Aon Risk Services v Australian National University

The position as at 25 March 2020

1. Although the possibility of dismissal of the proceedings by reason of the non-compliance with the Court's orders and directions was raised by the Court, it was common ground that the Defendants, who supported such an order, should be heard in chief and that the Plaintiffs should then have the opportunity to respond to the Defendants' submissions and evidence and the Court's concerns. I will refer to the evidence, correspondence and submissions in chronological order since that allows the clearest view of the changes in the Plaintiffs' position and the developments in the state of discovery in the course of the discovery order compliance hearings.
2. At the first hearing on 25 March 2020, which was adjourned at the Plaintiffs' request, the Defendants relied on the affidavit dated 24 March 2020 of their solicitor, Mr Grossman, which sets out the history of the Plaintiffs' defaults in compliance with the orders which I had made between September 2019 and December 2019. Mr Grossman also referred to the advice provided by the accounting expert retained by the Defendants, Mr Ferrier, that he cannot further progress the expert evidence which the Defendants have been ordered to provide until the Plaintiffs provide discovery of financial information for the 2013 to 2017 financial years, which were addressed in the Plaintiffs' expert evidence and were the subject of the Court's earlier discovery orders. That affidavit also annexed correspondence in which the Defendants' solicitors had, in measured terms and largely without success, followed up on the Plaintiffs' continuing failure to comply with the Court's discovery orders. The Defendants also relied on a second affidavit of Mr Grossman dated 24 or 25 March 2020, which was read subject to a limiting order under s 136 of the Evidence Act 1995 (NSW) to identify the content of the expert accounting report on which the Plaintiffs relied and to correct the description of an email referred to in Mr Grossman's first affidavit. The expert report on which the Plaintiffs rely refers, as the source of several tables referred by that expert, to "financial statements", without further identifying the nature of those documents. The Defendants have, reasonably, sought to be assured that the documents on which the Plaintiffs' expert has relied have been made available to them, and I have raised that question on several occasions with Counsel for the Plaintiffs. There is, regrettably, still no clarity as to the documents on which the Plaintiffs' expert had relied, or whether they have been discovered, although they would likely have fallen within the Court's discovery orders.
3. The Plaintiffs relied on a first statement dated 24 March 2020 of their solicitor, Mr Amirbeaggi. He there indicated that he has isolated himself in far northern New South Wales since 13 March 2020 and his staff are working remotely. I recognise the difficulty suffered by members of the community in respect of the COVID-19 virus, but I also recognise that many legal practitioners (including those working in regional New South Wales) are continuing to conduct matters in the courts in an efficient way, and the difficulties in respect of discovery relate to orders made in September and October 2019, as to which discovery was due by 21 December 2019, long before any issue arose as to COVID-19. Mr Amirbeaggi also there referred to the Plaintiffs' appeal from the Court's order declining to allow them further to amend their pleadings, and to the fact that an application for leave to appeal and that appeal are listed for hearing on 23 June 2020. The existence of an application for leave to appeal in respect of a proposed amended pleading is irrelevant to the Plaintiffs' obligation to comply with orders made in respect of the proceedings as they stand. The Plaintiffs have also, as Mr Fernon made clear, intentionally not sought to set aside category 3 of the discovery orders because they seek to advance a wider case than they are currently permitted to advance on the pleadings. The Plaintiffs cannot, with respect, choose to leave that discovery order on foot and then not comply with it. I note, for completeness, that Ms Dolenec submitted that that financial information would also be relevant to quantification because the Plaintiffs provided continued services to Cadbury Schweppes after 2015, quite apart from the Plaintiffs' election not to set aside that discovery category.
4. Mr Amirbeaggi there referred to several other difficulties which he had suffered in the several months of non-compliance with the Court's orders. Mr Amirbeaggi's evidence was also that administration and financial matters relating to JEVPL were managed by Joseph and Elizabeth Vella who are both elderly; that the retrieval of JEVPL's records had been time consuming because of the "disorganisation of the records, age of the records, volume, and different locations in which they were/are kept" and he noted that he had been provided with approximately 30 boxes of documents from late February 2020. As will emerge below, that evidence was, at best, substantially incomplete because other staff within JEVPL managed its electronic accounting records, with which Mr and Mrs Vella had little or no involvement, and discovery orders were also not complied with in respect of those records. Mr Amirbeaggi's evidence was that those documents were then being categorised in accordance with the discovery orders, although it is not clear whether that later occurred. Mr Amirbeaggi then suggested that that task would be completed by mid-April 2020, over six months after discovery orders had been made and long after discovery was due, and expressed uncertainty as to how documents would then be provided to the Defendants. He also indicated that he expected it would take several weeks if not months to complete the discovery process.
5. In her initial submissions for the adjourned hearing on 25 March 2020, Ms Dolenec rightly recognised that the Court had power to dismiss proceedings for the failure to comply with a direction or order under s 61(3) of the Civil Procedure Act 2005 (NSW). Ms Dolenec also rightly pointed to the fact that, as Mr Grossman's evidence showed, the Court had made several orders since 23 September 2019 to seek to progress the matter to hearing. In submissions in reply for that hearing, Ms Dolenec pointed to the Plaintiffs' delay in filing and serving their Amended Statement of Claim. That matter seems to me to have caused little prejudice to the Defendants, where the nature of the amendments that were permitted were clear from the orders that were made by the Court. Ms Dolenec also referred to the difficulties that have arisen where Mr and Mrs Vella were left to attend to discovery without any substantial assistance. It seems to me that it was not sufficient for the Plaintiffs to leave Mr and Mrs Vella to undertake a significant discovery of hard copy documents, in a complex commercial matter, without adequate assistance, even if they were personally prepared to undertake that task in that manner, which they could not conceivably have completed within the time that was required by the Court's orders. It was also not acceptable to fail to discover electronic records, for which other staff of JEVPL were responsible.
6. Ms Dolenec also there pointed out, with substantial force, that the continuing delays in the proceedings involve real prejudice to the six defendants who have been involved in this litigation for five years; that the litigation concerns an alleged oral contract or partnership agreement formed in 2001, nearly 20 years ago, and allegedly breached in 2012, and that justice is diminished by the effluxion of time. This is a substantial concern in the relevant circumstances. Ms Dolenec submitted that the Court could be satisfied that the Plaintiffs did not genuinely wish the matter to go to trial in a reasonable period, or to have the matter ready for trial within an acceptable period; that there has been inordinate and inexcusable delay; and there has been prejudice to the Defendants. She also submitted that, by reference to the approach of the Full Court of the Federal Court in Lenijamar Pty Ltd v AGC (Advances) Ltd [1990] FCA 520; (1990) 27 FCR 388 at 395-396, to which I refer below: "… [I]t is submitted that in circumstances where the inability or unwillingness to cooperate with the Court and with the [D]efendants to have the matter ready for trial in a reasonable period (whatever the [P]laintiffs' state of mind or resources, or the circumstances of the [P]laintiffs' solicitor) and the continuing non-compliance occasioning unnecessary delay, expense and prejudice to the [D]efendants, means the only way to ensure that the overriding purpose of the CPA is complied with is to dismiss the matter pursuant to s 61(3)(a)."
