2014 to 2018 and the Quickbook database files for the financial years ending 30 June 2018 to 2019 (Accounting Database Files); (b) payroll activity summaries and payroll advice reports for MML for the financial years ending 30 June 2015 to 2019. 1. During argument on 30 April 2020 resolution was reached by the parties as to the scope of the documents to be produced pursuant to the MML subpoena (as amended) by reference to the 28 April Ashurst letter (T4:50-5:04; 10:43-11:48 and 16:32-47). Hence the Court made order 1 in the terms that it did on that day. That is, the Court deliberately referred to "30 June 2014" in the order because it had understood that, notwithstanding the terms of the amended subpoena, the agreed position of the parties was to produce the documents as formulated in paragraph 1(a) of the 28 April Ashurst letter. 2. Order 1 was framed in terms provided to it by the parties. Specifically, the Verde Terra parties expressly told the Court that the records of MML could be produced in the manner stipulated. 3. By notice of motion filed on 27 May 2020, the Verde Terra parties sought to amend order 1 as follows: (1) in answer to the MML subpoena (as amended), MML is to produce to the Court on a USB stick all MYOB database files for the financial years ending 30 June 2015 to 30 June 2018 and the exported Quickbooks files for the financial years ending 30 June 2018 to 30 June 2019 referred to in the MML subpoena, otherwise the notice of motion to set aside that subpoena is dismissed. 1. There were two aspects to the application: first, a so-called 'slip rule' amendment to delete the reference to "30 June 2014"; and second, a change to the method of production of the financial information contained in the Quickbooks files referred to in order 1. 2. In support of the motion, the Verde Terra parties relied upon an affidavit of Mr Matthew Abrahamian, sworn 8 May 2020. Mr Abrahamian is a solicitor and director of Law Corporation Pty Ltd, which acts for MML. 3. The parties resolved the substance of the application immediately prior to the hearing of the application. These are the Court's reasons for making the orders that the parties now jointly seek. The Application of the Slip-Rule is Appropriate 1. The parties conceded that the reference to the financial year ending "30 June 2014" in the 28 April Ashurst letter (the genesis of order 1) was in error. This is because the 2014 financial year concluded prior to the making of the 2014 consent orders, the setting aside of which is the gravamen of the dispute between the parties in the principal proceedings. 2. The parties are therefore in agreement that order 1 should be amended to remove the reference to "30 June 2014" and in lieu thereof replace it with "30 June 2015". 3. The slip-rule is contained in r 36.17 of the Uniform Civil Procedure Rules 2005 ("UCPR"): 36.17 Correction of judgment or order If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error. 1. In Greg Barnes, Chief Regulatory Office, Natural Resources Access Regulator v O'Haire [2019] NSWLEC 158 the Court described the operation of the slip-rule as follows (at [39]-[42]): 39 Historically, courts have an inherent jurisdiction to correct any clerical mistake or error in a judgment or order where it was the result of an accidental slip or omission (Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 449-452 and Newmont Yandal at [18]). That power is now contained in r 36.17 of the UCPR. 40 The slip rule can be used to correct mistakes or errors in order to reflect the true objective intention of the decision maker at the time the decision and orders were made (Al Maha v Huajun [2018] NSWCA 245; (2018) 233 LGERA 170 at [267] and Newmont Yandal at [116]). 41 In Zoef v Nationwide News Pty Ltd (No 2) [2017] NSWCA 2, Gleeson JA described the scope and operation of the slip rule as follows (at [35]-[36]): 35 The slip rule has been held to permit applications for variations of orders where the mistake or error requiring the change lay in a party's failure to advert to a matter at the time of the hearing. In Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140 at [24], Giles JA (Spigelman CA and Handley JA agreeing) referred with approval to the following statement by Toohey J in Raybos Australia Pty Ltd v Tectran Corporation Ltd(1988) 77 ALR 190 at 191: In many cases the slip rule or its equivalent is invoked when, through error or oversight, a judgment or order fails to express correctly the intention of the court at the time when the judgment or order was announced. But it is clear that this power of correction extends to cases where a matter, through inadvertence, was not dealt with at the hearing. In that case the purpose of correction is not to give expression to the intention of the court at the time the judgment or order was pronounced … 36 Giles JA continued at [25] as follows: Applications under a slip rule have been entertained to vary orders by inclusion of interest in a judgment (L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2)(1982) 151 CLR 590; Gould v Vaggelas(1983) 157 CLR 271), ordering repayment of the judgment sum (The Commonwealth of Australia v McCormack(1984) 155 CLR 273; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2)(1991) 27 NSWLR 659) and making an order for costs (Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd). This has been so "regardless of whether the order has been drawn up, passed and entered" (L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) at 595; see also Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) at 661). 