New South Wales Supreme Court CITATION : Harrem Pty Ltd v Tebb & Anor [2008] NSWSC 510 HEARING DATE(S) : 23 May 2008 JUDGMENT DATE : 23 May 2008 JURISDICTION : Equity Division JUDGMENT OF : Palmer J EX TEMPORE JUDGMENT DATE : 23 May 2008 DECISION : Costs order set aside. CATCHWORDS : PRACTICE AND PROCEDURE – COSTS – Counsel obtains indemnity costs on ground of want of jurisdiction and abuse of process – no notice of point given to plaintiff – plaintiff's counsel taken by surprise – jurisdiction point erroneous – Deputy Registrar makes costs order founded on erroneous submission – comments on "trial by ambush". CATEGORY : Consequential orders CASES CITED : Tomko v Palasty (No 2) [2007] NSWCA 369 Harrem Pty Ltd t/as Cth Transport and Storage (Plaintiff) PARTIES : Robert Andrew Tebb (First Defendant) Annette Tebb (Second Defendant) D. Pupovac (Respondent) FILE NUMBER(S) : SC 5873/06 COUNSEL : B.C.A. Bradley (Plaintiff) A.D. Crossland (Respondent) SOLICITORS : Robert Tricca & Associates (Plaintiff) Pizzinga & Associates (Respondent) PALMER J. 5873/06 Harrem Pty Limited t/as Cth Transport & Storage v. Tebb & Anor JUDGMENT – Ex tempore 23 May, 2008 1 By Notice of Motion filed on 7 February 2008 the Plaintiff seeks a review under UCPR 49.19 of an order made by a Deputy Registrar on 2 November 2007 dismissing with indemnity costs a Notice of Motion filed by the Plaintiff on 26 October 2007. In that Notice of Motion, the Plaintiff sought an order that its expert be permitted access to the property of the present Respondent, Mr Pupovac, for the purpose of gathering evidence in the proceedings. Mr Pupovac was not a party to the proceedings. The Deputy Registrar dismissed the Plaintiff's Notice of Motion and ordered that the Plaintiff pay Mr Pupovac's costs on the indemnity basis, essentially because he was persuaded by Counsel appearing for Mr Pupovac that the Court had no power to make such an order for inspection against a person not a party to the proceedings, so that the Plaintiff's Notice of Motion was an abuse of process. 2 Counsel now appearing for Mr Pupovac in this motion concedes that the power to make such an order is clearly given by UCPR 23.8 and that the submission made to the Deputy Registrar that the Plaintiff's Notice of Motion was an abuse of process was founded upon a misstatement of the law. 3 The Plaintiff's Notice of Motion for review of the Deputy Registrar's decision was filed a little more than two months after the time for review had expired. The Plaintiff therefore needed an extension of time, which it sought earlier today. Mr Pupovac resisted that application, saying that he had suffered prejudice by the Plaintiff's delay in prosecuting its application for review of the Deputy Registrar's decision. 4 I have dealt with the application for extension of time and I will make an order nunc pro tunc extending the time for filing the Plaintiff's Notice of Motion for review of the Deputy Registrar's decision up to and including 7 February 2007. The prejudice which Mr Pupovac has suffered by the Plaintiff's delay in filing the Notice of Motion can easily be cured by an appropriate costs order, which I will make at the conclusion of the hearing of this motion. 5 The Plaintiff now seeks an order discharging the costs order made by the Deputy Registrar and seeks, in lieu, an order that Mr Pupovac pay the Plaintiff's costs of the Notice of Motion filed on 26 October 2007. 6 Although Mr Pupovac concedes that the basis upon which an indemnity costs order was made by the Deputy Registrar was erroneous, he says that this Court should now order that the costs of that motion be paid by the Plaintiff on the party/party basis. 7 It is not in dispute that in a review of a Registrar's decision under UCPR 49.19 the Court is not subject to the restrictions applying to an appeal to the Court of Appeal from the decision of a Judge. The applicant for review does not need to demonstrate that the Registrar has fallen into a material error of fact or law. The reviewing judicial officer is free to receive new evidence or to exercise discretion differently, although considerable weight is always given to the experience of the Registrars in matters of practice and procedure: see generally Tomko v Palasty (No 2) [2007] NSWCA 369. 8 The circumstances in which this dispute has come to this Court for review are unfortunate. Costs have been incurred which were unnecessary and could easily have been avoided. The fault in that regard is not that of the Plaintiff. The facts are as follows. 