7. Mr Fernon, in submissions for the adjourned hearing on 25 March 2020, emphasised, and I accept, that the Court must have regard to the factors specified in ss 56-58 of the Civil Procedure Act in determining whether proceedings are dismissed, including under s 61 of the Civil Procedure Act. I return to those factors below. Mr Fernon accepted, with a degree of understatement, that "delays have occurred" in the provision of the Plaintiffs' discovery. He submitted that those delays were not intentional or contumelious, and that proposition was developed at length in his subsequent written and oral submissions. He submitted, in justification or possibly explanation of the Plaintiffs' failure to comply with the discovery orders that: "The task of obtaining the documents is being undertaken by Elizabeth and Joseph Vella, the elderly princip[als] of the plaintiffs' business but with knowledge of the location, nature and identification of relevant documents." As I have noted above, Mrs Vella's affidavit evidence and in submissions at a subsequent hearing show that that submission was incorrect in an important respect, because Mrs Vella had no involvement in the non-discovery of the Plaintiffs' financial records held in electronic form, as to which the Plaintiffs were in breach of the Court's orders, and remained in breach at least until shortly before the delivery of this judgment. As I have noted above, that is also not an explanation for the delays in discovery, but emphasises the Plaintiffs' failure appropriately to resource the discovery process, over a long period, so as to comply with the Court's orders.
8. Mr Fernon also submitted that the Plaintiffs' delays have caused no prejudice to the Defendants or overall delay in the conduct of the proceedings. That submission could not fairly have been made, where the evidence makes clear that, and it would in any event have been obvious that, at least the continuing delay in the discovery of the Plaintiffs' financial records has exposed the Defendants to additional costs; has prevented them complying with the order to complete their expert accounting report by the date ordered; and has prevented the Court making any further order for them to complete that report or allocating a hearing date; and has exposed the Defendants and the community to the wasted costs and loss of Court time referable to the several discovery order compliance hearings. Mr Fernon also referred to the fact that the Plaintiffs' amendment application is subject to an appeal (or, more precisely, an application for leave to appeal and if leave is granted, an appeal) which is to be heard on 23 June 2020 and that the proceedings would "necessarily be subject to and delayed pending the outcome of that appeal". I also reject that submission. The Plaintiffs did not seek any stay of the discovery and other orders made at first instance pending appeal. As Mr Fernon recognised in the course of oral submissions, the Plaintiffs have been content to remain subject to discovery orders on the basis of the wider case they seek to bring, and the Defendants may have been required to address that wider case in their expert evidence, had the Plaintiffs complied with those discovery orders. The difficulty here was not the Plaintiffs' application for leave to appeal in respect of the amendment application, but the Plaintiffs' non-compliance over a substantial period with the wider discovery orders that they chose to leave in place while that application was on foot.

The position as at 2 April 2020

1. After the adjournment of the hearing on 25 March at their request, the Plaintiffs served an unverified list of documents on 27 March 2020, then described as a "first tranche" of their discovery. By a letter dated 30 March 2020, the Defendant's solicitor, Mr Grossman, sought copies of some of the documents that had been discovered, clarification of which documents remain to be produced, and again emphasised that the Defendants' accounting expert required access to financial documents in electronic form in order to complete his report. It is not necessary now to decide whether the production of the relevant financial records in printed form would have complied with the discovery orders, despite the practical difficulties that would have caused for the review of those documents, since the Plaintiffs have largely not made the documents available in that form. Mr Grossman also fairly pointed out that a claim for confidentiality then made by the Plaintiffs, and consequential redaction of documents, was inconsistent with the Court's previous rejection of that claim in a merits judgment.
2. Three days after the Plaintiffs' unverified list, by letter dated 30 March 2020, the Plaintiffs' solicitors advised the Defendants' solicitor, without further explanation, that: "1. There is no longer and [sic] 'first tranche' of more tranches to come. Our clients' discovery is complete. 2. Discovery of all categories is complete. That is advised on the caveat that discovery is an ongoing obligation and if records are later located they will be discovered."
3. In submissions, Ms Dolenec raises a concern as to the "caveat" in the second paragraph of that letter, in the context of the Plaintiffs' unexplained change from a "first tranche" to complete discovery. It is hardly surprising that the Defendants are concerned that that "caveat", without further explanation, leaves open the possibility that the further tranches of discovery that had originally been foreshadowed by the Plaintiffs could later be produced on the basis that they were later located, and that the Plaintiffs' discovery may not, in fact, be complete. The costs of preparing the Defendants' expert accounting evidence would very likely be increased, if the documents to which the expert initially has access are not complete. However, I have not taken into account any possibility that the Plaintiffs might seek to give discovery in further tranches in considering whether to dismiss the proceedings for non-compliance with the Court's orders, where that possibility was not put to Mr Amirbeaggi or Mrs Vella, who were not cross-examined, although it was squarely raised in the Defendants' submissions.
4. On 31 March 2020, Mr Amirbeaggi sent an email to Mr Grossman which I should set out in full, because it received some attention in submissions and raises substantial difficulties: "For clarity, the items in Category 3 can only be provided electronically to you by you/your expert attending our client's premises at [Ingleburn]. That is because they are contained in a transport accounting management system that is hosted on our client's server i.e. we cannot provide you with a URL and password to it. That is why we had suggested that we produce the records in printed fashion in first instance i.e. to expedite. Might I have your advice as to when you and your expert would like to attend upon the client offices to inspect the file electronically? They are ready for inspection."
5. The first difficulty with this email is that the orders made by the Court in late October 2019 had expressly provided for the discovery of "electronic accounting data" in category 3, and the fact that the Plaintiffs held some of their accounts and ledgers on proprietary accounting software was known and expressly addressed by those orders. The Plaintiffs had many months to address that difficulty, although there is no evidence they did so before the risk that their continuing default would result in the dismissal of the proceedings emerged in late March and April 2020.
6. The second difficulty with that email is that what was contemplated by Mr Amirbeaggi's suggestion that financial records would be "provided electronically" to the Defendants' solicitor or their accounting expert at JEVPL's offices was that he or she would be permitted to view unidentified records on a computer screen at those offices. That was not the electronic provision of accounting data held in electronic form for the purposes of discovery, as Mr Amirbeaggi had described it. That was also not discovery because the Plaintiffs had made no attempt to identify or list, in advance, which financial records that would then be made available for the Defendants' inspection on screen, and the process they proposed would have left the Defendants' legal representatives to negotiate the scope of what they could view on an ad hoc basis, without any meaningful verification of the completeness of the records that were made available to them.
