Baker & Provan Defence Pty Limited v Supacat Pty Limited

What cost order should be made?

Dealing with Supacat's submission first, it argues that an indemnity costs order in its favour is appropriate in this case because Baker & Provan was wholly unsuccessful in obtaining an order that Supacat give discovery of the 34 categories of documents listed in schedule 1 to its motion.
Supacat also submits that Baker & Provan's conduct, before and after the hearing, has caused unreasonable delay and expense, arguing that Baker & Provan's revised list of categories sent on 3 March 2020 was the first genuine attempt by Baker & Provan to properly limit discovery to documents relevant to a fact in issue.
I am not persuaded by Supacat's submissions that Baker & Provan should pay Supacat's costs of the discovery motion on an indemnity basis. In my opinion, Supacat could not be considered to be the successful party on the motion. I am also of the view that it was not unreasonable for Baker & Provan to have filed the discovery motion when it did and that it did not conduct the application in a way which justifies an indemnity costs order in favour of Supacat.
As Baker & Provan's submissions note, at an early stage, Baker & Provan sought to agree discovery categories without the need for any interlocutory dispute. Initially, Supacat rejected that approach on the basis that discovery was unnecessary. That position changed and Supacat later agreed to a timetable for discovery. As to be expected, the parties then sought to negotiate the categories for discovery by each party. Agreement was reached in respect of the discovery sought by Supacat but not in relation to all of the categories sought by Baker & Provan.
Supacat points to Baker & Provan filing the motion having not responded to comments made by Supacat on the disputed categories. Those comments were made in a letter dated 4 December 2019 sent by Supacat at 3.33pm on the same day Baker & Provan was due to file its discovery application, according to a timetable which Supacat had requested be extended. Supacat's letter also made clear that it continued to dispute some of the categories because they sought documents which Supacat asserted were not relevant to any fact in issue in the proceedings.
Thus, Baker & Provan's discovery motion was filed on 9 December 2019 in the context where the parties had attempted but had failed to reach agreement on the categories and where orders had been made and extended requiring the filing of an application around that time.
I also do not consider that Baker & Provan's conduct prior to and at the hearing of the motion was unreasonable or led to delay or further costs. The refinement of its discovery request to 18 disputed categories responded to matters raised, not only in Supacat's letter of 4 December 2019, but also to affidavits served by Supacat earlier in February 2020. While some criticism could be levelled at Baker & Provan for making its refinements late in the day, doing so assisted in confining the issues in dispute at the hearing.
As to Baker & Provan's conduct at the hearing, Baker & Provan's oral argument focussed on issues of principle and categories by way of example, in the expectation that the Court's views on those matters might enable the parties to agree the position on the remaining categories. That was a sensible and efficient way to approach the disputes between the parties and assisted in achieving consent orders by way of a final outcome. Baker & Provan also took on board comments from the bench and agreed not to press certain categories of discovery and to revise the others. The arguments it advanced at the hearing were, in my view, plainly arguable and, in some cases, were accepted over Supacat's contentions.
After the hearing, the parties exchanged communications in relation to Baker & Provan's refined version of the categories for discovery. Ultimately, the discovery categories were agreed based on what appears to have been compromises by both parties as well as the outcome of the disputes at the hearing.
I accept that each of the 16 discovery categories the subject of the consent orders have been redrafted and do not reflect the precise terms of the corresponding categories set out in schedule 1 to the motion. But they are the refinement of categories which Supacat had, in some cases, argued at the hearing should not be the subject of any discovery order at all and which, in earlier correspondence, had been rejected as not being relevant to the issues in the case. As noted above at [16] and [20], the Court was not persuaded by Supacat's submissions on some of those issues.
Accordingly, I do not consider this to be a case where Baker & Provan could be said to have unreasonably pursued or persisted with a motion which had no merit. Nor do I consider that Baker & Provan failed in its duty to further the overriding purpose of the Civil Procedure Act of facilitating the just, quick and cheap resolution of the real issues in the proceedings by conducting the application in a way that caused unreasonable delay and expense.
Finally, having obtained orders for discovery after a contested motion, in my view, the starting position is that Baker & Provan, rather than Supacat, is the party that might be considered to have had overall success and should have the benefit of a costs order its favour.
This is the position adopted by Baker & Provan. It submits that Supacat should be ordered to pay its costs as it had success on the discovery motion, with Supacat being ordered to give discovery of documents falling within the vast majority of the disputed categories.
Baker & Provan also argues that Supacat's conduct of the application was unreasonable, pointing to its initial stance that discovery was unnecessary and its position at the hearing that Baker & Provan was not entitled to most of the categories of documents. Pausing here, even if I accepted that Supacat's initial position on discovery was unreasonable, it does not seem to me to justify a costs order in favour of Baker & Provan in relation to the motion. The question to be determined is what cost order is fair and reflects the interests of justice having regard to the outcomes on the motion.
The discovery motion has, in effect, been dealt with in a conclusive way with the result that Baker & Provan obtained discovery orders. But those orders were not made following a hearing and determination of all the issues raised by the motion. Rather, the discovery orders were made by consent on terms negotiated by the parties after a hearing on some of the principal issues in dispute in respect of which both parties had success. Baker & Provan had success in obtaining discovery in relation to documents which Supacat had argued at the hearing were not relevant but also failed to satisfy the Court in respect of other categories. Supacat had success in limiting the scope of discovery in respect of most categories.
In my view, it is not fair or reflective of the interests of justice for Baker & Provan to recover its costs of the motion as a discrete event where the Court was of the view that the categories it pressed at the hearing were too broad and should be refined to accommodate legitimate concerns which had been raised by Supacat, and some categories sought were considered by the Court to not be discoverable.
Equally, I do not consider it to be fair for Supacat to recover its costs as a discrete event. Baker & Provan had to pursue the discovery orders by way of motion and had success on substantive issues argued at the hearing as to whether documents of the type caught by some of the categories were relevant to the facts in issue in the proceedings.
Where there is a mixed outcome in proceedings, the Court may make an order apportioning costs between issues on which the party who has overall been successful and those on which that party has failed: Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [14]. In this case, neither party sought an order apportioning costs between them.
Another option would be to make no orders as to costs. However, the costs of the discovery motion have been incurred as part of the ongoing dispute between the parties. In my view, fairness dictates that some cost order should be made to enable recovery of those costs by one party.
The proceedings are set down for a final hearing soon, in May 2020. To my mind, sufficient justice would be served in this case by making an order for the costs of the discovery motion to form part of the costs of the proceedings with the result that one party will have awarded to it the costs of the discovery motion as part of the final outcome in the proceedings. That order reflects the 'default' costs order in rule 42.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) for interlocutory applications. It is also, in my view, appropriate given the varying successes each of the parties had on the issues argued at the hearing and because, ultimately, the discovery orders were made by consent after some negotiation and compromise by the parties.
I note that Baker & Provan's submissions refer to an open offer it made, at the time the parties reached agreement in relation to the categories of discovery, to forgo the need for submissions on costs and to agree that costs be in the cause in accordance with r 42.7. As no evidence of that offer was before the Court and no submission made that it should be taken into account, I have not done so.
For these reasons, I order that the costs of the plaintiff's notice of motion for discovery filed on 9 December 2019 be costs in the cause.

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