9 In 2006 the Plaintiff had commenced proceedings against the former owners of the commercial property now owned by Mr Pupovac. The dispute concerned a lease. One of the issues was the dimensions of the leased property. The Plaintiff wished to engage an expert to measure the leased property and for that purpose the expert required access to the property. On 10 October 2007, the Plaintiff's solicitor wrote to Mr Pupovac explaining that the Plaintiff had commenced proceedings in the Supreme Court against Mr Pupovac's predecessor in title and requesting permission for the expert to have access to the property for the purpose of measurement. There was no response to this letter. 10 The Plaintiff's solicitor rang Mr Pupovac's office on 17 October, 23 October and 24 October 2007 and left messages for Mr Pupovac to return his calls. The calls were not returned. On 24 October the Plaintiff's solicitor sent a facsimile to Mr Pupovac advising that if there was no communication from Mr Pupovac by 5pm on 25 October the Plaintiff would file a Notice of Motion in the Supreme Court seeking an order for access to the property. There was no response and the Plaintiff's Notice of Motion was filed on 26 October 2007 returnable on 2 November 2007 before the Deputy Registrar. 11 Although there had been no response from Mr Pupovac to the Plaintiff's solicitor, Mr Pupovac had had a telephone conversation with a director of the Plaintiff on 17 October, in which Mr Pupovac had made it very clear that he would not grant access and that, if the Plaintiff wished to take legal steps to obtain access, "that is fine – let the legal people handle it" . That conversation probably explains why Mr Pupovac did not respond to communications from the Plaintiff's solicitor. 12 All this evidence was in affidavits placed before the Deputy Registrar on 2 November 2007. After the Plaintiff's Notice of Motion had been filed, Mr Pupovac retained a solicitor who wrote to the Plaintiff's solicitor on 31 October 2007 saying that Mr Pupovac now consented to giving access to the Plaintiff's expert but only upon certain terms, one of them being that Mr Pupovac be provided with a copy of the expert's report. The Plaintiff's solicitor responded acceding to some terms but, quite properly, not to the term that the expert's report be provided to Mr Pupovac. On the same day the Plaintiff's solicitor wrote seeking consent to an order that Mr Pupovac pay the Plaintiff's costs of the Notice of Motion as his consent to access had only been given after the Notice of Motion had been filed. There was no written response. 13 On the morning of 2 November 2007, the parties' legal representatives had a discussion before the matter was called on before the Deputy Registrar. The Plaintiff was represented by senior counsel and Mr Pupovac was represented by junior counsel. Agreement was reached on all matters save costs. The Deputy Registrar was informed that each party would be seeking costs of the Notice of Motion and argument was set down for later that day. Senior Counsel for the Plaintiff was not available later in the day and consequently arranged for a junior member of his floor to appear to argue costs. 14 When the costs argument came on for hearing, Mr Pupovac's Counsel submitted to the Deputy Registrar that there was no provision in the Rules of Court for the order sought by the Plaintiff in the Notice of Motion, nor was there any other power under which such an order could be made. The transcript of argument is in evidence. It is clear that Counsel for Mr Pupovac made that submission in forceful and dogmatic terms and that junior counsel then appearing for the Plaintiff was taken completely by surprise, so that he was not able to point out that the order sought by the Plaintiff was fairly and squarely within UCPR 23.8 – a Rule which, incidentally, has been in effect for a long time in the rules of the Court. 15 The Deputy Registrar was impressed with the submission that the Notice of Motion was an abuse of process and he accepted it. It is true that Counsel for Mr Pupovac also submitted that it was unreasonable for a party to litigation to seek access to a third party's property and that the Plaintiff should therefore pay Mr Pupovac's costs in any event. However, it is obvious from the transcript that the Deputy Registrar would never have ordered the Plaintiff to pay indemnity costs had he not been persuaded by an erroneous submission that the Notice of Motion was an abuse of process. 