7. The third difficulty with that email is that the proposition that the Plaintiffs could not provide a website link and password was incorrect, although they had not then done so, and they had not then made sufficiently diligent enquiries to provide any reasonable basis for advancing it. The fourth difficulty is that, whether or not the production of printed copies of financial records held in electronic form would have complied with the Court's discovery orders, the Plaintiffs did not produce those records in that form. I do not need to resolve a further dispute as to whether that suggestion had in fact previously been made by Mr Amirbeaggi, as his email stated.
8. By letter dated 31 March 2020, the Defendants' solicitor responded, in measured terms, that: "We refer to your email inviting Mr Ferrier to attend your clients' premises in Ingleburn to inspect documents on your clients' server. This is the first time you have advised of any issue with [JEVPL] providing electronic discovery. Do you say there is some technical reason that the relevant electronic files cannot be downloaded, exported or converted into a zip file and placed onto a USB to be provided to our office for the purpose of inspection by Mr Ferrier? If so, can you please advise of the reason that the information cannot be exported so that our clients may obtain technical advice on this matter. It will be helpful if you would advise: (a) the name of the proprietary transport management system used by the Plaintiffs; (b) the steps that have been taken to download, export, or convert the information; (c) whether any technical or professional assistance has been sought in exporting, downloading or converting the information, including from the proprietor of the system; (d) any reason that the attempts to export or download the data have been unsuccessful, including any error message or advice your client has received; and (e) whether electronic copies of the information have previously been successfully made, and if so, who holds such copies."
9. The Plaintiffs' solicitors did not then respond to that letter, and those issues were first, and partially, addressed by Mr Birch's evidence dated 14 April 2020, to which I refer below.
10. By a further statement dated 31 March 2020, Mr Amirbeaggi accepted that the process of discovery had been "delayed" and suggested that he ought to have brought the delay to the Court's attention. That proposition does not advance the Plaintiffs' position, for reasons that I will note below. Mr Amirbeaggi also refers to internal turnover within the staff of his firm and to the fact that Mr and Mrs Vella, who had been left by the Plaintiffs to undertake discovery without sufficient assistance, are respectively 76 and 66 years of age; that Mr Vella cannot read and write English, although he has apparently been left to attend to discovery of documents written in English in a complex commercial matter; and that Mrs Vella has difficulty with comprehension of English when it concerns legal matters and process, although she too has been left to attend to discovery in a complex commercial matter. Mr Amirbeaggi also refers to Mrs Vella's position that only she and Mr Vella deal with financial matters and records of the business and with legal matters and records concerning themselves or the business. That is difficult to reconcile with the extensive evidence led by their son, JEVPL's General Manger, as to JEVPL's affairs in these proceedings. However, assuming its truth, the fact that that may be Mr and Mrs Vella's preference does not provide an adequate explanation for the Plaintiffs not devoting additional resources to the discovery process, to allow the Court's orders to be complied with. Far from providing any explanation of the delays in complying with the Court's orders as to discovery, it seems to me that these matters emphasise the unreasonable way in which the Plaintiffs have approached discovery, by leaving the task to Mr and Mrs Vella who should not fairly have been left to bear that burden without adequate assistance. As I have noted above, it also does not address the then then continuing failure to provide adequate access to financial records held in electronic form, as to which Mr and Mrs Vella were not attending to discovery.
11. By that further statement, some 7 days after his earlier statement indicating that it would take several weeks if not months to complete the discovery process, Mr Amirbeaggi also indicated, without further explanation, that the Plaintiffs had now completed their discovery and that he had written to the solicitor for the Defendants noting that discovery was complete and that inspection was available. As will emerge below, both of those propositions were also incorrect in substance.
12. The Defendants in turn rely on Mr Grossman's affidavit dated 1 April 2020, which refers to his inspection of the documents referred to in the Plaintiffs' then unverified list of documents at Mr Fernon's chambers, and to the fact that, some three days after the Defendants were advised that a "first tranche" of documents was to be discovered, they were then advised that the Plaintiffs' discovery was complete. There is, as I noted above, no explanation of how that position came to change so quickly. Mr Grossman also there refers to several other difficulties with the discovery given by the Plaintiffs.
13. By further submissions for the hearing on 2 April 2020, also adjourned at the Plaintiffs' request, Ms Dolenec submitted that, notwithstanding developments in the intervening period, the Plaintiffs had demonstrated that, without the Court's continued intervention, they would disregard orders and, even when the Court intervened, they would only attend to such orders on their own terms and in a manner which was expensive and time-wasting for the Defendants. Ms Dolenec also submitted that the Plaintiffs had approached this matter by now contending their discovery was complete, when that was likely not the case. She also pointed to the inconsistent statements made to the Defendants as to the status of their discovery, to which I have referred above. It would not be appropriate to reach any finding as to the completeness of the Plaintiffs' discovery, where that discovery has been verified, beyond the finding that they had not complied for several months with the order for discovery of their financial records, and the further finding that that non-compliance has caused significant difficulties for the preparation of the proceedings for hearing and now prevents the Court making any proper order for the future conduct of the proceedings or setting them down for hearing.
14. Ms Dolenec emphasised the fact that the Plaintiffs' changes of position, from the fact that 30 boxes would be discovered to the fact that 13 boxes were discovered, and from the fact that discovery would take at least 4 weeks to complete to completing it in 2 days, were unexplained. She submitted that documents that were not discovered, and still are not discovered, in accordance with the Court's orders included financial information that is critical to an assessment of the Plaintiffs' claim for damages. She emphasised the consequential prejudice to the Defendants, both by the time that must be devoted to pursuing issues as to the inadequacy of discovery, and the delays and interruptions to the preparation of their expert accounting evidence. She submitted that the Court cannot be satisfied that these proceedings will progress without constant supervision and intervention of the Court, or with such constant supervision and intervention.
15. In supplementary submissions for that adjourned hearing on 2 April 2020, Mr Fernon submitted that the provision of access to inspect the documents produced by the Plaintiffs was complete, subject to a confidentiality issue. As events have emerged, that submission was also not correct as a matter of fact. Mr Fernon also addressed the steps taken by the Plaintiffs to comply with the discovery orders, as set out in Mr Amirbeaggi's statements dated 24 and 31 March 2020. I have addressed Mr Amirbeaggi's evidence of those matters above. Mr Fernon also submitted that the Plaintiffs' default in compliance with the discovery orders had been rectified and there was no ongoing default. That was also not correct, as the production of subsequent documents by the Plaintiffs demonstrated, and adequate discovery and access to financial records over the period required by the discovery orders was not given by the Plaintiffs until, at best, shortly before this judgment. Mr Fernon repeated the submissions, which I have addressed above, that there was "no attempt to ignore or not comply with the Court orders" and that there was no identifiable prejudice to the Defendants. As I have noted above, the Court's power to make orders for non-compliance with its directions under s 61 of the Civil Procedure Act is not limited to circumstances of contumelious or intentional default, and these delays plainly caused substantial prejudice to the Defendants.

