Barescape Pty Ltd & Anor v Bacchus Holdings Pty Ltd

Judgment 1In these proceedings, the Plaintiffs, Barescape Pty Ltd as trustee for The Vs Family Trust and Anthony Ventura, seek orders pursuant to s 61 of the Civil Procedure Act 2005 (NSW) that the Cross-Claim filed by the Defendants be struck out or, alternatively, a joint expert report dated 6 July 2011 and any supplementary joint expert reports or oral evidence from the experts be struck out, disallowed or rejected and consequential orders. This application was initially sought to be agitated shortly before the hearing and was then made returnable before me, as the trial judge, on the first day of the hearing. 2The Plaintiffs rely primarily on the affidavit of Anthony Ventura sworn 3 August 2011 and have also read portions of several other affidavits and tendered documentary evidence on the motion. The Defendants rely on an affidavit of the solicitor acting for the Defendants in the proceedings, Robert Faraday-Bensley sworn 8 August 2011; an affidavit of the accounting expert retained by the Defendants, Claude Jugmans, sworn 8 August 2011; the affidavit of Bree Clysedale sworn 30 April 2010 and also tendered documentary evidence on the motion. 3When Mr Burbidge QC opened the motion before me, Mr Kelly SC, who appears for the Defendants, indicated a concern that the Defendants could be prejudiced by a lack of clarity as to the matters on which the Plaintiffs relied for the application. I stood down the matter for some time and requested Mr Burbidge to prepare a short document identifying the matters on which the Plaintiffs relied. A document was provided to the Defendants that identifies the matters of fact upon which the Plaintiffs rely and documents relevant to the motion and Mr Kelly has indicated the Defendants are in a position to address the motion on that basis. That document was subsequently amended in the course of argument on the motion. Mr Burbidge also handed up a document identifying the evidence on which the Plaintiffs relied, which was also amended in the course of the motion, and I have reviewed that evidence. 4Numerous issues are identified by the Plaintiffs and it is plain that some or many of these issues are historical in character. The way in which the evidence was led by the Plaintiffs and submissions were put by Mr Burbidge did not clearly differentiate between those matters which were complaints as to the way in which discovery or the provision of documents had been addressed by the Defendants in the past, where any deficiencies had since been corrected, and any issues which were currently unresolved. 5The Plaintiffs contend that, on 11 May 2011, Bergin CJ in Eq ordered that an MYOB data file from 1 July 2008 be produced by the Defendants and several different versions of that file have been produced. The Defendants respond that those different versions exist because data is prepared at different times for different purposes and some versions include adjustments for accruals and depreciation. Mr Jugmans, the accounting expert retained by the Defendants, gave evidence of the nature of the differences and of the manner in which the expert accounting witnesses have addressed them and expressed the view, which he indicates is common ground with the expert accounting witness retained by the Plaintiffs, that the matter does not impact on their joint report in any material way. I should add that, where different versions of the data existed, they were required to be discovered and this appears to have occurred. To the extent that this causes difficulty for the Defendants in establishing the amounts claimed in the Cross-Claim as a matter of evidence, that is a matter to be addressed at the hearing and not by striking out the Cross-Claim. 6The Plaintiffs rely on various matters relating to the absence of access to point of sale (POS) data for a period and the form on which such data was produced. They contend that her Honour ordered that the POS report for Bacchus restaurant and summary print outs of the POS system from 15 September 2009 to date be produced and contend that those reports have not been produced for part of the period. This issue relates to data that is apparently held on a decommissioned POS system. It appears that at least part of the hardware for that system still exists although the Defendants' evidence is that they are unable to access the data contained in it. The Defendants have indicated that they will allow access to that hardware to the Plaintiffs, although it appears that offer may not have been made as early as it could have been. I do not regard this issue, on its own or combined with the other issues which have been identified, as supporting the orders which are sought in the motion. 7The Plaintiffs also submit that her Honour ordered that, to the extent they were able, the Defendants produce identified POS reports in a way that met the description in her Honour's order and that they were not produced in this manner. The Defendants contend that they have produced the best and most complete information that the POS system is capable of producing and there is no reason why I should not accept that evidence. 8The Plaintiffs contend that Bergin CJ in Eq ordered that all function records for Bacchus restaurant be produced and identify several examples of function records that they contend have not been produced. The evidence led by the Defendants establishes that discovery has been given in respect of this category and, if there are any remaining issues, they are narrow in scope and could be addressed by a notice to produce or orders for production of specific documents and do not warrant the wider orders sought by the Plaintiffs in the motion. 