16 It is also clear, I think, that if attention had been drawn to the fact that, far from being an abuse of process, the Notice of Motion properly invoked an express power given by UCPR 23.8, the Registrar would not have ordered the Plaintiff to pay Mr Pupovac's costs of the motion on any basis. 17 It is highly unfortunate that when Mr Pupovac's legal advisers were informed by the Plaintiff's advisers that the submission to the Deputy Registrar as to an abuse of process was clearly erroneous, the matter could not have been resolved sensibly and the costs order vacated by consent. Doubtless, however, feelings were inflamed by the fact that the abuse of process point had never been disclosed by counsel for Mr Pupovac to senior counsel for the applicant prior to the costs argument before the Deputy Registrar actually taking place. 18 If timely disclosure of such a "killer point" had been made, senior counsel would never have left the costs argument to a hastily instructed junior. Further, senior counsel would have been able to point out at once that the "killer point" was without substance and that express power for the order sought was provided by UCPR 23.8. 19 What has occurred in this case is an instance of "trial by ambush". The culture which fostered that practice in litigation is long dead. The pressure and cost of litigation is now so great that the Court requires the real issues in the case to be identified to both sides as soon as possible so that both can fairly come to grips with them without delay. "Trial by ambush" is actively discouraged in this Court. Practitioners who engage in that tactic do not enjoy the Court's respect. I say this in order to remind the profession that significant points of law, particularly those going to jurisdiction, should be brought to the attention of the opponent as soon as possible. If the point is a good one, wasteful litigation might be avoided. If the opponent presses ahead regardless and fails, an indemnity costs order may follow. But at least the parties will have avoided the waste of time and money which has occurred in this case. 20 As it is, I now have to review the decision of the Deputy Registrar on the basis of the evidence before him and on the basis of the evidence as to correspondence between the solicitors which has now been adduced. 21 In my view, the Plaintiff was not acting unreasonably by requesting access to Mr Pupovac's premises. That was a legitimate evidence-gathering exercise for which provision is made in the Court Rules. When access was refused by Mr Pupovac for no stated reason, the Plaintiff was acting reasonably in commencing proceedings against him by the Notice of Motion filed on 26 October 2007. 22 Counsel for Mr Pupovac submitted that the Plaintiff acted unreasonably in failing to provide Mr Pupovac with any details as to the issues in the proceedings between the Plaintiff and the Defendants, but it is clear from Mr Pupovac's conversation with the Plaintiff's director on 17 October 2007 that Mr Pupovac did not want to know any such details. In any event, Counsel for Mr Pupovac has not been able to say why the provision of further details about the litigation was necessary for Mr Pupovac's decision as to whether access to his premises should be granted. 23 In my view, the Plaintiff filed its Notice of Motion with a proper basis in fact and law for doing so. It reasonably requested Mr Pupovac to pay its costs of a Motion which should have been unnecessary. When Mr Pupovac refused, the Plaintiff was compelled to argue costs before the Deputy Registrar. The Deputy Registrar's decision was essentially flawed by error of law, as I have discussed earlier, and his discretion miscarried accordingly. 24 For these reasons I set aside the order made by the Deputy Registrar on 2 November 2007 that the Plaintiff pay Mr Pupovac's costs of the Notice of Motion on the indemnity basis. In lieu, I order that the costs of that motion be paid by Mr Pupovac. 25 I will hear further argument as to whether the costs of the motion filed on 26 October 2007 should be paid on any basis other than the party/party basis. I will also hear argument as to the costs of the Plaintiff's Notice of Motion filed on 7 February 2008. I will allow set-off against any costs payable by Mr Pupovac to the Plaintiff of any amount reasonably incurred by Mr Pupovac in obtaining a costs assessment consequent upon the costs order made on 2 November 2007 and thrown away by the delay of the Plaintiff in filing its Notice of Motion of 7 February 2008 out of time. – oOo – 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.