The position at the hearing on 17 April

1. At the hearing on 17 April 2020, the Plaintiffs relied on a statement dated 14 April 2020 of Mr Pathinather, a solicitor employed in Mr Amirbeaggi's firm. The statement referred to the review of 30 boxes of documents and the discovery of some 3,000 documents, which he says had by then been made available for inspection by the Defendants' solicitor at Mr Fernon's chambers, and to the provision of some other documents in electronic form. Mr Pathinather responded to a number of criticisms made by Mr Grossman of the Plaintiffs' production in several categories of discovery. Mr Pathinather also referred to steps that had been taken, since the matter was previously listed on 2 April, to provide copies of bank statements and referred to steps which had belatedly been taken to give discovery in electronic form of pre-2011 financial information; and steps that were then being taken to identify backup files for financial records for 2013-2015 which it was said had been destroyed by a "ransomware" virus.
2. Mr Pathinather also referred to the position in respect of financial records after 2015 and stated that: "The records 2015 and onwards are on the Plaintiffs' software system called "Freight2020". These records cannot be made available because this is a customised software system that has been designed specifically for the First Plaintiff's requirements and cannot be accessed by third parties. Mr Birch has caused inquiries to be made of the Freight2020 programmers to extract the data responsive to the categories but he does not know how long this process would take. Remote access login can be provided for the "Freight2020" system if required though all that would allow for is for the Defendants['] representatives to view the files and no more." Mr Pathinather also annexed copies of correspondence dated 14 April 2020, referring to the fact that some further documents had been sent and more documents would be sent to the Defendants' solicitors. I return to the position as to those documents below.
3. The Plaintiffs also relied on Mrs Vella's statement dated 14 April 2020, which indicated that she is principally responsible for maintaining JEVPL's accounting, commercial and legal records and that her son, the general manager of freight operations, manages its freight operations but does not have the same knowledge of the extent and location of JEVPL's records as she does. Mrs Vella indicated that JEVPL's other staff were not present at the relevant times to be of assistance in identifying the relevant documents. With all respect to Mrs Vella, I am not persuaded that Mrs Vella's personal knowledge of the documents required that she be left, with only the assistance of her elderly husband who does not read English, to undertake discovery without any or any substantial assistance. There is no reason why Mrs Vella could not have shared her knowledge of the location of documents with JEVPL's other staff members or with employees of the Plaintiffs' solicitors or with contractors, in order to undertake the process of discovery in accordance with the Court's orders. While Mrs Vella no doubt had a proper concern in ensuring that discovery was undertaken properly, that did not require her to undertake discovery without the assistance of other competent staff, who could have been properly supervised by her or JEVPL's general manager or the Plaintiffs' solicitors. Mrs Vella was also not responsible for the Plaintiffs' discovery of or giving access to electronic financial records as I have noted above, or for the Plaintiffs' then continuing failure to do so.
4. Mrs Vella also referred to her instruction given on 30 March 2020 that discovery was complete and to the matters which have emerged since that date to indicate that discoverable documents had not in fact been produced. Mrs Vella also pointed out that she had not been involved in the discovery of JEVPL's electronic records and that Mr Birch addressed those records. That matter emphasises the fact that it was not necessary that discovery of physical records be left only to Mrs Vella and her husband and also means that the strains on her provide no explanation for the delays in discovery of those records and ongoing failure to make those electronic financial records available. I deal with that question below.
5. By his statement dated 14 April 2020, Mr Birch in turn referred to the process for discovery of financial records held by the Plaintiffs in electronic form, although he did not suggest that process commenced following the orders for discovery of those records made in September and October 2019, referring only to steps he took in late March and April 2020. Mr Birch referred to the circumstances in which he initially believed that discovery of financial records since 2015 could only be undertaken by the Defendants attending JEVPL's offices in Ingleburn; to his having made inquiries of the supplier of the Freight2020 software used by JEVPL in late March 2020 (several months after discovery orders had been made) which led him to believe that it was not possible to extract records and make them available in USB format to the Defendants; and to further inquiries that had been made, but apparently only since 2 April 2020, which suggested that it may be possible to extract data limited to certain categories.
6. Mr Birch also referred to the possibility that access to the relevant system could be obtained by the Defendants by using a customer login provided by Freight2020's programmers at his request, but dismissed that possibility in his statement on the basis that: "… [S]uch a customer login would enable direct access and the ability to change the operating systems of the [JEVPL]. Mr Birch fairly conceded, in answer to questions from me in his oral evidence on 17 April 2020, that there was no realistic basis to think that either an independent expert retained by the Defendants or the Defendants' solicitors would seek to use such remote access to change JEVPL's operating system, given the range of professional obligations to which they are subject. The Plaintiffs had not then, throughout the several months since orders for discovery of financial records were made, offered remote access limited, for example, to the Defendants' solicitors and accounting expert. Mr Fernon submits that the discovery orders would have entitled the Defendants to access those documents, but that simply highlights the Plaintiffs' ongoing failure to take any step to address the difficulties which they perceived existed, by seeking a variation of the earlier orders to permit remote access limited to the independent accounting expert retained by the Defendants and the Defendants' solicitors.
7. The Plaintiffs also relied on two letters dated 16 April 2020 from their solicitors to the Defendants' solicitors, which indicated that there were no additional documents to discover, contrary to Mrs Vella's previous position, and that a USB containing certain bank records and a USB containing 2013-2015 back up electronic financial records would be sent by registered post on 17 April 2020, the date of that hearing. The Plaintiffs also tendered a verified list of documents containing a solicitor's certificate dated 15 April 2020 and a verifying affidavit signed by Mrs Vella, but not witnessed. Sensibly, no point was taken by the Defendants as to the form of that affidavit given the practical issues arising from the COVID-19 virus.
8. The Defendants in turn tendered Mrs Vella's affidavit dated 30 January 2017 which indicated that, at least since August 2013, JEVPL had employed a fulltime internal accountant who was, at least as at January 2017, responsible for all of the payroll, bookkeeping and general accounting for JEVPL, and that Mrs Vella was then responsible for JEVPL's online banking facility, arranging motor vehicle registrations for trucks, daily banking and everyday office duties. That evidence was not wholly consistent Mrs Vella's evidence in her statement dated 14 April 2020, to which I referred above, as to the range of her responsibilities or that only she or her husband, personally, could do the work necessary to give effect to the Court's discovery orders. The Defendants also tendered Mr Amirbeaggi's affidavit dated 23 August 2019 which described Mr Amirbeaggi's close involvement in the preparation of the Plaintiffs' expert accounting report, and to the steps which had then been taken by the Plaintiffs and that accounting expert to search archive boxes of records for material sought by the Plaintiffs' accounting expert.
