J T Interior Pty Ltd v Ozzy States Pty Ltd [2019] NSWSC 48

Supreme Court New South Wales

Medium Neutral Citation: J T Interior Pty Ltd v Ozzy States Pty Ltd [2019] NSWSC 48 Hearing dates: 1 February 2019 Date of orders: 07 February 2019 Decision date: 07 February 2019 Jurisdiction: Common Law Before: Harrison J Decision: No order as to costs Catchwords: COSTS – where defendant applied to set aside an examination order – where examination order amended – where parties unable to agree who should pay costs of the application to set aside the examination order – where both parties benefited from amendment to the examination order – where prior to determination of the defendant's application the plaintiff proposed the examination order be varied in terms substantially similar to the amended order – where no evidence that the defendant responded to the plaintiff's proposal – principle that costs should ordinarily follow the event of limited assistance – no order as to costs Cases Cited: J T Interior Pty Ltd v Ozzy States Pty Ltd [2018] NSWSC 1336 Category: Costs Parties: Ozzy States Pty Ltd (Applicant/Defendant) J T Interior Pty Ltd (Respondent/Plaintiff) Representation: Counsel: T Boyle (Respondent/Plaintiff)

Solicitors: Madison Marcus Law Firm (Applicant/Defendant) Dentons Australia (Respondent/Plaintiff) File Number(s): 2017/331449 Publication restriction: Nil

