Ace Hire Aust Pty Limited v ADI Limited

Supreme Court of NSW|2006-09-15|Before: Einstein J, Bergin J

CITATION : Ace Hire Aust Pty Limited v ADI Limited [2006] NSWSC 969

HEARING DATE(S) : 15/9/06 JURISDICTION : Equity Division Commercial List

DECISION : Order for defendant to depose as to extent of sufficiency of verified list of documents.

CATCHWORDS : Practice and Procedure - Additional discovery

LEGISLATION CITED : Uniform Civil Procedure Rules 2005 (NSW)

Azzi v Volvo (2006) NSWSC 283 CASES CITED : British Association of Glass Bottle Manufacturers Ltd v Nettlefold (1912) AC 209 Mulley v Manifold (1959) 103 CLR 341

PARTIES : Ace Hire Aust Pty Limited (Plaintiff) ADI Limited (Defendant)

COUNSEL : Mr M Cohen (Plaintiff) Mr Orsborn (Defendant)

SOLICITORS : Cosoff Cudmore Know (Plaintiff) Steven Kouris Lawyers (Defendant)

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Friday 15 September 2006 ex tempore Revised 19 September 2006

1 The original notice of motion sought an order pursuant to regulation 21.2 of the Uniform Civil Procedure Rules 2005 that the defendant provide the plaintiff with further and better discovery and an order that the defendant discover all documents enumerated by category under cover of a letter dated 23 May 2006. 2 During the hearing of the notice of motion the plaintiff's counsel sought and obtained leave to amend the notice of motion to now seek an order that the company secretary or other proper officer of the defendant depose upon affidavit to the conduct, extent and sufficiency of the verified list of documents in terms of the documents which have been produced. That application for leave to amend was not opposed. 3 The Court has before it an affidavit of Mr Kevin Rohith Pathinather sworn on 11 September 2006, being a solicitor at the firm of solicitors on the record for the plaintiff. 4 The Court also has before it a bundle of correspondence tendered by the defendant and marked as exhibit R1. The parties have also been content to respectively treat as before the Court, the lists of documents filed on the one hand by the defendants and on the other hand by the plaintiff. 5 The plaintiff claims that the relief now sought is appropriate as a result of the inadequate discovery given by the defendant and is necessary to permit the plaintiff to undertake the preparation of its evidence for trial, which it submits has been impeded by the default of the defendant in giving proper discovery. 6 The background to the matter as between May 2006 and 11 September 2006 is conveniently chronicled in paragraphs 4 to 17 inclusive of the plaintiff's submissions: "4. On 23 May 2006, the Solicitors for the Plaintiff served the list of categories of discovery required to be given by the Defendant. 5. On 2 June 2006, Bergin J made orders by consent that the time for discovery and inspection was to be extended to 21 July 2006. 6. On 21 July 2006, the Plaintiff filed its verified List of documents, but by reason that the Defendant was in default, time for compliance by the Defendant was extended by the Court to 11 August 2006. 7. On 2 August 2006, the solicitors for the Plaintiff communicated with the solicitor for the Defendant notifying the default with compliance with the timetable. 8. On 15 August 2006, the Defendant filed its verified List of Documents out of time. 9. On 18 August 2006, the solicitors for the Plaintiff notified the solicitors for the Defendant that the discovery given was deficient. 10. On 18 August 2006, the solicitor for the Defendant responded that a later reply would be provided. 11. On 22 August 2006, the solicitors for the Plaintiff were able to undertake inspection. 12. On 31 August 2005, the solicitors for the Plaintiff communicated further with the solicitors for the Defendant noting that the deficiency in discovery given by the Defendant was prejudicing the Plaintiff's preparation of its evidence. 13. On 1 September 2006, copies of documents requested from the Defendant were provided to the solicitors for the Plaintiff. 14. On 5 September 2006, the solicitors for the Defendant responded indicating that upon his instructions all relevant documents had been discovered. 15. On 6 September 2006, the solicitors for the Plaintiff communicated further with the Solicitor for the Defendant noting additional deficiencies with the discovery provided by the Defendant. 16. On 6 September 2006, the solicitor for the Defendant replied noting that a response would be provided on 8 September 2006. 17. On 11 September 2006, the solicitor for the Defendant sent a further response to the solicitor for the Plaintiff that he would revert back shortly."

7 This correspondence was updated by Exhibit R1 taking the position up to 14 September 2006 which adds little to the stance previously taken by the defendant. 8 The principal dispute in the proceeding concerns the alleged repudiation by the defendant of a subcontract by which the plaintiff supplied scaffolding services to the defendant in its capacity as head contractor to the Australian Government's contract to refit and upgrade six naval frigates operated by the Royal Australian Navy. 9 It is clear that the parties are at issue as to the question of whether or not and, if so, in relation to precisely which documents, the defendant has not complied with its discovery obligations. The defendant contends that it has complied with its discovery obligations to the letter. The plaintiff contends to the contrary. 10 The defendant stands on the proposition that the plaintiff is unable to point to any particular document which has not been discovered. The plaintiff, on the other hand, has taken the Court very closely to the detailed correspondence, relies upon the correspondence, and has taken the Court most particularly to a comparisons between: i. the plaintiff's list of documents [on the thirteenth and fourteenth pages] where "documents by class", are referred to as including tax invoices issued by Ace to ADI, purchase orders issued by ADI and Ace quotations in reply and a further set of tax invoices for equipment costs for work on Garden Island. [The number of documents in those three classes is, respectively, 1,134, 249 and 240.];