9. In further submissions for the hearing on 17 April 2020, Ms Dolenec submitted that the Plaintiffs seemed to have made some attempt to address deficiencies in discovery which had been specifically identified following the Defendants' inspection of the hard copy documents that had been made available on 31 March 2020, but there was no suggestion that they had undertaken any comprehensive review to satisfy themselves, or the Court, as to the adequacy of their discovery. Ms Dolenec also pointed to the then continuing failure to produce financial information and submitted that the Plaintiffs had still not produced, at least in any identifiable way, the documents made available to their expert which were the basis for section 8 of his report. In her oral submissions at the hearing on 17 April 2020, Ms Dolenec advanced a range of criticisms of the Plaintiffs' discovery and their evidence, which elaborated on, but did not substantially advance, her written submissions to which I have referred above.
10. Mr Fernon's further supplementary submissions for the hearing on 17 April addressed the further statements of Mrs Vella, Mr Birch and Mr Pathinather to which I have referred above. Those submissions also referred to additional documents which had been produced, subsequent to the earlier representations by the Plaintiffs that discovery was complete, and addressed the position in respect of financial information held on JEVPL's "Freight2020" software system. Mr Fernon referred to additional inquiries which were then being made, several months after discovery had first been ordered, which would indicate whether such documents could be electronically extracted and made available. He did not offer any commitment by the Plaintiffs to make such documents available or any timeframe in which that would occur, notwithstanding the Court's earlier orders for discovery of those documents.
11. Mr Fernon also submitted that: "[JEVLPL] is not ignoring Court directions. It has endeavoured to comply with them in good faith. There have been delays, mistakes and oversights. However, that does not warrant the dismissal of the proceedings. No prejudice is identified to the Defendants. Significant prejudice will be incurred by the Plaintiffs." I have addressed aspects of that submission above. I reject, as I have noted above, the proposition that no prejudice to the Defendants has arisen from these matters. I recognise that the dismissal of the proceedings will involve significant prejudice to the Plaintiffs, including as to costs. It is important also to recognise, however, that the Plaintiffs brought a complex commercial case, claiming damages over a significant period, and it is not sufficient to "endeavour" to comply with discovery orders, without devoting adequate resources to doing so, particularly where the failure to do so, including in respect of the provision of financial records has continued over several months.
12. In his oral submissions at the hearing on 17 April 2020, Mr Fernon advanced submissions that Mr Vella and Mrs Vella have been working hard to give discovery, and sought to address the concern to which I have referred above, that they have been provided insufficient assistance to do so. That did not assist so far as they were not responsible for electronic financial records or the ongoing failure to discover or provide adequate access to them. Mr Fernon also focussed on the Plaintiffs' failure to restore the matter before the Court, implicitly on the basis that they would not have needed to comply with the existing discovery orders had they disclosed their ongoing default in that way. That submission does not assist the Plaintiffs. Had they restored the matter before the Court to disclose their default in discovery, before that default emerged at the directions hearing on 23 March 2020, there is no realistic prospect that the Court would have made orders to extend the time of discovery for any significant further period, given the history of delay in the proceedings and the fact that the delay in discovery largely if not entirely reflected the Plaintiffs' failure adequately to resource the discovery process. In particular, JEVPL is a commercial enterprise; evidence in these proceedings has been led by its General Manager, Mr and Mrs Vella's son, and there is evidence that the Company has administrative staff; and there is no sensible basis on which discovery of hard copy documents should have been left only to Mr and Mrs Vella, without further administrative and legal assistance, prompting their complaints as to the strains which it has imposed upon them; and they were not responsible for the failure to discover or allow adequate access to electronic financial records. Mr Fernon also repeated the submission that there was no "calculation", in the sense of wrongful intent, on the part of JEVPL to frustrate the process of discovery. That is not a necessary element of the Court making an order under s 61 of the Civil Procedure Act arising from the failure to comply with its orders.
13. Mr Fernon also submitted that the orders made by the Court for access to financial records did not limit access, in respect of financial records from 2015 onwards, to the Defendants' solicitor and expert witness. As I noted above, that submission does not assist the Plaintiffs, because it simply emphasises the fact that, while it should have been apparent long ago that the Plaintiffs would have difficulty in giving electronic access to information held on their proprietary accounting software, they took no effective steps to address those difficulties, including by exploring the possibility of providing remote access (at least prior to April 2020) or advancing any suggestion that such access could be provided, limited in the first instance to the Defendants' solicitors and independent accounting expert. The Defendants had no opportunity to address that issue where, as I have noted above, the Plaintiffs' solicitors failed to respond to the Defendants' solicitors request for further information as to the nature of that difficulty.
14. When I reserved the matter for judgment, following the hearing on 17 April, and against the contingency that the Plaintiffs might take steps to address the issues which had been raised before judgment was delivered, I directed the parties to relist the matter within one business day if, prior to the delivery of judgment, the Plaintiffs provided access in electronic form to documents falling within category 3 of the discovery categories, by providing a copy of that material to the Defendants or providing remote access to that material, so far as it related to financial information for the period from 2015 held on JEVPL's "Freight2020" software system.

Relisting of the matter on 29 April and 2 May

1. On 23 April 2020, the Defendants sought to have the matter relisted for directions. Later the same day, the Plaintiffs filed and served an affidavit of Mr Pathinather dated 23 April 2020 which recognised that, at the time he had signed his statement dated 14 April 2020, the Plaintiffs had not then given discovery of JEVPL's pre-2011 financial records of the Company, CBA bank statements for the last 7 years, JEVPL's financial records for the years 2013-2015, and electronic data stored on JEVPL's "Freight2020" server post-2011, which, as noted above, includes financial records since 2015. The consequence of that recognition was that the Plaintiffs had not then complied with the discovery orders relating to the Company's accounting records held in electronic form.
2. Mr Pathinather also referred to the fact that his first statement had said that he had caused a USB containing financial records for the earlier period to be sent to the Defendants' solicitors by registered post, and noted the reference at the hearing before me on 17 April 2020 to the fact that that USB had not been received by the Defendants. Mr Pathinather's evidence was that, when he initially checked the status of the package it was in transit in a facility in Strathfield but, when he again checked the position on 20 April 2020, the Australia Post website said it was in transit at a facility in South Australia. Mr Pathinather also led evidence, at third hand, of a suggested process of Australia Post that might have had that result to which I give no weight. Mr Pathinather referred to evidence from Mr Birch that obtaining a new USB copy of the records provided would be a "time-consuming task" and did not indicate when that task would be complete. Mr Pathinather referred to the provision of copies of CBA statements to the Defendants' solicitor.