9Next, it is suggested that the Defendants failed to comply with UCPR 21.5(1) discovery orders in relation to the documents in a list provided to the Plaintiffs on 23 May 2011. There is a contest between the parties, which I am unable to resolve without cross-examination, as to whether documents were numbered and produced in logical order when produced. It appears that, even if documents were not well-organised when produced, the accounting expert retained by the Plaintiffs has been able to organise them for the purposes of his work and any issue as to additional costs incurred is capable of being addressed by orders for costs. The Plaintiffs also complain of a failure to discover categories of documents in breach of the orders for discovery made on 7 July 2010 and 11 May 2011. I do not understand this complaint to have been pressed as a separate matter and the relevant failures were not separately identified in submissions before me. 10The Plaintiffs complain of a failure to comply with an order that the Defendants advise the Plaintiffs of the documents provided to the Defendant's expert. It appears from Mr Faraday-Bensley's affidavit that this order was complied with. 11The Plaintiffs contend that significant prejudice has been occasioned to them by reason of these matters. I do not consider the Plaintiffs have established any substantial breach of the Court's orders by the defendants, although the process of discovery has plainly been time consuming and appears to have occurred in several tranches over a long period, with a substantial number of documents being produced shortly before the hearing, I do not consider the Plaintiffs have established any prejudice that could not be remedied by orders for costs or a short deferral of the hearing date, but the Plaintiffs made clear that they do not seek such a deferral when I specifically raised that matter with them. 12The Plaintiffs also contend that the accounting expert retained by the Defendants, Mr Jugmans, has "rewritten" his report, changing the material relied on, and this was said to be contrary to orders made by the Court for the conferral of experts. I do not consider that service of Mr Jugmans' further report by the Defendants is inconsistent with her Honour's orders which expressly reserved the ability of each party to serve its own further expert's report. The first of the changes made appears to reflect correction of several factual matters addressed by Mr Jugmans' report in response to comments made by the Plaintiffs' expert and additional factual material and does not seem to me to give rise to any cause for complaint. 13It appears that new assumptions as to the capacity of the Bacchus and Longworth House restaurants were also given to Mr Jugmans, shortly before the hearing date, and he has also amended his report on the basis of those assumptions. However, no evidence was led before me to suggest that the accounting expert retained by the Plaintiffs would have any difficulty in addressing those new matters and, in reply, it emerged that the Plaintiffs' expert had in fact prepared his draft report and provided it to the Defendants' expert for review. In these circumstances, I am not satisfied that the amendment of the assumptions as to the capacity of the restaurants which Mr Jugmans has been asked to make, although it has occurred at a very late stage, has caused any significant prejudice to the Plaintiff. 14It appears that the orders made by Bergin CJ in Eq concerning the conferral of experts have not yet been complied with, or fully complied with, and that is regrettable but is capable of being remedied by orders extending the time for such conferral to take place. 15The Plaintiffs have also identified an additional ground on which they seek the orders identified above, that the absence of discovery of particular documents or lateness of discovery of those documents is prejudicial to the Plaintiffs so far as it impedes the investigation of allegations which they may wish to put as to the independence of Mr Siderovski (an accountant who previously provided services to Mr Ventura and continues to provide such services to the Second Defendant, Mr Higgins, and to the Bacchus restaurant), the integrity of documents prepared by him and whether those documents provide a proper basis for the expert report. So far as this ground relies on the matters noted above, I do not consider it is established for the reasons noted above. The Plaintiffs also relied on the Defendants' failure to discover statements for a bank account maintained by Sidcor Chartered Accountants, a firm associated with Mr Siderovski, from which it appears some payments relating to the Bacchus restaurant were made. However, by letter dated 8 November 2010, the Defendants' solicitors had advised Mr Ventura that the Defendants did not possess those documents and there is no evidence before me that they had control of them. The Plaintiffs did not, as they might have, seek to have the Court issue a subpoena requiring the production of the relevant documents by Sidcor Chartered Accountants. That omission is striking, particularly where the Plaintiffs now place significant weight on this matter, and was not explained by any evidence to which my attention was drawn. 16Complaints are also made as to the integrity of the information put before the experts in order to prepare their reports. In my view, those complaints are properly addressed by a challenge to the assumptions made by the experts or the data on which they have relied at the hearing and do not warrant the orders now sought by the Plaintiffs. 