42 The rule can also be used where a matter that should have been raised or adverted to was not considered at hearing. In Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, Lockhart J (Black CJ agreeing) observed that (at 391): It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court's order was made, or judgment given. It extends to the intention which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative: Fritz v Hobson at 561-562; Chessum and Sons v Gordon [1901] 1 KB [sic] 694; Tak Ming Co Ltd at 304; Shaddock per Mason ACJ, Wilson and Deane JJ at 594-5; and Gould v Vaggelas at 274-275. 1. The UCPR are made under the Civil Procedure Act, and therefore, the Court must seek to give effect to the overriding purpose when exercising the power to correct a judgment or order under r 36.17 (Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411 at [26]-[27]). In light of s 56(2) of the Civil Procedure Act, the words "error" and "correct" in r 36.17 of the UCPR should not be given a narrow interpretation (Newmont Yandal at [116]). 2. The power in r 36.17 can extend to correct accidental mistakes made by a party's legal representatives that have resulted in the Court making orders that were not intended to be made (Newmont Yandal at [116] and [153]). 3. In relation to the determination of whether there has been an "error", in Newmont Yandal Spigelman CJ stated that it must be determined "whether the Court's order can be characterised as arising from an accidental slip or omission. Advertence or inefficiency on the part of legal representatives may explain why the Court's order can be so characterised" (at [153]). But the conduct of the legal representatives must be able to be characterised as "accidental", rather than "deliberate", in order for the power in r 36.17 to be enlivened (Newmont Yandal at [164]). 4. It has been held that the test for whether a mistake or omission is accidental is generally whether "if the matter had been drawn to the court's attention would the correction at once have been made" (Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 453). This test has been endorsed in Newmont Yandal at [137] and Elyard at 404. 5. In the present case the error was not an accidental slip or omission made by the Court. The Court intended to include the date "30 June 2014" because this is what the parties consented to at the time of the crafting of the order. 6. Rather, it was the parties that made a mistake. What was intended was a reference to the financial year ending 2015, in conformity with the amended subpoena to MML. The reference in the 28 April Ashurst letter to "30 June 2014" was in error. 7. In light of the principles articulated above, and given that the plain intention of the parties was for the operative scope of the subpoena to commence on 30 June 2015, and not 30 June 2014, the Court accedes to the request to amend order 1 pursuant to r 36.17 of the UCPR by deleting the reference to "30 June 2014" and inserting in its place "30 June 2015". To do so fulfils the overriding purpose contained in s 56 of the Civil Procedure Act 2005 ("CPA"). The Order to Produce Cannot be Wholly Complied With 1. More substantive was the matter raised in Mr Abrahamian's affidavit, namely, that when the proceedings were last before the Court the Verde Terra parties expressly indicated that MML could produce on a USB the QuickBooks database files for the financial years ending 30 June 2018 to 30 June 2019 (a USB has been produced with the MYOB database files of MML for the financial years 2015-2018 used to produce general ledger printouts included in Ex TARTAK-03 as required by order 1). 2. The information given to the Court emanated from advice provided by Mr James Head, a partner at Deloitte, which is the registered tax agent and accountant for MML. 3. It was for this reason that the Court, by consent, made order 1 in the form that it did on 30 April 2020. 4. The information provided by Mr Head was not, it transpired, correct. 5. Mr Abrahamian deposed that pursuant to further conversations with Mr Head on 4 and 6 May 2020, the version of QuickBooks software that MML uses is cloud-based and that there is no way of copying or exporting the database file of QuickBooks from the cloud to a USB in the same way that the MYOB database files could be provided. Mr Head had wrongly understood the exportable Excel data files from QuickBooks to constitute the QuickBooks database file. 6. Mr Abrahamian has contacted QuickBooks which has confirmed that the cloud-based version of the software does not have the functionality to permit the database file to be downloaded. It only has an export function that enables the exporting of the data contained on the cloud-based service in Excel format. 