ii. the defendant's list of documents as between item 52 and 53 where various invoices and associated paperwork from Ace are referred to, there being, in terms of the numbers of documents in the group, either 10 or 22. 11 To my mind this is prima facie evidence of certainly a curious circumstance. It is of course possible that for some reason documents which were once in existence, are no longer able to be located. 12 It is true, as the plaintiff has submitted, that the former conclusiveness of the affidavit verifying discovery has now been attenuated such that classes of discovery are to be agreed inter partes and, if not agreed, subject to determination by the Court pursuant to the provisions of Part 21 rule 21.2 of the UCPR [see Azzi v Volvo (2006) NSWSC 283 at paragraph 10 per Brereton J]. 13 I further accept that the service of a notice to produce is not a proper substitute for an application for further and better discovery where discovery that has been given by a party is inadequate [cf Brereton J at 11]. 14 Brereton J at 13 observed as follows:

"If the plaintiff contends that documents falling within one of the classes which it specified and in respect of which an order for discovery was made have not in fact been discovered, the only proper remedy is for it to seek further and better discovery, upon proof that there has been a failure to give proper discovery in that class. The defendant, of course, should be alert that if it transpires that it has not given proper discovery of documents in classes which were identified for discovery, then that will have been a serious default on its part." 15 The principles which inform the view that the Court may take as to insufficiency of discovery are well-known and relate to information within (a) the pleadings, the verified list of documents or documents referred to therein; (b) any other source that constitutes an admission of the existence of a discoverable document not thus far discovered; (c) the apparent exclusion of documents from discovery by a party under misconception of the case [see British Association of Glass Bottle Manufacturers Ltd v Nettlefold (1912) AC 209; Mulley v Manifold (1959) 103 CLR 341]. 16 My own view, having read the materials before the Court, is that a prima facie case has been made out by the plaintiff that, on the high balance of probabilities, a subcontract involving the plaintiff to a head contract between the defendant and the Australian Government for work to be performed conducted over a period of more than three years upon Frigates operated by the Navy and worth hundreds of millions of dollars is ex hypothesise likely to produce more than the 100 or so documents discovered by the defendant. However, upon the face of the defendant's verified list of documents of 15 August 2006 there does seem to have been a limited discovery in respect of which, as the plaintiff submits, at least some 32 documents appear to be limited entirely to perfunctory work by way of copies of invoices served by the plaintiff upon the defendant for work performed. It should be noted that in the plaintiff's discovery such invoices and purchase orders run to more than 1,600 pages of such documents. 17 Additionally, and as the plaintiffs have submitted, the correspondence between the solicitors for the parties does not indicate on any fair reading that the defendant suffers any misapprehensions or misconceptions as to what case is being propounded by the plaintiff. In the period from 18 August 2006 until 14 September 2006 there had been significant review of the documents in the correspondence passing between the solicitors in an endeavour to enable a non-litigated outcome to this interlocutory dispute. 18 As at 13 September 2006 the solicitors for the plaintiff had narrowed the ambit of the further discovery required to documents in categories 3, 4, 6, 7, 13 and 14 prescribed by the letter contained in annexure A to the Pathinather affidavit and supporting documentation referred to within documents number 35, 39 and 40 within the defendant's verified list of documents dated 15 August 2006. 19 During the course of argument a number of possibilities were mooted by the Court with the respective counsel who have appeared. It is fair to say that there has been a ready acceptance by the defendant to the proposition that it cannot be said that, outside of questions concerning costs and inconvenience, there is any real prejudice to the defendant were the Court to make, for example, the order sought by the amendment to the notice of motion. It is true that the Court is to a certain extent blindfolded because, just as the plaintiff, the Court has had no actual sighting of documents which are arguably extant and ought to but have not been discovered. On the other hand, it is also true that a mere statement by a party from the Bar table to the effect that the other party cannot point to any particular document, could not possibly be conclusive in terms of this type of application. 20 To my mind, the principled exercise of the Court's discretion in the circumstances is to note the radical opposition by the defendant to the submission that it has fallen short in any which way of proper and full compliance with its discovery obligations; to note that the defendant may in due course, should it be proven that its stance was correct, obtain a costs order and obtain a costs order arguably on a particular basis. 21 The proceedings will be next before the Court on 13 October 2006 22 However, all things being considered, the justice of the situation does require that the Court order, and I now order, as follows:

(1) I order that the company secretary or other proper officer of the defendant depose upon affidavit to the steps taken to ascertain the extent and sufficiency of the documents listed in the defendants verified list of documents dated 15 August 2006, and that an affidavit to that effect be filed and served on or before 29 September 2006.

(2) Order that the defendant file and serve the affidavit required by Order (1) on or before 29 September 2006.

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