New South Wales Court of Appeal CITATION: Garth Barnett Interior Design Pty Ltd v Ellis [2009] NSWCA 193 HEARING DATE(S): 29 June 2009 JUDGMENT OF: Giles JA at [1], [19]-[22], [24], [26]; McColl JA at [23]; Young JA at [2]-[18] EX TEMPORE JUDGMENT DATE: 29 June 2009 DECISION: Leave to appeal refused with costs. CATCHWORDS: PROCEDURE - discovery of documents from prospective defendant- preliminary discovery ordered on basis that although the identity of the defendant and the causes of action were clear, there was insufficient information available to the respondents to decide whether or not it was commercially viable to commence proceedings against the applicant- in principle this is correct. Civil Procedure Act 2005, s 56 LEGISLATION CITED: Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005, r.5.3(1) CASES CITED: Morton v Nylex Pty Ltd [2007] NSWSC 562 Garth Barnett Interior Design Pty Ltd (Applicant) PARTIES: Stephen Ellis (First Repondent) Angie Ellis (Second Respondent) FILE NUMBER(S): CA 40050/09 COUNSEL: M R Elliott (Applicant) S J Philips (Respondents) SOLICITORS: Slade Manwaring (Applicant) McLachlan Thorpe Partners (Respondents) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 4745/08 LOWER COURT JUDICIAL OFFICER: Quirk DCJ LOWER COURT DATE OF DECISION: 28 November 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40050/09 GILES JA McCOLL JA YOUNG JA Monday 29 June 2009 GARTH BARNETT INTERIOR DESIGN PTY LTD v ELLIS Judgment 1 GILES JA: I will ask Young JA to give the first judgment. 2 YOUNG JA: This is an application for leave to appeal against a decision of her Honour Judge Quirk in the District Court granting the present respondents preliminary discovery. The application is being considered by way of concurrent hearing, the court considering both whether the case is a proper one in which to grant leave to appeal as well matters that go to the appeal should leave be granted. 3 The basal background facts are that the respondents retained the applicant by contract as an interior designer. The respondents say in general that the applicant grossly overcharged for its services, it breached its contract, and there is a hint of a claim for deceptive and misleading conduct under the Trade Practices Act 1974 (Cth). 4 The respondents say that they have made inquiries of firms who supplied materials to the applicant for use on the respondents' job and those inquiries reveal some grossly-inflated mark-ups and other significant overcharging, however, the respondents say that they are unaware as to the extent of the overcharging and they have not got all the documents that they need to show the extent. 5 The respondents say they are practical people and do not wish to embark on litigation if the commercial return from what will probably be substantial fees is only small. Thus, although the respondents are aware of the identity of the person they wish to sue and they are aware of the causes of action, they say that, despite the inquiries they have already made, they are unable to obtain sufficient information to decide whether or not to commence proceedings against the applicant. 6 Judge Quirk upheld their claim and granted relief by way of preliminary discovery. 7 Rule 5.3(1) of the Uniform Civil Procedure Rules 2005 is as follows: "If it appears to the court that: (a) the applicant may be entitled to make a claim for relief from the court against a person ( the prospective defendant ) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief." 8 The first question that we need to consider is whether leave to appeal should be granted. The applicant rightly says that leave is needed because the decision below was an interlocutory decision, however it is put that the decision sits at the more substantive end of the spectrum of interlocutory decisions, it is not merely procedural. Although not finally determining the rights of the parties, the order has an invasive effect in altering the applicant's right as to who may have access to its records. 9 The respondents say that, whilst they would agree that the decision sits at the more substantive end of the spectrum, leave should be refused as there has not been shown any appealable error in the learned primary judge's decision and that any appeal would be close to hopeless. 10 It seems to me that there are really five matters that must be weighed as to whether leave should be granted. I will list these in no particular order. 11 First, the court should not be too ready to hold up the progress of litigation in the District Court by being too liberal in granting leave to appeal in interlocutory matters. 12 Secondly, that first point is reinforced by s 56 of the Civil Procedure Act 2005 which requires the court to ensure as far as possible that litigation is disposed of cheaply and expeditiously. 