3. Mr Pathinather also referred to having been copied on correspondence between Mr Amirbeaggi and Mr Grossman regarding remote access to JEVPL's "Freight2020" system and to an inspection of files on that system by the Company's representatives. Mr Pathinather's reference to the content of that correspondence implied, but did not expressly say, that remote access had been provided to that system generally, and Mr Amirbeaggi led no evidence in that respect. Mr Grossman's evidence in response was that the access which was provided was significantly limited. Mr Pathinather's evidence, in respect of the physical inspection, was that only certain aspects of the "Freight2020" system were responsive to the categories of discovery but he did not give evidence that the Plaintiffs, or he, had undertaken any review of the relevant files to confirm that matter. Mr Pathinather also referred to his having declined to permit access to a portal containing "customer details", notwithstanding that that folder was titled "customer lists" and the Plaintiffs had been ordered to give discovery in that category.
4. By a further affidavit dated 24 April 2020, Mr Grossman responded to Mr Pathinather's affidavit, and observed that the remote access that had been provided to the "Freight2020" software was limited to three functions, although that system appeared to contain some 23 modules; that Mr Grossman had observed evidence, in his inspection, that JEVPL operates a current Westpac bank account as to which no discovery has been given; that, as Mr Pathinather had also indicated, Mr Grossman had not been permitted access to an electronic file described as "client lists" despite the corresponding discovery category; and that financial records in a form that could be utilised or manipulated electronically had not made available to the Defendants for a significant period. He addressed these issues in further detail which it is not necessary to address for the purposes of this judgment.
5. The matter was again listed on 29 April 2020, in what should have been a final hearing. Mr Fernon had difficulty joining the virtual courtroom by telephone but Mr Amirbeaggi represented the Plaintiffs on that occasion. About an hour before that hearing, the Plaintiffs served a further affidavit of Mr Birch, which I granted leave for them to read given the significance of its content, and on the basis that I would likely grant leave to Ms Dolenec to cross-examine Mr Birch. About 9 minutes before the hearing, the Plaintiffs served a further affidavit of Mr Pathinather, which I declined leave to read at that point, while recognising that such leave might be granted on a further adjournment. The matter was then further adjourned to 4 May 2020 at Ms Dolenec's request to allow her to prepare to cross-examine Mr Birch. I then noted the difficulties which had arisen from the late service of new affidavit evidence throughout the hearings of the matter, and directed that no further affidavit evidence or statements or other evidence were to be filed or relied on in respect of the question whether the proceedings should be dismissed for non-compliance with the directions previously made by the Court. Notwithstanding that direction, the Defendants' solicitors then sent a further affidavit of Mr Grossman to my Associate late on 1 May 2020, indicating that they would seek leave to read it at the adjourned hearing.
6. At the 4 May 2020 hearing, the Plaintiffs did not seek to read Mr Pathinather's affidavit of 29 April 2020 and the Defendants did not seek to read Mr Grossman's affidavit in response at the adjourned hearing on 2 May 2020. By the date of that hearing, it was common ground that the Plaintiffs had made available electronic financial records for the period from 2007 to 2011, at least because the USB that had been previously posted by the Plaintiffs' solicitors to the Defendants' solicitors had been received on the day of that hearing. It was also common ground that the Plaintiffs had made available financial records held in electronic form for the period to 2015, although the Defendants advanced criticisms of the usability of some of that data. It appears, from Mr Birch's cross-examination, that those criticisms reflect, at least in part, the consequence of provision of discovery from back-up electronic files, where primary accounting records had been affected by the ransomware attack to which I referred above.
7. The Plaintiffs had also provided remote access to a range of financial information for the period from 2015 held on the Freight2020 software, by adding a "lawyer access" functionality which extended to some but not all of the functionality of that system, although Mr Birch acknowledged in cross-examination that a large part of that access was not available until 30 April 2020, after the matter had last been listed before the Court. Ms Dolenec cross-examined Mr Birch as to the extent of the functionality of that remote access, but this is not an application for further and better discovery and those criticisms do not establish a continuing non-compliance with the Court's orders beyond 30 April 2020. Ms Dolenec identifies other suggested deficiencies with discovery, in her written submissions for the hearing on 29 April 2020 and in oral submissions made on 4 May 2020, but it does not seem to me that those matters rise to a level that they constitute non-compliance with the Court's orders, as distinct from matters which may or may not warrant orders for further and better discovery in specific categories.

Determination and orders

1. In the result, several months after discovery orders were made in September and October 2019, and over a month after the question of dismissal for non-compliance with the Court's orders arose, and after five further hearings to address that issue, including several adjournments at the Plaintiffs' request and one adjournment arising from the Plaintiffs' late service of affidavit evidence, the discovery orders made by the Court in September and October 2019 have been substantially complied with. This raises an issue of principle as to how the Court should now address substantial non-compliance with its orders, continuing over a considerable period, which is substantially remedied only after a prolonged process to determine whether the proceedings should be dismissed.
2. I have regard, in determining the orders that should now be made, to the fact that the Plaintiffs' delays in complying with the Court's discovery orders and proving access occurred after the Court had already emphasised the difficulties arising from the continuing delay in the proceedings. I also have regard to the significance of compliance with discovery orders, where made, in achieving a fair hearing. While I am conscious of confining orders for discovery to the real issues in the proceedings, the discovery orders were here made after lay evidence had been filed and were directed to quantification issues which are important issues in the proceedings, as to which the Plaintiffs have led expert accounting evidence. The Plaintiffs' compliance with the discovery orders was necessary to the regular conduct of a trial and the integrity of the Court's processes: Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 at [366]-[368], recently approved by a Full Court of the Federal Court in Clifton (liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 at [137]ff. Compliance with those orders, critically including the provision of access to the Plaintiffs' financial records held in electronic form within the discovery categories, was also necessary for the case to be managed to a hearing within a reasonable time, since the Defendants could not reasonably be ordered to file and serve their accounting expert evidence and the matter could not be set down for hearing until those orders were complied with and that access was provided.
3. I also recognise that the Court has power to dismiss proceedings for the failure to comply with a direction or order under s 61(3) of the Civil Procedure Act 2005 (NSW). I am conscious that I must exercise my discretion whether to make such an order having regard to ss 56-58 of the Civil Procedure Act. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings, and s 57 requires proceedings to be managed having regard, inter alia, to their just determination. Section 58 of the Civil Procedure Act requires the Court to have regards to the dictates of justice when considering an order, and also requires the Court to have regard to the provisions of ss 56 and 57.
