New South Wales Supreme Court CITATION : Riverina Wines Pty Limited v Tetra Pak Marketing Pty Limited [2006] NSWSC 520 HEARING DATE(S) : 10 May 2006 JUDGMENT DATE : 10 May 2006 JURISDICTION : Civil JUDGMENT OF : McClellan CJatCL DECISION : 1. I order the respondent to deliver up all documents which it holds in relation to the claim by Riverina Wines Pty Limited v Tetra Pak to the solicitors, Aitken McLachlan Thorpe, by close of business, Monday, 15 May 2006; 2. Respondent to pay the applicant's costs of the motion. CATCHWORDS : NOTICE OF MOTION UNDER LEGAL PROFESSION ACT 2004 - release of solicitors' files - damages claim for defective packaging - lien over the file - costs incurred in other proceedings - whether claim by the solicitors reasonable - whether solicitors should have accepted previous offer LEGISLATION CITED : Legal Profession Act 2004 PARTIES : Riverina Wines Pty Limited (P/A on motion) Denniston & Day (Resp on motion) FILE NUMBER(S) : SC 20308/03 COUNSEL : S J Stanton (P/A on motion) H Altan (Resp on motion) SOLICITORS : Aitken McLachlan Thorpe (P/Al) Denniston & Day (Resp) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McCLELLAN CJ at CL WEDNESDAY 10 MAY 2006 20308/03 RIVERINA WINES PTY LIMITED v TETRA PAK MARKETING PTY LIMITED JUDGMENT - re release of solicitors' files 1 HIS HONOUR: This is a motion brought by the plaintiff seeking an order pursuant to s 728 of the Legal Profession Act 2004 ("that Act") directing the respondent, Denniston & Day Solicitors, to deliver up all documents which it holds in relation to Supreme Court proceedings number 20308/2003 Riverina Wines Pty Limited v Tetra Pak Marketing Pty Limited & Ors, within three days. The applicant accepts that such an order would only be made on conditions as contemplated by section 728 of the Act. 2 The fundamental proceedings, as I understand it, relate to a claim by Riverina Wines Pty Limited that it was supplied defective packaging by Tetra Pak Marketing Pty Limited. The packaging is to facilitate the sale of the applicant's wines in cask form. It is alleged that the cask supplied was defective causing a taint in the wine and, I infer, making it unacceptable for sale. 3 The applicant first retained the respondent, I have been informed, in December 2000 although for some unexplained reason, proceedings were not commenced until November 2003. Those proceedings have only progressed to a limited degree as is made plain by the examination of the court file. As I understand the position, the applicant determined a little while ago to terminate the services of Denniston & Day and retain other solicitors. However, those solicitors have been impeded in their capacity to progress the matter by reason of the fact that Denniston & Day have retained the file claiming a lien over it. That lien is said to arise by reason of costs incurred in two proceedings. 4 The applicant company Riverina Wines Pty Limited is controlled by the Sergi family, Mr Antonio Sergi is the chief executive of the company, and his son Guiseppe Sergi is the general manager. As I understand it, they supplied a volume of vine cuttings to another enterprise known as Jarrett who were grape growers. The Jarretts allege that the cuttings were in some way defective. Proceedings were commenced and ultimately Riverina Wines Pty Limited was joined in those proceedings. The proceedings ultimately settled following mediation before Mr Coombs QC. The respondent has forwarded a bill to Riverina Wines in relation to costs incurred in that matter. However, Riverina Wines do not accept that the bill has been properly drawn because it claims effectively half of the costs in those proceedings against Riverina Wines. 5 Riverina Wines in correspondence have indicated that this was not appropriate because in fact there were three parties; two of those parties are the Messrs Sergi and the third party is the company. Accordingly, it is submitted that the company is only obliged to pay one-third of the costs of those proceedings. Nothing has been put before me to suggest that this analysis of the situation is otherwise than appropriate. Accordingly, a demand in excess of one-third would seem to be excessive and I would not impose that obligation in relation to any order for the release of the file. Perhaps after the matter has been analysed following the taxation situation it may be shown to be different, but the material before me does not suggest that this is the case. 6 The other costs claimed by the respondent are in relation to the proceedings against Tetra Pak in relation to which the order is sought for the production of the file. In relation to those proceedings, I understand that the solicitors claim an amount in excess of $100,000 by way of professional fees and disbursements. The applicant disputes that the respondent is entitled to those sums, and ultimately, the matter will presumably be resolved by taxation. The parties were progressing towards some sensible resolution of the present problem. By letter dated 24 April 2006, the solicitors made an offer to settle on the following basis: "1. That half of our professional costs in the matter of Jarrett and Riverina Wines in an amount of $6,000 plus GST of $600 plus all of our disbursements attributable to Riverina Wines in accordance with our account of 7 February 2006 be paid. We therefore require a cheque from yourselves in the sum of $18,559.53 which monies are to be released immediately for payment. 