Judgment 1. HIS HONOUR: On 31 August 2018, I published reasons for judgment in this matter dealing with an application by the defendant to set aside an examination order upon the basis, generally speaking, that it was framed in unacceptably wide terms and did not demonstrate the existence of a legitimate forensic purpose: see J T Interior Pty Ltd v Ozzy States Pty Ltd [2018] NSWSC 1336. I declined to set the order aside but instead indicated that it was, in my opinion, capable of being amended so as properly to describe the documents to which the plaintiff genuinely sought access and thereby simultaneously to alleviate the defendant's concerns. I directed that the parties bring in orders that gave effect to the concerns that had been raised. That occurred on 1 February 2019. 2. The parties were, however, unable to agree upon who should pay the costs of the application. These reasons deal with that issue. 3. It is clear that the defendant was unsuccessful in its attempt to have the order wholly set aside. By the same token, the orders as framed by the plaintiff contained infelicities that caused, or that had the potential to cause, confusion and uncertainty. The result of my decision was to provoke the parties to agree upon orders that varied the Examination Order dated 18 December 2017 so that the identified problems were eliminated. The relevant order that was framed after agreement between the parties now reads as follows: "1. Paragraph 2 of the Examination Order dated 18 December 2017 be varied so that it reads as follows: The Company must produce to the Court, the following: (a) all Documents comprising profit and loss statements for the Period; (b) all Documents evidencing any advance of funds and/or loans to or from the Company (that are not otherwise payments for services or contracted works undertaken by or for the Company) that exist or have existed during the Period including any relevant loan documents and loan balance sheets; (c) all tax returns of the Company for the Period; (d) all Documents evidencing any liability owed by the Company (whether beneficially or otherwise) to any third party for the Period including but not limited to contractors, employees and other third parties; (e) all Documents evidencing any trust, superannuation fund or joint venture in which the Company (in any capacity) is involved (whether beneficially or otherwise) for the Period; (f) all Documents evidencing any assets held (including any partial or whole interests) by the Company (whether beneficially or otherwise) for the Period; (g) all Documents evidencing forecasts of revenue for current or future projects undertaken by the company. Where: Company means Ozzy States Pty Limited, the defendant. Documents includes any record of information, and includes: (a) anything on which there is writing, or (b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them, or (c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else, or (d) a map, plan, drawing or photograph. Period means the period from 1 July 2017 to date." 1. It seems to me that both parties benefited from this outcome in fairly equal measure, so that any resort to the principle that costs should ordinarily follow the event is in this case of limited assistance. However, by letter dated 28 August 2018, after the defendant's notice of motion had been filed, and well before the matter reached me, the solicitors for the plaintiff had in fact proposed that the Examination Order be varied. That letter was in the following relevant terms: "9. On 26 April 2018, your firm indicated in an email to us that it expected to receive instructions regarding setting aside the aspects of the Examination Order that mirrored the Notice. 10. On 27 April 2018, given the circumstances, the Notice was stood over to 11 May 2018. 11. On 10 May 2018, we wrote to you advising that whilst we did not agree with the allegations made regarding the Notice, we were nonetheless instructed to withdraw it. 12. Also on 10 May 2018, we noted by email that it was Ozzy's intention to make an application seeking to narrow the scope of documents sought in the Examination Order. In doing so, we invited you to communicate with us to identify the specific categories of documents asserted to be liable to be struck out or set aside so that we could obtain instructions accordingly. 13. On 11 May 2018, orders were made withdrawing the Notice and listing the Examination Order (insofar as it required production of documents) for 25 May 2018. 14. On 18 May 2018, we again wrote to you inviting you to: (a) communicate with us to identify the specific categories of documents said to be liable to being struck out or set aside from the scope of required documents under the Examination Order so that we could obtain instructions regarding that position; and (b) as to the balance of the documents required by the Examination Order, produce those documents. 15. On 23 May 2018, we requested a response to our above email. You advised that you would respond the next day. 16. On 24 May 2018, you wrote a letter putting our client on notice that Ozzy intended to object to the production of all documents sought under the Examination Order pursuant to rule 38.3(5) of the UCPR and otherwise set aside paragraphs 2(a) to (c) inclusive. 17. On 19 June 2018, we responded to your letter. In our letter, and in order to narrow the issues in dispute and avoid the need to incur further costs ventilating the issues before the Court, we proposed that the categories be narrowed as follows: The Company must produce to the Court, the following: (a) all Documents comprising profit and loss statements for the Period; (b) all Documents evidencing any advance of funds and/or loans to or from the Company (that are not otherwise payments for services or contracted works undertaken by or for the Company) that exist or have existed during the Period including any relevant loan documents and loan balance sheets; (c) all tax returns of the Company for the Period; (d) all Documents evidencing any liability owed by the Company (whether beneficially or otherwise) to any third party for the Period including but not limited to contractors, employees and other third parties; (e) all Documents evidencing any trust, superannuation fund or joint venture in which the Company (in any capacity) is involved (whether beneficially or otherwise) for the Period; (f) all Documents evidencing any assets held (including any partial or whole interests) by the Company (whether beneficially or otherwise) for the Period; (g) all Documents evidencing forecasts of revenue for current or future projects undertaken by the Company. Where: Documents includes any record of information, and includes: (a) anything on which there is writing, or (b) anything on which there are marks, figures, symbols, or perforations having a meaning for persons qualified to interpret them, or (c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else, or (d) a map, plan, drawing or photograph. Period means the period from 1 July 2017 to date. (Revised Categories) 18. To date, we have not received any substantive response to our letter of 19 June 2018." 1. Although the proposed variation to the order made in that letter and the order upon which the parties have now agreed are not identical, there is little of substance between them that is different. The plaintiff's proposal was made in the context of a letter that concluded with an express indication that the plaintiff intended to rely upon that letter and previous correspondence in relation to the question of costs of the defendant's notice of motion, implicitly if the proposed draft was not accepted. If the solicitors for the defendant replied to that letter, or otherwise engaged in correspondence on the issue of costs that it raised, no such correspondence has been provided to me. 2. The letter of 28 August 2018 was not described as a Calderbank letter and did not purport to be a formal offer of compromise. That does not matter. It is reasonably apparent that the plaintiff was proposing a solution that would have or at least could have avoided the costs associated with a contested application. The solicitors for the defendant could not have been under any misapprehension about that. On the other hand, the very reason that the defendant felt constrained to challenge the wording of the examination order in the first place was because of the way it had been drawn by those acting for the plaintiff. There is in these circumstances what I consider to be a roughly equal contribution to the factors that generated the interlocutory proceedings before me. 3. In my opinion, having regard to these matters, it is appropriate that there should be no order as to the costs of the motion.