4. I have regard to wider issues as to the conduct of civil proceedings and the Court's role in case management and in addressing issues of delay in litigation which are squarely raised by this matter. I bear in mind the Court of Appeal's observations in Richards v Cornford (No 3) [2010] NSWCA 134 at [42]-[44] as follows: "The litigious process is inherently stressful for any party, in particular an individual. … That stress includes the uncertainty and concern as to the effects of legal costs that can lead to bankruptcy and financial ruin. The reality of the personal strain of litigation is now clearly recognised by the Courts. This being the nature of the process of litigation, the courts in this country in modern times, have sought to exercise control and supervision over litigation in order to see cases resolved in a relatively timely fashion. It cannot always be done. Parties, practitioners, courts and judges sometimes fall behind by reference to appropriate standards of efficiency and timeliness. Nevertheless, the need for the due despatch of the cases of litigants is ever-present and is a fundamental aim of the administration of justice. To put the matter simply and bluntly, parties are entitled to expect that the costly and stressful, though necessary evil that is litigation be resolved with reasonable despatch so as to minimise, where reasonably possible, the time during which people are subjected to its rigours and strains" [citation omitted].
5. Australian courts also often refer to the observations of the High Court of Australia in Aon Risk Services v Australian National University (2009) 239 CLR 175 in case management decisions. That case was an appeal against a decision of a trial judge to allow an amendment to pleadings at a late stage, in a case which had already suffered substantial delays. A joint judgment of five members of the High Court observed (at [98]), in relation to rules of court that were similar to s 56 of the Civil Procedure Act, that: "Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and costs are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs."
6. The joint judgment also observed (at [113]) that: "In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings."
7. Similar views were expressed by the Chief Justice (at [35]) and by Heydon J (at [154]-[156]).
8. A unanimous High Court in turn summarised the holding in Aon in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, in a case where there had been inadvertent disclosure of privileged documents. The High Court there observed (at [51]) that: "In Aon Risk Services Australia Ltd v Australian National University, it was pointed out that case management is an accepted aspect of the system of civil justice administered by the courts in Australia. It had been recognised some time ago by courts in the common law world that a different approach was required to tackle the problems of delay and cost in the litigation process. Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants. The [Aon decision] … confirmed as correct an approach to interlocutory proceedings which has regard to the wider objects of the administration of justice."
9. The Court also noted (at [56]-[57]) that: "The evident intention and the expectation of the C[ivil] P[rocedure] A[ct] is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose. That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge's individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the C[ivil] P[rocedure] A[ct] can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the C[ivil] P[rocedure] A[ct] assume that its purpose, to a large extent, will coincide with the dictates of justice."
10. In UBS AG v Tyne (as trustee of the Argot Trust) [2018] HCA 45; (2018) 360 ALR 184, in dealing with a question of overlapping successive proceedings, a plurality of the High Court again referred to Aon and noted (at [38]) that its effect was that: "The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the [Federal Court Act] [corresponding to s 56 of the Civil Procedure Act]. As the joint reasons in Aon explain, the "just resolution" of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the [Federal Court Act]. Integral to a "just resolution" is the minimisation of delay and expense. These considerations inform the rejection in Aon of the claimed "right" of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate."
11. Returning now to the scope of s 61 of the Civil Procedure Act, in Lenijamar Pty Ltd v AGC (Advances) Ltd above, Wilcox and Gummow JJ considered an equivalent provision to s 61 of the Civil Procedure Act and observed that: "It is to be noted that the power given by this rule is conditioned on one circumstance only: the failure of a party to comply with an order of the court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion conferred by the rule. There is no requirement of "inordinate and inexcusable delay" on the part of the applicant or the applicant's lawyers, although any such delay is likely to be a significant matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. And it must be remembered that, in almost every case, delay adversely affects the quality of the trial and is an additional burden upon the parties."
12. Their Honours further observed that: "The observations which we have just made about the scope of [the corresponding rule] are not intended to convey the impression that any failure to comply with a procedural direction will appropriately result in the dismissal of the proceeding. On the contrary, the rules must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim; compare the approach taken to non-compliance with time limitations in respect of appeals in Van Reesema v Giameos (1979) 27 ALR 525. We would not wish our observations to cause respondents to apply for dismissal of proceedings simply because there has been a non-compliance with a direction by the applicant, even though it does not cause or indicate a continuing problem in preparing the matter for an early trial. The discretion conferred by [the corresponding rule] is unconfined, except for the condition of non-compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the Judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default."
13. The approach in Lenijamar was followed and applied by Stevenson J in The Recyclers (NSW) Pty Ltd v Ayoub (No 3) [2016] NSWSC 576 at [48]ff, where his Honour recognised that striking out a defence or cross-claim would be a drastic step; that there were competing factors at play, including on the one hand the prejudice to a party that was denied an opportunity to defend proceedings or prosecute a cross-claim; and, on the other, a history of non-compliance with Court orders in that case; and the prejudice to other parties who were faced with delays to the proceedings and, in that case, the risk of loss of a hearing date with no resolution of the outstanding issues in the foreseeable future.
14. There may be a question, which Counsel did not raise, as to whether the Court's powers under s 61 of the Civil Procedure Act extend to both orders and directions for the future conduct of the proceedings. In Re Punters Show Pty Limited [2017] NSWSC 605 at [37], I expressed the view that the Court's powers under that section extended to non-compliance with orders or directions made by the Court and, even if those powers did not extend to "orders" as distinct from "directions", then the Court had inherent jurisdiction to deal with non-compliance with its orders. A similar issue was addressed by Adamson J in Webster v Super Smart Strategies Pty Ltd; Courtney v Super Smart Strategies Pty Ltd [2017] NSWSC 531 where her Honour noted (at [55]) that there was no doubt the Court had power to make an order dismissing proceedings for non-compliance with its orders or directions; that the scope of s 61 of the Civil Procedure Act had been addressed in submissions before her; and that her Honour preferred to make the orders she then made dismissing the relevant proceedings in the Court's inherent jurisdiction "to avoid such nice questions"; see also Ghosh v NineMSN Pty Ltd [2015] NSWCA 334; (2015) 90 NSWLR 595. I would also make orders in the Court's inherent jurisdiction to deal with a breach of the orders in these proceedings, to the extent that any question may arise as to the scope of the Court's powers to make such orders under s 61 of the Civil Procedure Act.
