Supreme Court New South Wales Medium Neutral Citation: G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 15) [2024] NSWSC 762 Hearing dates: 18 June 2024 Decision date: 18 June 2024 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Allow $85,000 for the applicant's costs of compliance incurred in relation to subpoenas Catchwords: CIVIL PROCEDURE – subpoenas – costs of compliance – whether costs were reasonably incurred Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 6) [2022] NSWSC 628 G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 8) [2022] NSWSC 1170 Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd (No 3) [2018] FCA 2101 Category: Procedural rulings Parties: Conmas Group Pty Ltd (formerly Calibre Group Pty Ltd) (Applicant) MACH Energy Australia Pty Ltd (First Respondent) MACH Mount Pleasant Operations Pty Ltd (Second Respondent) Representation: Counsel: J Entwistle (Applicant) E Ball (Respondents) Solicitors: HWL Ebsworth (Applicant) Corrs Chambers Westgarth (Respondents) File Number(s): 2019/71358 EX TEMPORE JUDGMENT (REVISED) 1. The background is set out in my earlier judgments in these proceedings, for example, that of 17 May 2022. [1] This is the Court's 15th and my 13th interlocutory judgment in these proceedings. I shall use the same abbreviations here as I have adopted in earlier judgments. 2. MACH caused two subpoenas to be issued to the company then known as Calibre Group Pty Ltd. That company is now known as Conmas Group Pty Ltd, but as the documents to which I refer describe it as Calibre, I shall adopt that nomenclature for the purposes of these reasons. 3. Calibre was at one stage the parent of the first plaintiff, although it is now a stranger to the litigation. 4. The subpoenas have now been answered. Calibre now seeks, by a notice of motion filed on 1 May 2024, its costs of compliance. 5. There is no dispute as to the principles to be applied. Under Uniform Civil Procedure Rules 2005 (NSW) r 33.11, the party in the position of Calibre may recover its actual costs reasonably incurred. The authorities show that a broad-brush approach is warranted. [2] 6. Originally, Calibre sought costs of $104,857.90. However, as advanced in written submissions and by Mr Entwistle, who appeared for Calibre this morning, Calibre no longer presses its costs in relation to a motion brought by MACH seeking to issue compliance with the first of the subpoenas. 7. That application was heard by Rees J on 28 November 2022 and 6 December 2022. 8. Calibre now seeks costs of $95,558.75. That is calculated as the difference between its actual total costs of complying with the subpoenas, $121,694.90, less its actual costs of the motion before Rees J, $12,484.90, less a discount of 12.5% which its costs consultant, Ms Rosati, has suggested was appropriate to take account of any inefficiencies or the like. 9. MACH does not oppose an order that it pay Calibre's reasonable costs of compliance with the subpoenas, but submits that the figure that should be adopted is $40,000, rather than the figure I have just mentioned. CDJV's motion to set aside the subpoena 1. Calibre incurred costs of $13,484.50 in relation to an application made by CDJV to set aside the subpoena. That application was on foot between 17 March and 17 May 2022, on which date I heard CDJV's application. The costs of $13,484.50 were evidently incurred in that period. 2. I heard CDJV's application on 17 May 2022 and dismissed it. [3] In my reasons I noted: [4] "Calibre appears today to inform me that it is neutral about the subpoena and has no objection to producing the documents and, indeed, was in the process of preparing documents for production when the Notice of Motion before me was filed." 1. The evidence before me today shows that, of the costs of $13,484.50 incurred by Calibre, $4,025 were incurred for counsel who appeared before me on the application. It was courteous of Calibre to appear before me on that occasion, but it was not reasonably necessary. 2. Further, as Mr Ball, who appeared for MACH, submitted before me today, although MACH issued the subpoenas, it was not responsible for the costs incurred as a result of CDJV's unsuccessful challenge to the subpoenas. On 6 June 2022 I ordered that CDJV pay MACH's costs of that application. 3. Calibre could simply have ignored CDJV's application or, perhaps, sought MACH's consent and the Court's approval to pause its efforts to comply with the subpoena pending the outcome of CDJV's application. It would thereby have incurred some costs referable to CDJV's application which might nonetheless have been seen as being reasonable costs of compliance. 4. However, Calibre did not do this. It engaged in the process of preparing documents for production, while at the same time involving itself in CDJV's application. I think in these circumstances MACH was correct to submit that Calibre should not have as a part of its costs of complying with the subpoena, the costs having been incurred in relation to the CDJV application. Calibre's claim for privilege 1. Calibre sought to claim privilege over certain documents called by the subpoena. 