7. Mr Abrahamian unreservedly apologised to the Court for inadvertently misleading it. Mr Patrick Larkin SC did the same on behalf of the Verde Terra parties. Both were correct to do so. The Court accepted the apology. 8. Nevertheless, this meant that the subpoena and order 1 made on 1 May 2020 could not be complied with. 9. In the result, Mr Gaudion has been unable to complete the work necessary for the purposes of the joint conferencing previously ordered to take place by 29 May 2020. Production is Not Possible and the Order Must be Amended 1. Because production as ordered in answer to the MML subpoena is not possible, order 1 must be amended. 2. Neither party cavilled with the proposition that the record of information that comprises MML's cloud-based QuickBooks subscription constituted a document for the purpose of the subpoena. The word "document" is not defined in the CPA or UCPR but it is defined in the Dictionary in the Evidence Act 1995 as follows: document means any record of information, and includes— (a) anything on which there is writing, or (b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them, or (c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else, or (d) a map, plan, drawing or photograph. 1. Nor was issue taken with the fact that access to the record (or document) was entirely within the Verde Terra parties' control. 2. In order to comply with the order for production material must be accessed that falls outside the scope of the amended MML subpoena, for example, MML's 2020 financial information. The QuickBooks subscription does not presently have the functionality to prevent this from occurring. In such circumstances, it is likely (without having to finally determine the question) that the "document" for the purpose of r 33.6(4) of the UCPR (dealing with the manner of compliance with a subpoena for production) is the entire cloud-based QuickBooks subscription (Sony Music Entertainment (Australia) Ltd v University of Tasmania [2003] FCA 532; (2003) 129 FCR 472 at [54] and [67] per Tamberlin J). Subjecting data retention systems designed in this way to compulsory production processes is likely to be problematic for parties and Courts alike. 3. The agreed resolution by the parties is to permit the Council's expert forensic accountant, Mr Gaudion, unsupervised "read-only" access to MML's QuickBooks subscription. This material will encompass more than the 2018 and 2019 accounts of MML. However, Mr Gaudion is well aware of his duties as an expert witness and the implied undertaking that prevents him from using the information that he accesses other than for the purposes of the litigation. The Council has stated that it will not instruct Mr Gaudion to examine or analyse the irrelevant 2020 financial information (or any other information falling outside the scope of the amended MML subpoena). 4. This proposal is sensible and entirely appropriate. The Court therefore makes the amendments sought to order 1 contained in the notice of motion. To do so will promote the quick, just and cheap resolution of the real issues for determination in the proceedings (s 56 of the CPA). Costs of the Motion 1. The Verde Terra parties sought an order that the costs of its application be reserved. 2. The Council, by contrast, sought an order that the costs be its costs in the cause. Simply put, this was because the bulk of the application to amend order 1 was caused by the innocent misleading of the Court on 30 April 2020 by the Verde Terra parties. On no view was this the fault of the Council. 3. The Court set out the relevant principles governing awards of costs in interlocutory proceedings in Verde Terra Pty Ltd v Central Coast Council (No 5) [2020] NSWLEC 48 (at [11]-[25]). They are adopted and applied without repetition here (and were recently affirmed in Wilson v Gilles (No 2) [2020] NSWSC 658 at [11]-[12] per Rees J). 4. Given that the need for the motion was, in truth, as a result of the inadvertence of the Verde Terra parties, the costs order proposed by the Council is apposite in all the circumstances. Orders 1. By consent the Court makes the following orders: 1. order 1 made on 1 May 2020 is amended to provide as follows: In answer to the MML subpoena (as amended), MML is to produce to the Court: (a) the MYOB data files referred to in the MML subpoena for the financial years ending 30 June 2015 to 30 June 2018, on a USB stick; (b) by Friday 5 June 2020, the Quickbooks data file or data files for the financial years ending 30 June 2018 and 30 June 2019, by providing the Court and the Council's expert witness Mr Gaudion read only access to MML's Quickbooks subscription, otherwise the notice of motion to set aside that subpoena is dismissed. 1. orders 6 and 7 made on 1 May 2020 are vacated; 2. the forensic accounting experts, Mr Gaudion and Dr Ferrier, are to commence a joint conclave by no later than 26 June 2020; 3. pursuant to their joint conclave, the forensic accounting experts are to file and serve a joint expert report by no later than 10 July 2020; 4. the costs of the notice of motion filed on 27 May 2020 are to be the First Respondent's costs in the cause; and 5. liberty to restore on three days' notice. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 June 2020