15. It seems to me that several factors here would support an order for dismissal of the proceedings, although there would plainly be significant detriment to the Plaintiffs, including as to costs, in respect of such an order, and although discovery has now substantially been given, several months after it was due and a month after the question of dismissal for non-compliance with the Court's orders arose. Adopting their Honours' language in Lenijamar, the non-compliance with the discovery orders plainly does not involve a mere failure to comply with a "procedural direction" but a substantial and ongoing non-compliance with essential steps to the preparation of the matter for a fair hearing. The Plaintiffs failed, for a long period, to comply with the Court's orders that the Plaintiffs give discovery of financial records and give access to such records to the Defendants, and ultimately only did so after several adjournments of the hearing as to dismissal of the proceedings for non-compliance with the Court's orders. Some six months have now passed since the relevant discovery orders were first made and over four months have passed since they were due to be complied with. It seems to me that the delay in giving discovery has been inordinate, notwithstanding the late steps made to remedy the defaults. There is plainly substantial prejudice to the Defendants from these matters, given the time that has passed since the events in issue and the risk of deteriorating recollections, the time that has passed since the proceedings have commenced, the costs that will necessarily have been incurred in addressing discovery failures and the fact that these proceedings have now not advanced towards a hearing in an orderly way over several months.
16. As I noted above, the Plaintiffs respond that their error was not to restore the matter before the Court to disclose the continuing delay, without recognising that the time for compliance with the Court's discovery orders would likely not have been extended had the matter been restored, given the insufficient resources devoted by the Plaintiffs to discovery, their lack of attention to providing access to financial documents held in electronic form prior to April 2020 and the prejudice to the Defendants and the public interest from continuing delay. The Plaintiffs submit, repeatedly, that their failures to comply with the Court's orders were not "deliberate" or "calculated" to frustrate the discovery process. It is, of course, not necessary to establish deliberate intent to frustrate the Court's orders in order to exercise the power under s 61 of the Civil Procedure Act or under the Court's inherent jurisdiction, although it seems to me that a party which knows that the resources it has devoted to discovery are insufficient; knows that they will not bring about discovery within the time ordered by the Court, or any reasonable time; knows that it has not taken steps to provide copies of financial records in electronic form on request for an extended period and takes no steps to devote additional resources so as to comply with the Court's orders, necessarily intends the consequences that will inevitably follow.
17. I am satisfied that the history of delay in the conduct of the proceedings, the length and scale of the Plaintiffs' default as to discovery, the Plaintiffs' continuing failure to comply with the Court's discovery orders in respect of financial records and the real detriment to the Defendants and the public interest in the delivery of justice arising from these matters, would warrant an order dismissing the proceedings (notwithstanding that order is a last resort, and recognising the prejudice to the Plaintiffs involved in making it), unless the Plaintiffs now make good the resulting detriment to the Defendants.
18. It seems to me, however, an order short of dismissal of the proceedings can be made that will address the detriment to the Defendants, where the Plaintiffs have now substantially, although belatedly, complied with the discovery orders and given access to discovered documents. That can be achieved only if the Defendants are fully and promptly compensated for the costs that have been wasted throughout the several months of delay after discovery was due and the several discovery order compliance hearings, and that requires not only the making of an order as to costs but also compliance with that order. It seems to me that such compensation would require at least that costs be payable to the Defendants on an indemnity basis, in respect of the Defendants' wasted costs of the discovery process since the Plaintiffs' discovery was due to be provided on 21 December 2019 and of the several discovery order compliance hearings, and on the basis that those costs be payable forthwith and are to be determined on a gross sum costs basis (unless the Defendants do not wish to seek costs on that basis) in order to avoid the further delays which would be involved in an assessment.
19. I bear in mind the principles that are applicable to making an indemnity costs order, a gross sum costs order and a forthwith order as to costs in that regard. Section 98 of the Civil Procedure Act 2005 (NSW) confers a discretionary power to determine costs on the Court and requires that that discretion be exercised judicially, and s 98(1)(c) permits the Court to order costs on an ordinary or an indemnity basis. Rule 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 deals with an order for costs on an indemnity basis. The jurisdiction to order costs is compensatory and not punitive and whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 89. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6] where the Court observed that an order for indemnity costs may be made where conduct in proceedings is plainly unreasonable or involves an element of delinquency. An order that costs be paid forthwith is unusual, but may be made where there is, inter alia, unreasonable conduct or substantial delay of a kind that would justify such an order, although the Court will also have regard to the capacity of a costs order to stultify proceedings: Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727 at [24]; Richmond v Ora Gold Ltd [2020] FCA 70 at [33]; Commissioner of Australian Federal Police v Omar [2020] NSWSC 155.
20. The circumstances in which a gross sum costs order may be made are also well established and I summarised them in Saba v Plumb & Anor [2017] NSWSC 955 at [23] as follows: "Section 98(4) of the Civil Procedure Act relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. That power is commonly exercised where costs have been incurred in a lengthy or complex case although it is not in its terms limited to such a case … The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis." [citations omitted
21. It seems to me that the basis for orders that costs be paid on an indemnity basis and forthwith, and for a gross sum costs order if sought by the Defendants, is established. The conduct of the discovery process by the Plaintiffs is of a nature that warrants an indemnity costs order and a forthwith order, extending to the costs of the discovery order compliance hearings that were consequential upon it. A gross sum costs order is warranted where the costs and delay of an assessment would exacerbate the prejudice to which the Defendants have already been exposed by the delays in discovery. Such an order is also, in my view, the only way in which the detriment (by way of delay and costs) to which the Defendants will have been exposed by the delays in discovery and their consequences may be minimised, although likely not extinguished, if the proceedings are not to be dismissed by reason of the matters addressed above.
22. If the Defendants elect to have those costs determined on a gross sum basis, I will make orders that will allow that to occur within several weeks, so that the costs orders are then made and are payable within a short time thereafter, although I will hear the parties in that regard. The proceedings may well then be dismissed if the order for payment of those costs is not complied with, given the lengthy non-compliance with the Court's previous orders recorded in this judgment and the real prejudice that the Defendants would suffer if they are left to a costs order that is also not complied with.
23. Accordingly, I make the following orders:
24. The Plaintiffs pay the Defendants' wasted costs of and incidental to (1) the Plaintiffs' failure to give discovery and access to discovered documents from 21 December 2019 until 30 April 2020 and (2) the determination whether the proceedings should be dismissed, on an indemnity basis and as determined (at the Defendants' election) on a gross sum basis, such costs to be payable forthwith.
25. Direct the Defendants, unless they elect within 7 days not to pursue an application for a gross sum costs order, to file and serve an interlocutory process seeking such an order, their affidavit evidence and submissions in support of that order by 4pm on 22 May 2020.
26. Direct the Plaintiffs to file and serve their affidavit evidence and submissions in response by 4pm on 5 June 2020. 4 The Defendants' application for determination of the quantum of their gross sum costs (if made) be listed with a view to hearing in the Corporations Motions List at 9.15am on 15 June 2020 before Black J, or such other date as may be agreed between the parties and available to the Court.

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. Decision last updated: 08 May 2020