2. In relation to Tetra Pak we propose that $20,000 be paid on account of disbursements, which sum is to be released immediately for payment. 3. That a quadripartite agreement be entered into between ourselves, your firm, Riverina Wines Pty Limited and Mr Antonio Sergi to the effect that our fees will be paid upon 30 days of completion of any assessment process your client wishes to pursue. 4. That we maintain our lien over the file which is to be available to us upon providing 24 hours notice should we need to access it to deal with any issue raised in the assessment process." 7 The offer was not accepted by the applicant; however, the only respect in which there was disagreement was in relation to the way in which the professional costs and disbursements in relation to the Jarrett matter should be resolved. 8 The applicant's solicitors responded by a proposal which provided in relation to paragraph 1 of the respondent's offer: "Our client pay one-third of your professional costs and disbursements in the matter of Jarrett, such monies to be released for payment." 9 That offer accords with my understanding of the likely obligation in relation to the costs of the Jarrett matter and, accordingly, seems to me to be reasonable. 10 It was not accepted by the respondent. The terms of the counter-offer from the applicant in relation to paragraphs 2, 3 and 4 were effectively the same as the offer which had been made. In those circumstances it seems to me that the respondent should reasonably have accepted that offer. 11 When the matter came before me this morning, counsel for the respondent indicated that the counter-offer had been rejected and the respondent now sought a much larger sum in relation to the costs and disbursements claimed in relation to the Tetra Pak matter before the file would be released. To my mind, the respondent's present position is unreasonable. As recently as 24 April he was prepared to accept an amount of $20,000. At this stage in relation to the Tetra Pak matter, pending taxation, I am not persuaded that I should impose a greater obligation. It is said that I should take that course because the respondent was entitled to reject the offer and, accordingly, has been required to come to court to defend its position in the matter. As I have indicated, I am of the opinion that it was not reasonable for the respondent to reject the offer of the applicant and, accordingly, it seems to me, the reason why this matter has come to court is due to the respondent taking that unreasonable position. 12 In these circumstances it seems to me appropriate that I order the release of the respondent's file in relation to the Tetra Pak matter to the applicant's present solicitors but on the conditions proffered by the applicant's solicitors in their letter of 9 May 2006. 13 ORDERS: 1. I order the respondent to deliver up all documents which it holds in relation to the claim by Riverina Wines Pty Limited v Tetra Pak to the solicitors, Aitken McLachlan Thorpe, by close of business, Monday, 15 May 2006. 14 The conditions which I provide are as follows: (a) The applicant pay the sum of $13,337.35 in relation to the costs and disbursements in the matter of Jarrett, such money is to be released for payment; (b) The applicant pays $20,000 on account of disbursements in the Tetra Pak matter to be released for payment; (c) A quadrapartite agreement be entered into between Aitken McLachlan Thorpe Solicitors and Denniston & Day Solicitors and Riverina Wines Pty Limited/Warburn Estate Pty Limited and Mr Antonio Sergi to the effect that the fees as assessed owing to Denniston & Day Solicitors will be paid within 30 days of the completion of any assessment process; and (d) Messrs Denniston & Day maintain their lien over the file which will be returned at the completion of the matter if the issue of fees has not been resolved, during the course of the matter and will be provided by way of any document on copy of the correspondence file on 48 hours notice at no cost to Denniston & Day should they require a document in order to deal with any issue raised in the assessment process; (e) The applicant is to lodge an application for assessment in relation to the bill of costs and disbursements in relation to both the Jarrett and Tetra Pak matter on or before the close of business on 5 June 2006. (f) I reserve liberty to either party on one day's notice. (g) S/O before Registrar Howe on 13 June 2006. I hope by that stage some progress towards identifying the hearing can be taken. You may need to raise with Registrar Howe whether the question of liability should be separated from damages. 15 The applicant seeks an order for costs. That order is resisted on the basis that the conditions which I have framed will not meet all of the costs which the solicitors may ultimately be entitled to. That is correct. However, it seems to me the necessity for the current motion was as a consequence of the solicitors' failure to accept what on any view was a reasonable counter-offer having regard to the offer which they themselves made. In those circumstances it seems to me appropriate to order the respondent to pay the applicant's costs of the motion and I do so. ********** 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.