Chapel Road Pty Limited v Australian Securities Investments Commission (No 5) [2011] NSWSC 1519

Supreme Court New South Wales

Medium Neutral Citation: Chapel Road Pty Limited v Australian Securities Investments Commission (No 5) [2011] NSWSC 1519 Hearing dates: 6 December 2011 Decision date: 09 December 2011 Jurisdiction: Common Law Before: Schmidt J Decision: The plaintiff is ordered to pay the defendant's costs of the motion, as agreed or assessed. Catchwords: PROCEDURE - costs - notice of motion Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Chapel Road Pty Limited v Australian Securities Investments Commission [2011] NSWSC 419 Category: Procedural and other rulings Parties: Chapel Road Pty Limited (Plaintiff) Australian Securities Investments Commission (Defendant) Representation: Counsel: Mr SJ Walsh (Plaintiff) Mr J Clarke (Defendant) Solicitors: Creagh & Creagh (Plaintiff) Blake Dawson (Defendant) File Number(s): 2006/266784 Publication restriction: None

Judgment 1By notice of motion filed in September 2011, the defendant sought orders varying an order earlier made in relation to discovery. The orders sought were consented to by the plaintiff at the hearing of the motion. There was, however, a dispute about costs. 2The order was the result of a contest, but not as to the terms of the order itself (see Chapel Road Pty Limited v Australian Securities Investments Commission [2011] NSWSC 419 ). Beforehand, the parties had co-operated in relation to informal discovery, but they could not agree about discovery in relation to third party documents. It was the order which the plaintiff had drafted, which was made. 3The discovery which had to be given was thus: "1. The Defendant provides Discovery in accordance with the categories nominated by the Plaintiff: "Documents" include emails, correspondence, minutes, notes, files, contracts, reports, drafts, instructions and memoranda. All documents referable to the Defendant's investigations to the consideration of training, supervision and compliance issues during the period of 30 June 1998 to 30 June 2002 in respect of the following entities: (a) Financial Wisdom Ltd. (b) Count Financial Group Pty Ltd. (c) Greater Western Financial Services Co Pty Ltd. (d) AMP Financial Planning Pty Ltd. (e) Grosvenor Securities Pty Ltd." 4After the order was made, the parties agreed on a timetable. The discovery was to be given by 26 August 2011. The defendant's solicitor Ms Susan Goodman explained in an affidavit dated 15 September 2011, the steps taken, in order to review the relevant files, so that the discovery could be given. That process ceased on 29 June, when the plaintiff failed to pay the third tranche of a security for costs order. That payment was made on 8 July and the discovery process was resumed. 5The security which has been ordered is for $175,000. 6Verified discovery of many documents was given on 26 August, after review of over 8,000 documents, of which only 237 were found to have come within the agreed categories. The cost incurred was in excess of $40,000. 7During the course of the work necessary to provide the discovery required by the order, a question emerged as to its meaning and a view was formed that the discovery was oppressive. These were not matters earlier agitated between the parties. Despite correspondence between the parties as to these difficulties in August, consent to amendment of the orders was refused by the plaintiff. 8On 1 September 2011, the motion was filed. Ms Goodman's affidavit evidence was that there are at least a further 8,000 documents which have been identified as necessary to be reviewed and further extensive searches necessary to be undertaken, in relation to some 82 investigating/surveillance activities pursued by the defendant, in relation to the nominated companies. It was estimated that this would require consideration of a further 93,000 documents at a cost of over $400,000. It was estimated that what was proposed by way of the amended order would result in a need to review a further 5,700 documents at a cost of a further $28,000. 9It was not until 16 November that consent was forthcoming from the plaintiff in relation to the order proposed in the motion. It was then advised that the agreement was forthcoming in order 'to avoid these protracted and expensive interlocutory hearings'. It was proposed that in accordance with the motion, costs be reserved. The defendant sought an order for its costs of the motion, with the result that the question of costs was all that remained to be determined at the hearing. 10Under the Uniform Civil Procedure Rules 2005, the usual order is that costs should follow the event. The plaintiff urged that the usual order would not be made, given that there was at the initial hearing no question raised as to either the meaning of the order, or that it would create any oppression; that it was not until Ms Goodman's affidavit of 15 September 2011 was served, that the nature of the difficulty was appreciated; and that it was relevant that the plaintiff's consent to the practical resolution of the motion, had rested on the basis of the order proposed in the motion, that costs would be reserved. 11What arises for consideration has to be approached in the face of the requirements of the Civil Procedure Act 2005, which by s 56 requires the Court to facilitate the just, quick and cheap resolution of the real issues in dispute in the proceedings. Section 59 emphasises the need to eliminate delay; s 60 requires that the Court's practice and procedure be implemented with the object of resolving the issues between the parties, so that cost is proportionate to the importance and complexity of the subject-matter in dispute. The Court must always act in accordance with the dictates of justice, having in mind matters specifies in s 58(2)(b): "(b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case." 12Like all other proceedings before the Court, these proceedings have to be managed in accordance with s 57, which requires that regard be paid to the following objects: "(a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties" 13So far as the parties are concerned, they too, have relevant obligations under s 56: "(3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (3A) A party to a civil dispute or civil proceedings is under a duty to take reasonable steps to resolve or narrow the issues in dispute in accordance with the provisions of Part 2A (if any) that are applicable to the dispute or proceedings in a way that is consistent with the overriding purpose. (4) Each of the following persons must not, by their conduct, cause a party to a civil dispute or civil proceedings to be put in breach of a duty identified in subsection (3) or (3A): (a) any solicitor or barrister representing the party in the dispute or proceedings, (b) any person with a relevant interest in the proceedings commenced by the party." 14The issue which was raised by the defendant with the plaintiff by letter of 12 August was the disproportionate costs being generated by the enquiries of the discovery which had been ordered, given the terms of the order and its apparent meaning. That was not a matter to which the parties had earlier turned their minds, but it was in their interests that the problem be promptly resolved, once identified. Their obligations under the Act required them to actively pursue its sensible resolution. 15The necessity of pursing orders from the Court by way of motion, was the result of the plaintiff's opposition to any amendment of the order. That was a position which altered, after considerable time was taken to reflect on the matters raised in the August correspondence, as amplified in Ms Goodman's affidavit. 16That situation is not one in which the Court's discretion to depart from the usual costs order may justly be exercised in favour of the plaintiff. The question of the costs of the motion must be resolved at some stage. The sensible time, consistently with the requirements of the Act, is now.