2. It is agreed that the following passage from the affidavit of MACH's solicitor, Mr Muir, summarises the course of events leading to the hearing before me: "On 15 June 2022, Calibre asserted blanket claims for legal professional privilege over 13 documents contained in packet S-1. On 19 July 2022, Mr Wallman affirmed an affidavit which (among other things): (i) withdrew eight out of 13 blanket claims for legal professional privilege; and (ii) modified claims made for partial privilege and relevance. At the hearing on 18 August 2022: (i) a number of Calibre's claims were abandoned – including the blanket claim of privilege in respect of … five documents – leaving only eight remaining (which were, in effect, the same four documents produced twice in email chains). (ii) Calibre's redactions for relevance were abandoned entirely. On 31 August 2022, Stevenson J upheld the claims for privilege over the remaining documents. His Honour made no orders as to costs." 1. On 31 August 2022, through my Associate, I notified the parties of my conclusions concerning the claims for privilege made by Calibre. I published my reasons on 31 August 2022. [5] 2. Calibre has incurred $44,368.50 costs in relation to the privilege claim. Mr Muir's summary shows there was a narrowing of issues concerning privilege between 15 June 2022 and the hearing. Ultimately, Calibre only pressed a claim for privilege over documents which really comprised, as I recall it, four separate email messages produced on a number of occasions. 3. However, as Mr Entwistle submitted, MACH proceeded to contest the remaining privilege claims after some earlier claims had been abandoned, and, for that reason, the hearing was necessary because of MACH's resistance in relation to those last claims. 4. Calibre must, however, have incurred some of the $44,368.50 on claims that were abandoned on the hearing before me. 5. In those circumstances, and applying the broad-brush approach of which the authorities speak, I propose to allow Calibre $35,000 on account of this matter. The appropriate discount 1. As I have said, based on Ms Rosati's advice, Calibre accepts that there should be a discount of 12.5% from its actual costs, being what Mr Entwistle described as an appropriate way to deal with the potential that there might have been irrecoverable work. 2. Mr Ball submitted there had been what he called "inefficiencies" in Calibre's process of compliance with the subpoenas. He pointed to evidence of Mr Muir that, between 2022 and 2023, some 43 letters were exchanged between Calibre's solicitor and MACH's solicitors relating to, it was said, Calibre's compliance with the subpoena, and to Mr Muir's contention that there had been what he described as "drip-feed further production of documents by Calibre". 3. Mr Ball submitted that, in those circumstances, the discount I should adopt should be in the order of 30% to 40% rather than the posited 12.5%. 4. I do not feel confident I can make an informed decision about those matters, and I propose to adopt Ms Rosati's figure. The hearing before Rees J 1. As I have said above, MACH's motion seeking compliance with the first subpoena was heard by Rees J in November and December 2022. 2. Mr Ball took me to various observations her Honour made during the course of those proceedings as to the approach adopted by Calibre in relation to that application. I am unable to see what assistance that gives me here. Costs of this application 1. Calibre seeks a gross sum costs order under s 98 of the Civil Procedure Act 2005 (NSW) in relation to its costs of this application. 2. Calibre's actual costs are in the order of $65,000. MACH's costs expert, Ms Cox, has opined that a more reasonable figure is $48,500. That difference is primarily because Ms Cox would exclude the costs of her opposite number, Ms Rosati. However, I do not think it unreasonable to engage a costs assessor in relation to a gross sum costs application and an application for costs of compliance with the subpoena. 3. Further, Ms Cox used a keyword search of Calibre's solicitor's invoices to conclude that some costs were unreasonably incurred. That seems a somewhat rough and ready way to conduct such an assessment. 4. The figure of $65,000 does seem high and does include the anticipated costs of a partner, associate, and solicitor attending for a half-day hearing of this application. In fact, it took a little less than an hour. 5. It also seems appropriate to adopt the 12.5% discount that Ms Rosati adopted in relation to the costs of compliance to the costs of this application. 6. Again, adopting the broad-brush approach of which the authorities speak, I propose to allow the costs of this application on a gross sum basis of $50,000. Summary 1. In relation to the costs of compliance, I accept the 12.5% discount proposed by Ms Rosati. 2. I do not allow the amount claimed by Calibre in relation to the CDJV motion. 3. I allow $35,000 for the privilege debate. 4. I allow $50,000 for the costs of this application. 5. I invite the parties to confer, do the arithmetic, and agree on the orders needed to give effect to these reasons. ********** Endnotes 1. G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 6) [2022] NSWSC 628. 2. Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd (No 3) [2018] FCA 2101 (Murphy J). 3. G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 6) (supra). 4. At [7]. 5. G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 8) [2022] NSWSC 1170. 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: 20 June 2024