17In support of the motion, the Plaintiffs tendered a bundle of emails exchanged between Mr Higgins, one of the Defendants, and Mr Siderovski shortly after the termination of Mr Ventura's involvement with the restaurant which indicated that Mr Higgins did not take a constructive approach to the provision of information to Mr Ventura, at least in the period after the dispute between them arose. That material also suggested that there is a close relationship between Mr Higgins and Mr Siderovski and the Plaintiffs contend it raises a possibility that Mr Siderovksi could have an interest of some kind in the Bacchus restaurant. Mr Higgins' failure to adopt a more constructive approach to the provision of information to Mr Ventura is, of course, regrettable but no subsisting prejudice to the Plaintiffs has been shown. The Plaintiffs have not pleaded any issue as to the relationship between Mr Higgins and Mr Siderovski but, to the extent that matter may be relevant to the cogency of information provided by Mr Siderovski's firm and relied upon by the accounting experts, it can be explored in cross-examination of the experts at the hearing. 18The Plaintiffs also complain that they bring what they characterise as a simple claim against the Defendants, which they say is ready for hearing, and are met with a Cross-Claim which is of greater factual complexity which, they argue, is not ready for hearing. I am not satisfied, on the basis of the evidence before me, that the Cross-Claim is not substantially ready for hearing, subject to the making of any specific orders which are required as to the production of outstanding documents and conferral of the experts. In any event, the Cross-Claim arises out of the same factual issues as the Plaintiffs' claim and needs to be determined, not least because the Defence filed by the Defendants asserts a set-off arising from claims brought by the Defendants against the Plaintiffs. In these circumstances, it would plainly not be appropriate to hear the Plaintiffs' case without the Cross-Claim and the Plaintiffs have made clear that they do not seek to have the hearing deferred or vacated. 19The Court's powers under Civil Procedure Act s 61, including the powers to strike out a claim or to strike out evidence, are subject to s 58 of the Act which requires the Court to act in accordance with the dictates of justice in exercising them. The question what are the dictates of justice in a particular case is to be determined having regard to the matters contained in Civil Procedure Act ss 56 and 57. The Court may also have regard to the matters specified in Civil Procedure Act s 58(2)(b) to the extent that it considers them relevant: Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [37]. 20Section 56 identifies the overriding purpose as to facilitate the just, quick and cheap resolution of the real issues in the proceedings and s 57(1) identifies objects including the just resolution of the proceedings, the efficient disposal of the Court's business and the timely disposal of the particular proceedings and all other proceedings in the Court at an affordable cost. I do not consider that the overriding purpose or those objects would be served by denying the Defendants an opportunity to have their Cross-Claim determined on the merits when any remaining issues as to discovery can be addressed by further directions and any issues as to the adequacy of the data and assumptions provided to the experts can properly be explored at a hearing. 21So far as Civil Procedure Act s 58(2) identifies other matters to which I may have regard, the lateness of the Plaintiffs' motion does not assist its prospects, although I regard this as a less significant factor than the other matters which I have addressed above. So far as the parties' compliance with Civil Procedure Act s 56(3) is concerned, both parties have largely acted appropriately in bringing previous discovery disputes before the Court, although there has been delay in production of documents on the part of both parties and it would have been preferable if greater efforts had been devoted to resolving these issues between the parties in a timely way. I also regard this as a less significant factor than the other matters which I have addressed above. The degree of injustice which would be suffered by the respective parties as a consequence of the order or direction is a factor supporting dismissal of the motion, since striking out the Cross-Claim or expert evidence would have a significant adverse impact on the Defendants, whereas the difficulties the Plaintiffs have identified can be addressed by case management, orders as to costs or a deferral of the commencement of the hearing (which, as I have noted, they do not seek). 22The striking out of Cross-Claims or expert evidence, and in particular a joint experts' report ordered by the Court in which the experts appear to have reached a significant measure of agreement, is a remedy of last resort. So far as there are any continuing issues as to discovery or the production of documents by third parties, I will make orders for specific discovery or abridge the time for service of subpoenas as appropriate. As I have noted above, any issues with the identification of documents or additional costs incurred by the manner in which they have been produced can be addressed by orders as to costs. 23For these reasons, I dismiss the Plaintiffs' motion. I will hear the parties as to costs.