13 Thirdly, if the proceedings are commenced the applicant will then have to give discovery of its records so there is little to be gained by the applicant if its appeal is successful. The applicant says as to this, "well, it may be that the respondents will not sue". There is, of course, that possibility, but, in view of what we have read, the chances of that seem to be fairly slim. 14 Fourthly, there has not been pointed out to us any reason why the primary judge's decision is wrong as a matter of principle. It is said that her Honour got the matter completely wrong, it is said that if the matter was being heard by us we would not come to the same decision, but there is no question of principle as to the error that her Honour is supposed to have made. Certain things have to "appear" to her Honour rather than having to be decided on the balance of probabilities. The question she did have to decide on the balance of probabilities was whether the plaintiffs (here, respondents) had sufficient information and thus she made her decision well within her mandate. 15 Fifthly, leaning in the opposite direction, leave to appeal might be given in a case where there is an interlocutory matter involving general principle, where there is no current appellate guidance, the point involved is likely to reoccur and the instant case would be a good vehicle in which to give guidance. 16 I am not at all sure whether the present case is the appropriate vehicle to test the relevant point and, in any event, I do not consider that this factor outweighs the others. 17 I should perhaps add this, that her Honour quoted a paragraph from a decision of Justice White in Morton v Nylex Pty Ltd [2007] NSWSC 562 where his Honour said at [33]: "The question is whether the applicant has insufficient information as to be able to decide whether to institute proceedings; not merely to establish a cause of action. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as a document which may establish whether there is a cause of action." I thought it was significant that neither counsel challenged that ruling, wisely I think, and indeed I agree with it. 18 Accordingly, in my view, we should refuse leave to appeal with costs. 19 GILES JA: I agree that leave to appeal should be refused and with the consequential costs order. 20 As explained by Young JA, the central question for the learned trial judge was whether, having made reasonable inquiries, the respondents were unable to obtain sufficient information to decide whether or not to commence proceedings against the applicant. That was not limited to sufficient information to decide whether or not they were "entitled to make a claim for relief", being the words earlier found in rule 5.3. Her Honour was of the view that the central question should be answered in the affirmative, and nothing has been shown, in my opinion, to indicate that in so concluding her Honour misapplied principle or so erred in her assessment of the facts that the view to which she came was not open to her. I do not accept the submission made by the applicant to the effect that, although her Honour recognised the correct principles, she did not apply them. That was a submission which depended, and depended only, on the applicant's submission that the result was not the correct one. 21 This was an unusual situation in which the applicant was not contending that preliminary discovery should be refused because the respondents had not made out a sufficient basis for entitlement to bring proceedings. It was the reverse. The applicant's stance was that the respondents had all the information they needed to decide whether or not to commence proceedings against it, with the qualification that in relation to one matter its position was that the respondents had not made reasonable inquiries. Where that was the stance of the applicant it made it a little difficult for it to submit that leave should be granted, because the discovery which flowed from the orders made by the trial judge would be discovery which would inevitably be made in the proceedings which it said the respondents were entitled to commence without more. The answer of the applicant was that the respondents might not commence proceedings, although why they would not was not taken up with Mr Ellis, one of the respondents, despite the opportunity to cross-examine him being there. As Young JA has indicated, it is not easy to see why the respondents would not bring proceedings. On the other hand, on the learned trial judge's findings there were grounds for them wishing to obtain further information in order to decide whether or not as a practical matter the proceedings should be brought. 22 In summary, therefore, it does not seem to me that there is an error of principle nor other reason shown to intervene in the learned trial judge's conclusion. I therefore agree with the orders proposed. 23 MCCOLL JA: I agree with Justice Young that leave to appeal should be refused with costs and I also agree with Justice Giles' remarks. 24 GILES JA: Mr Elliott, is there anything you can say about costs? 25 ELLIOTT: No, your Honour. 26 GILES JA: Well the order of the court will be that leave is refused with costs. ****************************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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